[Federal Register Volume 59, Number 193 (Thursday, October 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24623]
[[Page Unknown]]
[Federal Register: October 6, 1994]
_______________________________________________________________________
Part III
Federal Election Commission
_______________________________________________________________________
11 CFR Part 9003, et al.
Public Financing of Presidential Primary and General Election
Candidates; Proposed Rule
FEDERAL ELECTION COMMISSION
[Notice 1994-13]
11 CFR Parts 9003, 9004, 9006, 9007, 9033, 9034, 9037, and 9038
Public Financing of Presidential Primary and General Election
Candidates
agency: Federal Election Commission.
action: Notice of proposed rulemaking.
-----------------------------------------------------------------------
summary: The Federal Election Commission is seeking comments on
proposed revisions to its regulations governing publicly financed
Presidential primary and general election candidates. These regulations
implement the provisions of the Presidential Election Campaign Fund Act
and the Presidential Primary Matching Payment Account Act, which
establish eligibility requirements for Presidential candidates seeking
public financing and indicate how funds received under the public
financing system may be spent. They also require the Commission to
audit publicly financed campaigns and seek repayment where appropriate.
The proposed rules reflect the Commission's experience in administering
this program during the 1992 election cycle and also seek to anticipate
some questions that may arise during the 1996 Presidential election
cycle. The Commission is requesting comments on the draft rules set out
in this Notice, and is also seeking comments on several issues for
which no specific regulatory language is proposed at this time. No
final decisions have been made by the Commission on any of the proposed
revisions in this Notice. Further information is provided in the
supplementary information which follows.
dates: Comments must be received on or before December 5, 1994.
addresses: Comments must be in writing and addressed to: Ms. Susan E.
Propper, Assistant General Counsel, 999 E Street, NW., Washington, DC
20463.
for further information contact: Ms. Susan E. Propper, Assistant
General Counsel, 999 E Street, NW., Washington, DC 20463, (202) 219-
3690 or (800) 424-9530.
supplementary information: The Commission is considering revising parts
of its regulations governing public financing of Presidential
campaigns, 11 CFR Parts 9001 et seq. and 9031 et seq., in order to more
effectively administer the public financing program during the 1996
election cycle. The Commission is publishing this Notice of Proposed
Rulemaking to invite comments on the proposed revisions.
The areas in which the Commission is considering possible revisions
are described in this portion of the Notice in narrative form. Those
revisions that would affect both primary and general election campaigns
are described in the first section of the narrative. The revisions that
would affect only primary or general elections, respectively, are set
out in the next two sections. The fourth section summarizes other
miscellaneous and technical amendments the Commission is proposing for
the public financing rules.
The Commission has prepared proposed regulatory language for many
of these revisions, and included this language in the last section of
the Notice. However, the Commission is also interested in receiving
comments on other possible changes for which no regulatory language has
been prepared. The narrative describes these approaches and highlights
the issues to which commenters are encouraged to direct their
attention. Please note that the narrative discussion is arranged by
topic, whereas the draft rules are set out in numerical order. Readers
should use the citations contained in the narrative to locate the
corresponding proposed language in the draft rules.
Primary and General Election Regulations
A. Qualified Campaign Expenses
1. Negligent Handling of Public Funds
Accounting procedures employed by the Commission make allowance for
reasonable loss and normal spoilage of equipment leased or purchased by
a campaign. However, the Commission has at times encountered incidents
involving the mismanagement or negligent handling of public funds that
do not fall into either of these categories. The proposed rules
therefore seek to clarify how such negligence and mismanagement is
handled in the audit process.
The Commission is seeking comment on whether, as a precondition for
the receipt of public funds, the candidate should agree to meet certain
standards in handling public monies as well as in overseeing the use of
and accounting for public funds. Such standards would be specified at
11 CFR 9003.1(b) and 9033.1(b). If this approach is taken, the
Commission welcomes comment on what standard(s) would be appropriate.
The proposed rules would amend 11 CFR 9004.4(b) and 9034.4(b), to
clarify that the cost of items that are lost or misplaced due to
negligence of a campaign committee will be considered a non-qualified
expense for purposes of these rules. However, the Commission recognizes
that there are varying degrees of negligence in this area, and that
certain factors should be considered prior to any determination that a
repayment is required. For example, these factors could include, but
would not be listed to, whether the committee demonstrates that it made
careful efforts to safeguard the missing equipment; the type of
equipment involved; the number of items that were lost; and the value
of the lost equipment as a percentage of the total value of the
equipment leased or owned by the committee. On this latter point, the
Commission notes that a lost item, such as a newly-acquired vehicle,
may involve a major investment of taxpayer funds, irrespective of the
fact that its cost is only a small percentage of the total amount of
equipment leased or owned by the campaign committee. The Commission
welcomes comments on other factors that should be considered in making
this determination.
Another approach would be to limit the dollar amount of lost
property that could be considered a qualified campaign expense. If a
committee lost goods worth more than the specified amount, any amount
over that figure would be a non-qualified campaign expense. This would
have the advantage of not requiring the Commission to get involved in
what could become a substantial number of negligence determinations,
while recognizing that some loss is inevitable in large, lengthy
campaigns. The Commission welcomes comments on this approach as well as
on what reimbursement limit should be specified, if this were to be
adopted.
The Commission is also seeking comments on how lost or stolen
uninsured items should be reflected on statements of net outstanding
campaign obligations [``NOCO'']. If an item is lost through negligence,
the question is whether it should continue to be treated as an asset
for purposes of the NOCO statement to avoid increasing the committee's
entitlement. Comments are welcome on how this should be done.
Please note that other proposed amendments to the NOCO requirements
are discussed under ``NOCO Statements,'' infra. A related topic, the
treatment of insurance proceeds, is discussed under ``Gains on the Use
of Public Funds,'' infra.
2. Closed Captioning
In 1992, Congress amended 26 U.S.C. 9003 to add a new paragraph
(e), stating that no publicly funded candidate may receive funding for
either the primary or general election campaign unless the candidate
agrees that all of his or her television commercials will be closed
captioned or otherwise capable of being viewed by deaf and hearing
impaired individuals. Pub. L. 102-393, section 534, 106 Stat. 1764
(1992). Although no corresponding amendment was made to 26 U.S.C. 9033,
section 9003(e) states that this requirement applies not only to
candidates who are eligible to receive amounts from the Presidential
Election Campaign Fund, but also to those eligible for funding ``under
chapter 96'' of Title 26 of the United States Code, that is, the
Presidential Primary Matching Payment Account Act. The Commission is
therefore proposing to add the statutory language to the candidate and
committee agreement requirements found at both 11 CFR 9003.1(b) and
9033.1(b).
3. Media Reimbursements
Section 9004.6 contains rules governing expenditures for
transportation and other services provided to media and Secret Service
personnel by presidential campaign committees receiving public
financing for the general election. Section 9034.6 is a parallel
provision governing primary committees that receive public funds from
the matching payment account. These provisions indicate that
expenditures for these purposes will, in most cases, be regarded as
qualified campaign expenses subject to the overall limitations of
sections 9003.2 and 9035.1, respectively.
However, sections 9004.6 and 9034.6 also allow committees to accept
limited reimbursement for these expenses from the media, and deduct any
reimbursements received from the amount of expenditures subject to the
overall expenditure limitation. These rules set limits on the amount of
reimbursement that a committee can accept, and require committees to
repay a portion of any reimbursement that exceeds those limits to the
Treasury.
The proposed rules seek to clarify the application of sections
9004.6 and 9034.6 by reorganizing them without any substantive change.
Under the proposed revisions, paragraphs (a) and (b) have been broken
into smaller subparagraphs. Paragraph (c) has been renumbered as
paragraph (e). Paragraph (d) has been renumbered as paragraph (c) and
broken into smaller paragraphs, and new paragraph (d) has been inserted
in order to clarify the interplay between two aspects of the existing
rules: The requirement that the committee return to the media
representative that portion of any reimbursement received that exceeds
the actual cost of the transportation and services provided by more
than 10%, and the requirement that the committee repay to the Treasury
any part of the reimbursements it receives that exceeds the actual and
administrative costs incurred by the committee. The Commission welcomes
comments on the proposed revisions to sections 9004.6 and 9034.6.
4. Travel Expenditures
The Commission seeks comments on modifying 11 CFR 9004.7 and 9034.7
to address several issues regarding the cost of campaign-related travel
using government airplanes, helicopters and other vehicles. The current
rules contemplate that for plane flights between cities served by a
regularly scheduled commercial airline service, the campaign must
reimburse the appropriate governmental entity for the first class
airfare, and that this amount is treated as a qualified campaign
expense. New language in section 9004.7(b)(5)(i) and section
9034.7(b)(5)(i) would specify that, for travel by airplane, the amount
of the lowest unrestricted non-discounted first class commercial
airfare available for the time traveled is to be used. Discounted fares
that are subject to restrictions on the dates and times of travel, or
restrictions on changing flights, are not comparable to the service
provided when the campaign uses a government conveyance. Campaign
committees are responsible for determining these amounts at the time of
the flight to ensure that the right amount is paid to the appropriate
government entity, and would need to maintain documentation supporting
these amounts. The lowest unrestricted non-discounted first class
airfare is available from several sources including travel agents and
the Official Airline Guide.
Questions have also arisen regarding cities that are served by
regular air service, but first class flights are not available. In this
case, the Commission proposes specifying that committees should use the
lowest unrestricted non-discounted coach fare available for the time
traveled. This approach is consistent with the valuation method
established by the Select Committee on Ethics of the United States
Senate for the use of private aircraft. See Interpretive Ruling No.
412, Select Committee on Ethics, United States Senate, 101st Cong., 1st
Sess., S. Prt. 101-18 at 251-52 (1989). It is also consistent with the
valuation methods used by the House of Representatives' Committee on
Standards of Official Conduct with respect to gifts of private
transportation not associated with official travel. See, Valuation of
Gifts of Transportation on Private Aircraft, Committee on Standards of
Official Conduct, Letter dated June 11, 1987.
For cities not served by regularly scheduled commercial service,
the current rules specify that the amount to be reimbursed is the
charter rate. The proposed revisions would clarify that the charter
rate used should be for a comparable airplane of similar make, model
and size. This provision would also be consistent with the approaches
used by the Congressional Committees.
Questions have also arisen regarding the costs of ``positioning''
flights that are needed to bring the government aircraft from one stop
where it dropped off the candidate and campaign staff to another stop
where it will pick them up to continue the trip or return to the point
of origin. New language in sections 9004.7(b)(5)(ii) and
9034.7(b)(5)(ii) would incorporate the Commission's policy that the
committee should pay the costs noted above for one passenger plus fuel
used and crew time. This approach recognizes that positioning flights
are campaign-related, and therefore these costs are properly treated as
qualified campaign expenses.
Paragraphs (b)(5)(iii) in sections 9004.7 and 9034.7 would contain
provisions regarding travel on government conveyances other than
airplanes. For travel by helicopter or ground conveyance, the
commercial rental rate should be paid for a comparable conveyance in
terms of size, model and make. Additional guidance on this area can be
found in Advisory Opinion 1992-34. Proposed sections 9004.7(b)(5)(iv)
and 9034.7(b)(5)(iv) would continue to require payment for the use of
accommodations paid for by a government entity. Under 11 CFR
100.7(a)(1)(iii)(B), the committee should use the usual and normal
charge in the market from which it ordinarily would have purchased the
accommodations. The term ``accommodations'' includes both lodging and
meeting rooms.
New paragraph (B)(8) of these sections would explicitly reflect
Commission policy that travel on corporate conveyances is governed by
11 CFR 114.9(e).
Finally, new language in paragraph (b)(2) of these sections would
provide additional guidance as to when a stop will be considered
campaign-related. Campaign activity includes soliciting, making or
accepting contributions, and expressly advocating the nomination,
election or defeat of any candidate. See, e.g., AOs 1994-15, 1992-6,
and opinions cited therein. The Commission has also indicated that the
absence of solicitations for contributions or express advocacy
regarding candidates will not preclude a determination that an activity
is ``campaign related.'' Id. Accordingly, the proposed rules would
include other factors to be considered in determining whether a stop is
campaign-related. The rules would also retain the current language
indicating that incidental campaign-related contacts during an
otherwise noncampaign-related stop would not cause the stop to be
considered campaign-related.
5. Winding Down Costs; Gifts and Bonuses
The current regulations at 11 CFR 9004.4(a)(4)(i) and
9034.4(a)(3)(i) permit candidates to receive contributions and matching
funds, and make disbursements, for the purpose of defraying winding
down costs over an extended period after the candidate's date of
ineligibility [``DOI'']. These amounts are treated as qualified
campaign expenses, and can result in additional audit fieldwork and
preparation of addenda to audit reports to focus on these receipts and
disbursements.
The Commission is proposing several ways to streamline and shorten
the audit process, discussed below. In addition, comments are welcome
on whether the amount that a candidate may receive for winding down
costs should be limited to no more than a flat dollar amount, or a set
percentage of the candidate's total expenditures during the campaign,
or a set percentage of total matching funds certified for the
candidate. If so, what should the amount or percentage be? If campaigns
receive a set dollar amount, but do not use the entire amount for
winding down costs, should they be permitted to retain the unspent
amount? Allowing them to keep the remainder would serve as an incentive
to complete the winding down process promptly. However, there are
public policy reasons for requiring the remaining funds to be returned
to the U.S. Treasury. Placing a cap on winding down expenses would
assist the Commission's goal of streamlining, but the amount chosen
would have to be sufficient to meet reasonable expenses incurred in
winding down the campaign. Another option would be to establish a
cutoff date after which winding down expenses would not longer be
considered qualified campaign expenses. Other suggestions that would
simplify and shorten the required audit process are encouraged. The
proposed rules do not include language regarding these proposals.
The Commission seeks comments on new language in section 9034.4(A)
incorporating the current practice of permitting publicly-funded
primary committees to treat 100% of salary, overhead and computer
expenses incurred after the candidate's date of ineligibility (DOI) as
exempt compliance expenses, beginning with the first full reporting
period after DOI. See, Financial Control and Compliance Manual for
Presidential Primary Candidates Receiving Public Financing, p. 25
(January, 1992). Please note that this approach does not apply to
expenses incurred during the period between DOI and the date on which a
candidate either re-establishes eligibility or ceases to continue to
campaign. Similarly, for general election candidates, new language
would be added to section 9004.4(a) to allow 100% of salary and
overhead expenses incurred after the end of the expenditure report
period to be paid from the legal and accounting compliance fund,
provided these expenses are solely to ensure compliance with the FECA
and the Fund Act.
Finally, new language in sections 9004.4(a) and 9034.4(a) would
permit campaign committees to use federal funds to defray the costs of
gifts or monetary bonuses for committee staff and consultants, as long
as the gifts do not exceed $150 per individual and as long as all gifts
and bonuses (except bonuses provided for at the outset in employment
and consulting contracts) are limited to $20,000. This approach is
somewhat similar to a provision included in the public funding rules
for convention committees at 11 CFR 9008.7(a)(4)(xii). See 59 FR 33618
(June 29, 1994). With regard to bonus arrangements provided for in
advance in employment and consulting contracts, comments are sought on
whether the amount of these bonuses should be restricted to a fixed
percentage of the compensation paid as provided by the contract, or
whether these bonuses should be subject to the overall $20,000 limit.
Such an approach would be intended to ensure that committees do not
give out sizable bonuses simply because they have surplus public funds
at the end of the campaign.
B. Documentation and Reporting
1. Documentation of Disbursements
Sections 9003.5(b)(1)(i) and 9033.11(b)(1)(i) set forth the
documentation required for disbursements in excess of $200. Although a
canceled check, negotiated by the payee, is required in most
situations, it is not currently required if the committee presents a
receipted bill from the payee stating the purpose of the disbursement.
