[Federal Register Volume 66, Number 216 (Wednesday, November 7, 2001)]
[Proposed Rules]
[Pages 56247-56248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27944]


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FEDERAL ELECTION COMMISSION

11 CFR Part 106

[NOTICE 2001-15]


Request for Comment on Draft Statement of Policy Regarding Party 
Committee Transfers of Nonfederal Funds for Payment of Allocable 
Expenses

AGENCY: Federal Election Commission.

ACTION: Draft statement of policy with request for comments.

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SUMMARY: In light of the suspension of fundraising activities by some 
party committees after the terrorist attacks of September 11, 2001, the 
Commission is considering exercising its discretion by not pursuing 
prima facie violations of the 60 day time limit for party committee 
transfers of nonfederal funds to pay for the nonfederal share of 
allocable expenses. The limitations on the scope and duration of the 
policy under consideration will be discussed in detail below. The 
Commission seeks comments on the policy under consideration, and on any 
other circumstances arising out of the events of September 11 that need 
to be addressed.

DATES: Comments must be submitted on or before November 14, 2001.

ADDRESSES: All comments should be addressed to Rosemary C. Smith, 
Assistant General Counsel, and must be submitted in either written or 
electronic form. Written comments should be sent to the Federal 
Election Commission, 999 E Street, NW, Washington, DC 20463. Faxed 
comments should be sent to (202) 219-3923, with printed copy follow-up 
to insure legibility. Electronic mail comments should be sent to 
[email protected]. Commenters sending comments by electronic mail must 
include their full name, electronic mail address and postal service 
address within the text of their comments. Comments that do not contain 
the full name, electronic mail address and postal service address of 
the commenter will not be considered. The Commission will make every 
effort to have public comments posted on its web site within ten 
business days of the close of the comment period.

FOR FURTHER INFORMATION CONTACT: Rosemary C. Smith, Assistant General 
Counsel, or Richard Ewell, Staff Attorney, 999 E Street, NW, 
Washington, D.C. 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: Sections 106.1 and 106.5 of the Commission's 
regulations (11 CFR 106.1 and 106.5) allow party committees to defray 
the costs of activities that relate to both federal and nonfederal 
elections by allocating the costs between their federal and nonfederal 
accounts, so long as they pay an amount equal to or greater than the 
federal portion of these expenses with funds that are permissible under 
the Federal Election Campaign Act, 2 U.S.C. Sec. 431 et seq. [``FECA'' 
or ``the Act''].
    Party committees allocate these expenses by paying the entire 
amount of the expense from a federal account or allocation account, and 
transferring funds from a nonfederal account to

[[Page 56248]]

cover the nonfederal portion of the allocable expense. 11 CFR 
106.5(g)(1)(i) and (ii). The regulations establish a time period, or 
``window,'' during which these nonfederal transfers may be made. 
``[S]uch funds may not be transferred more than 10 days before or more 
than 60 days after the payments for which they are designated are 
made.'' 11 CFR 106.5(g)(2)(ii)(B). Any transfer made more than 60 days 
after payment of the related allocable expense ``shall be presumed to 
be a loan or contribution from the non-federal account to a federal 
account, in violation of the Act.'' 11 CFR 106.5(g)(2)(iii).
    In many instances, party committees plan and execute allocable 
activities based, in part, on the expectation that they will 
subsequently receive nonfederal funds that can be transferred to their 
federal or allocation accounts before the expiration of the 60 day time 
limit in section 106.5(g)(2)(ii)(B). In most instances, committees' 
expectations are realized.
    However, some party committees voluntarily suspended their 
fundraising activities in the immediate aftermath of the September 11, 
2001 terrorist attacks. See e.g., FEC Advisory Opinion Request 2001-16; 
Rachel Van Dongen, Shoptalk, Roll Call, October 11, 2001 http://www.rollcall.com/pages/politics/shoptalk/. As a result, some party 
committees may not have sufficient funds in their nonfederal accounts 
to make transfers to their federal accounts or allocation accounts in a 
timely manner, i.e., within 60 days of when the committee pays the 
allocable expense for which those funds would be transferred.\1\
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    \1\ The Commission notes that the rules permit but do not 
require party committees to transfer nonfederal funds to cover the 
nonfederal portion of an allocable expense, since the effect of not 
making such a transfer would be that federal funds are used to 
defray the full amount of the allocable expense, a result that is 
permissible under the Act and regulations. See Methods of Allocation 
Between Federal and Non-Federal Accounts; Payments; Reporting, 55 FR 
26058, 26063 (June 26, 1990) (explaining that ``allocating a portion 
of certain costs to a committee's non-federal account is a 
permissive rather than a mandated procedure'').
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    The Commission recognizes that this situation is the result of the 
unprecedented events of September 11, 2001, which have had a 
significant impact on many aspects of American life, and could not have 
been anticipated.
    In light of these circumstances, the Commission is considering 
exercising its discretion by not pursuing prima facie violations of the 
60 day time limit in certain limited situations. Under the policy being 
considered, the Commission would not pursue an untimely party committee 
transfer made to cover the nonfederal share of an allocable expense 
paid between August 27, 2001 and November 1, 2001, if the transfer is 
made no later than December 31, 2001, and is fully disclosed on the 
party committee's year end report. Alternatively, the Commission would 
not pursue an untimely party committee transfer made to cover the 
nonfederal share of an allocable expense paid between August 27, 2001 
and December 31, 2001, if the transfer is made no later than March 1, 
2002, and is fully disclosed on the party committee's applicable 
report.
    The Commission invites comments on the policy that is under 
consideration. Comments may be submitted on any aspect of the policy 
being considered, including its scope and duration, or on any other 
circumstance arising out of the attacks of September 11 that should be 
addressed. After reviewing the comments received, the Commission will 
issue a final Statement of Policy.
    The Commission is taking this action in response to the unique 
circumstances described above. Consequently, this action should not be 
viewed as a precedent for any similar action in the future.

    Dated: November 2, 2001.
Danny L. McDonald,
Chairman, Federal Election Commission.
[FR Doc. 01-27944 Filed 11-6-01; 8:45 am]
BILLING CODE 6715-01-U