[House Report 104-677]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-677
_______________________________________________________________________


 
                  CAMPAIGN FINANCE REFORM ACT OF 1996
                                _______
                                

 July 16, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Thomas, from the Committee on House Oversight, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3760]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on House Oversight, to whom was referred the 
bill (H.R. 3760) to amend the Federal Election Campaign Act of 
1971 to reform the financing of Federal election campaigns, and 
for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Campaign Finance 
Reform Act of 1996''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

         TITLE I--RESTORING CONTROL OF ELECTIONS TO INDIVIDUALS

Sec. 101. Requiring majority of House of Representatives candidate 
funds to come from individuals residing in district.
Sec. 102. Reduction in allowable contribution amounts for political 
action committees in Federal elections to level allowed for 
individuals.
Sec. 103. Modification of limitations on contributions when candidates 
spend or contribute large amounts of personal funds.
Sec. 104. Indexing limits on contributions.
Sec. 105. Prohibition of leadership committees.
Sec. 106. Prohibiting bundling of contributions to candidates by 
political action committees and lobbyists.
Sec. 107. Definition of independent expenditures.
Sec. 108. Requirements for use of payroll deductions for contributions.

               TITLE II--STRENGTHENING POLITICAL PARTIES

Sec. 201. Modification of contribution limits and requirements for 
political parties.
Sec. 202. Allowing political parties to offset funds carried over from 
previous elections.
Sec. 203. Prohibiting use of non-Federal funds in Federal elections.
Sec. 204. Permitting parties to have unlimited communication with 
members.
Sec. 205. Promoting State and local party volunteer and grassroots 
activity.

                 TITLE III--DISCLOSURE AND ENFORCEMENT

Sec. 301. Timely reporting and increased disclosure.
Sec. 302. Streamlining procedures and rules of Federal Election 
Commission.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Effective date.
Sec. 402. Severability.
Sec. 403. Expedited court review.

SEC. 2. FINDINGS.

  Congress finds the following:
          (1) Our republican form of government is strengthened when 
        voters choose their representatives in elections that are free 
        of corruption or the appearance of corruption.
          (2) Corruption or the appearance of corruption in elections 
        may evidence itself in many ways:
                  (A) Voters who democratically elect representatives 
                must believe they are fairly represented by those they 
                elect. The current election laws have led many to 
                believe that the interests of those who actually vote 
                for their representatives are less important than those 
                who cannot vote, but who can influence an election by 
                their contributions to the candidates.
                  (B) Failure to disclose, or timely disclose, those 
                who contribute and how much they contribute 
                unnecessarily withholds information voters need to cast 
                ballots with complete confidence, thereby increasing 
                the belief of, or the appearance of, corruption.
                  (C) The diminishing role of political parties, 
                despite parties' long-standing role in advancing broad 
                national agendas, in assisting the election of party 
                candidates, and in organizing members, has relatively 
                enhanced groups that pursue narrower interests. This 
                relative shift of influence has been interpreted by 
                some as corrupting the election process.
                  (D) Complicated and obsolete election laws and rules 
                discourage citizens from becoming candidates, allow for 
                coerced involuntary payments for political purposes, 
                fail to keep contribution amounts current with 
                inflation, and fail to provide reasonable compensating 
                contribution limits for candidates who run against 
                candidates who wish to exercise their constitutional 
                right of spending their own resources. The current 
                state of laws and rules is such that if they do not 
                corrupt, at the very least they unduly hinder fair, 
                honest, and competitive elections.

         TITLE I--RESTORING CONTROL OF ELECTIONS TO INDIVIDUALS

SEC. 101. REQUIRING MAJORITY OF HOUSE OF REPRESENTATIVES CANDIDATE 
                    FUNDS TO COME FROM INDIVIDUALS RESIDING IN 
                    DISTRICT.

  (a) In General.--Section 315 of the Federal Election Campaign Act of 
1971 (2 U.S.C. 441a) is amended by adding at the end the following new 
subsection:
  ``(i)(1) A candidate for the office of Representative in, or Delegate 
or Resident Commissioner to, the Congress may not accept contributions 
with respect to an election cycle from persons other than local 
individual residents totaling in excess of the total of contributions 
accepted from local individual residents (as determined on the basis of 
the most recent information included in reports pursuant to section 
304(d).
  ``(2) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, contributions of the 
candidate's personal funds shall be subject to the following rules:
          ``(A) To the extent that the amount of the contribution does 
        not exceed the limitation on contributions made by an 
        individual under subsection (a)(1)(A), such contribution shall 
        be treated as any other contribution.
          ``(B) The portion (if any) of the contribution which exceeds 
        the limitation on contributions which may be made by an 
        individual under subsection (a)(1)(A) shall be allocated in 
        accordance with paragraph (8).
  ``(3) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, contributions from a 
political party or a political party committee shall be allocated in 
accordance with paragraph (8).
  ``(4) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, any funds remaining in the 
candidate's campaign account after the filing of the post-general 
election report under section 304(a)(2)(A)(ii) for the most recent 
general election shall be allocated in accordance with paragraph (8).
  ``(5) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, any contributions accepted 
pursuant to subsection (j) which are from persons other than local 
individual residents shall be allocated in accordance with paragraph 
(8).
  ``(6)(A) Any candidate who accepts contributions that exceed the 
limitation under this subsection, as determined on the basis of 
information included in reports pursuant to section 304(d), shall pay 
to the Commission at the time of the filing of the report which 
contains the information, for deposit in the Treasury, an amount equal 
to 3 times the amount of the excess contributions (or, in the case of a 
candidate described in subparagraph (C), an amount equal to 5 times the 
amount of the excess contributions plus a civil penalty in an amount 
determined by the Commission).
  ``(B) Any amounts paid by a candidate under this paragraph shall be 
paid from contributions subject to the limitations and prohibitions of 
this title, including the limitation under this subsection.
  ``(C) A candidate described in this subparagraph is a candidate who 
accepts contributions that exceed the limitation under this subsection 
as of the last day of the period ending on the 20th day before an 
election or any period ending after such 20th day and before or on the 
20th day after such election.
  ``(7) As used in this subsection, the term `local individual 
resident' means an individual who resides in the congressional district 
involved.
  ``(8) For purposes of this subsection, any amounts allocated in 
accordance with this paragraph shall be allocated as follows:
          ``(A) 50 percent of such amounts shall be deemed to be 
        contributions from local individual residents.
          ``(B) 50 percent of such amounts shall be deemed to be 
        contributions from persons other than local individual 
        residents.''.
  (b) Reporting Requirements.--Section 304 of such Act (2 U.S.C. 434) 
is amended by adding at the end the following new subsection:
  ``(d) Each principal campaign committee of a candidate for the House 
of Representatives shall include the following information in reports 
filed under subsection (a)(2) and subsection (a)(6)(A):
          ``(1) With respect to each report filed under such 
        subsection--
                  ``(A) the total contributions received by the 
                committee with respect to the election cycle involved 
                from local individual residents (as defined in section 
                315(i)(7)), as of the last day of the period covered by 
                the report;
                  ``(B) the total contributions received by the 
                committee with respect to the election cycle involved 
                which are not from local individual residents, as of 
                the last day of the period covered by the report; and
                  ``(C) a certification as to whether the contributions 
                reported comply with the limitation under section 
                315(i), as of the last day of the period covered by the 
                report.
          ``(2) In the case of the first report filed under such 
        subsection which covers the period which begins 19 days before 
        an election and ends 20 days after the election--
                  ``(A) the total contributions received by the 
                committee with respect to the election cycle involved 
                from local individual residents (as defined in section 
                315(i)(7)), as of the last day of such period;
                  ``(B) the total contributions received by the 
                committee with respect to the election cycle involved 
                which are not from local individual residents, as of 
                the last day of such period; and
                  ``(C) a certification as to whether the contributions 
                reported comply with the limitation under section 
                315(i), as of the last day of such period.''.

SEC. 102. REDUCTION IN ALLOWABLE CONTRIBUTION AMOUNTS FOR POLITICAL 
                    ACTION COMMITTEES IN FEDERAL ELECTIONS TO LEVEL 
                    ALLOWED FOR INDIVIDUALS.

  (a) In General.--Section 315(a) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 441a(a)) is amended--
          (1) in paragraph (1)--
                  (A) in subparagraph (A), by inserting after ``Federal 
                office'' the following: ``or to any other political 
                committee other than a political party committee in any 
                calendar year'',
                  (B) in subparagraph (A), by adding ``or'' at the end,
                  (C) in subparagraph (B), by striking ``; or'' and 
                inserting a period, and
                  (D) by striking subparagraph (C); and
          (2) by amending paragraph (2) to read as follows:
  ``(2) No political party committee may make contributions--
          ``(A) to any candidate or the candidate's authorized 
        political committees with respect to any election for Federal 
        office which, in the aggregate, exceed $5,000; or
          ``(B) to any other political committee other than a political 
        party committee in any calendar year which, in the aggregate, 
        exceed $5,000.''.
  (b) Political Party Committee Defined.--The second sentence of 
section 315(a)(4) of such Act (2 U.S.C. 441a(a)(4)) is amended to read 
as follows: ``For purposes of this section, the term `political party 
committee' means a political committee which is a national, State, 
district, or local political party committee (including any subordinate 
committee thereof).''.
  (c) Conforming Amendments.--Section 311(a)(6) of such Act (2 U.S.C. 
438(a)(6)) is amended--
          (1) in subparagraph (B), by striking ``multi-candidate 
        committees'' the first place it appears and inserting 
        ``political committees which are not authorized committees of 
        candidates or political party committees'';
          (2) in subparagraph (B), by striking ``multi-candidate 
        committees'' the second place it appears and inserting ``such 
        committees''; and
          (3) in subparagraph (C), by striking ``multi-candidate 
        committees'' and inserting ``committees described in 
        subparagraph (B)''.

SEC. 103. MODIFICATION OF LIMITATIONS ON CONTRIBUTIONS WHEN CANDIDATES 
                    SPEND OR CONTRIBUTE LARGE AMOUNTS OF PERSONAL 
                    FUNDS.

  (a) In General.--Section 315 of the Federal Election Campaign Act of 
1971 (2 U.S.C. 441a), as amended by section 101(a), is further amended 
by adding at the end the following new subsection:
  ``(j)(1) Notwithstanding subsection (a), if in a general election a 
House candidate makes expenditures of personal funds (including 
contributions by the candidate to the candidate's authorized campaign 
committee) in an amount in excess of the amount of the limitation 
established under subsection (a)(1)(A) and less than or equal to 
$150,000 (as reported under section 304(a)(2)(A)), a political party 
committee may make contributions to an opponent of the House candidate 
without regard to any limitation otherwise applicable to such 
contributions under subsection (a), except that the opponent may not 
accept aggregate contributions under this paragraph in an amount 
greater than the greatest amount of personal funds expended (including 
contributions to the candidate's authorized campaign committee) by any 
House candidate (other than such opponent) with respect to the election 
(as reported in a notification submitted under section 304(a)(6)(B)).
  ``(2) If a House candidate makes expenditures of personal funds 
(including contributions by the candidate to the candidate's authorized 
campaign committee) with respect to an election in an amount greater 
than $150,000 (as reported under section 304(a)(2)(A)), the following 
rules shall apply:
          ``(A) In the case of a general election, the limitations 
        under subsections (a)(1) and (a)(2) (insofar as such 
        limitations apply to political party committees and to 
        individuals) shall not apply to contributions to the candidate 
        or to any opponent of the candidate, except that neither the 
        candidate or any opponent may accept aggregate contributions 
        under this subparagraph and paragraph (1) in an amount greater 
        than the greatest amount of personal funds (including 
        contributions to the candidate's authorized campaign committee) 
        expended by any House candidate with respect to the election 
        (as reported in a notification submitted under section 
        304(a)(6)(B)).
          ``(B) In the case of an election other than a general 
        election, the limitations under subsection (a)(1) (insofar as 
        such limitations apply to individuals) shall not apply to 
        contributions to the candidate or to any opponent of the 
        candidate, except that neither the candidate or any opponent 
        may accept aggregate contributions under this subparagraph in 
        an amount greater than the greatest amount of personal funds 
        (including contributions to the candidate's authorized campaign 
        committee) expended by any House candidate with respect to the 
        election (as reported in a notification submitted under section 
        304(a)(6)(B)).
  ``(3) In this subsection, the term `House candidate' means a 
candidate in an election for the office of Representative in, or 
Delegate or Resident Commissioner to, the Congress.''.
  (b) Notification of Expenditures of Personal Funds.--Section 
304(a)(6) of such Act (2 U.S.C. 434(a)(6)) is amended--
          (1) by redesignating subparagraph (B) as subparagraph (C); 
        and
          (2) by inserting after subparagraph (A) the following new 
        subparagraph:
  ``(B)(i) The principal campaign committee of a House candidate (as 
defined in section 315(j)(3)) shall submit the following notifications 
relating to expenditures of personal funds by such candidate (including 
contributions by the candidate to such committee):
          ``(I) A notification of the first such expenditure (or 
        contribution) by which the aggregate amount of personal funds 
        expended (or contributed) with respect to an election exceeds 
        the amount of the limitation established under section 
        315(a)(1)(A) for elections in the year involved.
          ``(II) A notification of each such expenditure (or 
        contribution) which, taken together with all such expenditures 
        (and contributions) in any amount not included in the most 
        recent report under this subparagraph, totals $5,000 or more.
          ``(III) A notification of the first such expenditure (or 
        contribution) by which the aggregate amount of personal funds 
        expended with respect to the election exceeds the level 
        applicable under section 315(j)(2) for elections in the year 
        involved.
  ``(ii) Each of the notifications submitted under clause (i)--
          ``(I) shall be submitted not later than 24 hours after the 
        expenditure or contribution which is the subject of the 
        notification is made;
          ``(II) shall include the name of the candidate, the office 
        sought by the candidate, and the date of the expenditure or 
        contribution and amount of the expenditure or contribution 
        involved; and
          ``(III) shall include the total amount of all such 
        expenditures and contributions made with respect to the same 
        election as of the date of expenditure or contribution which is 
        the subject of the notification.''.

SEC. 104. INDEXING LIMITS ON CONTRIBUTIONS.

  (a) In General.--Section 315(c) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 441a(c)) is amended by adding at the end the 
following new paragraph:
  ``(3)(A) The amount of each limitation established under subsection 
(a) shall be adjusted as follows:
          ``(i) For calendar year 1997, each such amount shall be equal 
        to the amount described in such subsection, increased (in a 
        compounded manner) by the percentage increase in the price 
        index (as defined in subsection (c)(2)) for each year after 
        1976 and before 1998.
          ``(ii) For calendar year 1999 and each second subsequent 
        year, each such amount shall be equal to the amount for the 
        second previous year (as adjusted under this subparagraph), 
        increased (in a compounded manner) by the percentage increase 
        in the price index for the previous year and the second 
        previous year.
  ``(B) In the case of any amount adjusted under this subparagraph 
which is not a multiple of $500, the amount shall be rounded to the 
nearest lowest multiple of $500.''.
  (b) Application of Indexing to Support of Candidate's Committees.--
Section 302(e)(3)(B) of such Act (2 U.S.C. 432(e)(3)(B)) is amended by 
adding at the end the following new sentence: ``The amount described in 
the previous sentence shall be adjusted (for years beginning with 1997) 
in the same manner as the amounts of limitations on contributions under 
section 315(a) are adjusted under section 315(c)(3).''.
  (c) Application of Indexing to Provisions Relating to Personal 
Funds.--
          (1) In general.--Section 315(j) of such Act (2 U.S.C. 
        441a(j)), as added by section 103(a), is amended--
                  (A) by redesignating paragraph (3) as paragraph (4); 
                and
                  (B) by inserting after paragraph (2) the following 
                new paragraph:
  ``(3) Each of the amounts provided under paragraph (1) or (2) shall 
be adjusted for each biennial period beginning after the 1998 general 
election in the same manner as the amounts of limitations on 
contributions established under subsection (a) are adjusted under 
subsection (c)(3).''.
          (2) Conforming amendment.--Section 304(a)(6)(B)(i) of such 
        Act (2 U.S.C. 434(a)(6)(B)(i)), as added by section 103(b), is 
        amended by striking ``section 315(j)(3)'' and inserting 
        ``section 315(j)(4)''.

SEC. 105. PROHIBITION OF LEADERSHIP COMMITTEES.

  (a) Leadership Committee Prohibition.--Section 302 of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 432) is amended by adding at 
the end the following new subsection:
  ``(j) A candidate for Federal office or an individual holding Federal 
office may not establish, maintain, finance, or control a political 
committee, other than a principal campaign committee of the candidate 
or the individual.''.
  (b) Conforming Amendment Relating to Joint Fundraising.--Section 
302(e)(3)(A) of such Act (2 U.S.C. 432(e)(3)) is amended by striking 
``except that--'' and all that follows and inserting the following: 
``except that the candidate for the office of President nominated by a 
political party may designate the national committee of such political 
party as a principal campaign committee, but only if that national 
committee maintains separate books of account with respect to its 
function as a principal campaign committee.''.
  (c) Effective Date; Transition Rule.--
          (1) In general.--The amendments made by this section shall 
        apply with respect to elections occurring in years beginning 
        with 1997.
          (2) Transition rule.--
                  (A) In general.--Notwithstanding section 302(j) of 
                the Federal Election Campaign Act of 1971 (as added by 
                subsection (a)), if a political committee established, 
                maintained, financed, or controlled by a candidate for 
                Federal office or an individual holding Federal office 
                (other than a principal campaign committee of the 
                candidate or individual) with respect to an election 
                occurring during 1996 has funds remaining unexpended 
                after the 1996 general election, the committee may make 
                contributions or expenditures of such funds with 
                respect to elections occurring during 1997 or 1998.
                  (B) Disbanding committees; treatment of remaining 
                funds.--Any political committee described in 
                subparagraph (A) shall be disbanded after filing any 
                post-election reports required under section 304 of the 
                Federal Election Campaign Act of 1971 with respect to 
                the 1998 general election. Any funds of such a 
                committee which remain unexpended after the 1998 
                general election and before the date on which the 
                committee disbands shall be returned to contributors or 
                available for any lawful purpose other than use by the 
                candidate or individual involved with respect to an 
                election for Federal office.

SEC. 106. PROHIBITING BUNDLING OF CONTRIBUTIONS TO CANDIDATES BY 
                    POLITICAL ACTION COMMITTEES AND LOBBYISTS.

  Section 316 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441b) is amended by adding at the end the following new subsection:
  ``(c)(1) No political action committee or person required to register 
under the Lobbying Disclosure Act of 1995 (2 U.S.C. 1601 et seq.) may 
act as an intermediary or conduit with respect to a contribution to a 
candidate for Federal office.
  ``(2) In this subsection, the term `political action committee' means 
any political committee which is not--
          ``(A) the principal campaign committee of a candidate; or
          ``(B) a political party committee.''.

SEC. 107. DEFINITION OF INDEPENDENT EXPENDITURES.

  Section 301 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
431) is amended by striking paragraph (17) and inserting the following:
  ``(17)(A) The term `independent expenditure' means an expenditure by 
a person for a communication expressly advocating the election or 
defeat of a clearly identified candidate which is not made with the 
cooperation or with the prior consent of, or in consultation with, or 
at the request or suggestion of, a candidate or any agent or authorized 
committee of such candidate.
  ``(B) For purposes of this paragraph--
          ``(i) `expressly advocating the election or defeat' means the 
        use in the communication of explicit words such as `vote for', 
        `reelect', `support', `cast your ballot for', `vote against', 
        `defeat', or `reject', accompanied by a reference in the 
        communication to one or more clearly identified candidates, or 
        words such as `vote' for or against a position on an issue, 
        accompanied by a listing in the communication of one or more 
        clearly identified candidates described as for or against a 
        position on that issue;
          ``(ii) `which is not made with the cooperation or with the 
        prior consent of, or in consultation with, or at the request or 
        suggestion of, a candidate or any agent or authorized committee 
        of such candidate' refers to the expenditure in question for 
        the communication made by the person; and
          ``(iii) the term `agent' means any person who has actual oral 
        or written authority, either express or implied, to make or 
        authorize the making of expenditures on behalf of a candidate.
  ``(C) An expenditure by a person for a communication which does not 
contain explicit words expressly advocating the election or defeat of a 
clearly identified candidate shall not be considered an independent 
expenditure.''.

SEC. 108. REQUIREMENTS FOR USE OF PAYROLL DEDUCTIONS FOR CONTRIBUTIONS.

  Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 
et seq.) is amended by adding at the end the following new section:
             ``use of payroll deductions for contributions
  ``Sec. 323. (a) Requirements for Authorization of Deduction.--
          ``(1) In general.--No amounts withheld from an individual's 
        wages or salary during a year may be used for any contribution 
        under this title unless there is in effect an authorization in 
        writing by the individual permitting the withholding of such 
        amounts for the contribution.
          ``(2) Period of authorization.--An authorization described in 
        this subsection may be in effect with respect to an individual 
        for such period as the individual may specify (subject to 
        cancellation under paragraph (3)), except that the period may 
        not be longer than 12 months.
          ``(3) Right of cancellation.--An individual with an 
        authorization in effect under this subsection may cancel or 
        revise the authorization at any time.
  ``(b) Information Provided by Withholding Entity.--
          ``(1) In general.--Each entity withholding wages or salary 
        from an individual with an authorization in effect under 
        subsection (a) shall provide the individual with a statement 
        that the individual may at any time cancel or revise the 
        authorization in accordance with subsection (a)(3).
          ``(2) Timing of notice.--The entity shall provide the 
        information described in paragraph (1) to an individual at the 
        beginning of each calendar year occurring during the period in 
        which the individual's authorization is in effect.''.

               TITLE II--STRENGTHENING POLITICAL PARTIES

SEC. 201. MODIFICATION OF CONTRIBUTION LIMITS AND REQUIREMENTS FOR 
                    POLITICAL PARTIES.

  (a) Treatment of Party Contributions Under Aggregate Individual 
Cap.--Section 315(a)(3) of the Federal Election Campaign Act (2 U.S.C. 
441a(a)(3)) is amended by adding at the end the following new sentence: 
``For purposes of this paragraph, in determining the amount of 
contributions made by an individual there shall be excluded any 
contributions made by the individual to a political party or a 
political party committee.''.
  (b) Limitation Amount for Contributions to State Political Parties.--
Section 315(a)(1)(B) of such Act (2 U.S.C. 441a(a)(1)(B)) is amended by 
inserting after ``national'' the following: ``or State''.

SEC. 202. ALLOWING POLITICAL PARTIES TO OFFSET FUNDS CARRIED OVER FROM 
                    PREVIOUS ELECTIONS.