The proposed rules would change the documentation requirements so that
committees must provide canceled checks negotiated by the payees for
all disbursements over $200. This change would assist the Commission's
audit staff in verifying that public funds are spent on qualified
campaign expenses. Committees should already have canceled checks in
their possession, so production would not be burdensome. Please note
that, as in the past, the proposed rules would require that
documentation in addition to the committee's check be provided for
disbursements exceeding $200.
2. Alphabetized Schedules
The proposed rules include two new sections, 11 CFR 9006.3 and
9037.4, which would require that presidential campaign committee
reports containing schedules generated from computerized files, list in
alphabetical order the sources of the receipts, the payees and
creditors. For individuals, including contributors, the list must be in
alphabetical order by surname. However, presidential campaign
committees would not be required to computerize their records if they
do not wish to do so. The new provision is intended to remedy
situations in which committees maintain computerized records of
contributors or payees in alphabetical order, but file schedules with
the order of the names scrambled. That practice makes it very
difficult, if not impossible, to locate particular names on the
committee's reports if the schedules are voluminous, thereby thwarting
the public disclosure purposes of the Federal Election Campaign Act, 2
U.S.C. 431 et seq. [``FECA''] and making it more difficult to monitor
compliance with the contribution limits.
C. Audits
1. Sampling and Disgorgement
The Commission has a statutory obligation to complete the audits of
publicly funded committees in a thorough and timely manner. In the
past, the resources required to conduct reviews of the contributions
received by presidential committees contributed to the Commission's
difficulty in fulfilling that obligation.
Beginning with the 1992 election cycle, however, the Commission
began to make more extensive use of statistical sampling for audits of
contributions received by publicly financed presidential primary
election committees, and to use the sample results to quantify, in
whole or in part, the dollar value of any related audit findings. While
the Commission continues to conduct a limited non-sample review of
contributions received by these committees, most audit testing of
contributions and supporting documentation is now done on a sample
basis. The Commission is now proposing that new paragraph (f) be added
to 11 CFR 9007.1 and 9038.1 to incorporate these procedures.
The Commission notes that this approach would apply in a general
election only to contributions raised due to a deficiency in the
Presidential Election Campaign Fund, or to contributions raised by new
or minor party candidates. See 26 U.S.C. 9003(c)(2), 9006(c); 11 CFR
9003.2(b)(2), 9003.3(b).
The use of statistical sampling is legally acceptable for
projecting certain components of a large universe, such as excessive
and prohibited contributions. See, e.g., Chavez County Home Health
Service v. Sullivan, 931 F.2d 904 D.C. Cir. 1991) (sampling audit used
to recoup Medicaid overpayments to health care providers); Michigan
Dep't of Education v. U.S. Dep't of Education, 875 F.2d 1196 (6th Cir.
1989) (sampling of 259 out of 66,368 total payment authorizations
upheld as proper basis for determining amount of misexpended federal
funds in vocational-rehabilitative program); Georgia v. Califano, 446
F. Supp. 404 (N.D. Ga. 1977) (Medicaid overpayments).
The statistical sampling technique currently employed in this
process, known as Dollar Unit Sampling, Probability Proportional to
Size, or Combined Attribute Variable Sampling, is widely accepted in
the auditing profession. This plan is discussed in the American
Institute of Certified Public Accounts' Audit and Accounting Guide
entitled Audit Sampling, and is the only sampling plan capable of
producing dollar projections supported by the audit software package
IDEA, which is marketed by the American Institute of Certified Public
Accountants. This same technique has been used by the Commission since
1980 to determine the amount of committees' matching fund payments.
The Commission is using this sampling plan to evaluate committees'
compliance with contribution prohibitions and limitations, itemization
of contributions, omission of disclosure information and receipts
documentation. See 2 U.S.C. 432(c), 434(b), 441a, 441b, 441c, 441e,
441g. For example, the Commission projects the total amount of
excessive or prohibited contributions based on apparent excessive or
prohibited contributions identified in a sample of a committee's
contributions. This projection becomes the basis, in whole or in part,
of the audit finding.
The Commission informs the committee which items serve as the basis
for the sample, and the committee responds only to the specific sample
items used to make the projection. If the committee shows that any
errors found among the sample items were not excessive or prohibited
contributions, timely refunded, reattributed or redesignated, or for
some other reason were not errors, a new projection is made, based on
the reduced number of errors in the sample.
The Commission is further proposing to clarify at new paragraphs
9007.1(f)(3) and 9038.1(f)(3) that the amount of any excessive or
prohibited contributions that are not refunded, reattributed or
redesignated in a timely manner shall be paid to the United States
Treasury. Committees have 30 days from the date of receipt in which to
refund prohibited contributions, and 60 days in which to seek the
reattribution, redesignation or refund of excessive contributions. 11
CFR 103.3(b) (1), (2) and (3). A committee's failure to take action on
these contributions, as well as attempts to cure them outside of the
specified time periods, would cause these contributions to be treated
as in violation of the FECA.
The equitable doctrine of disgorgement supports the payment to the
Treasury under these circumstances. See generally, United States v.
Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411
(E.D.N.Y. 1988), aff'd 879 F.2d 20 (2d Cir. 1989) (disgorgement an
appropriate, non-punitive remedy to deprive wrongdoers of their ill-
gotten gains and to deter future violations). A payment to the Treasury
is an equitable remedy for contributions that have been accepted in
violation of 2 U.S.C. 441a and 441b, and is also consistent with past
Commission practice. See Matter Under Review [``MUR''] 1704 (based upon
preliminary estimates, Commission directed respondents to pay $350,000
to the United States Treasury for contributions that would have
exceeded section 441a limits); Plaintiff's Motion to Effectuate
Judgment, FEC v. Populist Party, No. 92-0674 (HHG) (D.D.C. filed May 4,
1993).
Moreover, this proposed payment is analogous to, and consistent
with, the requirement at 11 CFR 9038.6 that stale-dated checks be paid
to the Treasury. This issue arose after the 1984 election cycle, and
the rule was promulgated as a means to codify the Commission practice
of requiring disgorgement, which was implemented during that cycle.
See, e.g., 52 FR 20864, 20874 (June 3, 1987).
Disgorgement eliminates the need for the Commission to monitor a
committee's refunds of excessive or prohibited contributions. In
addition, it is easier for a committee to make one payment to the
Treasury, as opposed to refunding multiple contributions. Finally, this
is a practical approach in those situations where it is difficult to
discern the original contributors.
2. Further Streamlining the Audit Process
The Commission is seeking comments and suggestions on ways to
further 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. The Commission's
responsibility for conducting a thorough audit and examination of
qualified campaign expenses is set out at 26 U.S.C. 9007(a) and
9038(a). The Commission has an additional responsibility to conduct
adjudications as to whether any portion of the public funds received
should be subject to a repayment. 26 U.S.C. 9007(b) and 9038(b). The
public financing statutes at 26 U.S.C. 9007(c) and 9038(c) specify a
three year time period in which the Commission will notify publicly
funded committees of repayment determinations. Separate enforcement
procedures are prescribed under 2 U.S.C. 437g.
The Commission has taken several actions to help insure that the
audit and repayment processes are completed as expeditiously as
possible. For example, the 1991 revisions to the public financing
regulations eased compliance with the state-by-state allocation rules
set forth at 11 CFR 106.2, and implemented improved use of subpoenas in
presidential audits. See 56 FR 35899-900, 35903-04 (July 29, 1991). In
addition, as noted above, the Commission has begun to use generally
accepted sampling procedures in conducting these audits, and has
instituted a policy that limits a committee to one extension of time in
which to respond to the Interim and Final Audit Reports [``IAR'' and
``FAR'']. These actions are having the desired effect, in that the
Commission is currently on schedule, or ahead of schedule, with respect
to nearly all 1992 audits.
Given this situation, one approach would be to wait until after the
new rules and procedures have been in place for an entire presidential
election cycle before evaluating what additional streamlining methods
are warranted, if any. In the alternative, the Commission welcomes
suggestions for further streamlining these processes, and seeks
comments on several possible changes that are explained below.
The Commission notes that it is important to ensure that whatever
streamlining measures are adopted do not adversely affect the
statutorily required audit process, the committees' due process rights
when repayment determinations are made, or the Commission's ability to
effectively conduct subsequent enforcement actions.
As for modifications to the actual audit and repayment processes,
the Commission is first considering whether the committee's oral
presentation should be held at an earlier point. Currently a committee
may request the opportunity to make an oral presentation if the
committee submits written materials disputing the initial repayment
determination contained in the FAR. 11 CFR 9007.2(c)(3), 9038.2(c)(3).
Please note that the Commission is not considering adding a second
hearing to the audit and repayment processes, but only whether the
current hearing should be held at a different point.
The Commission recognizes that some committees might prefer to make
this presentation earlier in the process. Moving up the hearing could
also help the Commission resolve issues at an earlier date. However, it
is unclear whether advancing the hearing would in and of itself shorten
either the audit or repayment process.
The Commission's experience has been that many issues are resolved
or narrowed as the audit progresses and the amount of the repayment is
further refined. Hence, an earlier date could result in a longer, less
manageable hearing on more issues. To date, the Commission has averaged
only five oral hearings per cycle, because sufficient issues were
resolved in or before the FAR in the other audits to make a hearing
unnecessary. The earlier in the process a hearing is held, the more
likely it is that a committee will request one. This approach could
thus slow down, rather than speed up, the audit process.
The Commission also seeks comments on whether to shorten the time
between various stages of the audit, repayment, and enforcement
processes, or to eliminate some of these stages. For example, the IAR
currently includes a preliminary repayment calculation, while the FAR
includes an initial repayment determination. 11 CFR 9007.1(c), (d);
9038.1(c), (d). The Commission issues the final repayment determination
following consideration of the initial repayment determination in the
FAR, along with, inter alia, information contained in the committee's
written response or presented at the hearing, if one is held. 11 CFR
9007.2(c)(4), 9038.2(c)(4).
One alternative would be to include the initial repayment
determination in the IAR, and include the final repayment determination
and statement of reasons in the FAR. The committee would then respond
to the IAR with a written statement and could request the opportunity
to make an oral presentation, as is now done following the FAR. This
hearing and related documentation would serve as the basis for the FAR.
The committee would continue to have the right to petition for a
rehearing, in accordance with 11 CFR 9007.5 and 9038.5, but would
exercise this right following the FAR/final repayment determination,
rather than after the later, separately-issued final repayment
determination that occurs under the present rules. Please note that
including the initial repayment determination in the IAR would not
change the rule that issuance of an IAR serves as notification of
repayment determinations. See 11 CFR 9007.2(a)(2) and 9038.2(a)(2).
A variation of this approach would be to provide a staff draft of
the IAR to the committee at the same time it is sent to the Commission,
much in the manner that the Commission currently provides a probable
cause to believe brief to respondents pursuant to 2 U.S.C. 437g(a)(3).
The committee could provide a written response to the staff-prepared
IAR and request a hearing before the Commission. The hearing and
additional materials submitted would serve as the basis for the
Commission's adoption of the FAR. The Commission would subsequently
issue the final repayment determination and statement of reasons.
While this approach could take less time, committees might prefer
to know when they are preparing their responses whether the Commission
agrees with the staff's analysis of the issues presented. This would
not be possible if the committee received the staff draft of the IAR at
the same time it was sent to the Commission. Also, the staff draft
could not contain an interim repayment determination, as that must be
approved by the Commission.
The Commission is also concerned with how confidentiality
requirements could impact on these proposed revisions. When committee
activities raise both repayment and enforcement issues, the current
confidentiality provisions require that matters already determined by
the Commission to warrant enforcement action not be made public during
the Commission's discussion of the initial repayment determination. For
example, the publicly released FAR does not discuss the referral of
specific matters for enforcement under 2 U.S.C. 437g. See 11 CFR
9007.1(e)(2), 9038.1(e)(2).
Regardless of what other changes might be made, the Commission is
considering whether the IAR should be made public at the time it is
sent to the committee. If this were done, the Commission's ``sunshine''
rules might require a public discussion of the IAR, unless the document
met other criteria requiring closed discussion under 11 CFR 2.4.
The Commission recognizes that committees may prefer that the
preliminary repayment calculation, which is now contained in the IAR,
not be publicly released, because the amount of the requested repayment
may be substantially altered prior to the issuance of the FAR or the
final repayment determination. On the other hand, publicly releasing
the IAR could encourage committees to address issues at an earlier
point, rather than waiting until the later stages of the audit and
repayment processes, as now sometimes occurs. If the decision is made
to release the IAR, the revised rules would note that the repayment
sought could be adjusted upwards or downwards, based on any subsequent
information.
Finally, the Commission is considering whether, in those audits
that lead to enforcement actions, the enforcement process should begin
at an earlier point, such as by making reason to believe findings when
the IAR is issued. This would permit the investigation to proceed
concurrently with the audit and repayment processes, so that the final
repayment determination and statement of reasons could be issued when
the enforcement matter is concluded.
The Commission already has begun to initiate enforcement actions at
an earlier point, in appropriate cases. However, it may prove
difficult, if not impossible, to formulate a specific policy that would
apply equitably to all audits as to when the enforcement process should
begin and when it should be completed. The Commission would not want
the completion of the audit and repayment processes to be delayed
because the enforcement action is still underway. Also, in some
situations, it may not be possible for the Commission to open an
enforcement matter before it issues a final repayment determination, if
that determination constitutes the Commission's earliest analysis of
whether certain actions may constitute violations. Thus the current
case-by-case approach may prove to be the best alternative.
3. Administrative Record
The Commission also has prepared new sections 9007.7 and 9038.7 to
explain which documents constitute the administrative record for
purposes of judicial review of final determinations regarding candidate
certification, eligibility, ineligibility, and repayment. For example,
the administrative record includes documents and other supporting
evidence on which the Commission's decision is based such as the
candidate agreement, matching fund submissions, Interim Audit Report,
NOCO statement, the Final Audit Report, transcript of the committee's
oral presentation, the final repayment determination, statements of
reasons, and the certifications of Commission votes. On the other hand,
the Commission has never considered the administrative record to
include documents in the files of individual Commissioners, or
documents in FEC employees' files which do not constitute a basis for
the Commission's decisions. It would also not be appropriate to include
in the administrative record transcripts or tapes of Commission
discussions of audit or repayment matters. Although these materials may
sometimes be made available under the Freedom of Information and
Government in the Sunshine Acts, they do not provide an adequate
explanation of the reasons for the Commission's decisions because they
represent pre-decisional discussions. Documents properly subject to
privileges such as an attorney-client privilege, or items constituting
attorney work product, would also not be made part of the
administrative record. The Commission welcomes comments regarding the
types of documents and materials that should or should not be
considered part of the administrative record.
D. Applicability of the Debt Collection Act to the Certification
Process
The Debt Collection Act, 31 U.S.C. 3701 et seq. [``DCA''], at
section 3716, authorizes the practice of administrative offset, whereby
amounts owed to the Government may be deducted from amounts due from
the Government to a debtor if certain requirements are met. This means,
for example, that the Commission could obtain repayments from certain
publicly funded campaigns that have failed to make timely restitution
of improperly-utilized public funds, if that candidate qualified for
public funding in a future election cycle.
One of the DCA's requirements is that, before an agency can utilize
this procedure, it must have prescribed regulations describing how this
will be done. However, the DCA has other ramifications both for public
funding, and for the Commission's enforcement process under the FECA.
For example, in some situations, section 3717 of the DCA would require
charging interest, penalties and processing and handling costs on
overdue debts. This could include both overdue repayments and overdue
civil penalties.
The Commission has an ongoing rulemaking that would revise various
FECA enforcement procedures, and is planning to publish an additional
Notice in connection with that rulemaking to seek comments on how the
DCA might be utilized in both the FECA and the public funding context.
Comments received in response to that Notice will serve as the basis
for deciding whether to amend the public funding rules to provide for
administrative offset, interest and other charges.
The Commission is also seeking comment on the related question of
whether, absent implementation of the DCA, it would be appropriate to
assess interest on late repayments (those made after 90 days following
notice of the Commission's repayment determination) and during
extensions of time on repayment determinations, especially those that
exceed the 90-day period established at 11 CFR 9007.2(d)(1) and
9038.2(d)(1).
While the presidential fund Acts contain no language on interest
assessment, federal common law holds that interest may be assessed on
debts owed the government, even without a statutory provision granting
that power. Robinson v. Watts Detective Agency, 685 F.2d 729, 741 (1st
Cir. 1982). In particular, a statute is not necessary to compel payment
of interest where equitable principles allow this. Young v. Godbe, 82
U.S. 562, 565 (1872).
In the absence of charges for delinquent payments, debtors have
little or no incentive to make timely payments. Without this
requirement, debtors may be more likely to pay their private sector
debts first, as these generally accrue interest, and their government
debts last.
The Commission has already established the precedent that it may
assess interest when a presidential committee seeks a stay of a
repayment determination pending appeal. 11 CFR 9007.5(c)(4),
9038.5(c)(4). One reason cited by the Commission for taking this action
was to protect the Treasury ``by helping to ensure that the repayment
challenge is a serious one and not a dilatory tactic.'' Agenda Document
#86-118, Proposed Revision of Title 26 Regulations (Nov. 26, 1986).
Another was that, if the candidate is earning interest on the disputed
repayment amount, the Treasury and not the candidate should receive the
benefit if the Commission's repayment determination is upheld. Id. Both
reasons are equally applicable to this discussion.
Another argument in support of collecting interest is that, by
agreeing to certain conditions, including an audit and appropriate
repayment, the presidential committees have established a contractual
relationship with the Commission under which interest assessment
becomes appropriate. See West Virginia v. United States, 479 U.S. 305,
310 (1987). Also, if a debtor-creditor relationship is established,
``interest is allowed as a means of compensating a creditor for loss of
use of his money.'' United States v. United Drill and Tool Corporation,
183 F.2d 998, 999 (D.C. Cir. 1950). Such a relationship exists in this
context in that, prior to the receipt of public funds, the candidate
must agree to repay unexpended funds, money determined to be spent in
an unqualified manner, and amounts received in excess of entitlement.
11 CFR 9003.1(b)(6), 9033.1(b)(7).
If the Commission decides to expand the current interest assessment
policy, it would seem appropriate that the same interest computation
formula be utilized across the board. Under current 11 CFR 9007.5(c)(4)
and 9038.5(c)(4), the interest assessed is the greater of that
calculated using the formula set forth at 28 U.S.C. 1961 (a) and (b)
for computing interest on money judgments in federal civil cases, or
the amount actually earned on the set-aside funds in controversy. The
Commission welcomes comments on whether this or some other approach
should be taken, should additional regulations be promulgated.
Please note that there is no specific language in the regulatory
text that addresses this situation. The Commission welcomes comments on
any aspect of this proposal.
Primary elections
A. Eligibility for Matching Payments; Amount of Entitlement
1. Complete Contributor Identifications
Treasurers of political committees, including authorized committees
of Presidential candidates, are required by 2 U.S.C. 432(i) and 434(b)
to use their best efforts to obtain, maintain and report the name,
address, occupation and employer of all contributors who give over $200
per calendar year. The Commission recently issued revised rules
regarding this reporting obligation. See 58 FR 57725 (Oct. 27, 1993).
During that rulemaking, two commenters suggested revising 11 CFR 9036.2
so that Presidential primary candidates would only receive matching
funds for contributions exceeding $200 containing complete contributor
information. While full contributor identifications are required for
such contributions in threshold submissions under 11 CFR 9036.1(b),
they are not currently required under 11 CFR 9036.2(b)(1)(v) for
additional submissions for matching funds. Accordingly, comments are
requested on whether to delete section 9036.2(b)(1)(v), thereby
requiring complete contributor information for all matchable
contributions exceeding $200. In the alternative, comments are sought
on only matching these contributions if committees can provide evidence
demonstrating they made their best efforts to obtain the information.
Please note that neither of these alternatives is included in the
proposed regulations which follow.
2. NOCO Statements
Section 9034.5(a) of the regulations requires the candidate to
submit a statement of net outstanding campaign obligations [``NOCO'']
within 15 days of his or her date of ineligibility. Section
9034.5(f)(1) also requires the candidate to submit a revised statement
of net outstanding campaign obligations with each subsequent matching
payment request. These NOCO statements provide the Commission with an
indication of the campaign's financial status. The Commission uses
these statements to determine whether the candidate is entitled to
receive any additional matching funds.
In some circumstances, the NOCO statements do not provide adequate
information about the candidate's remaining obligations. For example,
many NOCO statements list the candidate's estimated necessary winding
down costs as a single lump sum, making it difficult for the Commission
to review the cost estimate to determine whether the candidate is
entitled to receive the entire estimated amount. In addition, because
several weeks now elapse between submission of the NOCO statement and
certification of the matching payments due to changes in the Treasury
Department's payment policy, the certification often does not reflect
the true financial status of the committee at the time of
certification. The candidate's financial situation invariably changes
during this period, and any change in the committee's net outstanding
campaign obligations should result in a change in the committee's
entitlement.
The proposed rule seeks to address these problems. Section
9034.5(b) would be amended to require a breakdown of the estimated
winding down costs listed on the NOCO statement by category and time
period. This breakdown would include estimates of quarterly or monthly
costs for office space rental, staff salaries, office supplies,
equipment rental, telephone expenses, postage and other mailing costs,
printing, and storage from the date of the NOCO statement until the
expected termination of the committee's political activity.
The proposed rule would also require a candidate who submits a
matching payment request and accompanying NOCO statement after his or
her date of ineligibility to submit an additional revised NOCO
statement. This statement would be due just before the certification
date, on a date that would be published by the Commission with the
dates for matching fund submissions and matching payment
certifications. The candidate would be required to prepare the
statement so that it reflects the financial status of the campaign
three business days before the statement's due date. The Commission
would then use this statement to determine whether the amount of
matching payments to be certified should be adjusted to reflect a
committee's changed financial situation. This would ensure that the
amount certified accurately reflects the committee's financial
situation at the time of certification. The Commission welcomes
comments on these proposed rules.
B. Qualified Campaign Expenses
1. Funding General Election Expenses with Primary Funds
The Presidential Election Campaign Fund Act, the Presidential
Primary Matching Payment Account Act, and Commission regulations
require that publicly funded presidential candidates use primary
election funds only for expenses incurred in connection with primary
elections, and that they use general election funds only for general
election expenses. 26 U.S.C. 9002(11), 9032(9); 11 CFR 9002.11, 9032.9.
These requirements are tied to the overall primary and general election
expenditure limits set forth at 2 U.S.C. 441a (b) and (c), and at 26
U.S.C. 9004(b) and 9034(b). See also 11 CFR 9004.1, 9004.3(b),
9034.1(d). Therefore, once a primary candidate is the clear and
projected winner of the primary election process and begins to campaign
by addressing issues and comparability with other projected general
election candidates, certain costs incurred prior to the candidate's
primary election date of ineligibility are considered general election
expenses that are reimbursable by the general election committee.
The Commission is seeking comments on whether the pertinent rules
should provide more specific guidance on how certain expenditures might
be characterized. Questions have arisen in recent election cycles as to
whether certain primary funding was in fact used to benefit the general
election. As additional states choose to hold their state nominating
conventions or primary elections early in the election cycle, the major
parties' selection of a nominee is increasingly likely to be decided
long before the convention. Once a candidate has secured enough
delegates to win the nomination, the focus of the campaign may turn in
large part to the general election. However, the Commission realizes
that it can be difficult to distinguish between legitimate primary
campaign activity, such as that which is designed to lock up delegates,
or is related to the primary outcomes or pre-convention preparation,
from activity that is geared towards the general election.
The Commission is considering several alternatives that would
provide additional guidance to presidential campaign committees on how
such expenditures are treated. The Commission welcomes comments on any
of these approaches, as well as suggestions on other ways available to
deal with this situation.
One question concerns depreciation of primary committee assets in
this situation. Section 9034.5(c)(1) currently permits a standard 40%
depreciation of capital assets held by a primary campaign committee,
except for items acquired after the committee's DOI. A higher
depreciation is allowed for a particular item if the committee
demonstrates through documentation that the asset's fair market value
is lower.
Under certain circumstances, however, the 40% figure may be overly
generous. For example, if the primary committee purchases a $20,000
computer system shortly before the primary election DOI and then sells
it to the general election committee, allowing the primary campaign to
assume a 40% depreciation would result in a nearly $8,000 subsidy from
the primary to the general election committee. The Commission is
therefore proposing that paragraph 9034.5(c)(1) be amended to clarify
that a higher, lower, or no depreciation may be claimed in appropriate
cases.
Current 11 CFR 9034.4(b)(3) states that expenses incurred after a
candidate's primary election DOI are not considered qualified campaign
expenses, except for certain winding down costs and costs incurred in
continuing to campaign. See 11 CFR 9034.4(a)(3). The Commission is
considering whether this language should be expanded to clarify that,
consistent with 26 U.S.C. 9002(11)(B) and 11 CFR 9002.11(b), goods
received prior to the DOI that are used for the general election, and
pre-DOI services that provide a benefit to the general election
campaign, are considered qualified campaign expenses for the general
election and not for the primary election.
One approach would be to allocate the cost of each capital asset
between the primary and the general election, based on when the asset
was acquired and the time the committee began to focus on the general
election. This could be difficult to administer, however, requiring as
it would an asset-by-asset determination.
Another approach would be to include a presumption in section
9034.4(b)(3) that capital assets purchased during a certain period
before the first day of the candidate's party's national nominating
convention are general election assets. Section 9034.4(b)(3) of the
proposed rules would set a presumed cutoff date of 60 days before the
start of the candidate's party's national nominating convention.
However, the Commission is requesting comments on whether some other
cutoff point would better serve this purpose, as well as whether a
uniform cutoff date, such as June 15 preceding the national nominating
convention, would be more appropriate. If so, what date should be
selected? If a more flexible approach is desirable, how should the
applicable timeframe be computed? Should it be the date of the
candidate's party's last state primary election?
Whatever approach is adopted, the presumption would be rebuttable
based on each candidate's particular circumstances. If a candidate
could demonstrate that he or she was still largely involved in
campaigning for the nomination after the presumptive cutoff date, that
date could be moved back. In the case of a brokered convention, several
candidates might be found to have focused nearly exclusively on
securing the nomination until the date during the convention on which
one in fact did so. Conversely, a candidate who became the clear and
projected nominee of a party early in the presidential election year
might be found to have made expenditures in connection with the general
election well in advance of the designated cutoff date.
In determining how expenditures made as of a certain date should be
characterized, the Commission might consider such information as how
many delegates the candidate has, the number of candidates who received
votes in each of the candidate's party's most recent state primary
elections or other state nominating procedures, the relative
percentages received by each candidate in these proceedings, and
whether the candidate had begun to focus on issues raised by other
projected general election candidates and his or her comparability with
such candidates. The Commission welcomes suggestions of other factors
that could prove helpful in making this determination.
Another question involves local campaign offices that continue to
operate after a state's primary election or other nominating procedure
is over, when the office is no longer focused on securing the
nomination in that state. The Commission is proposing a rebuttable
presumption that a local campaign office that remains open more than 30
days after a state's primary election, or the close of any other
nomination process in that state, is operating in support of the
general election campaign. The Commission welcomes comments on this
approach, as well as suggestions for others that would result in a fair
attribution of these expenditures.
This situation becomes more complicated when applied to supplies
and materials. The Commission is therefore seeking comments on how such
items should be treated. One approach would be to require an inventory
of everything on hand, including campaign materials but perhaps
excluding items below a certain threshold amount, as of the DOI. These
items would then be sold to the general election at cost. If there was
no inventory, everything purchased or delivered in the last 60 days
before the DOI would be presumed to be a general election expense. The
Commission notes that this approach could be difficult to verify, since
the inventory would be at a point in time which could not be recreated.
Nevertheless, it is important that primary election funds not be used
to subsidize the general election.
Finally, the Commission welcomes comments on how other foods and/or
services, such as campaign-related travel and media expenses, should be
treated in this context. For example, if a candidate travels to a state
where the primary has already been held, some of the travel could be
for fundraising to help obtain the nomination, but some or all might be
for general election purposes.
Nothing in this NPRM is intended to revise the Commission's
``continuing to campaign'' rules set forth at 11 CFR 9034.4(a)(3)(ii).
These rules allow a candidate who is no longer eligible for matching
funds but is still seeking the nomination to use post-DOI contributions
to pursue his or her primary campaign--a different situation than that
addressed in this proposal.
The Commission recognizes that, under unusual circumstances, a
candidate who appears to have been eliminated early in the election
cycle may later secure the nomination. As is currently true, these
special situations would be evaluated on a case-by-case basis.
Conversely, a candidate who appears to have secured the nomination
early in the campaign may in fact fail to obtain it, and thus not
qualify for general election funding. The Commission is less concerned
with this possibility, as the focus of this portion of the rulemaking
is on how certain expenditures should be treated by those candidates
who go on to become the convention's nominee.
2. Convention Expenses of Ineligible Candidates
The Commission is seeking comments on whether expenses incurred by
losing primary election candidates in attending their party's national
nominating convention should be considered a qualified campaign expense
under 11 CFR 9032.9. Such attendance could provide a defeated candidate
the opportunity to continue to fundraise, perhaps to campaign for the
vice presidential nomination, and to maintain contact with his or her
pledged convention delegates.
The Commission notes, however, that qualified campaign expenses are
defined in the Presidential Primary Matching Payment Account Act at 26
U.S.C. 9032(9)(A) as those ``incurred by a candidate, or by his
authorized committee, in connection with his campaign for nomination
for election.'' This definition seemingly does not apply to those no
longer seeking the presidential nomination. Also, the term
``candidate'' is defined as ``an individual who seeks nomination for
election to be President of the United States,'' and thus does not on
its face include those seeking the vice presidential nomination. 26
U.S.C. 9032(2). Further, in recent years presidential candidates have
increasingly announced their vice presidential selections in advance
(at times well in advance) of the national convention. Finally, under
11 CFR 9034.1(b), candidates can already count fundraising expenses
incurred following their Date of Ineligibility (DOI), including those
incurred at a national nominating convention, as qualified campaign
expenses.
The Commission is also concerned about potential practical problems
with this approach. For example, if a candidate's DOI occurs early in
the election cycle, there will be a substantial gap between the DOI and
the date of the convention. The purpose of the 10% rule (26 U.S.C.
9033(c)(1)(B); 11 CFR 9033.5(b)), under which a candidate becomes
ineligible for additional funding on the 30th day following the date of
the second consecutive primary election in which he or she receives
less than 10% of the popular vote, is to discontinue funding of
candidates who have not received substantial support following their
initial establishment of eligibility. See 122 Congressional Record
S.3787 (daily ed. March 18, 1976) (remarks of Sen. Taft).
A related concern is that, under these circumstances, the
Commission may be well along in the audit of a candidate's campaign by
the time the convention opens. Providing an additional matching fund
period to such candidates could substantially complicate the audit
process.
If this approach were to be adopted, the Commission welcomes
comments on who should be covered by the new provision, and during what
timeframe it should apply. Should this be limited to expenses incurred
by the candidate, or the candidate and his or her immediate family, or
should it also include campaign staff? If the latter, should such staff
be limited, either by number or position held in the campaign? The
Commission notes that, where a number of candidates sought the
nomination, the expenses of these candidates, their families, and
accompanying campaign staff could be substantial.
Please note that the draft rules that follow do not include any
specific regulatory language on this point.