  Section 315 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441a), as amended by sections 101 and 103(a), is further amended by 
adding at the end the following new subsection:
  ``(k)(1) Subject to paragraph (2), if, in a general election for 
Federal office, a candidate who is the incumbent uses campaign funds 
carried forward from an earlier election cycle, any political party 
committee may make contributions to the nominee of that political party 
to match the funds so carried forward by such incumbent. For purposes 
of this paragraph, funds shall be considered to have been carried 
forward if the funds represent cash on hand as reported in the 
applicable post-general election report filed under section 304(a) for 
the general election involved, plus any amount expended on or before 
the filing of the report for a later election, less legitimate 
outstanding debts relating to the previous election up to the amount 
reported.
  ``(2) The political party contributions under paragraph (1) may be 
made without regard to any limitation amount otherwise applicable to 
such contributions made under subsections (a) or (i), but a candidate 
may not accept contributions under this subsection in excess of the 
total of funds carried forward by the incumbent candidate.''.

SEC. 203. PROHIBITING USE OF NON-FEDERAL FUNDS IN FEDERAL ELECTIONS.

  Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 
et seq.), as amended by section 108, is further amended by adding at 
the end the following new section:
               ``restrictions on use of non-federal funds
  ``Sec. 324. (a) Prohibiting Use of Funds in Federal Elections.--No 
funds may be expended by a political party committee for the purpose of 
influencing an election for Federal office unless the funds are subject 
to the limitations and prohibitions of this Act, except as may be 
provided in this section.
  ``(b) Restrictions on Use of Funds for Mixed Activities.--
          ``(1) Prohibiting use by national party committees.--A 
        national committee of a political party (including any 
        subordinate committee thereof) may not use any funds which are 
        not subject to the limitations and prohibitions of this Act for 
        any mixed activity.
          ``(2) Mixed activity defined.--In this subsection, the term 
        `mixed activity' means any activity which is both for the 
        purpose of influencing an election for Federal office and for 
        any purpose unrelated to influencing an election for Federal 
        office, including voter registration, absentee ballot programs, 
        and get-out-the-vote programs, but does not include the payment 
        of any administrative or overhead costs, including salaries 
        (other than payments made to individuals for get-out-the-vote 
        activities conducted on the day of an election), rent, 
        fundraising, or communications to members of a political party.
  ``(c) Restrictions on Use of Funds for Mixed Candidate-Specific 
Activities.--
          ``(1) Requiring allocation among candidates.--A political 
        party committee may use funds which are not subject to the 
        limitations and prohibitions of this Act for mixed candidate-
        specific activities if the funds are allocated among the 
        candidates involved on the basis of the time and space 
        allocated to the candidates.
          ``(2) Mixed candidate-specific activity defined.--In this 
        subsection, the term `mixed candidate-specific activity' means 
        any activity which is both for the purpose of promoting a 
        specific candidate or candidates in an election for Federal 
        office and for the purpose of promoting a specific candidate or 
        candidates in any other election.''.

SEC. 204. PERMITTING PARTIES TO HAVE UNLIMITED COMMUNICATION WITH 
                    MEMBERS.

  (a) In General.--Section 315(d) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 441a(d)) is amended by adding at the end the 
following new paragraph:
  ``(4)(A) For purposes of applying the limitations established under 
paragraphs (2) and (3), in determining the amount of expenditures made 
by a national committee of a political party or a State committee of a 
political party (including any subordinate committee of a State 
committee), there shall be excluded any amounts expended by the 
committee for communications to the extent the communications are made 
to members of the party.
  ``(B) For purposes of subparagraph (A), an individual shall be 
considered to be a `member' of a political party if any of the 
following apply:
          ``(i) The individual is registered to vote as a member of the 
        party.
          ``(ii) There is a public record that the individual voted in 
        the primary of the party during the most recent primary 
        election.
          ``(iii) The individual has made a contribution to the party 
        and the contribution has been reported to the Commission (in 
        accordance with this Act) or to a State reporting agency.
          ``(iv) The individual has indicated in writing that the 
        individual is a member of the party.''.
  (b) Funds Available for Party Communications.--Section 324 of such 
Act, as added by section 203, is amended by adding at the end the 
following new subsection:
  ``(d) Funds for Party Communications With Members.--Subsection (a) 
shall not apply with respect to funds expended by a political party for 
communications to the extent the communications are made to members of 
the party (as determined in accordance with section 315(d)(4)), except 
that any communications which are both for the purpose of expressly 
advocating the election or defeat of a specific candidate for election 
to Federal office and for any other purpose shall be subject to 
allocation in the same manner as funds expended for mixed candidate-
specific activities under subsection (c).''.

SEC. 205. PROMOTING STATE AND LOCAL PARTY VOLUNTEER AND GRASSROOTS 
                    ACTIVITY.

  (a) Encouraging State and Local Party Activities.--
          (1) Contributions.--Section 301(8)(B) of the Federal Election 
        Campaign Act of 1971 (2 U.S.C. 431(8)(B)) is amended--
                  (A) by striking ``and'' at the end of clause (xiii);
                  (B) by striking the period at the end of clause (xiv) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xv) the payment by a State or local committee of a 
        political party for any of the following activities:
                  ``(I) The listing of the slate of the party's 
                candidates, including the communication of the slate to 
                the public.
                  ``(II) The mailing of materials for or on behalf of 
                specific candidates by volunteers (including labeling 
                envelopes or affixing postage or other indicia to 
                particular pieces of mail), other than the mailing of 
                materials to a commercial list.
                  ``(III) Conducting a telephone bank for or on behalf 
                of specific candidates staffed by volunteers.
                  ``(IV) The distribution of collateral materials (such 
                as pins, bumper stickers, handbills, brochures, 
                posters, party tabloids, and yard signs) for or on 
                behalf of specific candidates (whether by volunteers or 
                otherwise).''.
          (2) Expenditures.--Section 301(9)(B) of such Act (2 U.S.C. 
        431(9)(B)) is amended--
                  (A) by striking ``and'' at the end of clause (ix);
                  (B) by striking the period at the end of clause (x) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xi) the payment by a State or local committee of a 
        political party for any of the following activities:
                  ``(I) The listing of the slate of the party's 
                candidates, including the communication of the slate to 
                the public.
                  ``(II) The mailing of materials for or on behalf of 
                specific candidates by volunteers (including labeling 
                envelopes or affixing postage or other indicia to 
                particular pieces of mail), other than the mailing of 
                materials to a commercial list.
                  ``(III) Conducting a telephone bank for or on behalf 
                of specific candidates staffed by volunteers.
                  ``(IV) The distribution of collateral materials (such 
                as pins, bumper stickers, handbills, brochures, 
                posters, party tabloids, and yard signs) for or on 
                behalf of specific candidates (whether by volunteers or 
                otherwise).''.
          (3) Conforming amendments.--(A) Section 301(8)(B)(x) of such 
        Act (2 U.S.C. 431(8)(B)(x)) is amended by striking ``in 
        connection with volunteer activities on behalf of nominees of 
        such party'' and inserting ``in connection with State or local 
        activities, other than any payment described in clause (xv)''.
          (B) Section 301(9)(B)(viii) of such Act (2 U.S.C. 
        431(9)(B)(viii)) is amended by striking ``in connection with 
        volunteer activities on behalf of nominees of such party'' and 
        inserting ``in connection with State or local activities, other 
        than any payment described in clause (xi)''.
  (b) Funds Available for Activities.--
          (1) Permitting use of non-federal funds for mixed 
        activities.--Section 324(b) of such Act, as added by section 
        203, is amended--
                  (A) by redesignating paragraph (2) as paragraph (3); 
                and
                  (B) by inserting after paragraph (1) the following 
                new paragraph:
          ``(2) Use by state or local party committees.--A State, 
        local, or district committee of a political party (including 
        any subordinate committee thereof) may use funds which are not 
        subject to the limitations and prohibitions of this Act for 
        mixed activity if the funds are allocated in accordance with 
        the process described in subsection (g).''.
          (2) Funds available for state and local parties.--Section 324 
        of such Act, as added by section 203 and as amended by section 
        204(b), is amended by adding at the end the following new 
        subsection:
  ``(e) Funds Available for State and Local Party Volunteer and 
Grassroots Activities.--Subsection (a) shall not apply with respect to 
payments described in section 301(8)(B)(xv) or section 301(9)(B)(xi), 
except that any payments which are both for the purpose of expressly 
advocating the election or defeat of a specific candidate for election 
to Federal office and for any other purpose shall be subject to 
allocation in the same manner as funds expended for mixed candidate-
specific activities under subsection (c).''.
          (3) Treatment of intra-party transfers.--Section 324 of such 
        Act, as added by section 203 and as amended by section 204(b) 
        and paragraph (2), is amended by adding at the end the 
        following new subsection:
  ``(f) Rule of Construction Regarding Intra-Party Transfers.--Nothing 
in this section shall be construed to prohibit the transfer between and 
among national, State, or local party committees (including any 
subordinate committees thereof) of funds which are not subject to the 
limitations and prohibitions of this Act.''.
          (4) Allocation procedures described.--Section 324 of such 
        Act, as added by section 203 and as amended by section 204(b) 
        and paragraphs (2) and (3), is amended by adding at the end the 
        following new subsection:
  ``(g) State and Local Party Committees; Method for Allocating 
Expenditures for Mixed Activities.--
          ``(1) General rule.--All State and local party committees 
        except those covered by paragraph (2) shall allocate their 
        expenses for mixed activities, as described in subsection 
        (b)(2), according to the ballot composition method described as 
        follows:
                  ``(A) Under this method, expenses shall be allocated 
                based on the ratio of Federal offices expected on the 
                ballot to total Federal and non-Federal offices 
                expected on the ballot in the next general election to 
                be held in the committee's State or geographic area. 
                This ratio shall be determined by the number of 
                categories of Federal offices on the ballot and the 
                number of categories of non-Federal offices on the 
                ballot, as described in subparagraph (B).
                  ``(B) In calculating a ballot composition ratio, a 
                State or local party committee shall count the Federal 
                offices of President, United States Senator, and United 
                States Representative, if expected on the ballot in the 
                next general election, as one Federal office each. The 
                committee shall count the non-Federal offices of 
                Governor, State Senator, and State Representative, if 
                expected on the ballot in the next general election, as 
                one non-Federal office each. The committee shall count 
                the total of all other partisan statewide executive 
                candidates, if expected on the ballot in the next 
                general election, as a maximum of two non-Federal 
                offices. State party committees shall also include in 
                the ratio one additional non-Federal office if any 
                partisan local candidates are expected on the ballot in 
                any regularly scheduled election during the 2 year 
                congressional election cycle. Local party committees 
                shall also include in the ratio a maximum of 2 
                additional non-Federal offices if any partisan local 
                candidates are expected on the ballot in any regularly 
                scheduled election during the 2 year congressional 
                election cycle. State and local party committees shall 
                also include in the ratio 1 additional non-Federal 
                office.
          ``(2) Exception for states that do not hold federal and non-
        federal elections in the same year.--State and local party 
        committees in states that do not hold Federal and non-Federal 
        elections in the same year shall allocate the costs of mixed 
        activities according to the ballot composition method described 
        in paragraph (1), based on a ratio calculated for that calendar 
        year.''.

                 TITLE III--DISCLOSURE AND ENFORCEMENT

SEC. 301. TIMELY REPORTING AND INCREASED DISCLOSURE.

  (a) Deadline for Filing.--
          (1) Requiring reports for all contributions made within 20 
        days of election; requiring reports to be made within 24 
        hours.--Section 304(a)(6)(A) of the Federal Election Campaign 
        Act of 1971 (2 U.S.C. 434(a)(6)(A)) is amended--
                  (A) by striking ``after the 20th day, but more than 
                48 hours before any election'' and inserting ``during 
                the period which begins on the 20th day before an 
                election and ends at the time the polls close for such 
                election''; and
                  (B) by striking ``48 hours'' the second place it 
                appears and inserting the following: ``24 hours (or, if 
                earlier, by midnight of the day on which the 
                contribution is deposited)''.
          (2) Requiring actual delivery by deadline.--
                  (A) In general.--Section 304(a)(6) of such Act (2 
                U.S.C. 434(a)(6)), as amended by section 103(b), is 
                further amended by adding at the end the following new 
                subparagraph:
  ``(D) Notwithstanding paragraph (5), the time at which a notification 
or report under this paragraph is received by the Secretary, the 
Commission, or any other recipient to whom the notification is required 
to be sent shall be considered the time of filing of the notification 
or report with the recipient.''.
                  (B) Conforming amendment.--Section 304(a)(5) of such 
                Act (2 U.S.C. 434(a)(5)) is amended by striking 
                ``paragraph (2)(A)(i) or (4)(A)(ii)'' and inserting 
                ``paragraphs (2)(A)(i), (4)(A)(ii), or (6))''.
  (b) Increasing Electronic Disclosure.--Section 304(a)(6) of such Act 
(2 U.S.C. 434(a)(6)), as amended by section 103(b) and subsection 
(a)(2)(A), is further amended by adding at the end the following new 
subparagraph:
  ``(E)(i) The Commission shall make the information contained in the 
reports submitted under this paragraph available on the Internet and 
publicly available at the offices of the Commission as soon as 
practicable (but in no case later than 24 hours) after the information 
is received by the Commission.
  ``(ii) In this subparagraph, the term `Internet' means the 
international computer network of both Federal and non-Federal 
interoperable packet-switched data networks.''.
  (c) Change in Certain Reporting From a Calendar Year Basis to an 
Election Cycle Basis.--Section 304(b) of such Act (2 U.S.C. 434(b)) is 
amended by inserting ``(or election cycle, in the case of an authorized 
committee of a candidate for Federal office)'' after ``calendar year'' 
each place it appears in paragraphs (2), (3), (4), (6), and (7).
  (d) Clarification of Permissible Use of Facsimile Machines to File 
Reports.--Section 304(a)(11)(A) of such Act (2 U.S.C. 434(a)(11)) is 
amended by striking ``method,'' and inserting ``method (including by 
facsimile device in the case of any report required to be filed within 
24 hours after the transaction reported has occurred),''.
  (e) Requiring Receipt of Independent Expenditure Reports Within 24 
Hours.--
          (1) In general.--Section 304(c)(2) of such Act (2 U.S.C. 
        434(c)(2)) is amended in the matter following subparagraph 
        (C)--
                  (A) by striking ``shall be reported'' and inserting 
                ``shall be filed''; and
                  (B) by adding at the end the following new sentence: 
                ``Notwithstanding subsection (a)(5), the time at which 
                the statement under this subsection is received by the 
                Secretary, the Commission, or any other recipient to 
                whom the notification is required to be sent shall be 
                considered the time of filing of the statement with the 
                recipient.''.
          (2) Conforming amendment.--Section 304(a)(5) of such Act (2 
        U.S.C. 434(a)(5)), as amended by subsection (a)(2)(B), is 
        further amended by striking ``or (6)'' and inserting ``or (6), 
        or subsection (c)(2)''.
  (f) Requiring Record Keeping and Reporting of Secondary Payments by 
Campaign Committees.--
          (1) Reporting.--Section 304(b)(5)(A) of such Act (2 U.S.C. 
        434(b)(5)(A)) is amended by striking the semicolon at the end 
        and inserting the following: ``, and, if such person in turn 
        makes expenditures which aggregate $500 or more in an election 
        cycle to other persons (not including employees) who provide 
        goods or services to the candidate or the candidate's 
        authorized committees, the name and address of such other 
        persons, together with the date, amount, and purpose of such 
        expenditures;''.
          (2) Record keeping.--Section 302 of such Act (2 U.S.C. 432), 
        as amended by section 105(a), is further amended by adding at 
        the end the following new subsection:
  ``(k) A person described in section 304(b)(5)(A) who makes 
expenditures which aggregate $500 or more in an election cycle to other 
persons (not including employees) who provide goods or services to a 
candidate or a candidate's authorized committees shall provide to a 
political committee the information necessary to enable the committee 
to report the information described in such section.''.
          (3) No effect on other reports.--Nothing in the amendments 
        made by this subsection may be construed to affect the terms of 
        any other recordkeeping or reporting requirements applicable to 
        candidates or political committees under title III of the 
        Federal Election Campaign Act of 1971.
  (g) Including Report on Cumulative Contributions and Expenditures in 
Post Election Reports.--Section 304(a)(7) of such Act (2 U.S.C. 
434(a)(7)) is amended--
          (1) by striking ``(7)'' and inserting ``(7)(A)''; and
          (2) by adding at the end the following new subparagraph:
  ``(B) In the case of any report required to be filed by this 
subsection which is the first report required to be filed after the 
date of an election, the report shall include a statement of the total 
contributions received and expenditures made as of the date of the 
election.''.
  (h) Including Information on Aggregate Contributions in Report on 
Itemized Contributions.--Section 304(b)(3) of such Act (2 U.S.C. 
434(b)(3)) is amended--
          (1) in subparagraph (A), by inserting after ``such 
        contribution'' the following: ``and the total amount of all 
        such contributions made by such person with respect to the 
        election involved''; and
          (2) in subparagraph (B), by inserting after ``such 
        contribution'' the following: ``and the total amount of all 
        such contributions made by such committee with respect to the 
        election involved''.

SEC. 302. STREAMLINING PROCEDURES AND RULES OF FEDERAL ELECTION 
                    COMMISSION.