C. Audits
1. Calculation of Repayment Ratio
Under section 9038.2(b)(2), committees are required to repay
amounts received from the matching payment account that are used for
non-qualified campaign expenses. The amount of any repayment sought
under section 9038.2(b)(2) bears the same ratio to the total amount of
non-qualified campaign expenses as the amount of matching funds
certified to the candidate bears to the candidate's total deposits, as
of the candidate's date of ineligibility. Repayment determinations
under this section include all non-qualified campaign expenses paid
between the committee's date of inception and the point when committee
accounts no longer contain matching funds. Thus, the repayment amount
is calculated by multiplying the total non-qualified campaign expenses
by the repayment ratio, as determined on the candidate's date of
ineligibility.
However, this section does not serve its intended purpose when
applied to a candidate that receives a significant amount of matching
payments after his or her date of ineligibility. Section 9038.2(b)(2)
does not take into account private contributions received by the
candidate after his or her date of ineligibility. Consequently, when
this section is applied to a candidate that receives a significant
amount of private contributions after that date, it generates a
repayment amount that does not accurately reflect the ratio of matching
payments to private contributions actually received by that candidate
during the courts of the campaign.
Similarly, section 9038.2(b)(2) is inconsistent with the statute
when applied to a candidate who does not receive matching payments
until after his or her date of ineligibility. Section 9038(b)(2) of the
Matching Payment Account Act requires a candidate who uses public funds
for non-qualified campaign expenses to repay a portion of the public
funds he or she received to the Treasury. However, when section
9038.2(b)(2) of the regulations is applied to a candidate who does not
receive matching payments until after his or her date of ineligibility,
the rule arguably generates a repayment ratio of zero even if the
candidate incurred numerous non-qualified campaign expenses. Thus,
under the regulations, the candidate would not be required to repay any
of those funds, even though the statute specifically requires repayment
in this situation.
Section 9038.2(b)(2)(iii) of the proposed rules contains two
proposed revisions that would address these situations. The first
proposal would change the date for determining the candidate's
repayment ratio from the date of ineligibility to 90 days after the
date of ineligibility. A ratio determined on the later date would take
into account most of the post-DOI private contributions received by the
candidate. As a result, the ratio will more accurately reflect the
amount of matching payments and private contributions actually
received. This approach would also produce an accurate repayment ratio
and repayment amount for those candidates that do not receive any
matching payments until after their date of ineligibility. As a result,
this proposed revision would address both of the situations described
above.
The second proposal, which is set out in paragraph (A) of this
section, would take a narrower approach. Under this proposal, the
Commission would treat all matching funds certified in response to
matching payment submissions received as of the candidate's date of
ineligibility as though they were certified as of the candidate's date
of ineligibility. Treating these funds as though they were certified
pre-DOI would allow the Commission to use these funds to calculate the
repayment ratio, resulting in a ratio of an amount greater than zero
that reflects the mix of public funds and private contributions
actually received. The Commission could then use this ratio to
determine the amount that the candidate is required to repay under
section 9038(b)(2) of the statute.
The Commission welcomes comments on which approach would be
preferable. Please note that, if the first approach is adopted,
paragraph (A) will be unnecessary, and therefore will not be included
in the final rules. If paragraph (A) is adopted, the candidate's
repayment ratio will continue to be determined as of the candidate's
date of ineligibility, as it is under the current rules.
In an effort to improve clarity, the proposed rules would also
break this section down in to separate paragraphs. The Commission
welcomes comments on the proposed changes to section 9038.2(b)(2).
D. Part 9039 Investigations
1. Commission Actions Following Part 9039 Investigations
The Commission's review and investigatory authority for
administering the matching fund program is set forth at 26 U.S.C.
9039(b). In carrying out these responsibilities, the Commission must
perform a continuing review of candidate and committee reports and
submissions, and other relevant information. The implementing
regulations are found at 11 CFR part 9039.
For the most part the Commission's review is routine, carried out
in accordance with the eligibility, audit and repayment procedures
contained elsewhere in the regulations. 26 U.S.C. 9039(b) and its
implementing regulations provide authority to conduct audits and
investigations outside of the audits required under 26 U.S.C. 9038 and
11 CFR part 9038. Most of these cases have involved issues relating to
a candidate's continuing eligibility or the amount of his or her
entitlement during the course of the campaign, although they could also
involve a post-election inquiry.
Section 9039.3 of the regulations describes how examinations,
audits and investigations are conducted in these inquiries. The
Commission is considering whether to provide in the final rules a
fuller explanation of actions that may be taken at the conclusion of
any such action. Please note that there is no specific language in the
text of the proposed rules on this point.
Under this approach, if the Commission decided to take no further
action in a 9039 case, the candidate(s) and committee(s) involved would
be so notified. If the Commission decided that there was a sufficient
basis to take further action, such action would follow as closely as
possible the procedures already in place for comparable situations. See
e.g., 11 CFR 9033.10. For example, a post election inquiry could lead
to either an additional repayment determination, in which case the
procedures set forth at 11 CFR 9038.2 for making and challenging
repayment determinations would apply, or a 2 U.S.C. 437g enforcement
action.
The Commission welcomes comments on these proposed amendments to 11
CFR part 9039.
General Elections
A. General Election Legal and Accounting Compliance Costs
On March 1, 1994, the Commission received a Petition for Rulemaking
from the Center for Responsive Politics requesting that the Commission
repeal its rules providing for the use of privately-financed general
election legal and accounting compliance funds [``GELAC''] in
Presidential campaigns. Specifically, the petitioner seeks repeal of 11
CFR 100.8(b)(15) (last two sentences), 106.2(b)(2)(iii) (last
sentence), 9002.11(b)(5), 9003.3(a), and 9035.1(c)(1). The petition
argues that the Commission's rules undermine the ability of the public
financing laws to achieve the objective of reducing the influence of
large contributions in Presidential elections. It charges that these
regulations permit evasion of the prohibition on accepting
contributions to defray qualified campaign expenses established by the
Presidential Election Campaign Fund Act. 26 U.S.C. 9003(b).
Furthermore, the petition claims that the Commission's regulations
violate the spending limits established by the FECA. 2 U.S.C. 441a.
On March 30, 1994, the Commission published a Notice of
Availability seeking statements in support of or in opposition to the
petition. 59 FR 14794 (March 30, 1994). In response to the Notice, four
statements have been received from the Internal Revenue Service, Public
Citizen, Common Cause, and a joint comment from the Democratic National
Committee and the Republican National Committee. Two were supportive
while one opposed the reversal of the Commission's long standing
policies regarding legal and accounting costs. The Internal Revenue
Service found no conflict with the Internal Code or the Regulations
thereunder.
The Commission is continuing to consider the petition as part of
this rulemaking and seeks further comment on abolishing the GELAC. The
Commission is also seeking evidence either supporting or refuting the
petitioner's claim that the privately-funded GELAC undermines the
public financing of general election campaigns by allowing the
actuality and the appearance of improper influence in Presidential
elections. Absent evidence supporting the petitioner's claim, the
Commission would be reluctant to completely eliminate the GELAC because
Presidential campaigns would need to devote some of their public funds
for compliance expenses, instead of using public moneys for campaign
expenses. The result could be significant difficulty in complying with
the public financing statutes and the FECA. The GELAC is also used to
make repayments, which would need to be funded from other sources.
Moreover, the elimination of monetary contributions of $1000 or less
for compliance purposes could force some committees to turn to much
larger in-kind donation of legal and accounting services to ensure that
their compliance obligations are satisfied. See 2 U.S.C. 431(8)(B)(ix)
and (9)(B)(vii).
Accordingly, comments are requested on several alternative
revisions to the GELAC. For example, should the amount raised and spent
for compliance costs be limited to a fixed percentage of the general
election spending limit? If so, what amount or percentage would be
sufficient to ensure that adequate amounts are available for meeting
compliance obligations? Please note that this approach is not included
in the proposed rules which Follow.
The petitioners and one commenter also challenge the
appropriateness of allowing fundraising costs for the GELAC to be paid
for by the GELAC on the ground these expenses are campaign expenses
that should be subject to the spending limits. The current rules permit
fundraising costs to be paid by the GELAC because it would not be
appropriate to sue public funds to solicit private contributions that
are used solely for legal and accounting compliance purposes. However,
the Commission is concerned that fundraising activities for the GELAC
could be used to generate electoral support for the candidate's
campaign, and if so, should be treated as qualified campaign expenses.
Accordingly, comments are sought on whether to continue to permit the
GELAC to pay the entire amount of these costs, or whether a fixed
percentage of GELAC fundraising costs should be paid by the general
election campaign committee. Splitting the costs would recognize that
solicitations and other activities conducted to raised GELAC funds have
a campaign-related component. Comments are sought as to the appropriate
percentage that should be paid from general election funds. Please note
that this approach is not included in the proposed rules which follow.
The Commission is also considering modifying section
9003.3(a)(1)(i)(A), which currently requires solicitations to clearly
state that the contributions are solicited for the GELAC. A new
sentence would also require solicitations to state that contributions
to the GELAC may not be used for campaign purposes.
Please note that the provisions regarding predesignations and
transfer of primary funds to the GELAC in paragraphs (a)(1) (ii)-(iv)
would be reorganized.
Current paragraphs (a)(2)(i) (A) through (H) of section 9003.3 set
forth the permissible sues of GELAC funds. The Petition for Rulemaking
urged the Commission to delete current paragraph (H) allowing GELAC
funds to be used to pay unreimbursed costs of providing transportation
for the Secret Service and national security staff. Although this
provisions is included in the attached proposed rules, the Commission
seeks further comment on whether it is appropriate to use GELAC funds
for this purpose. Please note that GELAC funds may not be used to pay
transition costs (cf. AO 1980-97); legal defense fund expenses (cf. AO
1979-37); legal expenses not related to ensuring compliance, such as
contract litigation or electoral college expenses; and winding down
expenses that are not for legal and accounting compliance purposes.
In addition, the Commission proposes reducing from 70% to 50% the
standard amount that the GELAC may pay for computer-related costs, and
the corresponding exclusion from the spending limits. See 11 CFR 9003.3
(a)(2)(ii)(A), (b)(6) and (c)(6). The GELAC is relatively small in
comparison to the publicly funded general election account. Much of the
computer costs are for basic accounting purposes, which the campaign
committee would need to perform regardless of the need to comply with
the campaign financing laws. Please note, however, that committees
would still be able to deduct a higher amount if they can show that
their computer-related compliance costs are higher.
Section 9003.3(a)(2)(iv) would be modified slightly to clarify that
funds remaining in the GELAC may only be used to pay debts remaining
from the primary or for other lawful purposes if all GELAC expenses
have been paid. Finally the Commission is proposing to revise two
citations contained in 11 CFR 9003.3(a)(2)(iii). The first sentence of
this paragraph currently refers to paragraphs 9003.3(a)(2)(i) (A)
through (E). This would be updated to read, ``11 CFR 9003.3(a)(2)(i)
(A) through (F) and (H).'' Also, the citation to paragraph
9003.3(a)(2)(i)(F) in the second sentence should instead refer
paragraph 9003.3(a)(2)(i)(G).
B. Gains on the Use of Public Funds
Section 9004.5 of the Commission's regulations allows a committee
to invest public funds or use them in other ways to generate income,
provided that an amount equal to the net income derived from those
investments, minus any taxes paid, is repaid to the Treasury. Section
9007.2(b)(4) also lists the receipt of any income as a result of
investment or other use of payments from the fund pursuant to 11 CFR
9004.5 as one of the basis for requiring repayment. These provisions
seek to ensure that any income received through these use of public
funds benefits the public financing system.
The proposed rules would indicate that section 9004.5 applies to
any use of public funds that results in come to the committee,
regardless of whether the committee engaged in that use with the
intention of generating income. The proposed rules also contain a
conforming amendment to section 9007.2(b)(4), which would indicate that
income on investment or other use of payments from the Fund must be
repaid to the Treasury. The Comission notes that if a committee loses
an item that is insured, and the insurance proceeds exceeds the cost of
replacing the item, such excess would be considered income for the
purposes of proposed sections 9004.5 and 9007.2(b)(4).
These provisions are not meant to require repayment of income that
qualifies as exempt function income under section 527(c)(3) of the
Internal Revenue Code, 26 U.S.C. 527(c)(3), such as receipts from
fundraising activities. The Commission welcomes comments on these
proposed revisions.
Miscellaneous and Technical Amendments
In the interests of clarity, the Commission is proposing to add a
comma in the last sentence of 11 CFR 9003.1(b)(4), and in the second
sentence of 11 CFR 9033.1(b)(5). Both paragraphs concern candidate and
committee agreements to furnish certain documentation to the
Commission.
Current 11 CFR 9033.4(b) states that, in evaluating a candidate's
matching funds submission, the Commission may consider other relevant
information in its possession, including but not limited to past
actions of the candidate in an earlier campaign. This provision was
held to exceed the Commission's statutory authority in LaRouche v. FEC,
996 F.2d 1263 (D.C. Cir. 1993), cert. denied 114 S. Ct. 550. The
Commission is therefore proposing to delete this paragraph from the
rule.
Conclusion
The Commission welcomes comments on the foregoing proposed
amendments to the public financing regulations, the issues raised in
this notice, and on other aspects of the public financing process that
could be addressed in these regulations. No final decision has been
made by the Commission concerning any of the proposals contained in
this Notice.
Certification of No Effect Pursuant to 5 U.S.C. Section 605(b)
(Regulatory Flexibility Act)
The attached proposed rules, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
The basis for this certification is that few, if any, small entities
will be affected by these proposed rules. Further, any small entities
affected are already required to comply with the requirements of the
Presidential Election Campaign Fund Act and the Presidential Primary
Matching Payment Account Act in these areas.
List of Subjects
11 CFR Parts 9003-9004
Campaign funds, Elections, Political candidates.
11 CFR Parts 9006-9007
Administrative practice and procedure, Campaign funds, Elections,
Political candidates, Reporting requirements.
11 CFR Parts 9033-9034
Campaign funds, Elections, Political candidates.
11 CFR Parts 9037-9038
Administrative practice and procedure, Campaign funds, Political
candidates.
For the reasons set out in the preamble, it is proposed to amend
subchapters E and F of chapter I of title 11 of the Code of Federal
Regulations as follows:
PART 9003--ELIGIBILITY FOR PAYMENTS
1. The authority citation for Part 9003 would continue to read as
follows:
Authority: 26 U.S.C. 9003 and 9009(b).
2. In Sec. 9003.1, the introductory text of paragraph (b) would be
republished, paragraph (b)(4) would be revised, and new paragraph
(b)(10) would be added, to read as follows:
Sec. 9003.1 Candidate and committee agreements.
* * * * *
(b) Conditions. The candidates shall:
* * * * *
(4) Agree that they and their authorized committee(s) will keep and
furnish to the Commission all documentation relating to receipts and
disbursements (including all books and bank records for all accounts),
all documentation required by this subchapter (including those required
to be maintained under 11 CFR 9003.5), and other information that the
Commission may request. If the Candidate or the candidate's authorized
committee maintains or uses computerized information containing any of
the categories of data listed in 11 CFR 9003.6(a), the committee will
provide computerized magnetic media, such as magnetic tapes or magnetic
diskettes, containing the computerized information at the times
specified in 11 CFR 9007.1(b)(1) that meets the requirements of 11 CFR
9003.6(b). Upon request, documentation explaining the computer system's
software capabilities shall be provided, and such personnel as are
necessary to explain the operation of the computer system's software
and the computerized information prepared or maintained by the
committee shall also be made available.
* * * * *
(10) Agree that any television commercial prepared or distributed
by the candidate will be prepared in a manner which ensures that the
commercial contains or is accompanied by closed captioning of the oral
content of the commercial to be broadcast in line 21 of the vertical
blanking interval, or is capable of being viewed by deaf and hearing
impaired individuals via any comparable successor technology to line 21
of the vertical blanking interval.
3. Section 9003.3 would be revised to read as follows:
Sec. 9003.3 Allowable Contributions.
(a) Legal and accounting compliance fund--major party candidates.
(1) Sources.
(i) A major party candidate may accept contributions to a legal and
accounting compliance fund if such contributions are received and
disbursed in accordance with this section. A legal and accounting
compliance fund may be established by such candidate prior to being
nominated or selected as the candidate of a political party for the
Office of President or Vice President of the United States.
(A) All solicitations for contributions to this fund shall clearly
state that such contributions will be used by this fund solely for
legal and accounting services to ensure compliance with Federal law.
Such solicitations shall also state that contributions to the fund will
not be used for the candidate's election.
(B) Contributions to this fund shall be subject to the limitations
and prohibitions of 11 CFR Parts 110, 114, and 115.
(ii)(A) Contributions made during the matching payment period that
do not exceed the contributor's limit for the primary election may be
redesignated and deposited in the legal and accounting compliance fund
before the nomination only if--
(1) The contributions represent funds in excess of any amount
needed to pay remaining primary expenses;
(2) The redesignations are received within 60 days of the
Treasurer's receipt of the contributions;
(3) The requirements of 11 CFR 110.1(b)(5) and (l) regarding
redesignations are satisfied; and
(4) The contributions have not been submitted for matching.
(B) All contributions redesignated and deposited pursuant to
paragraph (a)(1)(ii)(A) of this section shall be subject to the
contribution limitations applicable for the general election, pursuant
to 11 CFR 110.1(b)(2)(i).
(iii) Fund received during the matching payment period that are
remaining in a candidate's primary election account after the
nomination may be transferred to the legal and accounting compliance
fund without regard to the contribution limitations of 11 CFR Part 110
and used for any purpose permitted under this section, only if the
funds are in excess of any amount needed to pay remaining net
outstanding campaign obligations under 11 CFR 9034.1(b) and any amount
required to be reimbursed to the Presidential Primary Matching Payment
Account under 11 CFR 9038.2. The excess funds so transferred may
include contributions made before the beginning of the expenditure
report period, which contributions do not exceed the contributor's
limit for the primary election. Such contributions need not be
redesignated by the contributors for the legal and accounting
compliance fund.
(iv) Contributions that are made after the beginning of the
expenditure report period but which are designated for the primary
election may be redesignated for the legal and accounting compliance
fund and transferred to or deposited in such fund if--
(A) The candidate obtains the contributor's redesignation in
accordance with 11 CFR 110.1;
(B) The funds are in excess of any amount needed to pay remaining
net outstanding campaign obligation under 11 CFR 9034.1(b) and any
amount required to be reimbursed to the Presidential Primary Matching
Payment Account under 11 CFR 9038.2; and
(C) The contributions have not been submitted for matching.
(v) Contributions made with respect to the primary election that
exceed the contributor's limit for the primary election may be
redesignated for the legal and accounting compliance fund and
transferred to or deposited in such fund if the candidate obtains the
contributor's redesignation in accordance with 11 CFR 110.1.
(2) Uses.
(i) Contributions to the legal and accounting compliance fund shall
be used only for the following purposes:
(A) To defray the cost of legal and accounting services provided
solely to ensure compliance with 2 U.S.C. 431 et seq. and 26 U.S.C.
9001 et seq. in accordance with paragraph (a)(2)(ii) of this section;
(B) To defray in accordance with paragraph (a)(2)(ii)(A) of this
section, that portion of expenditures for payroll, overhead, and
computer services related to ensuring compliance with 2 U.S.C. 431 et
seq. and 26 U.S.C. 9001 et seq.;
(C) To defray any civil or criminal penalties imposed pursuant to 2
U.S.C. 437g or 26 U.S.C. 9012;
(D) To make repayments under 11 CFR 9007.2;
(E) To defray the cost of soliciting contributions to the legal and
accounting compliance fund;
(F) To defray the cost of producing, delivering and explaining the
computerized information and materials provided pursuant to 11 CFR
9003.6 and explaining the operation of the computer system's software;
(G) To make a loan to an account established pursuant to 11 CFR
9003.4 to defray qualified campaign expenses incurred prior to the
expenditure report period or prior to receipt of federal funds,
provided that the amounts so loaned are restored to the legal and
accounting compliance fund; and
(H) To defray unreimbursed costs incurred in providing
transportation and services for the Secret Service and national
security staff pursuant to 11 CFR 9004.6.
(ii) (A) Expenditures for payroll (including payroll taxes),
overhead and computer services, a portion of which are related to
ensuring compliance with title 2 of the United States Code and chapter
95 of title 26 of the United States Code, shall be initially paid from
the candidate's federal fund account under 11 CFR 9005.2 and may be
later reimbursed by the compliance fund. For purposes of paragraph
(a)(2)(i)(B) of this section, a candidate may use contributions to the
compliance fund to reimburse his or her federal fund account an amount
equal to 10% of the payroll and overhead expenditures of his or her
national campaign headquarters and state offices. Overhead expenditures
include, but are not limited to rent, utilities, office equipment,
furniture, supplies and all telephone charges except for telephone
charges related to a special use such as voter registration and get out
the vote efforts. In addition, a candidate may use contributions to the
compliance fund to reimburse his or her federal fund account an amount
equal to 50% of the costs (other than payroll) associated with computer
services. Such costs include but are not limited to rental and
maintenance of computer equipment, data entry services not performed by
committee personnel, and related supplies. If the candidate wishes to
claim a larger compliance exemption for payroll or overhead
expenditures, the candidate shall establish allocation percentages for
each individual who spends all or a portion of his or her time to
perform duties which are considered necessary to ensure compliance with
title 2 of the United States Code or chapter 95 of title 26 of the
United States Code. The candidate shall keep detailed records to
support the derivation of each percentage. Such records shall indicate
which duties are considered compliance and the percentage of time each
person spends on such activity. If the candidate wishes to claim a
larger compliance exemption for costs associated with computer
services, the candidates shall establish allocation percentages for
each computer function that is considered necessary, in whole or in
part, to ensure compliance within 2 U.S.C. 431 et seq., and 26 U.S.C.
9001 et seq. The allocation shall be based on a reasonable estimate of
the costs associated with each computer function, such as the costs for
data entry services performed by persons other than committee personnel
and processing time. The candidate shall keep detailed records to
support such calculations. The records shall indicate which computer
functions are considered compliance-related and shall reflect which
costs are associated with each computer function. The Commission's
Financial Control and Compliance Manual for General Election Candidates
Receiving Public Funding contains some accepted alternative allocation
methods for determining the amount of salaries and overhead
expenditures that may be considered exempt compliance costs.
(B) Reimbursement from the compliance fund may be made to the
separate account maintained for federal funds under 11 CFR 9005.2 for
legal and accounting compliance services disbursements that are
initially paid from the separate federal funds account. Such
reimbursement must be made prior to any final repayment determination
by the Commission pursuant to 11 CFR 9007.2. Any amounts so reimbursed
to the federal fund account may not subsequently be transferred back to
the legal and accounting compliance fund.
(iii) Amounts paid from this account for the purposes permitted by
paragraphs (a)(2)(i) (A) through (F) and (H) of this section shall not
be subject to the expenditure limits of 2 U.S.C. 221a(b) and 11 CFR
110.8. (See also 11 CFR 100.8(b)(15).) When the proceeds of loans made
in accordance with paragraph (a)(2)(i)(G) of this section are expended
on qualified campaign expenses, such expenditures shall count against
the candidate's expenditure limit.
(iv) Contributions to or funds deposited in the legal and
accounting compliance fund may not be used to retire debts remaining
from the Presidential primaries, except that, if after payment of all
expenses set out in paragraph (a)(2)(i) of this section, there are
excess campaign funds, such funds may be used for any purpose permitted
under 2 U.S.C. 439a and 11 CFR Part 113, including payment of primary
election debts.
(3) Deposit and disclosure.
(i) Amounts received pursuant to paragraph (a)(1) of this section
shall be deposited and maintained in an account separate from that
described in 11 CFR 9005.2 and shall not be commingled with any money
paid to the candidate by the Secretary pursuant to 11 CFR 9005.2.
(ii) The receipts to and disbursements from this account shall be
reported in a separate report in accordance with 11 CFR 9006.1(b)(2).
All contributions made to this account shall be recorded in accordance
with 11 CFR 102.9. Disbursements made from this account shall be
documented in the same manner provided in 11 CFR 9003.5.
(b) Contributions to defray qualified campaign expenses--major
party candidates.
(1) A major party candidate or his or her authorized committee(s)
may solicit contributions to defray qualified campaign expenses to the
extent necessary to make up any deficiency in payments received from
the Fund due to the application of 11 CFR 9005.2(b).
(2) Such contributions must either be deposited in a separate
account or be deposited with federal funds received under 11 CFR
9005.2. Disbursements from this account shall be made only to defray
qualified campaign expenses and to defray the cost of soliciting
contributions to such account. All disbursements from this account
shall be documented in accordance with 11 CFR 9003.5 and shall be
reported in accordance with 11 CFR 9006.1.
(3) A candidate may make transfers to this account from his or her
legal and accounting compliance fund.
(4) The contributions received under this section shall be subject
to the limitations and prohibitions of 11 CFR Parts 110, 114 and 115
and shall be aggregated with all contributions made by the same persons
to the candidate's legal and accounting compliance fund under paragraph
(a) of this section for the purposes of such limitations.
(5) Any costs incurred for soliciting contributions to this account
shall not be considered expenditures to the extent that the aggregate
of such costs does not exceed 20 percent of the expenditure limitation
under 11 CFR 9003.2(a)(1). These costs shall, however, be reported as
disbursements in accordance with 11 CFR Part 104 and 11 CFR 9006.1. For
purposes of this section, a candidate may exclude from the expenditure
limitation an amount equal to 10% of the payroll (including payroll
taxes) and overhead expenditures of his or her national campaign
headquarters and state offices as exempt fundraising costs.
(6) Any costs incurred for legal and accounting services which are
provided solely to ensure compliance with 2 U.S.C. 431 et seq. and 26
U.S.C. 9001 et seq. shall not count against the candidate's expenditure
limitation. Such costs include the cost of producing, delivering and
explaining the computerized information and materials provided pursuant
to 11 CFR 9003.6 and explaining the operation of the computer system's
software. For purposes of this section, a candidate may exclude from
the expenditure limitation an amount equal to 10% of the employee
payroll (including payroll taxes) and overhead expenditures of his or
her national campaign headquarters and state offices. In addition, a
candidate may exclude from the expenditure limitation an amount equal
to 50% of the costs (other than payroll) associated with computer
services.
(i) For purposes of this paragraph, overhead costs include, but are
not limited to, rent, utilities, office equipment, furniture, supplies
and all telephone charges except for telephone charges related to a
special use such as voter registration and get out the vote efforts.
(ii) For purposes of this paragraph, costs associated with computer
services include, but are not limited to, rental and maintenance of
computer equipment, data entry services not performed by committee
personnel, and related supplies.
(7) If the candidate wishes to claim a larger compliance or
fundraising exemption under paragraph (b)(5) or (b)(6) of this section
for employee payroll and overhead expenditures, the candidate shall
establish allocation percentages for each individual who spends all or
a portion of his or her time to perform duties which are considered
compliance or fundraising. The candidate shall keep detailed records to
support the derivation of each percentage. Such records shall indicate
which duties are considered compliance or fundraising and the
percentage of time each person spends on such activity.
(8) If the candidate wishes to claim a larger compliance exemption
under paragraph (b)(6) of this section for costs associated with
computer services, the candidate shall establish allocation percentages
for each computer function that is considered necessary, in whole or in
part, to ensure compliance with 2 U.S.C. 431 et seq. and 26 U.S.C. 9001
et seq. The allocation shall be based on a reasonable estimate of the
costs associated with each computer function, such as the costs for
data entry services performed by other than committee personnel and
processing time. The candidate shall keep detailed records to support
such calculations. The records shall indicate which computer functions
are considered compliance-related and shall reflect which costs are
associated with each computer function.
(9) The Commission's Financial Control and Compliance Manual for
General Election Candidates Receiving Public Funding contains some
accepted alternative allocation methods for determining the amount of
salaries and overhead expenditures that may be considered exempt
compliance costs or exempt fundraising costs.
(c) Contributions to defray qualified campaign expenses--minor and
new party candidates.
(1) A minor or new party candidate may solicit contributions to
defray qualified campaign expenses which exceed the amount received by
such candidate from the Fund, subject to the limits of 11 CFR
9003.2(b).
(2) The contributions received under this section shall be subject
to the limitations and prohibitions of 11 CFR Parts 110, 114 and 115.
(3) Such contributions must either be deposited in a separate
account or be deposited with federal funds received under 11 CFR
9005.2. Disbursements from this account shall be made only for the
following purposes:
(i) To defray qualified campaign expenses;
(ii) To make repayments under 11 CFR 9007.2;
(iii) To defray the cost of soliciting contributions to such
account;
(iv) To defray the cost of legal and accounting services provided
solely to ensure compliance with 2 U.S.C. 431 et seq. and 26 U.S.C.
9001 et seq;
(v) To defray the cost of producing, delivering and explaining the
computerized information and materials provided pursuant to 11 CFR
9003.6 and explaining the operation of the computer system's software.
(4) All disbursements from this account shall be documented in
accordance with 11 CFR 9003.5 and shall be reported in accordance with
11 CFR Part 104 and 9006.1.
(5) Any costs incurred for soliciting contributions to this account
shall not be considered expenditures to the extent that the aggregate
of such costs does not exceed 20 percent of the expenditure limitation
under 11 CFR 9003.2(a)(1). These costs shall, however, be reported as
disbursements in accordance with 11 CFR Part 104 and 9006.1. For
purposes of this section, a candidate may exclude from the expenditure
limitation an amount equal to 10% of the payroll (including payroll
taxes) and overhead expenditures of his or her national campaign
headquarters and state offices as exempt fundraising costs.
(6) Any costs incurred for legal and accounting services which are
provided solely to ensure compliance with 2 U.S.C. 431 et seq. and 26
U.S.C. 9001 et seq. shall not count against the candidate's expenditure
limitation. For purposes of this section, a candidate may exclude from
the expenditure limitation an amount equal to 10% of the employee
payroll (including payroll taxes) and overhead expenditures of his or
her national campaign headquarters and state offices. In addition, a
candidate may exclude from the expenditure limitation an amount equal
to 50% of the costs (other than payroll) associated with computer
services.
(i) For purposes of this paragraph, overhead costs include, but are
not limited to, rent, utilities, office equipment, furniture, supplies
and all telephone charges except for telephone charges related to a
special use such as voter registration and get out the vote efforts.
(ii) For purposes of this paragraph, costs associated with computer
services include but are not limited to, rental and maintenance of
computer equipment, data entry services not performed by committee
personnel, and related supplies.
(7) If the candidate wishes to claim a larger compliance or
fundraising exemption under paragraph (c)(6) of this section for
payroll and overhead expenditures, the candidate shall establish
allocation percentages for each individual who spends all or a portion
of his or her time to perform duties which are considered compliance or
fundraising. The candidate shall keep detailed records to support the
derivation of each percentage. Such records shall indicate which duties
are considered compliance or fundraising and the percentage of time
each person spends on such activity.
(8) If the candidate wishes to claim a larger compliance exemption
under paragraph (c)(6) of this section for costs associated with
computer services, the candidate shall establish allocation percentages
for each computer function that is considered necessary, in whole or in
part, to ensure compliance with 2 U.S.C. 431 et seq. and 26 U.S.C. 9001
et seq. The allocation shall be based on a reasonable estimate of the
costs associated with each computer function, such as the costs for
data entry services performed by other than committee personnel and
processing time. The candidate shall keep detailed records to support
such calculations. The records shall indicate which computer functions
are considered compliance-related and shall reflect which costs are
associated with each computer function.