  (a) Standards for Commission Regulation and Judicial 
Interpretation.--Section 307 of the Federal Election Campaign Act of 
1971 (2 U.S.C. 437d) is amended by adding at the end the following new 
subsection:
  ``(f)(1) When developing prescribed forms and making, amending, or 
repealing rules pursuant to the authority granted to the Commission by 
subsection (a)(8), the Commission shall act in a manner that will have 
the least restrictive effect on the rights of free speech and 
association so protected by the First Article of Amendment to the 
Constitution of the United States.
  ``(2) When the Commission's actions under paragraph (1) are 
challenged, a reviewing court shall hold unlawful and set aside any 
actions of the Commission that do not conform with the principles set 
forth in paragraph (1).''.
  (b) Written Responses to Questions.--
          (1) In general.--Title III of such Act (2 U.S.C. 431 et seq.) 
        is amended by inserting after section 308 the following new 
        section:
                 ``other written responses to questions
  ``Sec. 308A. (a) Permitting Responses.--In addition to issuing 
advisory opinions under section 308, the Commission shall issue written 
responses pursuant to this section with respect to a written request 
concerning the application of this Act, chapter 95 or chapter 96 of the 
Internal Revenue Code of 1986, a rule or regulation prescribed by the 
Commission, or an advisory opinion issued by the Commission under 
section 308, with respect to a specific transaction or activity by the 
person, if the Commission finds the application of the Act, chapter, 
rule, regulation, or advisory opinion to the transaction or activity to 
be clear and unambiguous.
  ``(b) Procedure for Response.--
          ``(1) Analysis by staff.--The staff of the Commission shall 
        analyze each request submitted under this section. If the staff 
        believes that the standard described in subsection (a) is met 
        with respect to the request, the staff shall circulate a 
        statement to that effect together with a draft response to the 
        request to the members of the Commission.
          ``(2) Issuance of response.--Upon the expiration of the 3-day 
        period beginning on the date the statement and draft response 
        is circulated (excluding weekends or holidays), the Commission 
        shall issue the response, unless during such period any member 
        of the Commission objects to issuing the response.
  ``(c) Effect of Response.--
          ``(1) Safe harbor.--Notwithstanding any other provisions of 
        law, any person who relies upon any provision or finding of a 
        written response issued under this section and who acts in good 
        faith in accordance with the provisions and findings of such 
        response shall not, as a result of any such act, be subject to 
        any sanction provided by this Act or by chapter 95 or chapter 
        96 of the Internal Revenue Code of 1986.
          ``(2) No reliance by other parties.--Any written response 
        issued by the Commission under this section may only be relied 
        upon by the person involved in the specific transaction or 
        activity with respect to which such response is issued, and may 
        not be applied by the Commission with respect to any other 
        person or used by the Commission for enforcement or regulatory 
        purposes.
  ``(d) Publication of Requests and Responses.--The Commission shall 
make public any request for a written response made, and the responses 
issued, under this section. In carrying out this subsection, the 
Commission may not make public the identity of any person submitting a 
request for a written response unless the person specifically 
authorizes the Commission to do so.
  ``(e) Compilation of Index.--The Commission shall compile, publish, 
and regularly update a complete and detailed index of the responses 
issued under this section through which responses may be found on the 
basis of the subjects included in the responses.''.
          (2) Conforming amendment.--Section 307(a)(7) of such Act (2 
        U.S.C. 437d(a)(7)) is amended by striking ``of this Act'' and 
        inserting ``and other written responses under section 308A''.
  (c) Opportunity for Oral Arguments Before Commission.--Section 
309(a)(3) of such Act (2 U.S.C. 437g(a)(3)) is amended--
          (1) by striking ``(3)'' and inserting ``(3)(A)''; and
          (2) by adding at the end the following new subparagraph:
  ``(B) If a respondent submits a brief under subparagraph (A), the 
respondent may submit (at the time of submitting the brief) a request 
to present an oral argument in support of the respondent's brief before 
the Commission. If at least 2 members of the Commission approve of the 
request, the respondent shall be permitted to appear before the 
Commission in open session and make an oral presentation in support of 
the brief and respond to questions of members of the Commission. Such 
appearance shall take place at a time specified by the Commission 
during the 30-day period which begins on the date the request is 
approved, and the Commission may limit the length of the respondent's 
appearance to such period of time as the Commission considers 
appropriate. Any information provided by the respondent during the 
appearance shall be considered by the Commission before proceeding 
under paragraph (4).''.
  (d) Index of Advisory Opinions.--
          (1) In general.--Section 308 of the Federal Election Campaign 
        Act of 1971 (2 U.S.C. 437f) is amended by adding at the end the 
        following new subsection:
  ``(e) The Commission shall compile, publish, and regularly update a 
complete and detailed index of the advisory opinions issued under this 
section through which opinions may be found on the basis of the 
subjects included in the opinions.''.
          (2) Effective date.--The Federal Election Commission shall 
        first publish the index of advisory opinions described in 
        section 308(e) of the Federal Election Campaign Act of 1971 (as 
        added by paragraph (1)) not later than 60 days after the date 
        of the enactment of this Act.
  (e) Standard for Initiation of Actions.--Section 309(a)(2) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 437g(a)(2)) is amended 
by striking ``it has reason to believe'' and all that follows through 
``of 1954,'' and inserting the following: ``it has a reason to 
investigate a possible violation of this Act or of chapter 95 or 
chapter 96 of the Internal Revenue Code of 1986 that has occurred or is 
about to occur (based on the same criteria applicable under this 
paragraph prior to the enactment of the Campaign Finance Reform Act of 
1996),''.
  (f) Application of Aggregate Contribution Limit on Calendar Year 
Basis During Non-Election Years.--Section 315(a)(3) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 441a(a)(3)) is amended by 
striking the second sentence.
  (g) Repeal Report by Secretary of Commerce on District-Specific 
Voting Age Population.--Section 315(e) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 441a(e)) is amended by striking ``States, of each 
State, and of each congressional district'' and inserting ``States and 
of each State''.
  (h) Commercially Reasonable Loans Not to be Treated as Contributions 
by Lender.--Section 301(8)(B)(vii) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 431(8)(B)(vii)) is amended--
          (1) by striking ``or a depository'' and inserting ``a 
        depository''; and
          (2) by inserting after ``Administration,'' the following: 
        ``or any other commercial lender,''.
  (i) Abolition of Ex Officio Membership of Clerk of House of 
Representatives on Commission.--Section 306(a) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 437c(a)) is amended--
          (1) in paragraph (1), by striking ``and the Clerk'' and all 
        that follows through ``designees'' and inserting ``or the 
        designee of the Secretary''; and
          (2) in paragraphs (3), (4), and (5), by striking ``and the 
        Clerk of the House of Representatives'' each place it appears.
  (j) Granting Commission Authority to Waive Reporting Requirements.--
Section 304 of such Act (2 U.S.C. 434), as amended by section 101(b), 
is further amended by adding at the end the following new subsection:
  ``(e) The Commission may by unanimous vote relieve any person or 
category of persons of the obligation to file any of the reports 
required by this section, or may change the due dates of any of the 
reports required by this section, if it determines that such action is 
consistent with the purposes of this title. The Commission may waive 
requirements to file reports or change due dates in accordance with 
this subsection through a rule of general applicability or, in a 
specific case, by notifying all the political committees involved.''.
  (k) Permitting Corporations to Communicate With All Employees.--
          (1) In general.--Section 316(b) of the Federal Election 
        Campaign Act of 1971 (2 U.S.C. 441b(b)) is amended by striking 
        ``executive or administrative personnel'' each place it appears 
        in paragraphs (2)(A), (2)(B), (4)(A)(i), (4)(D), and (5) and 
        inserting ``officers or employees''.
          (2) Conforming amendment.--Section 316(b) of such Act is 
        amended by striking paragraph (7).
  (l) Permitting Unlimited Solicitations by Corporations or Labor 
Organizations; Protecting Confidentiality of Contributions Not Greater 
Than $100.--Section 316(b) of the Federal Election Campaign Act of 1971 
(2 U.S.C. 441b(b)(3)), as amended by subsection (k)(2), is amended--
          (1) in paragraph (4)(A), by striking ``(B), (C),'' and 
        inserting ``(C)'';
          (2) in paragraph (4)(A)(ii), by striking the period at the 
        end and inserting the following: ``, its officers or employees 
        and their families, employees who are not members and their 
        families, and officers, employees, or stockholders of a 
        corporation (and their families) in which the labor 
        organization represents members working for the corporation.'';
          (3) in paragraph (4), by striking subparagraph (B); and
          (4) by adding at the end the following new paragraph:
  ``(7)(A) Any corporation or labor organization (or separate 
segregated fund established by such a corporation or such a labor 
organization) making solicitations of contributions shall make such 
solicitations in a manner that ensures that the corporation, 
organization, or fund cannot determine who makes a contribution of $100 
or less as a result of such solicitation and who does not make such a 
contribution.
  ``(B) Subparagraph (A) shall not apply with respect to any 
solicitation of contributions of a corporation from its 
stockholders.''.
  (m) Greater Protection Against Force and Reprisals.--Section 
316(b)(3) of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441b(b)(3)), is amended--
          (1) by redesignating subparagraphs (A) through (C) as 
        subparagraphs (B) through (D); and
          (2) by inserting before subparagraph (B) (as so redesignated) 
        the following new subparagraph:
          ``(A) for such a fund to cause another person to make a 
        contribution or expenditure by physical force, job 
        discrimination, financial reprisals, or the threat of force, 
        job discrimination, or financial reprisal;''.
  (n) Requiring Complainant to Provide Notice to Respondents.--Section 
309(a)(1) of the Federal Election Campaign Act of 1971 (2 U.S.C. 
437g(a)(1)) is amended by striking the third sentence and inserting the 
following: ``The complaint shall include the names and addresses of 
persons alleged to have committed such a violation. Within 5 days after 
receipt of the complaint, the Commission shall provide written notice 
of the complaint together with a copy of the complaint to each person 
described in the previous sentence, except that if the Commission 
determines that it is not necessary for a person described in the 
previous sentence to receive a copy of the complaint, the Commission 
shall provide the person with written notice that the complaint has 
been filed, together with written instructions on how to obtain a copy 
of the complaint without charge from the Commission.''.
  (o) Standard Form for Complaints; Stronger Disclaimer Language.--
          (1) Standard form.--Section 309(a)(1) of the Federal Election 
        Campaign Act of 1971 (2 U.S.C. 437g(a)(1)) is amended by 
        inserting after ``shall be notarized,'' the following: ``shall 
        be in a standard form prescribed by the Commission, shall not 
        include (but may refer to) extraneous materials,''.
          (2) Disclaimer language.--Section 309(a)(1) of such Act (2 
        U.S.C. 437g(a)(1)) is amended--
                  (A) by striking ``(a)(1)'' and inserting 
                ``(a)(1)(A)''; and
                  (B) by adding at the end the following new 
                subparagraph:
  ``(B) The written notice of a complaint provided by the Commission 
under subparagraph (A) to a person alleged to have committed a 
violation referred to in the complaint shall include a cover letter (in 
a form prescribed by the Commission) and the following statement: `The 
enclosed complaint has been filed against you with the Federal Election 
Commission. The Commission has not verified or given official sanction 
to the complaint. The Commission will make no decision to pursue the 
complaint for a period of at least 15 days from your receipt of this 
complaint. You may, if you wish, submit a written statement to the 
Commission explaining why the Commission should take no action against 
you based on this complaint. If the Commission should decide to 
investigate, you will be notified and be given further opportunity to 
respond.'''.
  (p) Banning Acceptance of Cash Contributions Greater Than $100.--
Section 315 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441a), as amended by sections 101, 103(a)(1), and 202, is further 
amended by adding at the end the following new subsection:
  ``(l) No candidate or political committee may accept any 
contributions of currency of the United States or currency of any 
foreign country from any person which, in the aggregate, exceed 
$100.''.
  (q) Appointment and Service of Staff Director and General Counsel of 
Commission.--
          (1) Appointment; length of term of service.--
                  (A) In general.--The first sentence of section 
                306(f)(1) of the Federal Election Campaign Act of 1971 
                (2 U.S.C. 437c(f)(1)) is amended by striking ``by the 
                Commission'' and inserting the following: ``by an 
                affirmative vote of not less than 4 members of the 
                Commission and may not serve for a term of more than 4 
                consecutive years without reappointment in accordance 
                with this paragraph''.
                  (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply with respect to any 
                individual serving as the staff director or general 
                counsel of the Federal Election Commission on or after 
                January 1, 1997, without regard to whether or not the 
                individual served as staff director or general counsel 
                prior to such date.
          (2) Treatment of individuals filling vacancies; termination 
        of authority upon expiration of term.--Section 306(f)(1) of 
        such Act (2 U.S.C. 437c(f)(1)) is amended by inserting after 
        the first sentence the following new sentences: ``An individual 
        appointed as a staff director or general counsel to fill a 
        vacancy occurring other than by the expiration of a term of 
        office shall be appointed only for the unexpired term of the 
        individual he or she succeeds. An individual serving as staff 
        director or general counsel may not serve in any capacity on 
        behalf of the Commission after the expiration of the 
        individual's term unless reappointed in accordance with this 
        paragraph.''.
          (3) Appointment of additional staff.--
                  (A) In general.--The last sentence of section 
                306(f)(1) of such Act (2 U.S.C. 437c(f)(1)) is amended 
                by inserting ``not less than 4 members of'' after 
                ``approval of''.
                  (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply with respect to personnel 
                appointed on or after January 1, 1997.
  (r) Encouraging Citizen Grassroots Activity on Behalf of Federal 
Candidates.--
          (1) Exemption of individual contributions under $100.--
        Section 301(8)(B) of the Federal Election Campaign Act of 1971 
        (2 U.S.C. 431(8)(B)), as amended by section 205(a), is further 
        amended--
                  (A) by striking ``and'' at the end of clause (xiv);
                  (B) by striking the period at the end of clause (xv) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xvi) any payment of funds on behalf of a candidate 
        (whether in cash or in kind, but not including a direct payment 
        of cash to a candidate or a political committee of the 
        candidate) by an individual from the individual's personal 
        funds which in the aggregate does not exceed $100, if the funds 
        are used for activities carried out by the individual or a 
        member of the individual's family.''.
          (2) Exemption of individual expenditures under $100.--Section 
        301(9)(B) of the Federal Election Campaign Act of 1971 (2 
        U.S.C. 431(9)(B)), as amended by section 205(b), is amended--
                  (A) by striking ``and'' at the end of clause (x);
                  (B) by striking the period at the end of clause (xi) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xii) any payment of funds on behalf of a candidate 
        (whether in cash or in kind, but not including a direct payment 
        of cash to a candidate or a political committee of the 
        candidate) by an individual from the individual's personal 
        funds which in the aggregate does not exceed $100, if the funds 
        are used for activities carried out by the individual or a 
        member of the individual's family.''.
  (s) Permitting Partnerships to Solicit Contributions and Pay 
Administrative Costs of Political Committees in Same Manner as 
Corporations and Labor Unions.--
          (1) Treatment of contributions.--Section 301(8)(B) of the 
        Federal Election Campaign Act (2 U.S.C. 431(8)(B)), as amended 
        by section 205(a) and subsection (r)(1), is amended--
                  (A) by striking ``and'' at the end of clause (xv);
                  (B) by striking the period at the end of clause (xvi) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xvii) any payment made or obligation incurred by a 
        partnership in the establishment and maintenance of a political 
        committee, the administration of such a political committee, or 
        the solicitation of contributions to such committee.''.
          (2) Treatment of expenditures.--Section 301(9)(B) of such Act 
        (2 U.S.C. 431(9)(B)), as amended by section 205(b) and 
        subsection (r)(2), is amended--
                  (A) by striking ``and'' at the end of clause (xi);
                  (B) by striking the period at the end of clause (xii) 
                and inserting ``; and''; and
                  (C) by adding at the end the following new clause:
          ``(xiii) any payment made or obligation incurred by a 
        partnership in the establishment and maintenance of a political 
        committee, the administration of such a political committee, or 
        the solicitation of contributions to such committee.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. EFFECTIVE DATE.

  Except as otherwise specifically provided, this Act and the 
amendments made by this Act shall take effect January 1, 1997.

SEC. 402. SEVERABILITY.

  If any provision of this Act or any amendment made by this Act, or 
the application thereof to any person or circumstance, is held invalid, 
the validity of the remainder of the Act and the application of such 
provision to other persons and circumstances shall not be affected 
thereby.

SEC. 403. EXPEDITED COURT REVIEW.

  (a) Right to Bring Action.--The Federal Election Commission, a 
political committee under title III of the Federal Election Campaign 
Act of 1971, or any individual eligible to vote in any election for the 
office of President of the United States may institute an action in an 
appropriate district court of the United States (including an action 
for declaratory judgment) as may be appropriate to construe the 
constitutionality of any provision of this Act or any amendment made by 
this Act.
  (b) Hearing by Three-Judge Court.--Upon the institution of an action 
described in subsection (a), a district court of three judges shall 
immediately be convened to decide the action pursuant to section 2284 
of title 28, United States Code. Such action shall be advanced on the 
docket and expedited to the greatest extent possible.
  (c) Appeal of Initial Decision to Supreme Court.--An appeal may be 
taken directly to the Supreme Court of the United States from any 
interlocutory order or final judgment, decree, or order issued by the 
court of 3 judges convened pursuant to subsection (b) in an action 
described in subsection (a). Such appeal shall be brought not later 
than 20 days after the issuance by the court of the judgment, decree, 
or order.
  (d) Expedited Review by Supreme Court.--The Supreme Court shall 
accept jurisdiction over, advance on the docket, and expedite to the 
greatest extent possible an appeal taken pursuant to subsection (c).

                           General Discussion

                 Purposes and Goals of the Legislation

    In a representative democracy, the critical link between 
the people and their government is a system of free, open and 
honest elections through which people choose who will represent 
their views in matters of public policy.
    No element of our electoral process is more important than 
the Constitutionally guaranteed rights of free speech and 
assembly. The ability of individuals and candidates to speak 
their views freely and vigorously provides a strong foundation 
for competitive elections and is the ultimate protection 
against tyranny. The U.S. Supreme Court has held that excessive 
regulation of campaign processes interferes with these 
Constitutional rights. In the landmark case of Buckley v. Valeo 
(1976), the Supreme Court held that mandatory limits on 
campaign expenditures are unconstitutional and further held 
that only ``corruption or the appearance of corruption'' could 
justify limits on campaign contributions.
    The findings (Section 2) of H.R. 3760 explain the need for 
Congress to reform certain provisions in law in order to remove 
the appearance or reality of corruption that exists in the 
current federal election process. The findings outline the 
fundamental goals of this legislation. They include:
          placing the interests of constituents in each 
        district at the center of the political process;
          providing citizens with timely information about 
        contributions and expenditures;
          strengthening the role of political parties;
          ensuring that political contributions are voluntary;
          protecting the value of individual contributions;
          ensuring equitable rules for opponents of candidates 
        who spend large amounts of personal funds; and
          fostering election rules that encourage rather than 
        discourage candidates from running for office.

Majority-in-district and local control of elections

    To ensure the integrity of elections, voters must be 
confident that their representatives primarily reflect their 
communities and districts, rather than those who live outside 
the district but may unduly influence an election by their 
contributions to candidates. The most powerful provision of 
this legislation is the requirement that a majority of a 
candidate's funds be raised from individuals residing in that 
candidate's district.
    The majority-in-district reform directly addresses the 
issues of voter alienation, cynicism and the appearance of 
corrupting special interest influences in our current election 
process. By re-uniting the voting and financing precincts, 
majority-in-district places local constituents, rather than 
outside special interests, at the heart of Congressional 
campaigns.
    For incumbents, majority-in-district will mean spending 
more campaign time in the district, talking to actual voters. 
It means more grassroots events at home, and less emphasis on 
events catering to special interests outside the district. Many 
attempts at reform seem to forget that elections are won by 
votes; it is the sum of perceptions, opinions and values that 
are inserted into the ballot box, not dollar bills. Majority-
in-district reinvigorates local participation, local dialogue 
and local action. It doesn't embrace other so-called reform 
efforts that seek to structure campaigns based on the premise 
that mass communication through television or mail is the 
preferred method of democratic action. In order to regain the 
confidence of the people, elected officials must talk to their 
constituents; they must be more than a video image on a 30 
second commercial, more than a photograph in a glossy brochure.
    Under the majority in district rule, the amount of money 
raised and spent in each congressional campaign will depend on 
the amount of money the residents of a district are willing to 
contribute to the candidates. The incumbent advantage of 
pleasing Washington interests in order to garner contributions 
is significantly reduced. Candidates who run negative 
campaigns, or engage in accusations and demagoguery, may very 
well be unable to raise funds from constituents who won't 
contribute their hard-earned money to support such campaigns. 
The conduct and tone of political campaigns may change to 
reflect local citizens' desire to discuss policy and issues.
    For challengers, majority-in-district means a more level 
playing field, particularly for local elected officials, 
citizen activists and civic leaders who are in tune with the 
local community. When a majority of funds must come from people 
in the district, the voices of local, ordinary citizens will be 
echoed in the halls of Congress.
    The majority-in-district concept applies equally to 
residents of large and small states. Every citizen's 14th 
Amendment right to equal protection of the law is preserved 
because all citizens, whether residents of a large or a small 
state, are equal in their district status in just one 
Congressional District. Majority-in-district also preserves the 
constitutional right of individuals anywhere in the country to 
contribute to campaigns of their choice, yet doesn't allow 
money from outside a district to dominate an election.
    Some question whether majority-in-district would hamper a 
candidate's ability to communicate their message. What better 
method for communication than through grassroots-based, 
individual and small group interaction? Majority-in-district 
emphasizes organization, volunteers and a local base of 
support; it reduces the impact of the intermediary, and of the 
impersonal, negative, over-professionalized campaign.
    Some worry about the mechanics of implementing a majority-
in-district requirement. Modern technology and the availability 
of voter lists, address lists and the ability of contributors 
to indicate, just as they indicate their occupation or address, 
the congressional district in which they reside, will allow for 
the development of sensible, easy methods of determining in-
district status.
    The Supreme Court has held that limitations on campaign 
contributions may be justified by the need to prevent 
``corruption or the appearance of corruption.'' Requiring that 
a majority of candidates' funds come from the people they 
represent is a solution specifically designed to alleviate the 
lack of confidence the American people currently express in our 
system of representative government.

Stronger political parties

    Political parties, with their long-standing role of 
advancing broad national agendas, nominating and electing 
candidates, and communicating with and organizing party 
members, can play a crucial role in balancing the influence of 
groups that pursue narrower interests. This legislation 
provides the means for political parties to reassert their 
historic and positive influence on federal elections. In order 
to be effective and credible, a national political party must 
balance its own interest with the national interest. Therefore, 
contributions to parties that are then used to communicate a 
party message, or to support a party nominee, reflect this 
balancing of interests and are a beneficial influence on the 
elections process.
    Stronger political parties are also vital to a renewal of 
grassroots citizen involvement and to ensuring more competitive 
elections. Political parties must have the resources to 
communicate, motivate, and involve citizens in activities for 
candidates and for the party as a whole. In testimony before 
the Committee, the Chairmen of the two national political 
parties decried the negative impact of current law, which 
doesn't recognize parties' unique role, on elections and voter 
participation:

          We must recognize parties' unique and necessary role 
        in our political process. What is disheartening to me, 
        however, is that we fail to learn from past mistakes by 
        over regulating and restricting the political speech of 
        our party organizations. . . . Political parties are 
        unlike any other kind of association. Given their 
        unique role and responsibility in our democratic 
        process, Congress should not only be cognizant of that 
        distinction but should make every effort to strengthen 
        the political party process. Congress must actively 
        affirm the fundamental First Amendment right to 
        associate and to speak through political parties . . .
          Campaign finance laws should result in campaigns and 
        elections being more open, fair and more competitive. 
        Parties should be recognized for the unique role they 
        play in this process . . .--Haley Barbour, Chairman, 
        Republican National Committee, before the Committee on 
        House Oversight, December 12, 1995.
           . . . I have witnessed--as all of us have--a 
        significant weakening of the parties as institutions 
        and a decline in their role in American political life. 
        It used to be that the parties were one of the key 
        means by which citizens felt connected to the people 
        who represented them. Through precinct and neighborhood 
        organizations, ordinary citizens were directly involved 
        in the workings of the party; local party officials 
        were in touch with the citizens and in turn reflected 
        their views and needs to the party hierarchy and 
        elected officials . . . There are many reasons for the 
        decline of the parties; volumes have been written on 
        the subject . . . And I believe it is essential to 
        accomplish these goals in a way that strengthens, 
        rather than weakens, the political parties . . . I 
        would like to make several specific suggestions in that 
        regard . . .
          First, the current provisions that allow state 
        parties to undertake grassroots volunteer activities, 
        which are at the heart of our coordinated campaigns, 
        should be maintained and, if possible, even expanded.
          Second, the amounts an individual is permitted to 
        contribute to candidates and party committees should be 
        increased to new levels that reflect the impact of 
        inflation since the current law was enacted, with those 
        levels adjusted periodically for inflation . . .
          Third, while it is essential to ban so-called soft 
        money contributed to help federal candidates, this 
        should be accomplished in a way that ensures that party 
        organizations have sufficient resources to carry out 
        campaign activity--including, in particular, grass 
        roots activities for their candidates . . .--Donald L. 
        Fowler, National Chairman, Democratic National 
        Committee, before the Committee on House Oversight, 
        December 12, 1995.

    The Washington Post, in an editorial entitled, ``Speech or 
Gift?'' dated April 22, 1996, stated in relation to a pending 
Supreme Court case, Colorado Federal Campaign Committee et al. 
v. Federal Election Commission, that:

          . . . there is no reason to assume that a political 
        party can corrupt a candidate in the way an individual 
        or business could by contributing to a campaign . . . 
        It's wrong for the government, in the guise of 
        protecting candidates from corruption, to regulate 
        party discourse on matters of general political 
        interest.

    In its June 26, 1996 decision in the Colorado case, the 
U.S. Supreme Court opinion echoes the Washington Post's 
editorial position:

          A political party's independent expression not only 
        reflects its members' views about the philosophical and 
        governmental matters that bind them together, it also 
        seeks to convince others to join those members in a 
        practical democratic task, the task of creating a 
        government that voters can instruct and hold 
        responsible for subsequent success or failure. The 
        independent expression of a political party's views is 
        ``core'' First Amendment activity no less than is the 
        independent expression of individuals, candidates or 
        other political committees.

    The legislation preserves a principle at the core of the 
1974 Federal Election Act: that express advocacy of federal 
candidates must be financed with federal funds, and that only 
federal funds may be used in federal elections. It provides 
parties with the ability to match, in contributions to its 
nominee, funds carried over by an incumbent from a previous 
election. It provides parties the ability to match large 
amounts of personal wealth spent by opponents.
    This legislation increases the ability of a party to obtain 
resources, to use those resources to assist candidates, to 
communicate with party members and to promote party grassroots 
activity. All of these contributions are fully disclosed and 
serve to make the political process more, not less, 
competitive. Under this legislation, increased contributions go 
to political parties, not directly to candidates. As a 
bipartisan group of political scientists stated in a brief 
filed with the Supreme Court on the Colorado case:

          As a source of campaign funds, American political 
        parties probably constitute the cleanest money in 
        politics.

Ensure that contributions are voluntary

    Political contributions must be voluntary, and not coerced. 
The right of citizens in a Democracy to support, through their 
actions and their contributions, only those candidates with 
whom they agree is fundamental. Current election law, and other 
provisions in federal law, do not adequately protect this 
right. Only voluntary contributions and voluntary participation 
protect the free and open character of the elections process. A 
coerced or involuntary contribution is the essence of political 
corruption.
    This legislation ensures that contributors who donate, 
through payroll deductions, to corporate and union Political 
Action Committees do so through a written agreement that is 
renewed annually. The legislation also broadens protection 
against coercion of contributions to candidates. It adds 
additional protection against coercion by providing for the 
preservation of confidentiality for the identity of those who 
contribute less than $100 to corporate and union PACs, and 
therefore the confidentiality of those who have voluntarily 
chosen not to participate as well. The goals of this 
legislation would be furthered by reforms in laws outside this 
Committee's jurisdiction, reforms that would ensure that no 
dues paid for other purposes are involuntarily used to 
influence elections, and reforms to ensure that disclosure of 
the use of these dues is timely and complete.