(9) The candidate shall keep and maintain a separate record of
disbursements made to defray exempt legal and accounting costs under
paragraphs (c)(6) and (7) of this section and shall report such
disbursements in accordance with 11 CFR Part 104 and 11 CFR 9006.1.
(10) The Commission's Financial Control and Compliance Manual for
General Election Candidates Receiving Public Funding contains some
accepted alternative allocation methods for determining the amount of
salaries and overhead expenditures that may be considered exempt
compliance costs or exempt fundraising costs.
4. Section 9003.5 would be revised to read as follows:
Sec. 9003.5 Documentation of disbursements.
(a) Burden of proof. Each candidate shall have the burden of
proving the disbursements made by the candidate or his or her
authorized committee(s) or persons authorized to make expenditures on
behalf of the candidate or authorized committee(s) are qualified
campaign expenses as defined in 11 CFR 9002.11. The candidate and his
or her authorized committee(s) shall obtain and furnish to the
Commission on request any evidence regarding qualified campaign
expenses made by the candidate, his or her authorized committees and
agents or persons authorized to make expenditures on behalf of the
candidate or committee(s) as provided in paragraph (b) of this section.
(b) Documentation required.
(1) For disbursements in excess of $200 to a payee, the candidate
shall present a canceled check negotiated by the payee that states the
purpose of the disbursement and either:
(i) A receipted bill from the payee that states the purpose of the
disbursement; or
(ii) If such a receipt is not available,
(A) One of the following documents generated by the payee: a bill,
invoice, or voucher that states the purpose of the disbursement; or
(B) Where the documents specified in paragraph (b)(1)(ii)(A) of
this section are not available, a voucher or contemporaneous memorandum
from the candidate or the committee that states the purpose of the
disbursement; or
(iii) Where the supporting documentation required in paragraphs
(b)(1) (i) or (ii) of this section is not available, the candidate or
committee may present collateral evidence to document the qualified
campaign expense. Such collateral evidence may include, but is not
limited to:
(A) Evidence demonstrating that the expenditure is part of an
identifiable program or project which is otherwise sufficiently
documented such as a disbursement which is one of a number of
documented disbursements relating to a campaign mailing or to the
operation of a campaign office; and
(B) Evidence that the disbursement is covered by a pre-established
written campaign committee policy, such as a daily travel expense
policy.
(2) For all disbursements of $200 or less, the candidate shall
present:
(i) A record disclosing the full name and mailing address of the
payee, and the amount, date and purpose of the disbursement, if made
from a petty cash fund; or
(ii) A canceled check negotiated by the payee that states the full
name and mailing address of the payee, and the amount, date and purpose
of the disbursement.
(3) For purposes of this section:
(i) ``Payee'' means the person who provides the goods or services
to the candidate or committee in return for the disbursement; except
that an individual will be considered a payee under this section if he
or she receives $500 or less advanced for travel and/or subsistence and
if the individual is the recipient of the goods or services purchased.
(ii) ``Purpose'' means the full name and mailing address of the
payee, the date and amount of the disbursement, and a brief description
of the goods or services purchased.
(c) Retention of records. The candidate shall retain records with
respect to each disbursement and receipt, including bank records,
vouchers, worksheets, receipts, bills and accounts, journals, ledgers,
fundraising solicitation material, accounting systems documentation,
and any related materials documenting campaign receipts and
disbursements, for a period of three years pursuant to 11 CFR 102.9(c),
and shall present these records to the Commission on request.
(d) List of capital and other assets.
(1) Capital assets. The candidate or committee shall maintain a
list of all capital assets whose purchase price exceeded $2,000 when
acquired by the campaign. The list shall include a brief description of
each capital asset, the purchase price, the date it was acquired, the
method of disposition and the amount received in disposition. For
purposes of this section, ``capital asset'' shall be defined in
accordance with 11 CFR 9004.9(d)(1).
(2) Other assets. The candidate or committee shall maintain a list
of other assets acquired for use in fundraising or as collateral for
campaign loans, if the aggregate value of such assets exceeds $5,000.
The list shall include a brief description of each such asset, the fair
market value of each asset, the method of disposition and the amount
received in disposition. The fair market value of other assets shall be
determined in accordance with 11 CFR 9004.9(d)(2).
PART 9004--ENTITLEMENT OF ELIGIBLE CANDIDATES TO PAYMENTS; USE OF
PAYMENTS
5. The authority citation for Part 9004 would continue to read as
follows:
Authority: 26 U.S.C. 9004 and 9009(b).
6. In section 9004.4 paragraph (a) would be revised, paragraph
(b)(1) would be republished, and paragraph (b)(8) would be added, to
read as follows:
Sec. 9004.4 Use of payments.
(a) Qualified campaign expenses. An eligible candidate shall use
payments received under 11 CFR Part 9005 only for the following
purposes:
(1) To defray qualified campaign expenses;
(2) To repay loans that meet the requirements of 11 CFR 100.7(a)(1)
or 100.7(b)(11) or to otherwise restore funds (other than contributions
received pursuant to 11 CFR 9003.3(b) and expended to defray qualified
campaign expenses) used to defray qualified campaign expenses;
(3) To restore funds expended in accordance with 11 CFR 9003.4 for
qualified campaign expenses incurred by the candidate prior to the
beginning of the expenditure report period.
(4) Winding down costs. The following costs shall be considered
qualified campaign expenses:
(i) Costs associated with the termination of the candidate's
general election campaign such as complying with the post-election
requirements of the Act and other necessary administrative costs
associated with winding down the campaign, including office space
rental, staff salaries, and office supplies; or
(ii) Costs incurred by the candidate prior to the end of the
expenditure report period for which written arrangement or commitment
was made on or before the close of the expenditure report period.
(iii) 100% of salary and overhead expenses incurred after the end
of the expenditure report period may be paid from a legal and
accounting compliance fund established pursuant to 11 CFR 9003.3,
provided that these expenses are solely to ensure compliance with 2
U.S.C. 431 et seq. and 26 U.S.C. 9001 et seq.
(5) Gifts and monetary bonuses. Gifts and monetary bonuses for
committee employees, consultants and volunteers in recognition for
campaign-related activities or services shall be considered qualified
campaign expenses, provided that the gifts do not exceed $150 total per
individual, and provided that the total for all gifts and monetary
bonuses (except bonus arrangements provided for in advance in an
employment or consulting contract) does not exceed $20,000
(b) Non-qualified campaign expenses--
(1) General. The following are examples of disbursements that are
not qualified campaign expenses.
* * * * *
(8) Negligent Handling of Public Funds. The cost of items that are
lost or misplaced due to negligence shall not be considered a qualified
campaign expense. Factors in making this determination shall include,
but not be limited to, whether the committee demonstrates that it made
conscientious efforts to safeguard the missing equipment; the type of
equipment involved; the number of items that were lost; and the value
of the lost equipment as a percentage of the total value of the
equipment leased or owned by the committee.
* * * * *
7. Section 9004.5 would be revised to read as follows:
Sec. 9004.5 Investment of public funds; other uses resulting in
income.
Investment of public funds or any other use of public funds that
results in income is permissible, provided that an amount equal to all
net income derived from such a use, less Federal, State and local taxes
paid on such income, shall be repaid to the Secretary. Any net loss
from an investment or other use of public funds will be considered a
non-qualified campaign expense and an amount equal to the amount of
such loss shall be paid to the United States Treasury as provided under
11 CFR 9007.2(b)(2)(i).
8. Section 9004.6 would be revised to read as follows:
Sec. 9004.6 Expenditures for transportation and services made
available to media personnel; reimbursements.
(a) General.
(1) Expenditures by an authorized committee for transportation,
ground services or facilities (including air travel, ground
transportation, housing, meals, telephone service, typewriters) made
available to media personnel, Secret Service personnel or national
security staff will be considered qualified campaign expenses, and,
except for costs relating to Secret Service personnel or national
security staff, will be subject to the overall expenditure limitations
of 11 CFR 9003.2(a)(1) and (b)(1).
(2) Subject to the limitations in paragraphs (b) and (c) of this
section, committees may seek reimbursement for these expenses and may
deduct any amounts received as reimbursements from the amount of
expenditures subject to the overall expenditure limitations of 11 CFR
9003.2(a)(1) and (b)(1). Expenses for which the committee receives no
reimbursement will be considered qualified campaign expenses, and, with
the exception of those expenses relating to Secret Service personnel
and national security staff, will be subject to the overall expenditure
limitation.
(b) Reimbursement limits.
(1) The committee may seek reimbursement of the expenses described
in paragraph (a)(1) of this section from the media representatives to
whom those services were provided. The amount sought shall not exceed
the media representative's pro rata share, or a reasonable estimate of
the media representative's pro rata share, of the actual cost of the
transportation and services mad available by more than 10%. Any
reimbursement received in excess of 110% of the actual pro rata cost of
the transportation and services made available shall be disposed of in
accordance with paragraph (d) of this section. For the purposes of this
section:
(i) A media representative's pro rata share shall be calculated by
dividing the total actual cost of the transportation and services by
the total number of individuals to whom such transportation and
services are made available. For purposes of this calculation, the
total number of individuals shall include committee staff, media
personnel, Secret Service personnel, national security staff and any
other individuals to whom such transportation and services are made
available; and
(ii) ``Administrative costs'' shall include all costs incurred by
the committee for making travel arrangements and for seeking
reimbursement, whether performed by committee staff or independent
contractors.
(c) Deduction of reimbursements from expenditures subject to the
overall expenditure limitation. The committee may deduct from the
amount of expenditures subject to the overall expenditure limitation:
(1) The amount of reimbursements received in payment for the
transportation and services described in paragraph (a) of this section,
up to the actual cost of transportation and services provided; and
(2) An amount of reimbursements received representing the
administrative costs incurred by the committee in providing these
services and seeking reimbursement for them, equal to:
(i) Three percent of the actual cost of transportation and services
provided under this section; or
(ii) An amount in excess of 3% representing the administrative
costs actually incurred by the committee, provided that the committee
is able to document that it incurred these higher administrative costs.
(d) Disposal of excess reimbursements. If the committee receives
reimbursements in excess of the amount deductible under paragraph (c)
of this section, it shall dispose of the excess amount in the following
manner:
(1) Any reimbursement received in excess of 110% of the actual pro
rata cost of the transportation and services made available to a media
representative shall be returned to the media representative.
(2) Any amount in excess of the amount deductible under paragraph
(c) of this section that is not required to be returned to the media
representative under paragraph (d)(1) shall be repaid to the Treasury.
(e) Reporting. The total amount paid by an authorized committee for
the cost of transportation or for ground services and facilities shall
be reported as an expenditure in accordance with 11 CFR 104.3(b)(2)(i).
Any reimbursement received by such committee for transportation or
ground services and facilities shall be reported in accordance with 11
CFR 104.3(a)(3)(ix).
9. Section 9004.7 would be revised to read as follows:
Sec. 9004.7 Allocation of travel expenditures.
(a) Notwithstanding the provisions of 11 CFR 106.3, expenditures
for travel relating to a Presidential or Vice Presidential candidate's
campaign by any individual, including a candidate, shall, pursuant to
the provisions of paragraph (b) of this section, be qualified campaign
expenses and be reported by the candidate's authorized committee(s) as
expenditures.
(b)(1) For a trip which is entirely campaign-related, the total
cost of the trip shall be a qualified campaign expense and a reportable
expenditure.
(2) For a trip which includes campaign-related and non-campaign
related stops, that portion of the cost of the trip allocable to
campaign activity shall be a qualified campaign expense and a
reportable expenditure. Such portion shall be determined by calculating
what the trip would have cost from the point of origin of the trip to
the first campaign-related stop and from the stop through each
subsequent campaign-related stop to the point of origin. If any
campaign activity, other than incidental contacts, is conducted at a
stop, that stop shall be considered campaign-related. Campaign activity
includes soliciting, making, or accepting contributions, and expressly
advocating the election or defeat of any candidate. Other factors,
including the setting, timing and statements or expressions of the
purpose of an event, the substance of the remarks or speech made, and
the audience, will also be considered in determining whether a stop is
campaign-related.
(3) For each trip, an itinerary shall be prepared and such
itinerary shall be made available for Commission inspection.
(4) For trips by government conveyance or by charter, a list of all
passengers on such trip, along with a designation of which passengers
are and which are not campaign-related, shall be made available for
Commission inspection.
(5)(i) If any individual, including, candidate, uses a government
airplane for campaign-related travel, the candidate's authorized
committee shall pay the appropriate government entity an amount equal
to:
(A) The lowest unrestricted and non-discounted first class
commercial air fare available for the time traveled, in the case of
travel to a city served by a regularly scheduled commercial airline
service; or
(B) The lowest unrestricted and non-discounted coach commercial air
fare available for the time traveled, in the case of travel to a city
served by regularly scheduled coach airline service, but not regularly
scheduled first class airline service; or
(C) The commercial charter rate for a comparable airplane (in terms
of size, model and make), in the case of travel to a city not served by
a regularly scheduled commercial airline service.
(ii) If a government airplane is flown to a campaign-related stop
where it will pick up passengers, or from a campaign-related stop where
it left off passengers, the candidate's authorized committee shall pay
the appropriate government entity an amount equal to the amount
required under paragraph (b)(5)(i) of this section for one passenger
plus costs for fuel and crew.
(iii) If any individual, including a candidate, uses a government
conveyance, other than an airplane, for campaign-related travel, the
candidate's authorized committee shall pay the appropriate government
entity an amount equal to the commercial rental rate for a comparable
conveyance, in terms of size, model and make.
(iv) If any individual, including a candidate, uses accommodations,
including lodging and meeting rooms, during campaign-related travel,
and the accommodations are paid for by a government entity, the
candidate's authorized committee shall pay the appropriate government
entity an amount equal to the usual and normal charge for the
accommodations, and shall maintain documentation supporting the amount
paid.
(v) For travel by airplane, the committee shall maintain
documentation of the lowest unrestricted nondiscounted air fare
available for the time traveled, including the airline or travel
service providing that fare. For travel by other conveyances, the
committee shall maintain documentation of the commercial rental rate
for a comparable conveyance, including the provider of the conveyance
and the size, model and make of the conveyance. For travel under
paragraph (b)(5)(ii) of this section, the committee shall maintain
documentation of fuel and crew costs.
(6) Travel expenses of a candidate's spouse and family when
accompanying the candidate on campaign-related travel may be treated as
qualified campaign expenses and reportable expenditures. If the spouse
or family members conduct campaign-related activities, their travel
expenses shall be qualified campaign expenses and reportable
expenditures.
(7) If any individual, including a candidate, incurs expenses for
campaign-related travel, other than by use of government conveyance or
accommodations, an amount equal to that portion of the actual cost of
the conveyance or accommodations which is allocable to all passengers,
including the candidate, who are traveling for campaign purposes shall
be a qualified campaign expense and shall be reported by the committee
as an expenditure.
(i) If the trip is by charter, the actual cost for each passenger
shall be determined by dividing the total operating cost for the
charter by the total number of passengers transported. The amount which
is a qualified campaign expense and a reportable expenditure shall be
calculated in accordance with the formula set forth at 11 CFR
9004.7(b)(2) on the basis of the actual cost per passenger multiplied
by the number of passengers traveling for campaign purposes.
(ii) If the trip is by non-charter commercial transportation, the
actual cost shall be calculated in accordance with the formula set
forth at 11 CFR 9004.7(b)(2) on the basis of the commercial fare. Such
actual cost shall be a qualified campaign expense and a reportable
expenditure.
(8) Travel on corporate airplanes and other corporate conveyances
is governed by 11 CFR 114.9(e).
PART 9006--REPORTS AND RECORDKEEPING
10. The authority citation for Part 9006 would continue to read as
follows:
Authority: 2 U.S.C. 434 and 26 U.S.C. 9006(b).