Protect the role of individual contributions

    Contribution limits set by Congress should retain their 
value, not be diminished over time by inflation. The current 
contribution limits were established over two decades ago. 
While the cost of consumer goods and services and the value of 
social security and other government entitlement benefits has 
increased threefold in that time, federal election limits have 
not changed. The real value of the $1,000 limit established in 
1974 is approximately $300 today. While $1,000 is not now, nor 
was it in 1974, an insignificant dollar amount, comprehensive 
reform legislation should include a provision that reflects 
real price and wage changes over the past twenty years, and 
ensure that the value of a dollar will be preserved in the 
future.
    In 1979, 17 years ago, the Committee on House 
Administration commissioned a report by the Institute of 
Politics at the John F. Kennedy School of Government at Harvard 
University, analyzing the impact of the Federal Election 
Campaign Act. One of their conclusions was ``the individual 
contribution limit ought to be raised from $1,000 to $3,000.''
    To quote from the study:

          Inflation alone dictates raising the limit to $1,500 
        for the 1980 campaign. But the study group strongly 
        feels the increase must go well beyond keeping pace 
        with the cost of living index. Simply put, the limit 
        was set too low in 1974 and the consequences of this 
        error have been profound.

    Since the passage of the Federal Election Campaign Reform 
Act, inflation has reduced the value of a contribution by more 
than 60%. The right of an individual to contribute to a 
candidate of his or her choice has been reduced by 60% without 
any Congressional action.
    This legislation indexes the level of contributions to and 
from individuals, political committees (as set by this 
legislation), and political parties to the Consumer Price 
Index.
    The legislation also preserves and strengthens the role of 
individual contributors in the elections process by equalizing 
the contribution level allowed for individuals and Political 
Action Committees (PACs). This legislation protects the 
Constitutional right of citizens to assemble and to act 
collectively through organizations such as PACs but does not 
grant such organizations the right to contribute more than an 
individual. To encourage individuals to contribute and 
communicate directly to candidates, the legislation also 
prohibits bundling by PACs and lobbyists. Leadership PACs, 
which add still another layer between the original individual 
contributor and the ultimate candidate beneficiary, are also 
eliminated by this legislation.

Increased disclosure

    Voters must have accurate and timely information about 
those who contribute to influence federal elections, and how 
much they contribute. This legislation significantly improves 
campaign contribution and expenditure reporting in several 
ways. The deadline for reporting last minute contributions is 
reduced from 48 to 24 hours. Key information must be placed on 
the internet, for enhanced public access. Secondary payments to 
campaign vendors must be reported. Candidate contributions and 
expenditures must be reported on an election cycle, and 
cumulative, per-election basis.
    A comprehensive definition of activities that influence 
elections may result in regulation, or disclosure, which 
impacts free speech by the press, or the right of individuals 
to speak collectively. Requiring unreasonable disclosure of 
activities that merely influence elections may have a chilling 
effect on the right of free speech, and therefore be 
Constitutionally suspect. As this report states at the outset, 
no element of our electoral process is more important than the 
Constitutionally guaranteed rights of free speech and assembly. 
Linking disclosure of activities to provisions of law, such as 
tax status or the ability to collect mandatory union dues may 
be a preferable disclosure method.

Fair rules when one candidate contributes personal resources

    When candidates exercise their Constitutional right to 
spend personal resources far in excess of individual 
contribution limits, the rules for that election should be 
modified to give, so far as is Constitutionally possible, all 
candidates the opportunity to raise funds in excess of those 
normal contribution limits and therefore help ensure more 
competitive elections.
    There is growing public concern that running for political 
office requires personal wealth, and that such personal wealth 
is a corrupting influence on the election process. Confidence 
in the integrity of the political process, and minimizing 
corruption or the appearance of corruption in that political 
process requires that the opportunity to compete effectively 
for federal office is equally available to individuals of 
ordinary means.
    Because candidates should be treated equally with respect 
to their ability to raise funds substantially in excess of 
normal contribution limits, when one candidate exercises his or 
her First Amendment right to spend very large amounts of 
personal resources, individual contribution limits should be 
lifted for other candidates as well.
    In primary or general elections where one candidate has 
spent more than $150,000 in personal funds, this legislation 
allows all candidates the opportunity to raise an equal amount 
with funds from individuals without, what is in this 
circumstance, an inequitable individual contribution limit. In 
addition, in general elections, a political party may make 
contributions to its nominee to match personal spending by a 
candidate that exceeds the individual contribution limit.

Election laws that encouarge people to run for office

    Election laws should encourage, not discourage, persons 
from running for public office. Citizens and candidates should 
be able to obtain accurate and timely information about the 
law, and how to comply.
    Far too often election rules intended to improve citizen 
access to the political process have the opposite effect. The 
cumulative effect of a complex mosaic of law, regulations, 
Federal Election Commission (FEC) advisory opinions, and 
unsettled issues often means that candidates must obtain costly 
legal advice simply to understand and comply with Federal 
election rules.
    Candidates or other political participants in the political 
process who are the subject of complaints and enforcement 
actions by the FEC find that the process often creates an 
impression of culpability where none has yet been found by the 
FEC. At a later stage, they find they have no right to argue 
their case in person before the FEC.
    This legislation requires the FEC, by unanimous agreement, 
to provide written answers to written requests for information 
where the law is clear and unambiguous. It requires the FEC to 
publish an index of its advisory opinions and written 
responses.
    The legislation changes the manner in which the FEC handles 
complaints to ensure that a notice of the complaint does not 
imply guilt, and an FEC decision simply to investigate is no 
longer characterized as a ``reason to believe'' that a person 
has committed a violation. It provides an opportunity, with the 
approval of two FEC Commissioners and with procedures defined 
by the Commission, for a respondent to have a hearing before 
the Commission.
    There are additional provisions in this legislation, many 
recommended by the FEC, to simplify and clarify rules and 
procedures and to apply consistent terminology and treatment of 
the law.

Protect other constitutional rights

    This legislation codifies the definition of express 
advocacy stated with clarity in the Buckley v. Valeo case. 
Express advocacy must include specific words of advocacy, not 
meet a vague and subjective criteria. Political participants 
should know with certainty when they have crossed the threshold 
which triggers regulation and restriction of campaign activity.
    The June, 1996 Supreme Court case of Colorado Federal 
Campaign Committee et al. v. Federal Election Commission 
confirmed the right of political parties to make independent 
expenditures. This legislation clarifies the definition of 
independent expenditures, to ensure that the rights of 
individuals, groups, and political parties, to make truly 
independent expenditures are protected.
    Finally, in order to give maximum effect to the 
Constitutional guarantees outlined in the case of Buckley v. 
Valeo, the legislation requires the FEC to draft regulations in 
a manner that has the least restrictive effect on First 
Amendment rights of free speech and assembly, and allows a 
Court to set aside FEC actions to the contrary.

                     section-by-section description

         TITLE I. RESTORING CONTROL OF ELECTIONS TO INDIVIDUALS

Section 101. Requiring majority of House of Representatives candidate 
        funds to come from individuals residing in district

    This section amends section 315 of the Federal Election 
Campaign Act of 1971 (the ``FECA'') to add a subsection to 
require that a majority of funds are received from residents of 
a candidate's district. Compliance with this section is 
required as of each report, based on cumulative contributions 
received during the election cycle. The following sources of 
funds are allocated 50% in district and 50% out of district: 
candidate's personal funds above individual contribution limit; 
contributions from political parties; funds carried forward 
after 20-day post general election report; as of enactment, 
funds carried forward from 1996 election. If a committee is not 
in compliance when filing reports within 20 days pre-and-post 
election, the candidate pays five times the amount of funds 
over majority in district plus civil penalty determined by FEC. 
If the candidate is not in compliance at other reporting 
periods, the candidate pays three times the amount of funds 
over majority in district.

Section 102. Reduction in allowable contribution amounts for political 
        action committees in federal elections to level allowed for 
        individuals

    This section amends section 315(a) of the FECA to reduce 
the amounts that a Political Action Committee (PAC) may 
contribute to the amounts that individuals may contribute. 
Further, it reduces the amounts that can be contributed to a 
PAC to that which can be contributed to an individual 
candidate.

Section 103. Modification of limitations on contributions when 
        candidates spend or contribute large amount of personal funds

    This section amends section 315 of the FECA by adding a 
subsection which provides the following:
    When, in a primary election, a candidate spends or 
contributes over $150,000 in personal funds, for all candidates 
in race individual contribution limits and Majority in District 
rules are lifted (individual aggregate limits and PAC 
contribution limits still apply) up to total amount of personal 
funds of the largest spending candidate's most recent report.
    When, in a general election, a candidate spends or 
contributes more in personal funds than the individual 
contribution limit, but not more than $150,000, then political 
parties may contribute to the opponent of the spending 
candidate matching dollars for all personal funds raised or 
expended above the individual contribution limit. These 
matching contributions are not counted toward party 
contribution limits.
    When, in a general election, a candidate spends or 
contributes more than $150,000 in personal funds, then for all 
candidates in the race, political parties may contribute 
matching dollars for all personal funds contributed or expended 
above the individual contribution limit. Such party 
contributions are not counted toward party contribution limits. 
Further, individual contribution limits and the application of 
the Majority in District rules for individual contributions are 
lifted (individual aggregate limits and PAC contribution limits 
still apply).
    No candidate may accept an aggregate of all such 
contributions which exceed the amount reported by the candidate 
spending personal funds.
    Further, this section amends section 304(a)(6) of the FECA 
to require that if a candidate contributes or expends personal 
funds greater than the individual contribution limit in any 
election, a candidate must report within 24 hours the first 
such contribution or expenditure which exceeds the individual 
limit, subsequent personal fund contributions or expenditures 
that aggregate $5,000 or more and the first contribution or 
expenditure by which the candidate first exceeds $150,000. The 
report that is filed must include the aggregate amount of 
personal funds in excess of the individual contribution limit 
expended or contributed to date for that election. The FEC will 
publish these reports on the FEC internet web site.

Section 104. Indexing limits on contributions

    This section amends section 315(c) of the FECA to provide 
that as of January, 1997, all contribution limits are indexed 
retroactively in accordance with adjustments since 1977 in the 
Consumer Price Index. (PAC limits are reduced to individual 
contribution limit in Section 102). Contribution amounts are 
indexed at the beginning of each subsequent election cycle. The 
adjustments are rounded to lowest multiple of $500.
    Further, this section amends section 302(e)(3)(B) of the 
FECA, to provide for similar retroactive indexing for the 
amount indicating support of a candidate.
    Further, this section amends section 315(j) of the FECA, to 
provide for similar indexing prospectively after the 1998 
election for the amount of personal spending by a candidate 
which triggers changes in contribution limits.

Section 105. Prohibition of leadership committees

    This section amends section 302 of the FECA by adding a 
subsection to provide that a candidate or Federal officeholder 
may only establish, maintain, finance or control a political 
committee which is a principal campaign committee of such 
individual. Existing committees established, maintained or 
controlled by such candidate or officeholder other than a 
designated principal campaign committee can continue to expend 
funds on-hand through 1998 general election. However, after 
1998 general election, any such committee must be dissolved.
    Further, this section amends section 302(e)(3)(A) of the 
FECA to provide that joint fundraising committees are 
prohibited.

Section 106. Prohibiting bundling of contributions to candidates by 
        political action committees and lobbyists

    This section amends section 316 of the FECA to provide that 
neither PACs nor lobbyists may act as an intermediary or 
conduit for contributions to a candidate for federal office.

Section 107. Definition of independent expenditures

    This section amends section 301(17) of the FECA to clarify 
the definition of independent expenditure and express advocacy 
in light of Supreme Court decisions. Under this definition an 
expenditure is not independent if there is any cooperation, 
prior consent or consultation about the expenditure between a 
candidate or a candidate's agent and the person making an 
expenditure. An expenditure is independent (and therefore not a 
contribution) if it is made without cooperation, prior consent 
or consultation about the expenditure candidate or candidate's 
agent.

Section 108. Requirements for use of payroll deductions for 
        contributions

    This section amends title III of the FECA by adding a new 
section to require that an individual's wages or salary cannot 
be withheld for any contributions under title III unless there 
is a current, written authorization from such individual. 
Authorization to withhold for contributions must be renewed at 
least every 12 months. The individual may cancel withholding 
authorization at any time. At least annually, the individual 
must be given notice that she/he may cancel or revise 
authorization at any time.

               TITLE II. STRENGTHENING POLITICAL PARTIES

Section 201. Modification of contribution limits and requirements for 
        political parties

    This section amends section 315(a)(3) of the FECA to 
require that contributions by individuals to political parties 
(national, state or local) are not counted against the 
individuals' aggregate annual contribution limit.
    Further, this section amends section 315(a)(1)(B) of the 
FECA to make contribution limits for contributions made to 
State parties equal to such limits for national parties.

Section 202. Allowing political parties to offset funds carried over 
        from previous elections

    This section amends section 315 of the FECA by adding a new 
subsection to permit that in a general election, a political 
party may match, in contributions to its nominee, funds carried 
forward by an opposing incumbent from previous election cycles. 
Party contributions for this purpose are not counted against 
the party contribution limit.

Section 203. Prohibiting use of non-federal funds in federal elections

    This section amends title III of the FECA by adding a new 
section that provides that a party may not use non-federal 
funds for the purpose of influencing federal elections except 
as provided in this section. A national party committee may not 
use non-federal funds for any mixed activity. Such activity is 
both for the purpose of influencing a federal election and for 
a purpose not related to a federal election, and includes voter 
registration, absentee ballot programs and GOTV programs, but 
it does not include payment of administrative or overhead costs 
related to these activities. Further, a party committee may use 
non-federal funds for mixed candidate-specific activities to 
the extent (based on the allocation of time and space) that 
such activities relate to non-federal candidates. Mixed 
candidate-specific activities are those which promotes specific 
candidates for federal elections and specific candidates for 
other elections.

Section 204. Permitting parties to have unlimited communication with 
        members

    This section amends section 315(d) of the FECA by adding a 
new paragraph which provides that amounts spent for party 
communication with its own members are excluded from national 
or State party expenditure limits. A party member is an 
individual who registered to vote as member of the party, voted 
in the party primary in most recent primary election, is a 
contributor to party, or states, in writing, that she/he is a 
member of the party. Communication costs which expressly 
advocate the election or defeat of a candidate for Federal 
Office must be paid with federal funds to the extent (based on 
the allocation of time and space) that such communication 
relates to federal candidates.

Section 205. Promoting State and local party volunteer and grassroots 
        activity

    This section amends sections 301 (8)(B) and (9)(B) of the 
FECA to exempt certain activities by State and local party 
committees from the definition of a contribution and 
expenditure. These activities include listing of a slate of 
party candidates, and communicating the slate to the public; 
mailings for or on behalf of candidates by volunteers 
(including labeling envelopes or affixing postage or other 
indicia to pieces of mail); conducting telephone banks staffed 
by volunteers for or on behalf of candidates; and the 
distribution of collateral material on behalf of candidates.
    Further, this section amends section 324 of the FECA to 
provide that such activities must be paid for with federal 
funds to the extent (based on the allocation of time and space) 
that such activities relate to federal candidates.
    Further, this section amends section 324 of the FECA to 
provide that other mixed activities by State and local party 
committees must be paid for with federal funds to the extent 
that such activities relate to federal candidates based on a 
ballot composition formula. (This formula is taken from current 
FEC regulations.)

                 TITLE III. DISCLOSURE AND ENFORCEMENT

Section 301. Timely reporting and increased disclosure

            (a) Deadline for filing
    This subsection amends section 304(a)(6) of the FECA to 
require notifications of contributions within 20 days of an 
election to be filed within 24 instead of 48 hours. Such notice 
must be actually received by the Commission within that time.
            (b) Increasing electronic disclosure
    This subsection amends section 304(a)(6) of the FECA to 
require the FEC to post information received in last minute 
contribution reports and in candidate personal expenditure 
reports on the Internet within 24 hours as well as having it 
publicly available at the FEC within 24 hours.
            (c) Change in certain reporting from a calendar year basis 
                    to an election cycle basis
    This subsection amends section 304(b) of the FECA to 
require that candidate committees report aggregate 
contributions and expenditures by election cycle (2 years for 
House) instead of calendar year.
            (d) Clarification of permissible use of facsimile machines 
                    to file reports
    This subsection amends section 304(a)(11)(A) of the FECA to 
clearly permit the FEC to accept certain notifications which 
are due within 24 hours by FAX.
            (e) Requiring receipt of independent expenditure reports 
                    within 24 hours
    This subsection amends section 304(c)(2) of the FECA to 
clarify that actual receipt by the FEC of certain notifications 
of large last minute independent expenditures is required 
within 24 hours.
            (f) Requiring record keeping and report of secondary 
                    payments by campaign committees
    This subsection amends section 304(b)(5)(A) of the FECA to 
require that payments of $500 or more made through an 
intermediary contractor or consultant to a third party must be 
reported, expanding current rules which already require such 
reports for credit cards and vendor payments but not consultant 
payments (such as those for advertising to media by ad 
agencies).
            (g) Including report on cumulative contributions and 
                    expenditures in post election reports
    This subsection amends section 304(a)(7) of the FECA to 
require a candidate's committee to report aggregate 
contributions and expenditures through election day in the 
first report required following such election.
            (h) Including information on aggregate contributions in 
                    report on itemized contributions
    This subsection amends section 304(b)(3) of the FECA to 
require candidate committees' reports of itemized contributions 
of $200 or more to include per-election totals for the 
contributor. Committees are already required to keep track of 
this information.

Section 302. Streamlining Procedures and Rules of Federal Election 
        Commission

            (a) Standards for Commission regulation and judicial 
                    interpretation
    This subsection amends section 307 of the FECA by adding a 
new subsection which requires that the Commission develop 
regulations in a manner that will have the least restrictive 
effect on free speech and association. Further, the subsection 
requires that a reviewing court strike down regulations not 
conforming to this standard.
            (b) Written responses to questions
    This subsection amends title III of the FECA by adding a 
new section that provides for written responses to written 
requests where the law is unambiguous. The procedure for 
issuing such a response is (1) staff analyzes request 
submitted, and if it believes the response meets standard of 
``unambiguous;'' (2) staff circulates statement of this to 
Commission members; (3) after 3 days, unless a commissioner 
objects to the response, the response is issued. This applies 
``safe harbor protection'' for a questioner who acts in good 
faith, relying upon the written response and requires the 
Commission to make requests for responses public (omitting name 
of requester unless given specific permission to publish name) 
and to publish a complete and detailed index of written 
responses under this section.
            (c) Opportunity for oral argument before Commission
    This subsection amends section 309(a)(3) of the FECA to 
require the FEC to allow a respondent to a complaint, when 
filing a brief, to request the right to present an oral 
argument before the Commission. If at least two commissioners 
approve the request, then the respondent appears in front of 
the Commission in open session to make an oral presentation in 
support of the brief and respond to questions. Such appearance 
must take place within 30 days from when the request is 
approved.
            (d) Index of advisory opinions
    This subsection amends section 308 of the FECA to require 
that, within 60 days of enactment of this act, the Commission 
compile, publish and regularly update, a complete and detailed 
index of advisory opinions.
            (e) Standard for initiation of actions
    This subsection amends section 309(a)(2) of the FECA to 
change the wording of the standard of initiation of action to 
``a reason to investigate a possible violation * * * that has 
occurred or is about to occur;'' from the current ``a reason to 
believe * * * that a person has committed or is about to commit 
a violation.'' The underlying basis for initiating action is 
not changed.
            (f) Application of aggregate contribution limit on calendar 
                    year basis during non-election years
    This subsection amends section 315(a)(3) of the FECA to 
have all individual contributions apply to the aggregate for 
the year in which they are made.
            (g) Repeal report by Secretary of Commerce on district-
                    specific voting age population
    This subsection amends section 315(e) of the FECA to 
eliminate the requirement for the Commerce Department to 
certify the voting age population for each district which is 
not necessary to implementation of the FECA.
            (h) Commercially reasonable loans not to be treated as 
                    contributions by lender
    This subsection amends section 301(8)(B)(vii) of the FECA 
to permit candidates to make personal contributions or loans 
from their credit card, brokerage, home equity line of credit 
or similar accounts if made in the ordinary course of business. 
Such loans would be treated as contributions to the campaign by 
the candidate, but not by the lender.
            (i) Abolition of ex officio membership of Clerk of House of 
                    Representatives on Commission
    This subsection amends section 306(a) of the FECA to remove 
all remaining references to the Clerk of the House and 
designees from the list of members of the FEC in the code.
            (j) Granting commission authority to waive reporting 
                    requirements
    This subsection amends section 304 of the FECA to grant the 
FEC authority to waive the requirement to report or time of 
filing of reports when, by unanimous decision, the FEC 
determines that such waiver is warranted.
            (k) Permitting corporations to communicate with all 
                    employees
    This subsection amends section 316(b) of the FECA to permit 
corporations to make partisan communications to all its 
officers and employees rather than just to its executive and 
administrative personnel as is currently permitted.
            (l) Permitting unlimited solicitations by corporations or 
                    labor organizations; Protecting confidentiality of 
                    contributions not greater than $100
    This subsection amends section 316(b) of the FECA to permit 
corporations and labor unions to make an unlimited number of 
solicitations for contributions to their PACs to a class of 
persons, including members, officers, employees and 
stockholders, for which current law provides two written 
solicitations. Further, this subsection extends the protection 
currently given workers by increasing the threshold at which 
unions and corporations must protect confidentiality of 
individual PAC contributors (from $50 to $100).
            (m) Greater protection against force and reprisals
    This subsection amends section 316(b)(3) of the FECA to 
prohibit the use of coercion with regard to contributions to 
candidates in addition to the current prohibition of such 
coercion for contributions to PACs.
            (n) Requiring complainant to provide notice to respondents
    This subsection amends section 309(a)(1) of the FECA to 
require that a complainant specify the respondents to the 
complaint and requires the FEC to provide a notice of complaint 
with a copy thereof, to such respondents, unless the FEC 
determines that notice with the complaint is unnecessary in 
which case the FEC shall provide notice with instructions on 
obtaining a copy of the complaint.
            (o) Standard form for complaints; stronger disclaimer 
                    language
    This subsection amends section 309(a)(1) of the FECA to 
require that the Commission prescribe a standard form for a 
complaint which may refer to, but may not include, extraneous 
materials, and also require that when the FEC distributes the 
complaint that the language in the transmittal clearly states 
that the Commission has not ``verified or given official 
sanction to the complaint'' and provide clear direction on the 
process for response.
            (p) Banning acceptance of cash contributions greater than 
                    $100
    This subsection amends section 315 of the FECA to prohibit 
acceptance of cash contributions in excess of $100. Currently, 
only the making of such contributions is prohibited.
            (q) Appointment and service of Staff Director and General 
                    Counsel of Commission
    This subsection amends section 306(f)(1) of the FECA to 
require that the staff director and general counsel of the 
Commission serve four year terms. At the beginning of each four 
year term, an appointment or reappointment must be approved by 
a majority vote of four commissioners. If there is no majority 
in favor of appointment or reappointment, the position is 
vacant. Further, this subsection clarifies that a four vote 
majority of commissioners is necessary to hire any senior 
staff.
            (r) Encouraging citizen grassroots activity on behalf of 
                    federal candidates
    This subsection amends sections 301 (8)(B) and (9)(B) of 
the FECA to provide that grassroots citizen activity, other 
than cash contributions, with a value of $100 or less are not 
contributions or expenditures under the FECA.
            (s) Permitting partnerships to solicit contributions and 
                    pay administrative costs of political committees in 
                    same manner as corporations and labor unions
    This subsection amends sections 301 (8)(B) and (9)(B) of 
the FECA to allow solicitation of contributions from partners, 
officers, employees and families and payment of administrative 
costs by partnerships for their political committees in same 
manner as allowed for corporations and unions.