11. Section 9006.3 would be added to read as follows:
Sec. 9006.3 Alphabetized schedules.
If the authorized committee(s) of a candidate file a schedule of
itemized receipts, disbursements, or debts and obligations pursuant to
11 CFR 104.3 that was generated directly or indirectly from
computerized files or records, the schedule shall list in alphabetical
order the sources of the receipts, the payees or the creditors, as
appropriate. Such schedule shall list all individuals, including
contributors, payees, and creditors in alphabetical order by surname.
PART 9007--EXAMINATIONS AND AUDITS; REPAYMENTS
12. The authority citation for Part 9007 would continue to read as
follows:
Authority: 26 U.S.C. 9007 and 9009(b).
13. In section 9007.1, new paragraph (f) would be added, to read as
follows:
Sec. 9007.1 Audits.
* * * * *
(f)(1) Sampling. In conducting an audit of contributions pursuant
to this section, the Commission may utilize generally accepted sampling
techniques to quantify, in whole or in part, the dollar value of
related audit findings. A projection of the total amount of violations
based on apparent violations identified in such a sample may become the
basis, in whole or in part, of any audit finding.
(2) A committee in responding to a sample-based finding concerning
excessive or prohibited contributions shall respond only to the
specific sample items used to make the projection. If the committee
demonstrates that any errors found among the sample items were not
excessive or prohibited contributions; were timely refunded,
reattributed or redesignated pursuant to 11 CFR 103.3(b)(1), (2) and
(3); or for some other reason were not errors; the Commission shall
make a new projection based on the reduced number of errors in the
sample.
(3) The committee shall submit a check to the United States
Treasury for the total amount of any contributions not refunded,
reattributed or redesignated in a timely manner in accordance with 11
CFR 103.3(b)(1), (2) or (3).
14. In section 9007.2, the introductory language of paragraph (b)
would be republished, and paragraph (b)(4) would be revised, to read as
follows:
Sec. 9007.2 Repayments.
* * * * *
(b) Bases for repayment. The Commission may determine that an
eligible candidate of a political party who has received payments from
the fund must repay the United States Treasury under any of the
circumstances described below.
* * * * *
(4) Income on investment or other use of payments from the Fund. If
the Commission determines that a candidate received any income as a
result of an investment or other use of payments from the fund pursuant
to 11 CFR 9004.5, it shall so notify the candidate, and such candidate
shall pay to the United States Treasury an amount equal to the amount
determined to be income, less any Federal, State or local taxes on such
income.
* * * * *
15. Section 9007.7 would be added to read as follows:
Sec. 9007.7 Administrative record.
(a) The Commission's administrative record for final determinations
under 11 CFR 9004.9, 9005.1 and 9007.2 may include the following:
(1) Candidate and committee agreements submitted pursuant to 11 CFR
9003.1;
(2) Candidate and committee certifications submitted pursuant to 11
CFR 9003.2;
(3) Statements of Net Outstanding Qualified Campaign Expenses;
(4) Pertinent portions of Interim and Final Audit Reports,
including attachments and supporting evidence;
(5) Pertinent portions of Initial and Final Repayment
Determinations, including attachments and supporting evidence;
(6) All certifications, notifications, and determinations made by
the Commission pursuant to 11 CFR 9004.9 and 9005.1;
(7) Other written correspondence or materials sent to, or received
from, the committee, witnesses, state or federal agencies or other
persons, including committee requests for extensions of time, pertinent
portions of committee responses to the Initial and Final Audit Reports,
and documentary or other evidence produced in response to a subpoena
duces tecum;
(8) The transcript or audio tape of any deposition taken;
(9) The transcript or audio tape of any oral presentation conducted
pursuant to 11 CFR 9007.2;
(10) The certification(s) of the Commission's decision(s) regarding
candidate certifications, eligibility determinations, and repayment
determinations;
(11) All additional documents and evidence identified or filed by
the Commission as part of the administrative record relied on in
reaching its decision(s); and
(12) Statements of Reasons adopted by the Commission.
(b) The Commission's administrative record for determinations under
11 CFR 11 CFR 9004.9, 9005.1 and 9007.2 does not include any materials
not specifically enumerated in paragraph (a) of this section, such as:
(1) Documents and materials in the files of individual
Commissioners or employees of the Commission that do not constitute a
basis for the Commission's decisions because they were not circulated
to the Commission and were not referenced in documents that were
circulated to the Commission;
(2) Transcripts or audio tapes of Commission discussions that are
pre-decisional, but such transcripts or tapes may be made available
under 11 CFR Parts 4 or 5; or
(3) Documents properly subject to privileges such as an attorney-
client privilege, or items constituting attorney work product.
(c) The administrative record identified in paragraph (a) of this
section is the exclusive record for the Commission's determinations
under 11 CFR 9004.9, 9005.1 and 9007.2
PART 9033--ELIGIBILITY FOR PAYMENTS
16. The authority citation for Part 9003 would be revised to read
as follows:
Authority: 26 U.S.C. 9003(e), 9033 and 9039(b).
17. In section 9033.1, the introductory language of paragraph (b)
would be republished, paragraph (b)(5) would be revised, and new
paragraph (b)(12) would be added, to read as follows:
Sec. 9033.1 Candidate and committee agreements.
* * * * *
(b) Conditions. The candidate shall agree that:
* * * * *
(5) The candidate and the candidate's authorized committee(s) will
keep and furnish to the Commission all documentation relating to
disbursements and receipts (including all books and book records for
all accounts), all documentation required by this section (including
those required to be maintained under 11 CFR 9033.11), and other
information that the Commission may request. If the candidate or the
candidate's authorized committee maintains or uses computerized
information containing any of the categories of data listed in 11 CFR
9033.12(a), the committee will provide computerized magnetic media,
such as magnetic tapes or magnetic diskettes, containing the
computerized information at the times specified in 11 CFR 9038.1(b)(1)
that meet the requirements of 11 CFR 9033.12(b). Upon request,
documentation explaining the computer system's software capabilities
shall be provided, and such personnel as are necessary to explain the
operation of the computer system's software and the computerized
information prepared or maintained by the committee shall be made
available.
* * * * *
(12) Agree that any television commercial prepared or distributed
by the candidate will be prepared in a manner which ensures that the
commercial contains or is accompanied by closed captioning of the oral
content of the commercial to be broadcast in line 21 of the vertical
blanking interval, or is capable of being viewed by deaf and hearing
impaired individuals via any comparable successor technology to line 21
of the vertical blanking interval.
Sec. 9033.4 [Amended]
18. In section 9033.4, paragraph (b) would be removed, and
paragraph (c) would be redesignated as paragraph (b).
19. Section 9033.11 would be revised to read as follows:
Sec. 9033.11 Documentation of disbursements.
(a) Burden of proof. Each candidate shall have the burden of
proving that disbursements made by the candidate or his or her
authorized committee(s) or persons authorized to make expenditures on
behalf of the candidate or authorized committee(s) are qualified
campaign expenses as defined in 11 CFR 9032.9. The candidate and his or
her authorized committee(s) shall obtain and furnish to the Commission
on request any evidence regarding qualified campaign expenses made by
the candidate, his or her authorized committees and agents or persons
authorized to make expenditures on behalf of the candidate or
committee(s) as provided in paragraph (b) of this section.
(b) Documentation required.
(1) For disbursements in excess of $200 to a payee, the candidate
shall present a canceled check negotiated by the payee that states the
purpose of the disbursement and either:
(i) A receipted bill from the payee that states the purpose of the
disbursement; or
(ii) If a receipt is not available,
(A) One of the following documents generated by the payee: A bill,
invoice, or voucher that states the purpose of the disbursement; or
(B) Where the documents specified in paragraph (b)(1)(ii)(A) of
this section are not available, a voucher or contemporaneous memorandum
from the candidate or the committee that states the purpose of the
disbursement; or
(iii) Where the supporting documentation required in paragraphs
(b)(1)(i) or (ii) of this section is not available, the candidate or
committee may present collateral evidence to document the qualified
campaign expense. Such collateral evidence may include, but is not
limited to:
(A) Evidence demonstrating that the expenditure is part of an
identifiable program or project which is otherwise sufficiently
documented such as a disbursement which is one of a number of
documented disbursements relating to a campaign mailing or to the
operation of a campaign office;
(B) Evidence that the disbursement is covered by a pre-established
written campaign committee policy, such as a daily travel expense
policy.
(2) For all disbursements of $200 or less, the candidate shall
present:
(i) A record disclosing the full name and mailing address of the
payee, and the amount, date and purpose of the disbursement, if made
from a petty cash fund; or
(ii) A canceled check negotiated by the payee that states the
identification of the payee, and the amount, date and purpose of the
disbursement.
(3) For purposes of this section,
(i) ``Payee'' means the person who provides the goods or services
to the candidate or committee in return for the disbursement; except
that an individual will be considered a payee under this section if he
or she receives $500 or less advanced for travel and/or subsistence and
if he or she is the recipient of the goods or services purchased.
(ii) ``Purpose'' means the full name and mailing address of the
payee, the date and amount of the disbursement, and a description of
the goods or services purchased.
(c) Retention of records. The candidate shall retain records, with
respect to each disbursement and receipt, including bank records,
vouchers, worksheets, receipts, bills and accounts, journals, ledgers,
fundraising solicitation material, accounting systems documentation,
matching fund submissions, and any related materials documenting
campaign receipts and disbursements, for a period of three years
pursuant to 11 CFR 102.9(c), and shall present these records to the
Commission on request.
(d) List of capital and other assets.
(1) Capital assets. The candidate or committee shall maintain a
list of all capital assets whose purchase price exceeded $2000 when
acquired by the campaign. The list shall include a brief description of
each capital asset, the purchase price, the date it was acquired, the
method of disposition and the amount received in disposition. For
purposes of this section, ``capital asset'' shall be defined in
accordance with 11 CFR 9034.5(c)(1).
(2) Other assets. The candidate or committee shall maintain a list
of other assets acquired for use in fundraising or as collateral for
campaign loans, if the aggregate value of such assets exceeds $5000.
The list shall include a brief description of each such asset, the fair
market value of each asset, the method of disposition and the amount
received in disposition. The fair market value of other assets shall be
determined in accordance with 11 CFR 9034.5(c)(2).
PART 9034--ENTITLEMENTS
20. The authority citation for Part 9034 would continue to read as
follows:
Authority: 26 U.S.C. 9034 and 9039(b).
21. In section 9034.4, paragraph (a) would be revised, paragraph
(b)(1) would be republished, paragraph (b)(3) would be revised, and
paragraph (b)(8) would be added, to read as follows:
Sec. 9034.4 Use of contributions and matching payments.
(a) Qualified campaign expenses--
(1) General. Except as provided in paragraph (b)(3) of this
section, all contributions received by an individual from the date he
or she becomes a candidate and all matching payments received by the
candidate shall be used only to defray qualified campaign expenses or
to repay loans or otherwise restore funds (other than contributions
which were received and expended to defray qualified campaign
expenses), which were used to defray qualified campaign expenses.
(2) Testing the waters. Even though incurred prior to the date an
individual becomes a candidate, payments made in accordance with 11 CFR
100.8(b)(1) for the purpose of determining whether an individual should
become a candidate shall be considered qualified campaign expenses if
the individual subsequently becomes a candidate and shall count against
that candidate's limits under 2 U.S.C. 441a(b).
(3) Winding down costs.
(i) Costs associated with the termination of political activity,
such as the costs of complying with the post election requirements of
the Act and other necessary administrative costs associated with
winding down the campaign, including office space rental, staff
salaries, and office supplies shall be considered qualified campaign
expenses. A candidate may receive and use matching funds for these
purposes either after he or she has notified the Commission in writing
of his or her withdrawal from the campaign for nomination or after the
date of the party's nominating convention, if he or she has not
withdrawn before the convention.
(ii) If the candidate has become ineligible due to the operation of
11 CFR 9033.5(b),he or she may only receive matching funds to defray
costs incurred before the candidate's date of ineligibility, for goods
and services to be received before the date of ineligibility and for
which written arrangement or commitment was made on or before the
candidate's date of ineligibility, until the candidate is eligible to
receive winding down costs under paragraph (a)(3)(i) of this section.
(iii) For purposes of the expenditure limitations set forth in 11
CFR 9035.1, 100% of salary, overhead and computer expenses incurred
after a candidate's date of ineligibility may be treated as exempt
legal and accounting compliance expenses beginning with the first full
reporting period after the candidate's date of ineligibility. For
candidates who continue to campaign or re-establish eligibility, this
paragraph shall not apply to expenses incurred during the period
between the date of ineligibility and the date on which the candidate
either re-establishes eligibility or ceases to continue to campaign.
(4) Taxes. Federal income taxes paid by the committee on non-exempt
function income, such as interest, dividends and sale of property,
shall be considered qualified campaign expenses. These expenses shall
not, however, count against the state or overall expenditure limits of
11 CFR 9035.1(a).
(5) Gifts and monetary bonuses. Gifts and monetary bonuses for
committee employees, consultants and volunteers in recognition for
campaign-related activities or services shall be considered qualified
campaign expenses, provided that the gifts do not exceed $150 total per
individual, and provided that the total for all gifts and monetary
bonuses (except bonus arrangements provided for in advance in an
employment or consulting contract) does not exceed $20,000.
(b) Non-qualified campaign expenses--
(1) General. The following are examples of disbursements that are
not qualified campaign expenses.
* * * * *
(3) Post-ineligibility expenditures. Any expenses incurred after a
candidate's date of ineligibility, as determined under 11 CFR 9033.5,
are not qualified campaign expenses except to the extent permitted
under 11 CFR 9034.4(a)(3). Any expenses incurred before the candidate's
date of ineligibility for goods and services to be received after the
candidate's date of ineligibility are not qualified campaign expenses.
In addition, any expenses incurred before the candidate's date of
ineligibility for goods and services to be received after the
candidate's date of ineligibility, or for property, services, or
facilities used to benefit the candidate's general election campaign,
are not qualified campaign expenses. For purposes of this paragraph, it
is presumed that capital assets delivered within 60 days of the first
day of the candidate's party's national nominating convention are
general election assets; and that a local campaign office that remains
open more than 30 days after a state's primary election or the close of
any other nomination process in that state is operating in support of
the general election campaign.
* * * * *
(8) Negligent Handling of Public Funds. The cost of items that are
lost or misplaced due to negligence shall not be considered a qualified
campaign expense. Factors in making this determination shall include,
but not be limited to, whether the committee demonstrates that it made
conscientious efforts to safeguard the missing equipment; the type of
equipment involved; the number of items that were lost; and the value
of the lost equipment as a percentage of the total value of the
equipment leased or owned by the committee.
* * * * *
22. Section 9034.5 would be amended by revising paragraphs (b),
(c)(1), and (f) to read as follows:
Sec. 9034.5 Net outstanding campaign obligations.
* * * * *
(b) Liabilities.
(1) The amount submitted as the total of outstanding campaign
obligations under paragraph (a)(1) of this section shall not include
any accounts payable for nonqualified campaign expenses nor any amounts
determined or anticipated to be required a repayment under 11 CFR part
9038 or any amounts paid to secure a surety bond under 11 CFR 9038.5.
(2) The amount submitted as estimated necessary winding down costs
under paragraph (a)(1) of this section shall be broken down by expenses
category and quarterly or monthly time period. This breakdown shall
include estimated costs for office space rental, staff salaries, office
supplies, equipment rental, telephone expenses, postage and other
mailing costs, printing and storage. The breakdown shall estimate the
costs that will be incurred in each category from the time the
statement is submitted until the expected termination of the
committee's political activity.
(c)(1) Capital assets, For purposes of this section, the term
capital asset means any property used in the operation of the campaign
whose purchase price exceeded $2000 when acquired by the committee.