                      TITLE IV. GENERAL PROVISIONS

Section 401. Effective date

    The effective date of the Act is January 1, 1997

Section 402. Severability

    Section 402 provides for general severability. If any 
provision is struck down, the remaining provisions of this act 
will survive.

Section 403. Expedited court review

    This section provides that the FEC, a political committee 
or eligible voter may institute an action in an appropriate 
district court. It requires that a panel of three district 
court judges immediately convene to decide on the action. An 
appeal of the decision may go directly to the Supreme Court and 
shall be brought within 20 days. The Supreme Court shall accept 
the jurisdiction over and advance the appeal on the docket to 
the greatest extent possible.

                            Committee Action

  On July 10, 1996, by rollcall vote (6-5), a quorum being 
present, the Committee agreed to a motion to report the bill 
favorably to the House, as amended.

                             Rollcall Votes

  In compliance with clause 2(l)(2)(B) of rule XI of the Rules 
of the House of Representatives, with respect to each rollcall 
vote on a motion to report the bill and on any amendment 
offered to the bill, the total number of votes cast for and 
against, and the names of those Members voting for and against, 
are as follows:

                       h.r. 3760, rollcall no. 1

  Amendment offered by Mr. Fazio. Subject: Independent 
expenditures.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................  .........         X   .........
Mr. Ehlers.............................  .........         X   .........
Mr. Roberts............................  .........         X   .........
Mr. Boehner............................  .........         X   .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................  .........         X   .........
Mr. Ney................................  .........         X   .........
Mr. Fazio..............................         X   .........  .........
Mr. Gejdenson..........................         X   .........  .........
Mr. Hoyer..............................         X   .........  .........
Mr. Jefferson..........................  .........  .........  .........
Mr. Pastor.............................         X   .........  .........
                                        --------------------------------
    Total..............................         4          6   .........
------------------------------------------------------------------------

                       h.r. 3760, rollcall no. 2

  Amendment offered by Mr. Fazio. Subject: Disclosure of 
activities, No. 1.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................  .........         X   .........
Mr. Ehlers.............................  .........         X   .........
Mr. Roberts............................  .........         X   .........
Mr. Boehner............................  .........         X   .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................  .........         X   .........
Mr. Ney................................  .........         X   .........
Mr. Fazio..............................         X   .........  .........
Mr. Gejdenson..........................         X   .........  .........
Mr. Hoyer..............................         X   .........  .........
Mr. Jefferson..........................  .........  .........  .........
Mr. Pastor.............................         X   .........  .........
                                        --------------------------------
    Total..............................         4          6   .........
------------------------------------------------------------------------

                       h.r. 3760, rollcall no. 3

  Amendment offered by Mr. Fazio. Subject: Disclosure of 
activities, No. 2.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................  .........         X   .........
Mr. Ehlers.............................  .........         X   .........
Mr. Roberts............................  .........         X   .........
Mr. Boehner............................  .........         X   .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................  .........         X   .........
Mr. Ney................................  .........         X   .........
Mr. Fazio..............................         X   .........  .........
Mr. Gejdenson..........................         X   .........  .........
Mr. Hoyer..............................         X   .........  .........
Mr. Jefferson..........................  .........  .........  .........
Mr. Pastor.............................         X   .........  .........
                                        --------------------------------
    Total..............................         4          6   .........
------------------------------------------------------------------------

                       h.r. 3760, rollcall no. 4

  Amendment offered by Mr. Fazio. Subject: Democrat substitute, 
No. 1.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................  .........         X   .........
Mr. Ehlers.............................  .........         X   .........
Mr. Roberts............................  .........         X   .........
Mr. Boehner............................  .........         X   .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................  .........         X   .........
Mr. Ney................................  .........         X   .........
Mr. Fazio..............................         X   .........  .........
Mr. Gejdenson..........................         X   .........  .........
Mr. Hoyer..............................         X   .........  .........
Mr. Jefferson..........................         X   .........  .........
Mr. Pastor.............................         X   .........  .........
                                        --------------------------------
    Total..............................         5          6   .........
------------------------------------------------------------------------

                       h.r. 3760, rollcall no. 5

  Amendment offered by Mr. Fazio. Subject: Democrat substitute, 
No. 2.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................  .........         X   .........
Mr. Ehlers.............................  .........         X   .........
Mr. Roberts............................  .........         X   .........
Mr. Boehner............................  .........         X   .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................  .........         X   .........
Mr. Ney................................  .........         X   .........
Mr. Fazio..............................         X   .........  .........
Mr. Gejdenson..........................         X   .........  .........
Mr. Hoyer..............................         X   .........  .........
Mr. Jefferson..........................         X   .........  .........
Mr. Pastor.............................  .........  .........         X 
                                        --------------------------------
    Total..............................         4          6          1 
------------------------------------------------------------------------

                       h.r. 3760, rollcall no. 6

  Motion by Mr. Ehlers. Subject: Report bill favorably to the 
House.

------------------------------------------------------------------------
                 Member                     Aye        Nay      Present 
------------------------------------------------------------------------
Mr. Thomas.............................         X   .........  .........
Mr. Ehlers.............................         X   .........  .........
Mr. Roberts............................         X   .........  .........
Mr. Boehner............................         X   .........  .........
Ms. Dunn...............................  .........  .........  .........
Mr. Diaz-Balart........................         X   .........  .........
Mr. Ney................................         X   .........  .........
Mr. Fazio..............................  .........         X   .........
Mr. Gejdenson..........................  .........         X   .........
Mr. Hoyer..............................  .........         X   .........
Mr. Jefferson..........................  .........         X   .........
Mr. Pastor.............................  .........         X   .........
                                        --------------------------------
    Total..............................         6          5   .........
------------------------------------------------------------------------

                      Committee Oversight Findings

  In compliance with clause 2(l)(3)(A) of rule XI of the Rules 
of the House of Representatives, the Committee states that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

            Statement on Budget Authority and Related Items

  The bill does not provide new budget authority, new spending 
authority, new credit authority, or an increase or decrease in 
revenues or tax expenditures and a statement under clause 
2(l)(3)(B) of rule XI of the Rules of the House of 
Representatives and section 308(a)(1) of the Congressional 
Budget Act of 1974 is not required.

               Congressional Budget Office Cost Estimate

  In compliance with clause 2(l)(3)(C) of rule XI of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, the following estimate and comparison 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 15, 1996.
Hon. William M. Thomas,
Chairman, Committee on House Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman:  The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3760, the Campaign 
Finance Reform Act of 1996.
    Because enactment of this legislation could affect 
receipts, pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: H.R. 3760.
    2. Bill title: Campaign Finance Reform Act of 1996.
    3. Bill status: As ordered reported by the House Committee 
on Oversight on July 10, 1996.
    4. Bill purpose: H.R. 3760 would amend the Federal Election 
Campaign Act of 1971 to reform the financing of federal 
election campaigns. The bill would:
          Require that a majority of campaign funds for a 
        candidate for the House of Representatives come from 
        individuals residing in the candidate's district, and 
        subject violators of this provision to a civil penalty;
          Modify limitations on certain campaign contributions 
        when a candidate for the House of Representatives 
        spends large amounts of personal funds;
          Prohibit bundling of contributions to candidates by 
        political action committees and lobbyists;
          Place restrictions on the use of nonfederal funds in 
        campaigns;
          Require candidates to file more reports on campaign 
        contributions with the Federal Election Commission 
        (FEC) and order the FEC to disclose this information 
        more quickly to the public; and
          Make many other changes to the Federal Election 
        Campaign Act of 1971.
    5. Estimated cost to the Federal Government: Because H.R. 
3760 would increase the responsibilities of the FEC, we 
estimate that the bill would result in greater spending by the 
agency, assuming appropriation of the necessary amounts. The 
bill also could affect revenues by increasing collections of 
civil fines, but we estimate that any change would be very 
small. CBO estimates that enacting H.R. 3760 would affect 
federal spending as shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                           1996    1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under current law:                                                                                     
    Estimated authorization level \1\...................      27      27      27      27      27      27      27
    Estimated outlays...................................      26      27      27      27      27      27      27
Proposed changes:                                                                                               
    Estimated authorization level.......................  ......       2       4       4       4       4       4
    Estimated outlays...................................  ......       2       4       4       4       4       4
Projected spending under H.R. 3760:                                                                             
    Estimated authorization level \1\...................      27      29      31      31      31      31      31
    Estimated outlays...................................      26      29      31      31      31      31      31
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
Civil fines:                                                                                                    
    Estimated revenues..................................  ......   (\2\)   (\2\)   (\2\)   (\2\)   (\2\)   (\2\)
----------------------------------------------------------------------------------------------------------------
\1\ The 1996 level is the amount appropriated for that year. The estimated authorization levels for 1997 through
  2002 reflect CBO baseline estimates for the FEC, assuming no adjustment for inflation.                        
\2\ Less than $500,000.                                                                                         

    The costs of this bill fall within budget function 800.
    6. Basis of estimate: Enacting H.R. 3760 would increase 
costs to the FEC to monitor candidates' compliance with the 
bill's provisions and to investigate complaints brought by 
candidates against each other. The FEC also would require 
greater resources to meet tighter disclosure deadlines.
    Based on limited information provided by the FEC, which has 
not yet completely reviewed the provisions of H.R. 3760, CBO 
estimates that enacting the bill would result in costs of about 
$2 million in fiscal year 1997 and roughly $4 million each year 
thereafter. These amounts would be subject to the availability 
of appropriations and would vary to the extent that the FEC 
enforces the bill's provisions.
    7. Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts through 1998. CBO estimates that enacting H.R. 3760 
could affect receipts; thus, pay-as-you-go procedures would 
apply to the bill.
    The imposition of a new civil fine in H.R. 3760 could cause 
governmental receipts to increase, but CBO estimates that any 
such increase would be less than $500,000 annually. Civil fines 
would be deposited in the general fund of the Treasury. The 
following table summarizes CBO's estimate of the pay-as-you-go 
impact of H.R. 3760.

                [By fiscal years; in millions of dollars]               
------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Change in outlays......................      (\1\)      (\1\)      (\1\)
Change in receipts.....................          0          0          0
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated impact on State, local, and tribal 
governments: H.R. 3760 contains no intergovernmental mandates 
as defined by the Unfunded Mandates Reform Act of 1995 (Public 
Law 104-4) and would have no impact on the budgets of state, 
local, or tribal governments.
    9. Estimated impact on the private sector: H.R. 3760 
contains new private-sector mandates as defined in Public Law 
104-4, but CBO has not completed an analysis of such mandates. 
CBO will provide its analysis of H.R. 3760's impact on the 
private sector under separate cover.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal Cost Estimate: Mark 
Grabowicz and Stephanie Weiner. State and Local Government 
Impact: Theresa Gullo. Private-Sector Impact: Matthew Eyles.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

   Oversight Findings of Committee on Government Reform and Oversight

  The Committee states, with respect to clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, that the 
Committee on Government Reform and Oversight did not submit 
findings or recommendations based on investigations under 
clause 4(c)(2) of rule X of the Rules of the House of 
Representatives.

                     Inflationary Impact Statement

  In compliance with clause 2(l)(4) of rule XI of the Rules of 
the House of Representatives, the Committee states that the 
bill will have no inflationary impact on prices and costs in 
the operation of the national economy.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                 FEDERAL ELECTION CAMPAIGN ACT OF 1971

          * * * * * * *

            TITLE III--DISCLOSURE OF FEDERAL CAMPAIGN FUNDS

                              definitions

      Sec. 301. When used in this Act:
      (1)  * * *
          * * * * * * *
      (8)(A)  * * *
      (B) The term ``contribution'' does not include--
          (i)  * * *
          * * * * * * *
          (vii) any loan of money by a State bank, a federally 
        chartered depository institution, [or a depository] a 
        depository institution the deposits or accounts of 
        which are insured by the Federal Deposit Insurance 
        Corporation, Federal Savings and Loan Insurance 
        Corporation, or the National Credit Union 
        Administration, or any other commercial lender, other 
        than any overdraft made with respect to a checking or 
        savings account, made in accordance with applicable law 
        and in the ordinary course of business, but such loan--
                  (I)  * * *
          * * * * * * *
          (viii) any gift, subscription, loan, advance, or 
        deposit of money or anything of value to a national or 
        a State committee of a political party specifically 
        designated to defray any cost for construction or 
        purchase of any office facility not acquired for the 
        purpose of influencing the election of any candidate in 
        any particular election for Federal office;
          (ix) any legal or accounting services rendered to or 
        on behalf of--
                  (I) any political committee of a political 
                party if the person paying for such services is 
                the regular employer of the person rendering 
                such services and if such services are not 
                attributable to activities which directly 
                further the election of any designated 
                candidate to Federal office; or
                  (II) an authorized committee of a candidate 
                or any other political committee, if the person 
                paying for such services is the regular 
                employer of the individual rendering such 
                services and if such services are solely for 
                the purpose of ensuring compliance with this 
                Act or chapter 95 or chapter 96 of the Internal 
                Revenue Code of 1954,
        but amounts paid or incurred by the regular employer 
        for such legal or accounting services shall be reported 
        in accordance with section 304(b) by the committee 
        receiving such services;
          (x) the payment by a State or local committee of a 
        political party of the costs of campaign materials 
        (such as pins, bumper stickers, handbills, brochures, 
        posters, party tabloids, and yard signs) used by such 
        committee [in connection with volunteer activities on 
        behalf of nominees of such party] in connection with 
        State or local activities, other than any payment 
        described in clause (xv): Provided, That--
                  (1)  * * *
          * * * * * * *
          (xi) the payment by a candidate, for nomination or 
        election to any public office (including State or local 
        office), or authorized committee of a candidate, of the 
        costs of campaign materials which include information 
        on or reference to any other candidate and which are 
        used in connection with volunteer activities (including 
        pins, bumper stickers, handbills, brochures, posters, 
        and yard signs, but not including the use of 
        broadcasting, newspapers, magazines, billboards, direct 
        mail, or similar types of general public communication 
        or political advertising): Provided, That such payments 
        are made from contributions subject to the limitations 
        and prohibitions of this Act;
          (xii) the payment by a State or local committee of a 
        political party of the costs of voter registration and 
        get-out-the-vote activities conducted by such committee 
        on behalf of nominees of such party for President and 
        Vice President: Provided, That--
                  (1) such payments are not for the costs of 
                campaign materials or activities used in 
                connection with any broadcasting, newspaper, 
                magazine, billboard, direct mail, or similar 
                type of general public communication or 
                political advertising;
                  (2) such payments are made from contributions 
                subject to the limitations and prohibitions of 
                this Act; and
                  (3) such payments are not made from 
                contributions designated to be spent on behalf 
                of a particular candidate or candidates;
          (xiii) payments made by a candidate or the authorized 
        committee of a candidate as a condition of ballot 
        access and payments received by any political party 
        committee as a condition of ballot access; [and]
          (xiv) any honorarium (within the meaning of section 
        323 of this Act)[.];
          (xv) the payment by a State or local committee of a 
        political party for any of the following activities:
                  (I) The listing of the slate of the party's 
                candidates, including the communication of the 
                slate to the public.
                  (II) The mailing of materials for or on 
                behalf of specific candidates by volunteers 
                (including labeling envelopes or affixing 
                postage or other indicia to particular pieces 
                of mail), other than the mailing of materials 
                to a commercial list.
                  (III) Conducting a telephone bank for or on 
                behalf of specific candidates staffed by 
                volunteers.
                  (IV) The distribution of collateral materials 
                (such as pins, bumper stickers, handbills, 
                brochures, posters, party tabloids, and yard 
                signs) for or on behalf of specific candidates 
                (whether by volunteers or otherwise);
          (xvi) any payment of funds on behalf of a candidate 
        (whether in cash or in kind, but not including a direct 
        payment of cash to a candidate or a political committee 
        of the candidate) by an individual from the 
        individual's personal funds which in the aggregate does 
        not exceed $100, if the funds are used for activities 
        carried out by the individual or a member of the 
        individual's family; and
          (xvii) any payment made or obligation incurred by a 
        partnership in the establishment and maintenance of a 
        political committee, the administration of such a 
        political committee, or the solicitation of 
        contributions to such committee.
      (9)(A)  * * *
      (B) The term ``expenditure'' does not include--
          (i)  * * *
          * * * * * * *
          (viii) the payment by a State or local committee of a 
        political party of the costs of campaign materials 
        (such as pins, bumper stickers, handbills, brochures, 
        posters, party tabloids, and yard signs) used by such 
        committee [in connection with volunteer activities on 
        behalf of nominees of such party] in connection with 
        State or local activities, other than any payment 
        described in clause (xi): Provided, That--
                  (1) such payments are not for the costs of 
                campaign materials or activities used in 
                connection with any broadcasting, newspaper, 
                magazine, billboard, direct mail, or similar 
                type of general public communication or 
                political advertising;
                  (2) such payments are made from contributions 
                subject to the limitations and prohibitions of 
                this Act; and
                  (3) such payments are not made from 
                contributions designated to be spent on behalf 
                of a particular candidate or particular 
                candidates;
          (ix) the payment by a State or local committee of a 
        political party of the costs of voter registration and 
        get-out-the-vote activities conducted by such committee 
        on behalf of nominees of such party for President and 
        Vice President: Provided, That--
                  (1) such payments are not for the costs of 
                campaign materials or activities used in 
                connection with any broadcasting, newspaper, 
                magazine, billboard, direct mail, or similar 
                type of general public communication or 
                political advertising;
                  (2) such payments are made from contributions 
                subject to the limitations and prohibitions of 
                this Act; and
                  (3) such payments are not made from 
                contributions designated to be spent on behalf 
                of a particular candidate or candidates; [and]
          (x) payments received by a political party committee 
        as a condition of ballot access which are transferred 
        to another political party committee or the appropriate 
        State official[.];
          (xi) the payment by a State or local committee of a 
        political party for any of the following activities:
                  (I) The listing of the slate of the party's 
                candidates, including the communication of the 
                slate to the public.
                  (II) The mailing of materials for or on 
                behalf of specific candidates by volunteers 
                (including labeling envelopes or affixing 
                postage or other indicia to particular pieces 
                of mail), other than the mailing of materials 
                to a commercial list.
                  (III) Conducting a telephone bank for or on 
                behalf of specific candidates staffed by 
                volunteers.
                  (IV) The distribution of collateral materials 
                (such as pins, bumper stickers, handbills, 
                brochures, posters, party tabloids, and yard 
                signs) for or on behalf of specific candidates 
                (whether by volunteers or otherwise);
          (xii) any payment of funds on behalf of a candidate 
        (whether in cash or in kind, but not including a direct 
        payment of cash to a candidate or a political committee 
        of the candidate) by an individual from the 
        individual's personal funds which in the aggregate does 
        not exceed $100, if the funds are used for activities 
        carried out by the individual or a member of the 
        individual's family; and
          (xiii) any payment made or obligation incurred by a 
        partnership in the establishment and maintenance of a 
        political committee, the administration of such a 
        political committee, or the solicitation of 
        contributions to such committee.
          * * * * * * *
    [(17) The term ``independent expenditure'' means an 
expenditure by a person expressly advocating the election or 
defeat of a clearly identified candidate which is made without 
cooperation or consultation with any candidate, or any 
authorized committee or agent of such candidate, and which is 
not made in concert with, or at the request or suggestion of, 
any candidate, or any authorized committee or agent of such 
candidate.]
  (17)(A) The term ``independent expenditure'' means an 
expenditure by a person for a communication expressly 
advocating the election or defeat of a clearly identified 
candidate which is not made with the cooperation or with the 
prior consent of, or in consultation with, or at the request or 
suggestion of, a candidate or any agent or authorized committee 
of such candidate.
  (B) For purposes of this paragraph--
          (i) ``expressly advocating the election or defeat'' 
        means the use in the communication of explicit words 
        such as ``vote for'', ``reelect'', ``support'', ``cast 
        your ballot for'', ``vote against'', ``defeat'', or 
        ``reject'', accompanied by a reference in the 
        communication to one or more clearly identified 
        candidates, or words such as ``vote'' for or against a 
        position on an issue, accompanied by a listing in the 
        communication of one or more clearly identified 
        candidates described as for or against a position on 
        that issue;
          (ii) ``which is not made with the cooperation or with 
        the prior consent of, or in consultation with, or at 
        the request or suggestion of, a candidate or any agent 
        or authorized committee of such candidate'' refers to 
        the expenditure in question for the communication made 
        by the person; and
          (iii) the term ``agent'' means any person who has 
        actual oral or written authority, either express or 
        implied, to make or authorize the making of 
        expenditures on behalf of a candidate.
  (C) An expenditure by a person for a communication which does 
not contain explicit words expressly advocating the election or 
defeat of a clearly identified candidate shall not be 
considered an independent expenditure.
          * * * * * * *

                  organization of political committees

    Sec. 302. (a)  * * *
          * * * * * * *
    (e)(1)  * * *
          * * * * * * *
    (3)(A) No political committee which supports or has 
supported more than one candidate may be designated as an 
authorized committee,[except that--
          [(i) the candidate for the office of President 
        nominated by a political party may designate the 
        national committee of such political party as a 
        principal campaign committee, but only if that national 
        committee maintains separate books of account with 
        respect to its function as a principal campaign 
        committee; and
          [(ii) candidates may designate a political committee 
        established solely for the purpose of joint fundraising 
        by such candidates as an authorized committee.] except 
        that the candidate for the office of President 
        nominated by a political party may designate the 
        national committee of such political party as a 
        principal campaign committee, but only if that national 
        committee maintains separate books of account with 
        respect to its function as a principal campaign 
        committee.
    (B) As used in this section, the term ``support'' does not 
include a contribution by any authorized committee in amounts 
of $1,000 or less to an authorized committee of any other 
candidate. The amount described in the previous sentence shall 
be adjusted (for years beginning with 1997) in the same manner 
as the amounts of limitations on contributions under section 
315(a) are adjusted under section 315(c)(3).
          * * * * * * *
  (j) A candidate for Federal office or an individual holding 
Federal office may not establish, maintain, finance, or control 
a political committee, other than a principal campaign 
committee of the candidate or the individual.
  (k) A person described in section 304(b)(5)(A) who makes 
expenditures which aggregate $500 or more in an election cycle 
to other persons (not including employees) who provide goods or 
services to a candidate or a candidate's authorized committees 
shall provide to a political committee the information 
necessary to enable the committee to report the information 
described in such section.
          * * * * * * *

                                reports

    Sec. 304. (a)(1)  * * *
          * * * * * * *
    (5) If a designation, report, or statement filed pursuant 
to this Act (other than under [paragraph (2)(A)(i) or 
(4)(A)(ii)] paragraphs (2)(A)(i), (4)(A)(ii), or (6), or 
subsection (c)(2) is sent by registered or certified mail, the 
United States postmark shall be considered the date of filing 
of the designation, report, or statement.
    (6)(A) The principal campaign committee of a candidate 
shall notify the Secretary or the Commission, and the Secretary 
of State, as appropriate, in writing, of any contribution of 
$1,000 or more received by any authorized committee of such 
candidate [after the 20th day, but more than 48 hours before 
any election] during the period which begins on the 20th day 
before an election and ends at the time the polls close for 
such election. This notification shall be made within [48 
hours] 24 hours (or, if earlier, by midnight of the day on 
which the contribution is deposited) after the receipt of such 
contribution and shall include the name of the candidate and 
the office sought by the candidate, the identification of the 
contributor, and the date of receipt and amount of the 
contribution.
  (B)(i) The principal campaign committee of a House candidate 
(as defined in section 315(j)(4)) shall submit the following 
notifications relating to expenditures of personal funds by 
such candidate (including contributions by the candidate to 
such committee):
          (I) A notification of the first such expenditure (or 
        contribution) by which the aggregate amount of personal 
        funds expended (or contributed) with respect to an 
        election exceeds the amount of the limitation 
        established under section 315(a)(1)(A) for elections in 
        the year involved.
          (II) A notification of each such expenditure (or 
        contribution) which, taken together with all such 
        expenditures (and contributions) in any amount not 
        included in the most recent report under this 
        subparagraph, totals $5,000 or more.
          (III) A notification of the first such expenditure 
        (or contribution) by which the aggregate amount of 
        personal funds expended with respect to the election 
        exceeds the level applicable under section 315(j)(2) 
        for elections in the year involved.
  (ii) Each of the notifications submitted under clause (i)--
          (I) shall be submitted not later than 24 hours after 
        the expenditure or contribution which is the subject of 
        the notification is made;
          (II) shall include the name of the candidate, the 
        office sought by the candidate, and the date of the 
        expenditure or contribution and amount of the 
        expenditure or contribution involved; and
          (III) shall include the total amount of all such 
        expenditures and contributions made with respect to the 
        same election as of the date of expenditure or 
        contribution which is the subject of the notification.
    [(B)] (C) The notification required under this paragraph 
shall be in addition to all other reporting requirements under 
this Act.
  (D) Notwithstanding paragraph (5), the time at which a 
notification or report under this paragraph is received by the 
Secretary, the Commission, or any other recipient to whom the 
notification is required to be sent shall be considered the 
time of filing of the notification or report with the 
recipient.
  (E)(i) The Commission shall make the information contained in 
the reports submitted under this paragraph available on the 
Internet and publicly available at the offices of the 
Commission as soon as practicable (but in no case later than 24 
hours) after the information is received by the Commission.
  (ii) In this subparagraph, the term ``Internet'' means the 
international computer network of both Federal and non-Federal 
interoperable packet-switched data networks.
    [(7)] (7)(A) The reports required to be filed by this 
subsection shall be cumulative during the calendar year to 
which they relate, but where there has been no change in an 
item reported in a previous report during such year, only the 
amount need be carried forward.
  (B) In the case of any report required to be filed by this 
subsection which is the first report required to be filed after 
the date of an election, the report shall include a statement 
of the total contributions received and expenditures made as of 
the date of the election.
          * * * * * * *
  (11)(A) The Commission shall permit reports required by this 
Act to be filed and preserved by means of computer disk or any 
other appropriate electronic format or [method,] method 
(including by facsimile device in the case of any report 
required to be filed within 24 hours after the transaction 
reported has occurred), as determined by the Commission.
          * * * * * * *
      (b) Each report under this section shall disclose--
          (1) the amount of cash on hand at the beginning of 
        the reporting period;
          (2) for the reporting period and the calendar year 
        (or election cycle, in the case of an authorized 
        committee of a candidate for Federal office), the total 
        amount of all receipts, and the total amount of all 
        receipts in the following categories:
                  (A)  * * *
          * * * * * * *
          (3) the identification of each--
                  (A) person (other than a political committee) 
                who makes a contribution to the reporting 
                committee during the reporting period, whose 
                contribution or contributions have an aggregate 
                amount or value in excess of $200 within the 
                calendar year (or election cycle, in the case 
                of an authorized committee of a candidate for 
                Federal office), or in any lesser amount if the 
                reporting committee should so elect, together 
                with the date and amount of any such 
                contribution and the total amount of all such 
                contributions made by such person with respect 
                to the election involved;
                  (B) political committee which makes a 
                contribution to the reporting committee during 
                the reporting period, together with the date 
                and amount of any such contribution and the 
                total amount of all such contributions made by 
                such committee with respect to the election 
                involved;
          * * * * * * *
                  (F) person who provides a rebate, refund, or 
                other offset to operating expenditures to the 
                reporting committee in an aggregate amount or 
                value in excess of $200 within the calendar 
                year (or election cycle, in the case of an 
                authorized committee of a candidate for Federal 
                office), together with the date and amount of 
                such receipt; and
                  (G) person who provides any dividend, 
                interest, or other receipt to the reporting 
                committee in an aggregate value or amount in 
                excess of $200 within the calendar year (or 
                election cycle, in the case of an authorized 
                committee of a candidate for Federal office), 
                together with the date and amount of any such 
                receipt;
          (4) for the reporting period and the calendar year 
        (or election cycle, in the case of an authorized 
        committee of a candidate for Federal office), the total 
        amount of all disbursements, and all disbursements in 
        the following categories:
                  (A)  * * *
          * * * * * * *
          (5) the name and address of each--
                  (A) person to whom an expenditure in an 
                aggregate amount or value in excess of $200 
                within the calendar year is made by the 
                reporting committee to meet a candidate or 
                committee operating expense, together with the 
                date, amount, and purpose of such operating 
                expenditure[;], and, if such person in turn 
                makes expenditures which aggregate $500 or more 
                in an election cycle to other persons (not 
                including employees) who provide goods or 
                services to the candidate or the candidate's 
                authorized committees, the name and address of 
                such other persons, together with the date, 
                amount, and purpose of such expenditures;
          * * * * * * *
          (6)(A) for an authorized committee, the name and 
        address of each person who has received any 
        disbursement not disclosed under paragraph (5) in an 
        aggregate amount or value in excess of $200 within the 
        calendar year (or election cycle, in the case of an 
        authorized committee of a candidate for Federal 
        office), together with the date and amount of any such 
        disbursement;
          (B) for any other political committee, the name and 
        address of each--
                  (i)  * * *
          * * * * * * *
                  (iii) person who receives any disbursement 
                during the reporting period in an aggregate 
                amount or value in excess of $200 within the 
                calendar year (or election cycle, in the case 
                of an authorized committee of a candidate for 
                Federal office) in connection with an 
                independent expenditure by the reporting 
                committee, together with the date, amount, and 
                purpose of any such independent expenditure and 
                a statement which indicates whether such 
                independent expenditure is in support of, or in 
                opposition to, a candidate, as well as the name 
                and office sought by such candidate, and a 
                certification, under penalty of perjury, 
                whether such independent expenditure is made in 
                cooperation, consultation, or concert, with, or 
                at the request or suggestion of, any candidate 
                or any authorized committee or agent of such 
                committee;
          * * * * * * *
                  (v) person who has received any disbursement 
                not otherwise disclosed in this paragraph or 
                paragraph (5) in an aggregate amount or value 
                in excess of $200 within the calendar year (or 
                election cycle, in the case of an authorized 
                committee of a candidate for Federal office) 
                from the reporting committee within the 
                reporting period, together with the date, 
                amount, and purpose of any such disbursement;
          (7) the total sum of all contributions to such 
        political committee, together with the total 
        contributions less offsets to contributions and the 
        total sum of all operating expenditures made by such 
        political committee, together with total operating 
        expenditures less offsets to operating expenditures, 
        for both the reporting period and the calendar year (or 
        election cycle, in the case of an authorized committee 
        of a candidate for Federal office); and
          * * * * * * *
    (c)(1)  * * *
    (2) Statements required to be filed by this subsection 
shall be filed in accordance with subsection (a)(2), and shall 
include--
          (A)  * * *
          * * * * * * *
          (C) the identification of each person who made a 
        contribution in excess of $200 to the person filing 
        such statement which was made for the purpose of 
        furthering an independent expenditure.
Any independent expenditure (including those described in 
subsection (b)(6)(B)(iii) aggregating $1,000 or more made after 
the 20th day, but more than 24 hours, before any election 
[shall be reported] shall be filed within 24 hours after such 
independent expenditure is made. Such statement shall be filed 
with the Secretary or the Commission and the Secretary of State 
and shall contain the information required by subsection 
(b)(6)(B)(iii) indicating whether the independent expenditure 
is in support of, or in opposition to, the candidate involved. 
Notwithstanding subsection (a)(5), the time at which the 
statement under this subsection is received by the Secretary, 
the Commission, or any other recipient to whom the notification 
is required to be sent shall be considered the time of filing 
of the statement with the recipient.
          * * * * * * *
  (d) Each principal campaign committee of a candidate for the 
House of Representatives shall include the following 
information in reports filed under subsection (a)(2) and 
subsection (a)(6)(A):
          (1) With respect to each report filed under such 
        subsection--
                  (A) the total contributions received by the 
                committee with respect to the election cycle 
                involved from local individual residents (as 
                defined in section 315(i)(7)), as of the last 
                day of the period covered by the report;
                  (B) the total contributions received by the 
                committee with respect to the election cycle 
                involved which are not from local individual 
                residents, as of the last day of the period 
                covered by the report; and
                  (C) a certification as to whether the 
                contributions reported comply with the 
                limitation under section 315(i), as of the last 
                day of the period covered by the report.
          (2) In the case of the first report filed under such 
        subsection which covers the period which begins 19 days 
        before an election and ends 20 days after the 
        election--
                  (A) the total contributions received by the 
                committee with respect to the election cycle 
                involved from local individual residents (as 
                defined in section 315(i)(7)), as of the last 
                day of such period;
                  (B) the total contributions received by the 
                committee with respect to the election cycle 
                involved which are not from local individual 
                residents, as of the last day of such period; 
                and
                  (C) a certification as to whether the 
                contributions reported comply with the 
                limitation under section 315(i), as of the last 
                day of such period.
  (e) The Commission may by unanimous vote relieve any person 
or category of persons of the obligation to file any of the 
reports required by this section, or may change the due dates 
of any of the reports required by this section, if it 
determines that such action is consistent with the purposes of 
this title. The Commission may waive requirements to file 
reports or change due dates in accordance with this subsection 
through a rule of general applicability or, in a specific case, 
by notifying all the political committees involved.
          * * * * * * *

                      federal election commission

    Sec. 306. (a)(1) There is established a commission to be 
known as the Federal Election Commission. The Commission is 
composed of the Secretary of the Senate [and the Clerk of the 
House of Representatives or their designees] or the designee of 
the Secretary, ex officio and without the right to vote, and 6 
members appointed by the President, by and with the advice and 
consent of the Senate. No more than 3 members of the Commission 
appointed under this paragraph may be affiliated with the same 
political party.
          * * * * * * *
    (3) Members shall be chosen on the basis of their 
experience, integrity, impartiality, and good judgment and 
members (other than the Secretary of the Senate [and the Clerk 
of the House of Representatives]) shall be individuals who, at 
the time appointed to the Commission, are not elected or 
appointed officers or employees in the executive, legislative, 
or judicial branch of the Federal Government. Such members of 
the Commission shall not engage in any other business, 
vocation, or employment. Any individual who is engaging in any 
other business, vocation, or employment at the time of his or 
her appointment to the Commission shall terminate or liquidate 
such activity no later than 90 days after such appointment.
    (4) Members of the Commission (other than the Secretary of 
the Senate [and the Clerk of the House of Representatives]) 
shall receive compensation equivalent to the compensation paid 
at level IV of the Executive Schedule. (5 U.S.C. 5315)
    (5) The Commission shall elect a chairman and a vice 
chairman from among its members (other than the Secretary of 
the Senate [and the Clerk of the House of Representatives]) for 
a term of one year. A member may serve as chairman only once 
during any term of office to which such member is appointed. 
The chairman and the vice chairman shall not be affiliated with 
the same political party. The vice chairman shall act as 
chairman in the absence or disability of the chairman or in the 
event of a vacancy in such office.
          * * * * * * *
    (f)(1) The Commission shall have a staff director and a 
general counsel who shall be appointed [by the Commission] by 
an affirmative vote of not less than 4 members of the 
Commission and may not serve for a term of more than 4 
consecutive years without reappointment in accordance with this 
paragraph. An individual appointed as a staff director or 
general counsel to fill a vacancy occurring other than by the 
expiration of a term of office shall be appointed only for the 
unexpired term of the individual he or she succeeds. An 
individual serving as staff director or general counsel may not 
serve in any capacity on behalf of the Commission after the 
expiration of the individual's term unless reappointed in 
accordance with this paragraph. The staff director shall be 
paid at a rate not to exceed the rate of basic pay in effect 
for level IV of the Executive Schedule (5 U.S.C. 5315). The 
general counsel shall be paid at a rate not to exceed the rate 
of basic pay in effect for level V of the Executive Schedule (5 
U.S.C. 5316). With the approval of not less than 4 members of 
the Commission, the staff director may appoint and fix the pay 
of such additional personnel as he or she considers desirable 
without regard to the provisions of title 5, United States 
Code, governing appointments in the competitive service.
          * * * * * * *

                        powers of the commission

    Sec. 307. (a) The Commission has the power--
          (1)  * * *
          * * * * * * *
          (7) to render advisory opinions under section 308 [of 
        this Act] and other written responses under section 
        308A;
          * * * * * * *
  (f)(1) When developing prescribed forms and making, amending, 
or repealing rules pursuant to the authority granted to the 
Commission by subsection (a)(8), the Commission shall act in a 
manner that will have the least restrictive effect on the 
rights of free speech and association so protected by the First 
Article of Amendment to the Constitution of the United States.
  (2) When the Commission's actions under paragraph (1) are 
challenged, a reviewing court shall hold unlawful and set aside 
any actions of the Commission that do not conform with the 
principles set forth in paragraph (1).

                           advisory opinions

    Sec. 308. (a) * * *
          * * * * * * *
  (e) The Commission shall compile, publish, and regularly 
update a complete and detailed index of the advisory opinions 
issued under this section through which opinions may be found 
on the basis of the subjects included in the opinions.


                  other written responses to questions


  Sec. 308A. (a) Permitting Responses.--In addition to issuing 
advisory opinions under section 308, the Commission shall issue 
written responses pursuant to this section with respect to a 
written request concerning the application of this Act, chapter 
95 or chapter 96 of the Internal Revenue Code of 1986, a rule 
or regulation prescribed by the Commission, or an advisory 
opinion issued by the Commission under section 308, with 
respect to a specific transaction or activity by the person, if 
the Commission finds the application of the Act, chapter, rule, 
regulation, or advisory opinion to the transaction or activity 
to be clear and unambiguous.
  (b) Procedure for Response.--
          (1) Analysis by staff.--The staff of the Commission 
        shall analyze each request submitted under this 
        section. If the staff believes that the standard 
        described in subsection (a) is met with respect to the 
        request, the staff shall circulate a statement to that 
        effect together with a draft response to the request to 
        the members of the Commission.
          (2) Issuance of response.--Upon the expiration of the 
        3-day period beginning on the date the statement and 
        draft response is circulated (excluding weekends or 
        holidays), the Commission shall issue the response, 
        unless during such period any member of the Commission 
        objects to issuing the response.
  (c) Effect of Response.--
          (1) Safe harbor.--Notwithstanding any other 
        provisions of law, any person who relies upon any 
        provision or finding of a written response issued under 
        this section and who acts in good faith in accordance 
        with the provisions and findings of such response shall 
        not, as a result of any such act, be subject to any 
        sanction provided by this Act or by chapter 95 or 
        chapter 96 of the Internal Revenue Code of 1986.
          (2) No reliance by other parties.--Any written 
        response issued by the Commission under this section 
        may only be relied upon by the person involved in the 
        specific transaction or activity with respect to which 
        such response is issued, and may not be applied by the 
        Commission with respect to any other person or used by 
        the Commission for enforcement or regulatory purposes.
  (d) Publication of Requests and Responses.--The Commission 
shall make public any request for a written response made, and 
the responses issued, under this section. In carrying out this 
subsection, the Commission may not make public the identity of 
any person submitting a request for a written response unless 
the person specifically authorizes to Commission to do so.
  (e) Compilation of Index.--The Commission shall compile, 
publish, and regularly update a complete and detailed index of 
the responses issued under this section through which responses 
may be found on the basis of the subjects included in the 
responses.

                              enforcement

    Sec. 309. (a)(1)(A) Any person who believes a violation of 
this Act or of chapter 95 or chapter 96 of the Internal Revenue 
Code of 1954 has occurred, may file a complaint with the 
Commission. Such complaint shall be in writing, signed and 
sworn to by the person filing such complaint, shall be 
notarized, shall be in a standard form prescribed by the 
Commission, shall not include (but may refer to) extraneous 
materials, and shall be made under penalty of perjury and 
subject to the provisions of section 1001 of title 18, United 
States Code. [Within 5 days after receipt of a complaint, the 
Commission shall notify, in writing, any person alleged in the 
complaint to have committed such a violation.] The complaint 
shall include the names and addresses of persons alleged to 
have committed such a violation. Within 5 days after receipt of 
the complaint, the Commission shall provide written notice of 
the complaint together with a copy of the complaint to each 
person described in the previous sentence, except that if the 
Commission determines that it is not necessary for a person 
described in the previous sentence to receive a copy of the 
complaint, the Commission shall provide the person with written 
notice that the complaint has been filed, together with written 
instructions on how to obtain a copy of the complaint without 
charge from the Commission. Before the Commission conducts any 
vote on the complaint, other than a vote to dismiss, any person 
so notified shall have the opportunity to demonstrate, in 
writing, to the Commission within 15 days after notification 
that no action should be taken against such person on the basis 
of the complaint. The Commission may not conduct any 
investigation or take any other action under this section 
solely on the basis of a complaint of a person whose identity 
is not disclosed to the Commission.
  (B) The written notice of a complaint provided by the 
Commission under subparagraph (A) to a person alleged to have 
committed a violation referred to in the complaint shall 
include a cover letter (in a form prescribed by the Commission) 
and the following statement: ``The enclosed complaint has been 
filed against you with the Federal Election Commission. The 
Commission has not verified or given official sanction to the 
complaint. The Commission will make no decision to pursue the 
complaint for a period of at least 15 days from your receipt of 
this complaint. You may, if you wish, submit a written 
statement to the Commission explaining why the Commission 
should take no action against you based on this complaint. If 
the Commission should decide to investigate, you will be 
notified and be given further opportunity to respond.''
    (2) If the Commission, upon receiving a complaint under 
paragraph (1) or on the basis of information ascertained in the 
normal course of carrying out its supervisory responsibilities, 
determines, by an affirmative vote of 4 of its members, that 
[it has reason to believe that a person has committed, or is 
about to commit, a violation of this Act of chapter 95 or 
chapter 96 of the Internal Revenue Code of 1954,] it has a 
reason to investigate a possible violation of this Act or of 
chapter 95 or chapter 96 of the Internal Revenue Code of 1986 
that has occurred or is about to occur (based on the same 
criteria applicable under this paragraph prior to the enactment 
of the Campaign Finance Reform Act of 1996), the Commission 
shall, through its chairman or vice chairman, notify the person 
of the alleged violation. Such notification shall set forth the 
factual basis for such alleged violation. The Commission shall 
make an investigation of such alleged violation, which may 
include a field investigation or audit, in accordance with the 
provisions of this section.
    (3)(A) The general counsel of the Commission shall notify 
the respondent of any recommendation to the Commission by the 
general counsel to proceed to a vote on probable cause pursuant 
to paragraph (4)(A)(i). With such notification, the general 
counsel shall include a brief stating the position of the 
general counsel on the legal and factual issues of the case. 
Within 15 days of receipt of such brief, respondent may submit 
a brief stating the position of such respondent on the legal 
and factual issues of the case, and replying to the brief of 
general counsel. Such briefs shall be filed with the Secretary 
of the Commission and shall be considered by the Commission 
before proceeding under paragraph (4).
  (B) If a respondent submits a brief under subparagraph (A), 
the respondent may submit (at the time of submitting the brief) 
a request to present an oral argument in support of the 
respondent's brief before the Commission. If at least 2 members 
of the Commission approve of the request, the respondent shall 
be permitted to appear before the Commission in open session 
and make an oral presentation in support of the brief and 
respond to questions of members of the Commission. Such 
appearance shall take place at a time specified by the 
Commission during the 30-day period which begins on the date 
the request is approved, and the Commission may limit the 
length of the respondent's appearance to such period of time as 
the Commission considers appropriate. Any information provided 
by the respondent during the appearance shall be considered by 
the Commission before proceeding under paragraph (4).
          * * * * * * *

                       administrative provisions

    Sec. 311. (a) The Commission shall--
          (1)  * * *
          * * * * * * *
          (6)(A) * * *
          (B) compile, maintain, and revise a separate 
        cumulative index of reports and statements filed by 
        [multi-candidate committees] political committees which 
        are not authorized committees of candidates or 
        political party committees, including in such index a 
        list of [multi-candidate committees] such committees; 
        and
          (C) compile and maintain a list of [multi-candidate 
        committees] committees described in subparagraph (B), 
        which shall be revised and made available monthly;
          * * * * * * *