Property that must be valued as capital assets under this section
includes, but is not limited to, office equipment, furniture, vehicles
and fixtures acquired for use in the operation of the candidate's
campaign, but does not include property defined as ``other assets''
under 11 CFR 9034.5(c)(2). A list of all capital assets shall be
maintained by the Committee in accordance with 11 CFR 9033.11(d). The
fair market value of capital assets may be considered to be the total
original cost of such items when acquired less than 40%, to account for
depreciation, except that items acquired after the date of
ineligibility must be valued at their fair market value on the date
acquired. If the candidate wishes to claim a higher depreciation
percentage for an item, he or she must list that capital asset on the
statement separately and demonstrate, through documentation, the fair
market value of each such asset. The Commission may disallow all or
some portion of the 40% depreciation if the asset was obtained by the
primary committee for use in the general election, or falls within a
presumption stated in 11 CFR 9034.4(b)(3).
* * * * *
(f)(1) The candidate shall submit a revised statement of net
outstanding campaign obligations with each submission for matching fund
payments filed after the candidate's date of ineligibility. the revised
statement shall reflect the financial status of the campaign as of the
close of business on the last business day preceding the date of
submission for matching funds. The revised statement shall also contain
a brief explanation of each change in the committee's assets and
obligations from the previous statement.
(2) A candidate who makes a submission described in paragraph
(f)(1) of this section shall also submit an additional revised
statement of net outstanding campaign obligations. This additional
statement shall be due on a date to be determined and published by the
Commission, which will be before the next regularly scheduled payment
date. This statement shall reflect the financial status of the campaign
as of the close of business three business days before the due date of
the statement. The revised statement shall also contain a brief
explanation of each change in the committee's assets and obligations
from the previous statement.
(3) After a candidate's date of ineligibility, if the candidate
does not receive the entire amount of matching funds on a regularly
scheduled payment date due to a shortfall in the matching payment
account, the candidate shall also submit a revised statement of net
outstanding campaign obligations. The revised statement shall be filed
on a date to be determined and published by the Commission, which will
be before the next regularly scheduled payment date.
23. Section 9034.6 would be revised to read as follows:
Sec. 9034.6 Expenditures for transportation and services made
available to media personnel; Reimbursements.
(a) General.
(1) Expenditures by an authorized committee for transportation,
ground services or facilities (including air travel, ground
transportation, housing, meals, telephone service, typewriters) made
available to media personnel, Secret Service personnel or national
security staff will be considered qualified campaign expenses, and,
except for costs relating to Secret Service personnel or national
security staff, will be subject to the overall expenditure limitation
of 11 CFR 9035.1(a).
(2) Subject to the limitations in paragraphs (b) and (c) of this
section, committees may seek reimbursement for these expenses and may
deduct any amounts received as reimbursements from the amount of
expenditures subject to the overall expenditure limitation of 11 CFR
9035.1(a). Expenses for which the committee receives no reimbursement
will be considered qualified campaign expenses, and, with the exception
of those expenses relating to Secret Service personnel and national
security staff, will be subject to the overall expenditure limitation.
(b) Reimbursement limits.
(1) The committee may seek reimbursement of the expenses described
in paragraph (a)(1) of this section from the media representatives to
whom those services were provided. The amount sought shall not exceed
the media representative's pro rata share, or a reasonable estimate of
the media representative's pro rata share, of the actual cost of the
transportation and services made available by more than 10%. Any
reimbursement received in excess of 110% of the actual pro rata cost of
the transportation and services made available shall be disposed of in
accordance with paragraph (d) of this section. For the purposes of this
section:
(i) A media representative's pro rata share shall be calculated by
dividing the total actual cost of the transportation and services by
the total number of individuals to whom such transportation and
services are made available. For purposes of this calculation, the
total number of individuals shall include committee staff, media
personnel, Secret Service personnel, national security staff and any
other individuals to whom such transportation and services are made
available; and
(ii) ``Administrative costs'' shall include all costs incurred by
the committee for making travel arrangements and for seeking
reimbursement, whether performed by committee staff or independent
contractors.
(c) Deduction of reimbursements from expenditures subject to the
overall expenditure limitation. The committee may deduct from the
amount of expenditures subject to the overall expenditure limitation of
11 CFR 9035.1(a):
(1) The amount of reimbursements received in payment for the
transportation and services described in paragraph (a) of this section,
up to the actual cost of transportation and services provided; and
(2) An amount of reimbursements received representing the
administrative costs incurred by the committee in providing these
services and seeking reimbursement for them, equal to:
(i) Three percent of the actual cost of transportation and services
provided under this section; or
(ii) An amount in excess of 3% representing the administrative
costs actually incurred by the committee, provided that the committee
is able to document that it incurred these higher administrative costs.
(d) Disposal of excess reimbursements. If the committee receives
reimbursements in excess of the amount deductible under paragraph (c)
of this section, it shall dispose of the excess amount in the following
manner:
(1) Any reimbursement received in excess of 110% of the actual pro
rata cost of the transportation and services made available to a media
representative shall be returned to the media representative.
(2) Any amount in excess of the amount deductible under paragraph
(c) of this section that is not required to be returned to the media
representative under paragraph (d)(1) shall be repaid to the Treasury.
(e) Reporting. The total amount paid by an authorized committee for
the cost of transportation or for ground services and facilities shall
be reported as an expenditure in accordance with 11 CFR 104.3(b)(2)(i).
Any reimbursement received by such committee for transportation or
ground services and facilities shall be reported in accordance with 11
CFR 104.3(a)(3)(ix).
24. Section 9034.7 would be revised to read as follows:
Sec. 9034.7 Allocation of Travel Expenditures.
(a) Notwithstanding the provisions of 11 CFR 106.3, expenditures
for travel relating to the office of President by any individual,
including a candidate, shall, pursuant to the provisions of paragraph
(b) of this section, be qualified campaign expenses and be reported by
the candidate's authorized committee(s) as expenditures.
(b) (1) For a trip which is entirely campaign-related, the total
cost of the trip shall be a qualified campaign expense and a reportable
expenditure.
(2) For a trip which includes campaign-related and non-campaign
related stops, that portion of the cost of the trip allocable to
campaign activity shall be a qualified campaign expense and a
reportable expenditure. Such portion shall be determined by calculating
what the trip would have cost from the point of origin of the trip to
the first campaign-related stop and from that stop through each
subsequent campaign-related stop, back to the point of origin. If any
campaign activity, other than incidental contacts, is conducted at a
stop, that stop shall be considered campaign-related. Campaign activity
includes soliciting, making, or accepting contributions, and expressly
advocating the election or defeat of any candidate. Other factors,
including the setting, timing and statements or expressions of the
purpose of an event, the substance of the remarks or speech made, and
the audience, will also be considered in determining whether a stop is
campaign-related.
(3) For each trip, an itinerary shall be prepared and such
itinerary shall be made available for Commission inspection.
(4) For trips by government conveyance or by charter, a list of all
passengers on such trip, along with a designation of which passengers
are and which are not campaign-related, shall be made available for
Commission inspection.
(5) (i) If any individual, including a candidate, uses a government
airplane for campaign-related travel, the candidate's authorized
committee shall pay the appropriate government entity an amount equal
to:
(A) The lowest unrestricted and non-discounted first class
commercial air fare available for the time traveled, in the case of
travel to a city served by a regularly scheduled commercial airline
service; or
(B) The lowest unrestricted and non-discounted coach commercial air
fare available for the time traveled, in the case of travel to a city
served by regularly scheduled coach airline service, but not regularly
scheduled first class airline service; or
(C) The commercial charter rate for a comparable airplane (in terms
of size, model and make), in the case of travel to a city not served by
a regularly scheduled commercial airline service.
(ii) If a government airplane is flown to a campaign-related stop
where it will pick up passengers, or from a campaign-related stop where
it left off passengers, the candidates's authorized committee shall pay
the appropriate government entity an amount equal to the amount
required under paragraph (b)(5)(i) of this section for one passenger
plus costs for fuel and crew.
(iii) If any individual, including a candidate, uses a government
conveyance, other than an airplane, for campaign-related travel, the
candidate's authorized committee shall pay the appropriate government
entity an amount equal to the commercial rental rate for a comparable
conveyance, in terms of size, model and make.
(iv) If any individual, including a candidate, uses accommodations,
including lodging and meeting rooms, during campaign-related travel,
and the accommodations are paid for by a government entity, the
candidate's authorized committee shall pay the appropriate government
entity an amount equal to the usual and normal charge for the
accommodations, and shall maintain documentation supporting the amount
paid.
(v) For travel by airplane, the committee shall maintain
documentation for the lowest unrestricted nondiscounted air fare
available for the time traveled, including the airline or travel
service providing that fare. For travel by other conveyances, the
committee shall maintain documentation of the commercial rental rate
for a comparable conveyance, including the provider of the conveyance
and the size, model and make of the conveyance. For travel under
paragraph (b)(5)(ii) of this section, the committee shall maintain
documentation of fuel and crew costs.
(6) Travel expenses of a candidate's spouse and family when
accompanying the candidate on campaign-related travel may be treated as
qualified campaign expenses and reportable expenditures. If the spouse
or family members conduct campaign-related activities, their travel
expenses will be treated as qualified campaign expenses and reportable
expenditures.
(7) If any individual, including a candidate, incurs expenses for
campaign-related travel, other than by use of government conveyance or
accommodations, an amount equal to that portion of the actual cost of
the conveyance or accommodations which is allocable to all passengers,
including the candidate, who are traveling for campaign purposes will
be a qualified campaign expense and shall be reported by the committee
as an expenditure.
(i) If the trip is by charter, the actual cost for each passenger
shall be determined by dividing the total operating cost for the
charter by the total number of passengers transported. The amount which
is a qualified campaign expense and a reportable expenditure shall be
calculated in accordance with the formula set forth at 11 CFR
9034.7(b)(2) on the basis of the actual cost per passenger multiplied
by the number of passengers traveling for campaign purposes.
(ii) If the trip is by non-charter commercial transportation, the
actual cost shall be calculated in accordance with the formula set
forth at 11 CFR 9034.7(b)(2) on the basis of the commercial fare. Such
actual cost shall be a qualified campaign expense and a reportable
expenditure.
(8) Travel on corporate airplanes and other corporate conveyances
is governed by 11 CFR 114.9(e).
PART 9037--PAYMENTS AND REPORTING
25. The authority citation for Part 9037 would continue to read as
follows:
Authority: 26 U.S.C. 9037 and 9039(b).
Section 9037.4 would be added to read as follows:
Sec. 9037.4 Alphabetized schedules.
If the authorized committee(s) of a candidate file a schedule of
itemized receipts, disbursements or debts and obligations pursuant to
11 CFR 104.3 that was generated directly or indirectly from
computerized files or records, the schedule shall list in alphabetical
order the sources of he receipts, the payees, or the creditors, as
appropriate. Such schedule shall list all individuals, including
contributors, payees and creditors, in alphabetical order by surname.
PART 9038--EXAMINATIONS AND AUDITS
27. The authority citation for part 9038 would continue to read as
follows:
Authority: 26 U.S.C. 9038 and 9039(b).
28. In section 9038.1, new paragraph (f) would be added, to read as
follows:
Sec. 9038.1 Audit.
* * * * *
(f)(1) Sampling. In conducting an audit of contributions pursuant
to this section, the Commission may utilize generally accepted sampling
techniques to quantify, in whole or in part, the dollar value of
related audit findings. A projection of the total amount of violations
based on apparent violations identified in such a sample may become the
basis, in whole or in part, or any audit finding.
(2) A committee in responding to a sample-based finding concerning
excessive or prohibited contributions shall respond only to the
specific sample items used to make the projection. If the committee
demonstrates that any errors found among the sample items were not
excessive or prohibited contributions; were timely refunded,
reattributed or redesignated pursuant to 11 CFR 103.3(b) (1), (2) and
(3); or for some other reason were not errors; the Commission shall
make a new projection based on the reduced number of errors in the
sample.
(3) The committee shall submit a check to the United States
Treasury for the total amount of any contributions not refunded,
reattributed or redesignated in a timely manner in accordance with 11
CFR 103.3(b) (1), (2) or (3).
29. In section 9038.2, the introductory language of paragraph
(b)(2) would be republished, and paragraph (b)(2)(iii) would be
revised, to read as follows:
Sec. 9038.2 Repayments.
* * * * *
(b) Bases for repayment * * *
(2) Use of funds for non-qualified campaign expenses. * * *
(iii) The amount of any repayment sought under this section shall
bear the same ratio to the total amount determined to have been used
for non-qualified campaign expenses as the amount of matching funds
certified to the candidate bears to the candidate's total deposits, as
of 90 days after the candidate's date of ineligibility. For the
purposes of this paragraph--
(A) All matching funds certified in response to matching payment
submissions received by the Commission as of the candidate's date of
ineligibility will be treated as though they were certified as of the
date of ineligibility;
(B) Total deposits is defined in accordance with 11 CFR
9038.3(c)(2); and
(C) In seeking repayment for non-qualified campaign expenses from
committees that have received matching fund payments after the
candidate's date of ineligibility, the Commission will review committee
expenditures to determine at what point committee accounts no longer
contain matching funds. In doing this, the Commission will review
committee expenditures from the date of the last matching fund payment
to the candidate, using the assumption that the last payment has been
expended on a last-in, first-out basis.
* * * * *
30. Section 9038.7 would be added to read as follows:
Sec. 9038.7 Administrative record.
(a) The Commission's administrative record for final determinations
under 11 CFR Part 9033 and Secs. 9034.5, 9036.5 and 9038.2 may include
the following:
(1) Candidate and committee agreements submitted pursuant to 11 CFR
9033.1;
(2) Candidate and committee certifications submitted pursuant to 11
CFR 9033.2;
(3) Threshold submissions and additional submissions for matching
fund payments;
(4) Statements of Net Outstanding Campaign Obligations;
(5) Pertinent portions of Interim and Final Audit Reports,
including attachments and supporting evidence;
(6) Pertinent portions of Initial and Final Repayment
Determinations, including attachments and supporting evidence;
(7) All certifications, notifications, and determinations made by
the Commission pursuant to 11 CFR Part 9033, and sections 9034.5 and
9036.5;
(8) Other written correspondence or materials sent to, or received
from, the committee, witnesses, state or federal agencies or other
persons, including committee requests for extensions of time, pertinent
portions of committee responses to the Initial and Final Audit Reports,
and documentary or other evidence produced in response to a subpoena
duces tecum;
(9) The transcript or audio tape of any deposition taken;
(10) The transcript or audio tape of any oral presentation
conducted pursuant to 11 CFR 9038.2;
(11) The certification(s) of the Commission's decision(s) regarding
candidate certifications, eligibility determinations, and repayment
determinations;
(12) All additional documents and evidence identified or filed by
the Commission as part of the administrative record relied on in
reaching its decision(s); and
(13) Statements of Reasons adopted by the Commission.
(b) The Commission's administrative record for determinations under
11 CFR Part 9033 and Secs. 9034.5, 9036.5 and 9038.2 does not include
any materials not specifically enumerated in paragraph (a) of this
section, such as:
(1) Documents and materials in the files of individual
Commissioners or employees of the Commission that do not constitute a
basis for the Commission's decisions because they were not circulated
to the Commission and were not referenced in documents that were
circulated to the Commission;
(2) Transcripts or audio tapes of Commission discussions that are
pre-decisional, but such transcripts or tapes may be made available
under 11 CFR Parts 4 or 5; or
(3) Documents properly subject to privileges such as an attorney-
client privilege, or items constituting attorney work product.
(c) The administrative record identified in paragraph (a) of this
section is the exclusive record for the Commission's determinations
under 11 CFR Part 9033 and Secs. 9034.5, 9036.5 and 9038.2.
Dated: September 30, 1994.
Trevor Potter,
Chairman.
[FR Doc. 94-24623 Filed 10-5-94; 8:45 am]
BILLING CODE 6715-01-M