             limitations on contributions and expenditures

    Sec. 315. (a)(1) No person shall make contributions--
          (A) to any candidate and his authorized political 
        committees with respect to any election for Federal 
        office or to any other political committee other than a 
        political party committee in any calendar year which, 
        in the aggregate, exceed $1,000; or
          (B) to the political committees established and 
        maintained by a national or State political party, 
        which are not the authorized political committees of 
        any candidate, in any calendar year which, in the 
        aggregate, exceed $20,000[; or].
          [(C) to any other political committee in any calendar 
        year which, in the aggregate, exceed $5,000.
    [(2) No multicandidate political committee shall make 
contributions--
          [(A) to any candidate and his authorized political 
        committees with respect to any election for Federal 
        office which, in the aggregate, exceed $5,000;
          [(B) to the political committees established and 
        maintained by a national political party, which are not 
        the authorized political committees of any candidate, 
        in any calendar year, which, in the aggregate, exceed 
        $15,000; or
          [(C) to any other political committee in any calendar 
        year which, in the aggregate, exceed $5,000.]
  (2) No political party committee may make contributions--
          (A) to any candidate or the candidate's authorized 
        political committees with respect to any election for 
        Federal office which, in the aggregate, exceed $5,000; 
        or
          (B) to any other political committee other than a 
        political party committee in any calendar year which, 
        in the aggregate, exceed $5,000.
    (3) No individual shall make contributions aggregating more 
than $25,000 in any calendar year. [For purposes of this 
paragraph, any contribution made to a candidate in a year other 
than the calendar year in which the election is held with 
respect to which such contribution is made, is considered to be 
made during the calendar year in which such election is held.] 
For purposes of this paragraph, in determining the amount of 
contributions made by an individual there shall be excluded any 
contributions made by the individual to a political party or a 
political party committee.
    (4) The limitations on contributions contained in 
paragraphs (1) and (2) do not apply to transfers between and 
among political committees which are national, State, district, 
or local committees (including any subordinate committee 
thereof) of the same political party. [For purposes of 
paragraph (2), the term ``multicandidate political committee'' 
means a political committee which has been registered under 
section 303 for a period of not less than 6 months, which has 
received contributions from more than 50 persons, and, except 
for any State political party organization, has made 
contributions to 5 or more candidates for Federal office.] For 
purposes of this section, the term ``political party 
committee'' means a political committee which is a national, 
State, district, or local political party committee (including 
any subordinate committee thereof).
          * * * * * * *
    (c)(1)  * * *
          * * * * * * *
  (3)(A) The amount of each limitation established under 
subsection (a) shall be adjusted as follows:
          (i) For calendar year 1997, each such amount shall be 
        equal to the amount described in such subsection, 
        increased (in a compounded manner) by the percentage 
        increase in the price index (as defined in subsection 
        (c)(2)) for each year after 1976 and before 1998.
          (ii) For calendar year 1999 and each second 
        subsequent year, each such amount shall be equal to the 
        amount for the second previous year (as adjusted under 
        this subparagraph), increased (in a compounded manner) 
        by the percentage increase in the price index for the 
        previous year and the second previous year.
  (B) In the case of any amount adjusted under this 
subparagraph which is not a multiple of $500, the amount shall 
be rounded to the nearest lowest multiple of $500.
    (d)(1)  * * *
          * * * * * * *
  (4)(A) For purposes of applying the limitations established 
under paragraphs (2) and (3), in determining the amount of 
expenditures made by a national committee of a political party 
or a State committee of a political party (including any 
subordinate committee of a State committee), there shall be 
excluded any amounts expended by the committee for 
communications to the extent the communications are made to 
members of the party.
  (B) For purposes of subparagraph (A), an individual shall be 
considered to be a ``member'' of a political party if any of 
the following apply:
          (i) The individual is registered to vote as a member 
        of the party.
          (ii) There is a public record that the individual 
        voted in the primary of the party during the most 
        recent primary election.
          (iii) The individual has made a contribution to the 
        party and the contribution has been reported to the 
        Commission (in accordance with this Act) or to a State 
        reporting agency.
          (iv) The individual has indicated in writing that the 
        individual is a member of the party.
    (e) During the first week of January 1975, and every 
subsequent year, the Secretary of Commerce shall certify to the 
Commission and publish in the Federal Register an estimate of 
the voting age population of the United [States, of each State, 
and of each congressional district] States and of each State as 
of the first day of July next preceding the date of 
certification. The term ``voting age population'' means 
resident population, 18 years of age or older.
          * * * * * * *
  (i)(1) A candidate for the office of Representative in, or 
Delegate or Resident Commissioner to, the Congress may not 
accept contributions with respect to an election cycle from 
persons other than local individual residents totaling in 
excess of the total of contributions accepted from local 
individual residents (as determined on the basis of the most 
recent information included in reports pursuant to section 
304(d)).
  (2) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, contributions of the 
candidate's personal funds shall be subject to the following 
rules:
          (A) To the extent that the amount of the contribution 
        does not exceed the limitation on contributions made by 
        an individual under subsection (a)(1)(A), such 
        contribution shall be treated as any other 
        contribution.
          (B) The portion (if any) of the contribution which 
        exceeds the limitation on contributions which may be 
        made by an individual under subsection (a)(1)(A) shall 
        be allocated in accordance with paragraph (8).
  (3) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, contributions from a 
political party or a political party committee shall be 
allocated in accordance with paragraph (8).
  (4) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, any funds remaining 
in the candidate's campaign account after the filing of the 
post-general election report under section 304(a)(2)(A)(ii) for 
the most recent general election shall be allocated in 
accordance with paragraph (8).
  (5) In determining the amount of contributions accepted by a 
candidate for purposes of this subsection, any contributions 
accepted pursuant to subsection (j) which are from persons 
other than local individual residents shall be allocated in 
accordance with paragraph (8).
  (6)(A) Any candidate who accepts contributions that exceed 
the limitation under this subsection, as determined on the 
basis of information included in reports pursuant to section 
304(d), shall pay to the Commission at the time of the filing 
of the report which contains the information, for deposit in 
the Treasury, an amount equal to 3 times the amount of the 
excess contributions (or, in the case of a candidate described 
in subparagraph (C), an amount equal to 5 times the amount of 
the excess contributions plus a civil penalty in an amount 
determined by the Commission).
  (B) Any amounts paid by a candidate under this paragraph 
shall be paid from contributions subject to the limitations and 
prohibitions of this title, including the limitation under this 
subsection.
  (C) A candidate described in this subparagraph is a candidate 
who accepts contributions that exceed the limitation under this 
subsection as of the last day of the period ending on the 20th 
day before an election or any period ending after such 20th day 
and before or on the 20th day after such election.
  (7) As used in this subsection, the term ``local individual 
resident'' means an individual who resides in the congressional 
district involved.
  (8) For purposes of this subsection, any amounts allocated in 
accordance with this paragraph shall be allocated as follows:
          (A) 50 percent of such amounts shall be deemed to be 
        contributions from local individual residents.
          (B) 50 percent of such amounts shall be deemed to be 
        contributions from persons other than local individual 
        residents.
  (j)(1) Notwithstanding subsection (a), if in a general 
election a House candidate makes expenditures of personal funds 
(including contributions by the candidate to the candidate's 
authorized campaign committee) in an amount in excess of the 
amount of the limitation established under subsection (a)(1)(A) 
and less than or equal to $150,000 (as reported under section 
304(a)(2)(A)), a political party committee may make 
contributions to an opponent of the House candidate without 
regard to any limitation otherwise applicable to such 
contributions under subsection (a), except that the opponent 
may not accept aggregate contributions under this paragraph in 
an amount greater than the greatest amount of personal funds 
expended (including contributions to the candidate's authorized 
campaign committee) by any House candidate (other than such 
opponent) with respect to the election (as reported in a 
notification submitted under section 304(a)(6)(B)).
  (2) If a House candidate makes expenditures of personal funds 
(including contributions by the candidate to the candidate's 
authorized campaign committee) with respect to an election in 
an amount greater than $150,000 (as reported under section 
304(a)(2)(A)), the following rules shall apply:
          (A) In the case of a general election, the 
        limitations under subsections (a)(1) and (a)(2) 
        (insofar as such limitations apply to political party 
        committees and to individuals) shall not apply to 
        contributions to the candidate or to any opponent of 
        the candidate, except that neither the candidate or any 
        opponent may accept aggregate contributions under this 
        subparagraph and paragraph (1) in an amount greater 
        than the greatest amount of personal funds (including 
        contributions to the candidate's authorized campaign 
        committee) expended by any House candidate with respect 
        to the election (as reported in a notification 
        submitted under section 304(a)(6)(B)).
          (B) In the case of an election other than a general 
        election, the limitations under subsection (a)(1) 
        (insofar as such limitations apply to individuals) 
        shall not apply to contributions to the candidate or to 
        any opponent of the candidate, except that neither the 
        candidate or any opponent may accept aggregate 
        contributions under this subparagraph in an amount 
        greater than the greatest amount of personal funds 
        (including contributions to the candidate's authorized 
        campaign committee) expended by any House candidate 
        with respect to the election (as reported in a 
        notification submitted under section 304(a)(6)(B)).
  (3) Each of the amounts provided under paragraph (1) or (2) 
shall be adjusted for each biennial period beginning after the 
1998 general election in the same manner as the amounts of 
limitations on contributions established under subsection (a) 
are adjusted under subsection (c)(3).
  (4) In this subsection, the term ``House candidate'' means a 
candidate in an election for the office of Representative in, 
or Delegate or Resident Commissioner to, the Congress.
  (k)(1) Subject to paragraph (2), if, in a general election 
for Federal office, a candidate who is the incumbent uses 
campaign funds carried forward from an earlier election cycle, 
any political party committee may make contributions to the 
nominee of that political party to match the funds so carried 
forward by such incumbent. For purposes of this paragraph, 
funds shall be considered to have been carried forward if the 
funds represent cash on hand as reported in the applicable 
post-general election report filed under section 304(a) for the 
general election involved, plus any amount expended on or 
before the filing of the report for a later election, less 
legitimate outstanding debts relating to the previous election 
up to the amount reported.
  (2) The political party contributions under paragraph (1) may 
be made without regard to any limitation amount otherwise 
applicable to such contributions made under subsections (a) or 
(i), but a candidate may not accept contributions under this 
subsection in excess of the total of funds carried forward by 
the incumbent candidate.
  (l) No candidate or political committee may accept any 
contributions of currency of the United States or currency of 
any foreign country from any person which, in the aggregate, 
exceed $100.

contributions or expenditures by national banks, corporations, or labor 
                             organizations

    Sec. 316. (a)  * * *
    (b)(1)  * * *
    (2) For purposes of this section and section 12(h) of the 
Public Utility Holding Company Act (15 U.S.C. 79l(h)), the term 
``contribution or expenditure'' shall include any direct or 
indirect payment, distribution, loan, advance, deposit, or gift 
of money, or any services, or anything of value (except a loan 
of money by a national or State bank made in accordance with 
the applicable banking laws and regulations and in the ordinary 
course of business) to any candidate, campaign committee, or 
political party or organization, in connection with any 
election to any of the offices referred to in this section, but 
shall not include (A) communications by a corporation to its 
stockholders and [executive or administrative personnel] 
officers or employees and their families or by a labor 
organization to its members and their families on any subject; 
(B) nonpartisan registration and get-out-the-vote campaigns by 
a corporation aimed at its stockholders and [executive or 
administrative personnel] officers or employees and their 
families, or by a labor organization aimed at its members and 
their families; and (C) the establishment, administration, and 
solicitation of contributions to a separate segregated fund to 
be utilized for political purposes by a corporation, labor 
organization, membership organization, cooperative, or 
corporation without capital stock.
    (3) It shall be unlawful--
          (A) for such a fund to cause another person to make a 
        contribution or expenditure by physical force, job 
        discrimination, financial reprisals, or the threat of 
        force, job discrimination, or financial reprisal;
          [(A)] (B) for such a fund to make a contribution or 
        expenditure by utilizing money or anything of value 
        secured by physical force, job discrimination, 
        financial reprisals, or the threat of force, job 
        discrimination, or financial reprisal; or by dues, 
        fees, or other moneys required as a condition of 
        membership in a labor organization or as a condition of 
        employment, or by moneys obtained in any commercial 
        transaction;
          [(B)] (C) for any person soliciting an employee for a 
        contribution to such a fund to fail to inform such 
        employee of the political purposes of such fund at the 
        time of such solicitation; and
          [(C)] (D) for any person soliciting an employee for a 
        contribution to such a fund to fail to inform such 
        employee, at the time of such solicitation, of his 
        right to refuse to so contribute without any reprisal.
    (4)(A) Except as provided in subparagraphs [(B), (C),] (C) 
and (D), it shall be unlawful--
          (i) for a corporation, or a separate segregated fund 
        established by a corporation, to solicit contributions 
        to such a fund from any person other than its 
        stockholders and their families and its [executive or 
        administrative personnel] officers or employees and 
        their families, and
          (ii) for a labor organization, or a separate 
        segregated fund established by a labor organization, to 
        solicit contributions to such a fund from any person 
        other than its members and their families[.], its 
        officers or employees and their families, employees who 
        are not members and their families, and officers, 
        employees, or stockholders of a corporation (and their 
        families) in which the labor organization represents 
        members working for the corporation.
    [(B) It shall not be unlawful under this section for a 
corporation, a labor organization, or a separate segregated 
fund established by such corporation or such labor 
organization, to make 2 written solicitations for contributions 
during the calendar year from any stockholder, executive or 
administrative personnel, or employee of a corporation or the 
families of such persons. A solicitation under this 
subparagraph may be made only by mail addressed to 
stockholders, executive or administrative personnel, or 
employees at their residence and shall be so designed that the 
corporation, labor organization, or separate segregated fund 
conducting such solicitation cannot determine who makes a 
contribution of $50 or less as a result of such solicitation 
and who does not make such a contribution.]
    (C) This paragraph shall not prevent a membership 
organization, cooperative, or corporation without capital 
stock, or a separate segregated fund established by a 
membership organization, cooperative, or corporation without 
capital stock, from soliciting contributions to such a fund 
from members of such organizations, cooperative, or corporation 
without capital stock.
    (D) This paragraph shall not prevent a trade association or 
a separate segregated fund established by a trade association 
from soliciting contributions from the stockholders and 
[executive or administrative personnel] officers or employees 
of the member corporations of such trade association and the 
families of such stockholders or personnel to the extent that 
such solicitation of such stockholders and personnel, and their 
families, has been separately and specifically approved by the 
member corporation involved, and such member corporation does 
not approve any such solicitation by more than one such trade 
association in any calendar year.
    (5) Notwithstanding any other law, any method of soliciting 
voluntary contributions or of facilitating the making of 
voluntary contributions to a separate segregated fund 
established by a corporation, permitted by law to corporations 
with regard to stockholders and [executive or administrative 
personnel] officers or employees, shall also be permitted to 
labor organizations with regard to their members.
          * * * * * * *
    [(7) For purposes of this section, the term ``executive or 
administrative personnel'' means individuals employed by a 
corporation who are paid on a salary, rather than hourly, basis 
and who have policymaking, managerial, professional, or 
supervisory responsibilities.]
  (7)(A) Any corporation or labor organization (or separate 
segregated fund established by such a corporation or such a 
labor organization) making solicitations of contributions shall 
make such solicitations in a manner that ensures that the 
corporation, organization, or fund cannot determine who makes a 
contribution of $100 or less as a result of such solicitation 
and who does not make such a contribution.
  (B) Subparagraph (A) shall not apply with respect to any 
solicitation of contributions of a corporation from its 
stockholders.
          * * * * * * *
  (c)(1) No political action committee or person required to 
register under the Lobbying Disclosure Act of 1995 (2 U.S.C. 
1601 et seq.) may act as an intermediary or conduit with 
respect to a contribution to a candidate for Federal office.
  (2) In this subsection, the term ``political action 
committee'' means any political committee which is not--
          (A) the principal campaign committee of a candidate; 
        or
          (B) a political party committee.
          * * * * * * *


              use of payroll deductions for contributions


  Sec. 323. (a) Requirements for Authorization of Deduction.--
          (1) In general.--No amounts withheld from an 
        individual's wages or salary during a year may be used 
        for any contribution under this title unless there is 
        in effect an authorization in writing by the individual 
        permitting the withholding of such amounts for the 
        contribution.
          (2) Period of authorization.--An authorization 
        described in this subsection may be in effect with 
        respect to an individual for such period as the 
        individual may specify (subject to cancellation under 
        paragraph (3)), except that the period may not be 
        longer than 12 months.
          (3) Right of cancellation.--An individual with an 
        authorization in effect under this subsection may 
        cancel or revise the authorization at any time.
  (b) Information Provided by Withholding Entity.--
          (1) In general.--Each entity withholding wages or 
        salary from an individual with an authorization in 
        effect under subsection (a) shall provide the 
        individual with a statement that the individual may at 
        any time cancel or revise the authorization in 
        accordance with subsection (a)(3).
          (2) Timing of notice.--The entity shall provide the 
        information described in paragraph (1) to an individual 
        at the beginning of each calendar year occurring during 
        the period in which the individual's authorization is 
        in effect.


                restrictions on use of non-federal funds


  Sec. 324. (a) Prohibiting Use of Funds in Federal 
Elections.--No funds may be expended by a political party 
committee for the purpose of influencing an election for 
Federal office unless the funds are subject to the limitations 
and prohibitions of this Act, except as may be provided in this 
section.
  (b) Restrictions on Use of Funds for Mixed Activities.--
          (1) Prohibiting use by national party committees.--A 
        national committee of a political party (including any 
        subordinate committee thereof) may not use any funds 
        which are not subject to the limitations and 
        prohibitions of this Act for any mixed activity.
          (2) Use by state or local party committees.--A State, 
        local, or district committee of a political party 
        (including any subordinate committee thereof) may use 
        funds which are not subject to the limitations and 
        prohibitions of this Act for mixed activity if the 
        funds are allocated in accordance with the process 
        described in subsection (g).
          (3) Mixed activity defined.--In this subsection, the 
        term ``mixed activity'' means any activity which is 
        both for the purpose of influencing an election for 
        Federal office and for any purpose unrelated to 
        influencing an election for Federal office, including 
        voter registration, absentee ballot programs, and get-
        out-the-vote programs, but does not include the payment 
        of any administrative or overhead costs, including 
        salaries (other than payments made to individuals for 
        get-out-the-vote activities conducted on the day of an 
        election), rent, fundraising, or communications to 
        members of a political party.
  (c) Restrictions on Use of Funds for Mixed Candi- date-
Specific Activities.--
          (1) Requiring allocation among candidates.--A 
        political party committee may use funds which are not 
        subject to the limitations and prohibitions of this Act 
        for mixed candidate-specific activities if the funds 
        are allocated among the candidates involved on the 
        basis of the time and space allocated to the 
        candidates.
          (2) Mixed candidate-specific activity defined.--In 
        this subsection, the term ``mixed candidate-specific 
        activity'' means any activity which is both for the 
        purpose of promoting a specific candidate or candidates 
        in an election for Federal office and for the purpose 
        of promoting a specific candidate or candidates in any 
        other election.
  (d) Funds for Party Communications With Members.--Subsection 
(a) shall not apply with respect to funds expended by a 
political party for communications to the extent the 
communications are made to members of the party (as determined 
in accordance with section 315(d)(4)), except that any 
communications which are both for the purpose of expressly 
advocating the election or defeat of a specific candidate for 
election to Federal office and for any other purpose shall be 
subject to allocation in the same manner as funds expended for 
mixed candidate-specific activities under subsection (c).
  (e) Funds Available for State and Local Party Volunteer and 
Grassroots Activities.--Subsection (a) shall not apply with 
respect to payments described in section 301(8)(B)(xv) or 
section 301(9)(B)(xi), except that any payments which are both 
for the purpose of expressly advocating the election or defeat 
of a specific candidate for election to Federal office and for 
any other purpose shall be subject to allocation in the same 
manner as funds expended for mixed candidate-specific 
activities under subsection (c).
  (f) Rule of Construction Regarding Intra-Party Transfers.--
Nothing in this section shall be construed to prohibit the 
transfer between and among national, State, or local party 
committees (including any subordinate committees thereof) of 
funds which are not subject to the limitations and prohibitions 
of this Act.
  (g) State and Local Party Committees; Method for Allocating 
Expenditures for Mixed Activities.--
          (1) General rule.--All State and local party 
        committees except those covered by paragraph (2) shall 
        allocate their expenses for mixed activities, as 
        described in subsection (b)(2), according to the ballot 
        composition method described as follows:
                  (A) Under this method, expenses shall be 
                allocated based on the ratio of Federal offices 
                expected on the ballot to total Federal and 
                non-Federal offices expected on the ballot in 
                the next general election to be held in the 
                committee's State or geographic area. This 
                ratio shall be determined by the number of 
                categories of Federal offices on the ballot and 
                the number of categories of non-Federal offices 
                on the ballot, as described in subparagraph 
                (B).
                  (B) In calculating a ballot composition 
                ratio, a State or local party committee shall 
                count the Federal offices of President, United 
                States Senator, and United States 
                Representative, if expected on the ballot in 
                the next general election, as one Federal 
                office each. The committee shall count the non-
                Federal offices of Governor, State Senator, and 
                State Representative, if expected on the ballot 
                in the next general election, as one non-
                Federal office each. The committee shall count 
                the total of all other partisan statewide 
                executive candidates, if expected on the ballot 
                in the next general election, as a maximum of 
                two non-Federal offices. State party committees 
                shall also include in the ratio one additional 
                non-Federal office if any partisan local 
                candidates are expected on the ballot in any 
                regularly scheduled election during the 2 year 
                congressional election cycle. Local party 
                committees shall also include in the ratio a 
                maximum of 2 additional non-Federal offices if 
                any partisan local candidates are expected on 
                the ballot in any regularly scheduled election 
                during the 2 year congressional election cycle. 
                State and local party committees shall also 
                include in the ratio 1 additional non-Federal 
                office.
          (2) Exception for states that do not hold federal and 
        non-federal elections in the same year.--State and 
        local party committees in states that do not hold 
        Federal and non-Federal elections in the same year 
        shall allocate the costs of mixed activities according 
        to the ballot composition method described in paragraph 
        (1), based on a ratio calculated for that calendar 
        year.
          * * * * * * *

                            Federal Mandates

  The Committee states, with respect to section 423 of the 
Congressional Budget Act of 1974, that the bill does not 
include any Federal mandate.
                             MINORITY VIEWS

    On November 2, 1995, Speaker Gingrich told this Committee 
that elections cost too little, and called for an increase in 
the amount of money in politics. He stated: ``[O]ne of the 
greatest myths of American politics is that campaigns are too 
expensive. The political process, in fact, is underfunded; it 
is not overfunded. * * *'' The Campaign Finance Reform Act of 
1996 (H.R. 3760)--which passed the Committee on a party line 
vote--achieves the Speaker's objective. It dramatically 
increases the amount of money in politics and the influence of 
the wealthy special interests that can provide the money.
    First, H.R. 3760 raises most of the contribution limits set 
forth in the Federal Election Campaign Act (``FECA''). The 
proposed increases are staggering. For example, a wealthy 
individual currently can contribute a total of $25,000 per year 
to candidates. PACs, and parties combined. Under the Republican 
bill, that same person could contribute over $3 million, more 
than 125 times the amount that the law presently allows. 
Moreover, the increased limits are indexed to ensure that they 
rise further--and that they continue to do so forever. This 
will ensure that wealthy contributors never lose their 
influence.
    Second, the Republican bill perpetuates the flow of 
unregulated ``soft money'' to the political parties. In the 
103rd Congress, the Republicans proposed a ban on soft money. 
H.R. 3760, by contrast, creates several new loopholes for the 
parties to use non-federal funds. The current Republican 
affection for soft money is unsurprising; in the fifteen month 
period following the 1994 election, the Republican Party 
received approximately $50 million in unregulated soft money 
from wealthy individuals and corporations.
    Third, H.R. 3760 reduces disclosure of political spending 
by special interest groups by codifying the narrowest possible 
definition of an independent expenditure. Under the Republican 
approach, advertising by special interest groups will be secret 
and unregulated unless it includes certain ``magic words.'' 
This provides a blueprint for avoiding disclosure, and invites 
the continued expansion of anonymous negative advertising 
campaigns. The Republicans apparently approve of unregulated 
negative advertisements, because they unanimously rejected 
Democratic efforts to require disclosure of the funding sources 
for such expenditures--including one proposal that was drawn 
directly from the Republican campaign finance proposal in the 
103rd Congress, and was sponsored by Speaker Gingrich and the 
current Chairman of this Committee.
    In sum, the Republican bill does exactly what it was 
designed to do. It dramatically increases the amount of money 
in politics and the political influence of the wealthy 
individuals and special interests who can afford to make the 
massive contributions that H.R. 3760 permits. As a consequence, 
the Republican bill makes ordinary working Americans irrelevant 
to the funding of the political process.

 A. The Republican Bill Dramatically Increases the Amount of Money in 
        Politics and the Influence of Wealthy Special Interests

    Virtually every provision of H.R. 3760 increases the amount 
of money in politics. Moreover, it does so in a way that 
increases the influence of the wealthiest Americans. The bill 
raises the limit on contributions to candidates. It raises the 
limit on contributions to national party committees. It raises 
the limit on contributions to state party committees. It raises 
the limit on contributions to local party committees. As a 
practical matter, the bill eliminates the aggregate limit on 
the amount that a wealthy individual can contribute to a 
political party and its candidates. The current limits permit a 
wealthy individual to contribute more each year than most 
Americans earn in a year. The ``limits'' in the Republican bill 
would permit that wealthy individual to contribute more in a 
single year than most Americans earn in a lifetime.

1. the republican bill will triple contribution limits immediately and 
           will guarantee that they continue to rise forever

    Under the guise of adjusting for inflation, the indexing 
proposal in H.R. 3760 will essentially triple most of the 
contribution limits set forth in the FECA. The indexing 
provision increases all applicable contribution limits by a 
factor of 2.917. Moreover, the provision calls for an automatic 
increase in contribution limits every time an indexed limit 
rises by a multiple of $500. In other words, the bill does not 
merely raise the contribution limits; it ensures that the 
limits continue to rise forever.
    The Republicans defend their proposed increase on the 
grounds that it compensates for inflation. Apparently, they 
fear that the political influence of the wealthy has waned 
because $1,000 contributions are worth less than they used to 
be and because the $25,000 aggregate annual contribution limit 
for individuals has not risen. Few Americans share this 
concern. Most Americans earn less than $25,000 per year and 
cannot conceive of contributing that much to political 
candidates. Nor can ordinary working Americans accept the 
Republican premise that a $1,000 individual contribution limit 
is inadequate, and that the limit must be raised (for now at 
least) to $2,500 per election and $5,000 per election cycle. 
Quite properly, the increased contribution limits proposed in 
H.R. 3760 will exacerbate the public perception that the 
political process is closed to ordinary working Americans, and 
that only the economic elites can participate effectively.
    In any event, it is noteworthy that Republican concerns 
about adjusting for inflation apparently do not extend to 
ordinary working Americans. In 1976--the year in which the 
Republican bill begins indexing contribution limits--the 
minimum wage was $2.30. If that amount were indexed under the 
Republican formula, the minimum wage currently would be $6.71. 
However, earlier this year, the Republicans, including Speaker 
Gingrich and the Chairman of this Committee, opposed raising 
the minimum wage to $5.15.

2. under h.r. 3760, a wealthy individual can give more than $3 million 
                   in contributions in a single year

    The Republican bill permits a wealthy individual to 
contribute immense amounts to candidates, PACs and political 
parties. Currently, an individual may contribute a combined 
total of $25,000 per year to candidates, PACs, and political 
parties. The Republican bill would permit that same individual 
to contribute more than $3 million each year.
    H.R. 3760 increases aggregate contribution limits in 
several ways. First, the bill raises the amount that an 
individual may contribute directly to candidates and PACs from 
$25,000 per calendar year to $72,500. Second, the bill 
increases the amount that an individual may contribute to a 
national political party from $20,000 total per calendar year 
to $58,000 per calendar year for each party committee. Because 
the national parties have three committees, an individual could 
give each party $174,000 per year. Third, the bill raises the 
total amount that an individual can contribute to a state 
political party from $5,000 per calendar year to $58,000 per 
calendar year for each party committee.
    The combined effect of these increases is staggering. As 
noted above, H.R. 3760 permits an individual to give $72,500 to 
candidates and PACs. Under current law, an individual who did 
so could make no other contributions that year. However, H.R. 
3760 exempts contributions to national and state parties from 
an individual's aggregate annual limit. In fact, H.R. 3760 
contains no limit on aggregate contributions to parties. As a 
consequence, the bill would permit an individual to give 
$58,000 to each of the 50 state parties--a total of $2.9 
million--in a single calendar year. The same individual could 
give $174,000 to a national party and $72,500 to candidates and 
PACs. Therefore, under H.R. 3760, a wealthy individual could 
make $3,146,500 in contributions each year, more than 125 times 
as much as he or she could contribute under current law. In 
addition, even these so-called limits are indexed, and would 
increase each year.

      3. the republican bill will increase unregulated soft money 
       contributions by wealthy indiviudals and special interests

    In recent times, soft money has been criticized as a back 
door through which unregulated contributions from wealthy 
individuals and corporations enter the political process. The 
Democratic campaign finance reform bill (H.R. 3505) would 
address this concern by banning soft money. The Republicans 
apparently agreed with this approach in the 103rd Congress. In 
their minority views regarding H.R. 3, the Republicans 
described soft money as a ``loophole'' and called for its 
elimination. Consistent with this rhetoric, the Republican 
campaign finance proposal (H.R. 3470) would have banned the use 
of soft money to influence federal elections.
    H.R. 3760, by contrast, makes no effort to staunch the flow 
of soft money. The newfound Republican attachment to soft money 
can be easily explained. In the fifteen months following the 
1994 election, the Republican Party received approximately $50 
million in soft money from wealthy individuals and 
corporations, more than two and a half times as much as they 
received from 1994-96 when they were in the minority. Thus, the 
Republicans will not sacrifice their partisan fundraising 
advantage on the altar of consistency--or principle. On the 
contrary, the Republican bill exploits the Republican affinity 
for unregulated soft money. The bill does not merely permit the 
continued flow of soft money; it actually expands the ways in 
which soft money can be used. By doing so, H.R. 3760 will 
increase the amount of soft money that flows into the political 
system--and the influence of the wealthy special interests that 
provide it.
    Under current law, a political party must use regulated 
funds to pay for its activities in support of federal 
candidates. If a party's activities benefit both federal and 
state candidates, the party must allocate the costs, and use 
federal funds for the federal portion. H.R. 3760, by contrast, 
would permit the use of unregulated, non-federal funds for a 
party's administrative expenses, including salaries, rent, and 
fundraising costs, even if those expenses were incurred 
entirely for the benefit of federal candidates.
    In addition, H.R. 3760 would permit the political parties 
to use soft money for unlimited communications with party 
members on any subject. Under current law, the parties are free 
to communicate their views to members and other voters, but the 
party expenditures count as contributions to the candidates 
they benefit. Under H.R. 3760, by contrast, most such 
communications would be exempt from a party's contribution 
limits. Moreover, the parties could use unregulated non-federal 
funds to pay for the communications, even if the communications 
were devoted entirely to discussons of federal candidates and 
federal issues. In practice, therefore, H.R. 3760 would permit 
the Republican Party to use unlimited and unregulated corporate 
contributions to pay for continuous attacks on Democratic 
officeholders--and to pretend that the attacks were not 
intended to benefit Republican candidates.
    It is beyond cavil that expanding the permissible uses of 
soft money will encourage the parties to seek more such funds. 
As a consequence, H.R. 3760 encourages the growth in 
unregulated soft money. Thus, the Republican bill would not 
only enormously increase the amount of money in politics, it 
would cause the increase to come from the worst possible 
place--unlimited and unregulated contributions from wealthy 
individuals and corporations. This can only exacerbate the 
public perception that the Republican Congress is for sale to 
the highest bidder.

4. h.r. 3760 encourages negative campaigning by adopting the narrowest 
            possible definition of independent expenditures

    H.R. 3760 encourages anonymous negative advertising. Under 
the guise of a ``bright-line'' test, the bill adopts the 
narrowest possible definition of an independent expenditure. In 
particular, the bill would exempt political advertisements by 
non-candidates from regulation as independent expenditures 
unless they contain certain ``magic words'' such as ``vote 
for'' or ``vote against.'' The Republican proposal would 
prohibit a court from considering the intent of the group 
sponsoring an advertisement. It also would prevent a court from 
considering the context of an advertisement--such as the 
advertisement's proximity in time to an election or the other 
activities of the group sponsoring the advertisement. As such, 
H.R. 3760 would do little more than provide a blueprint for 
avoiding regulation by clever draftsmanship.
    The practical effects of the Republican proposal illustrate 
its absurdity. Under the Republican definition, a special 
interest group like GOPAC could run negative advertisements 
that attack a candidate by name during the weeks before an 
election, and which state that ``It's time for a change''--
without reporting the advertisements to the Federal Election 
Commission or disclosing the funding sources for the 
advertisements. The same special interest group also could run 
advertisements criticizing the Democrats and urging voters to 
``vote Republican''--without reporting its expenditures to the 
FEC or disclosing the funding sources for the advertisements. 
Common sense dictates that these advertisements would have the 
intent--and the effect--of influencing an election. However, as 
long as they avoided the ``magic words,'' they would be 
completely unregulated.
    The American people believe that political campaigns have 
become too negative. The Republican bill thumbs its nose at 
this concern. Instead of limiting the special interest 
advertising that has contributed to the public perception that 
campaigns are too negative, the Republican bill encourages more 
such advertising. H.R. 3760 will open the floodgates to 
unrestrained--and unreported--negative advertising campaigns by 
special interests.

5. the in-district limits proposed by the republicans are an unworkable 
                                  sham

    H.R. 3760 would require congressional candidates to raise 
more than half of their campaign contributions (50% plus one 
cent) from individuals who reside in their congressional 
districts. This proposal raises serious constitutional 
questions regarding the first amendment rights of candidates 
and potential contributors from outside the district. Even if 
the proposal is constitutional, however, it is not workable. 
There is no practical way for a candidate to determine whether 
a contributor lives in his or her district. Moreover, the 
proposal is a sham.

Taken as a whole, the Republican bill would centralize political power 
        in Washington

    The Republicans describe their in-district fundraising 
proposal as a way to return political influence to local 
voters. Under some circumstances, in-district limits might well 
increase the influence of local residents--at least those local 
residents wealthy enough to contribute $2,500 to candidates as 
permitted under H.R. 3760. However, in the context of the 
entire Republican bill, the in-district provision actually 
would have the opposite effect.
    As a practical matter, H.R. 3760 would restrict fundraising 
by individual candidates, but would permit virtually limitless 
contributions to the national and state political parties. The 
bill also would expand dramatically the ways in which a party 
could use those funds to benefit candidates. In addition, the 
Supreme Court recently held that parties may make unlimited 
independent expenditures on behalf of candidates. As a 
consequence, the Republican in-district limits actually would 
shift power--in the form of money and resources--away from 
individual candidates and towards the national party apparatus 
in Washington.

The in-district proposal is unworkable

    As noted previously, there is no reasonable way for a 
candidate to determine where a contributor resides. To begin 
with, a contributor has no legal obligation to provide a 
candidate with his or her address. Moreover, those contributors 
who do provide addresses frequently provide business addresses, 
not their residences. Consequently, there are numerous 
contributors for whom candidates cannot obtain accurate 
addresses.
    Even if a candidate could obtain accurate addresses for all 
contributors, there is no practical way to determine whether 
the contributors live in the candidate's congressional 
district. Voter registration lists, for example, do not include 
all district residents and are not updated sufficiently 
frequently. Zip codes and telephone exchanges may demonstrate 
that contributors live outside a district, but cannot be used 
to determine whether a contributor lives inside a district 
because zip codes and telephone exchanges cross district lines.
    Although a candidate conceivably could combine the 
foregoing information to construct an approximate list of in-
district contributors, the cost and administrative burden 
involved in such an effort would be substantial. For a well-
established and well-funded incumbent, the money and human 
resources to compile the information presumably could be 
diverted from other purposes. For an underfunded challenger, 
however, the burden could doom a campaign. As a practical 
matter, moreover, an incumbent would be far more likely than a 
challenger to have access to the wealthy district residents 
with the resources to contribute the $2,500 per election 
permitted under H.R. 3760. Therefore, the in-district limit 
would severely limit a challenger's ability to raise enough 
money to run a credible campaign. As such, the Republican 
proposal would create an incumbent advantage.
    In sum, the Republican in-district provision is a gimmick, 
not a workable proposal.

6. THE REPUBLICANS IMPOSE SUBSTANTIAL NEW RESPONSIBILITIES ON THE FEC, 
      BUT REFUSE TO PROVIDE SUFFICIENT RESOURCES TO DISCHARGE THEM

    The Republican campaign finance bill would require the FEC 
to discharge a number of additional responsibilities. For 
example, H.R. 3760 would require the FEC to process within 24 
hours all candidate reports filed during the last 20 days of a 
campaign, and to post those reports on the Internet within 24 
hours of receipt. Similarly, the Republicans would establish a 
second procedure whereby the Commission could respond to 
written inquires regarding its rules (advisory opinions already 
are available). Also, the Republican in-district fundraising 
proposal would impose new duties on the FEC--which presumably 
would be called upon to ascertain the residence of 
contributors, at least in disputed cases.
    Whatever the merits of these proposals, they share a common 
flaw. Under the Republican Congress, the FEC lacks the 
resources to carry them out. Moreover, the situation is getting 
worse. This year, by a party-line vote, the Committee froze the 
FEC budget at 1996 levels--which the FEC estimated meant a real 
reduction of approximately $1.2 million.

B. The Democratic Bill Reduces the Amount of Money in Politics and the 
                 Influence of Wealthy Special Interests

    The American people believe that campaigns cost too much. 
They further believe that the cost entailed in seeking or 
retaining office makes candidates vulnerable to improper 
influence from the wealthy special interests that fund 
campaigns. As discussed above, the Republican bill would 
exacerbate the problem by increasing the amount of money in 
politics. The Democratic approach to campaign finance reform, 
by contrast, would effectuate the desire of the American 
people. The fundamental purpose of the Democratic campaign 
finance reform bill (H.R. 3505)--``the American Political 
Reform Act''--is to reduce the amount of money in politics and 
thereby to reduce the influence of the wealthy special 
interests that provide that money.
    The contrast between H.R. 3505 and the Republican bill is 
stark. First and foremost, H.R. 3505 imposes voluntary limits 
on campaign spending. The Republican bill does nothing to limit 
campaign spending. Second, the Democratic bill forces 
candidates to rely on small contributions from ordinary working 
Americans. The Republican bill encourages candidates to raise 
their campaign funds primarily from wealthy individuals and 
special interests. Third, H.R. 3505 bans soft money. The 
Republican bill increases its attractiveness. Fourth, the 
Democratic bill defines independent expenditures far more 
broadly than the Republican bill. Thus, H.R. 3505 would 
diminish anonymous negative advertising while the Republican 
bill would invite it.

 1. THE DEMOCRATIC BILL IMPOSES A VOLUNTARY LIMIT ON CAMPAIGN SPENDING

    The Supreme Court established in 1976 that mandatory 
spending limits for congressional candidates violate the first 
amendment. At the same time, however, the Court held that 
voluntary spending limits do not violate the constitution. As 
such, the Court delineated the best, and possibly the only, 
method for reducing the amount of money in politics--voluntary 
spending limits.
    Following the Supreme Court's lead, the Democratic bill 
establishes a voluntary spending limit for congressional 
candidates. In general, H.R. 3505 would permit a candidate to 
spend $600,000 per election cycle, indexed for inflation. The 
limits do not apply to certain legal and accounting costs 
incurred by campaigns. Also, the limits increase slightly if a 
candidate endures a closely contested primary. The Republicans 
quibble that these provisions raise the actual amount a 
candidate may spend. That observation is true but irrelevant. 
The central point remains: H.R. 3505 limits campaign spending 
and ensures that campaign spending remains limited for all 
times. The Republican bill does not even try to limit spending.

2. The democratic bill will ensure that reduced campaign spending does 
                 not result in reduced political speech

    Speaker Gingrich has opposed campaign spending limits on 
the grounds that American businesses spend more money selling 
consumer products than congressional candidates spend seeking 
election. This argument is a canard. Spending limits are 
entirely compatible with open political discourse.
    The spending limits in H.R. 3505 will not diminish 
political speech. In exchange for limiting their campaign 
spending, candidates would receive reduced rates for 
television, radio and postage. This provision not only makes 
the voluntary limits attractive to candidates--and thus makes 
the limits effective--it also ensures that the American people 
have access to the vigorous political discourse they deserve.
    In sum, the Democratic bill will allow candidates to get 
their message out without becoming beholden to special 
interests. The Republican bill perpetuates the current system 
in which candidates need to raise and spend enormous amounts--
which increases the influence of wealthy special interests at 
the expense of the average American voter.

     3. The democratic bill encourages candidates to rely on small 
                              contributors

    As noted previously, the Republican bill increases the 
influence of the wealthiest contributors by raising the 
contribution limits from $1,000 per election to $2,500 per 
election and by raising the aggregate limit on individual 
contributions from $25,000 per year to $72,500 per year. The 
Democratic bill, by contrast, limits contributions from the 
wealthiest contributors, and encourages candidates to depend 
upon small contributors who give $200 or less. As a practical 
matter, therefore, the Democratic bill shifts political 
influence away from the wealthiest contributors and towards 
ordinary working Americans.
    The Democratic bill divides contribution limits into three 
categories: PACs, large individual contributors, and small 
individual contributors. First, H.R. 3505 limits PAC 
contributions to $200,000 or one-third of a candidate's total 
spending limit. Second, H.R. 3505 caps contributions from 
wealthy contributors who give over $200 to $200,000 or one-
third of candidate's total spending limit. Finally, H.R. 3505 
permits unlimited contributions from small donors who give less 
than $200. Taken together, the contribution limits in H.R. 3505 
encourage candidates to seek contributions from small donors--
and discourage excessive reliance on large contributors and 
PACs. In this fashion, the Democratic bill will reduce the 
influence of wealthy special interests and will enhance the 
influence of ordinary working Americans.

              4. THE DEMOCRATIC BILL ELIMINATES SOFT MONEY

    As discussed above, soft money contributions to political 
parties have been criticized as a loophole in the campaign 
finance laws and as a back door through which wealthy special 
interests gain influence over the political process. These 
concerns are especially acute because soft money contributions 
are unlimited--contributors can give as much as they want--and 
because the contributions often come from corporations and 
other organizations that are prohibited from making direct 
campaign contributions.
    The Democratic bill addresses public concerns over soft 
money by prohibiting soft money contributions. The Republican 
bill does not limit soft money.

    5. THE DEMOCRATS WOULD INCREASE DISCLOSURE OF POLITICAL SPENDING

    Even if the contribution limits and soft money ban 
contained in H.R. 3505 were enacted into law, wealthy special 
interests could redirect much of their political spending into 
less regulated forms, such as independent expenditures and so-
called ``issue advocacy'' campaigns. During the mark-up, the 
Democrats offered several proposals to address this problem. 
All were rejected by the Republicans on party-line votes.

Independent expenditures

    H.R. 3505 would halt some of the most egregious abuses of 
issue advocacy by clarifying the definition of an independent 
expenditure. This provision, which codifies existing law, is 
based on Furgatch v. Federal Election Commission, 807 F.2d 857 
(9th Cir. 1987), a decade-old federal appeals court decision. 
Under Furgatch, a court may consider the context of an 
expenditure or a communication in determining whether it 
contained express advocacy--and thus was intended to influence 
a federal election. This is a reasonable and realistic 
approach, and stands in stark contrast to the Republican bill--
which permits unbridled and unregulated expenditures, so long 
as they do not contain explicit terminology such as ``vote 
for'' or ``vote against.''
    There are three principal effects of defining a 
communication as an independent expenditure: (1) corporations 
and labor organizations are prohibited from making such 
expenditures; (2) groups that make permissible independent 
expenditures must register with the FEC and disclose the 
sources of their contributions; and (3) independent 
expenditures by PACs or political parties must be made with 
regulated federal funds, not unregulated soft money. These 
modest burdens will not limit legitimate political speech in 
any way. They will, however, shed sunlight on political 
spending by interest groups, and apprise the American people 
where the interest groups raised those funds.

Election-related issue advocacy

    Committee Democrats also sought to address concerns raised 
by political communications that do not rise to the level of 
independent expenditures, but still are intended to affect the 
electoral process. In particular, Mr. Fazio offered an 
amendment to compel disclosure of election-related expenditures 
by corporations, labor organizations, and nonprofits. This 
amendment would not have limited speech in any way; however, it 
would have provided the American people with the full range of 
information necessary to evaluate the advertisements that they 
view, including the source of the funds used to pay for the 
advertisements. Disclosure would not affect legitimate issue 
advocacy from identifiable sponsors. However, it would have 
discouraged the anonymous negative advertising campaigns that 
have proliferated lately. Nonetheless, the amendment was 
defeated on a party-line vote.
    The Republican rejection of the amendment is ironic because 
the Republicans drafted the provision, and included it in their 
campaign finance proposal during the 103rd Congress. There are 
two possible explanations for their change of heart: (1) the 
Republicans were not serious about the proposal during the 
103rd Congress and included it in their bill for some other 
reason; or (2) the Republicans no longer want to stem negative 
advertising now that they are in the majority. In either event, 
the lines are clearly drawn. The Democrats want to reduce 
unregulated negative political advertising and the Republicans 
do not.

C. Conclusion

    In light of the foregoing, it is clear that the Democrats 
and the Republicans take fundamentally different approaches to 
campaign finance reform. The Democrats believe that there is 
too much money in politics and that wealthy special interests 
have too much influence. The Republicans believe that there is 
not enough money in politics and that wealthy special interests 
should have greater influence.
    We urge rejection of the Republican ``more money'' bill 
(H.R. 3760) and the passage of the Democratic substitute (H.R. 
3505).


                                   Vic Fazio.
                                   Steny Hoyer.
                                   Ed Pastor.
                                   Sam Gejdenson.
                                   Wm. J. Jefferson.