[Federal Register Volume 67, Number 97 (Monday, May 20, 2002)]
[Proposed Rules]
[Pages 35654-35689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-12177]



[[Page 35653]]

-----------------------------------------------------------------------

Part III





Federal Election Commission





-----------------------------------------------------------------------



11 CFR Parts 100, 102 et al.



Prohibited and Excessive Contributions; Non-Federal Funds or Soft 
Money; Proposed Rule

  Federal Register / Vol. 67, No. 97 / Monday, May 20, 2002 / Proposed 
Rules  

[[Page 35654]]


-----------------------------------------------------------------------

FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 102, 104, 106, 108, 110, 114, 300, and 9034

[Notice 2002-7]


Prohibited and Excessive Contributions; Non-Federal Funds or Soft 
Money

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Election Commission seeks comments on proposed 
changes to its rules relating to funds raised, received, and spent by 
party committees under the Federal Election Campaign Act of 1971, as 
amended (``FECA'' or the ``Act''). The proposed rules are based on the 
Bipartisan Campaign Reform Act of 2002 (``BCRA''), which adds to the 
Act new restrictions and prohibitions on the receipt, solicitation, and 
use of certain types of non-Federal funds, which are commonly referred 
to as ``soft money.'' BCRA and the proposed rules prohibit national 
parties and Federal candidates and officeholders from raising non-
Federal funds. They also generally require State, district, and local 
party committees to fund ``Federal election activity,'' including voter 
registration and get-out-the-vote (``GOTV'') drives, with money raised 
pursuant to the limitations, prohibitions, and reporting requirements 
of the Act, or with a combination of funds subject to various 
requirements of the Act and BCRA. They also address fundraising by 
Federal and non-Federal candidates and officeholders on behalf of 
political party committees, other candidates, and non-profit 
organizations.
    BCRA's general effective date is November 6, 2002, the day 
following the November 2002 general election, although national party 
committees that received soft money prior to that date may use these 
funds for certain purposes before January 1, 2003. The changes to the 
Act's contribution limits take effect on January 1, 2003.
    Further information is contained in the Supplementary Information 
that follows. Please note that the Commission has not made a final 
decision on any of these proposals.

DATES: Comments must be received on or before May 29, 2002. The 
Commission will hold a hearing on these proposed rules on June 4 and 5, 
2002, at 9:30 a.m. Commenters wishing to testify at the hearing must so 
indicate in their written or electronic comments.

ADDRESSES: All comments should be addressed to Ms. Rosemary C. Smith, 
Assistant General Counsel, and must be submitted in either electronic 
or written form. Electronic mail comments should be sent to 
[email protected] and must include the full name, electronic mail 
address, and postal service address of the commenter. Electronic mail 
comments that do not contain the full name, electronic mail address, 
and postal service address of the commenter will not be considered. 
Faxed comments should be sent to (202) 219-3923, with printed copy 
follow-up to ensure legibility. Written comments and printed copies of 
faxed comments should be sent to the Federal Election Commission, 999 E 
Street, NW., Washington, DC 20463. Commenters are strongly encouraged 
to submit comments electronically to ensure timely receipt and 
consideration. The hearing will be held in the Commission's ninth floor 
meeting room, 999 E St. NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Ms. Rosemary C. Smith, Assistant 
General Counsel, or Attorneys Ruth Heilizer (definitions), Jonathan M. 
Levin (office buildings), Dawn Odrowski (national parties and tax-
exempt organizations), Rita A. Reimer (Federal and State candidates), 
John C. Vergelli (Levin funds), or Anne A. Weissenborn (parties), 999 E 
Street NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002 
(``BCRA''), Public Law 107-155, 116 Stat. 81 (March 27, 2002), contains 
extensive and detailed amendments to the Federal Election Campaign Act 
of 1971, as amended (``FECA'' or the ``Act''), 2 U.S.C. 431 et seq. 
This is the first of a series of Notices of Proposed Rulemakings 
(``NPRM'') the Commission will publish over the next several months in 
order to meet the rulemaking deadlines set out in BCRA.
    This NPRM addresses BCRA's new limitations on party, candidate, and 
officeholder solicitation and use of non-Federal funds. Section 402 of 
BCRA establishes a 90-day deadline for the Commission to promulgate 
these rules. Since BCRA was signed into law on March 27, 2002, the 90-
day deadline is June 25, 2002.
    Future NPRMs will address: (1) Electioneering communications and 
issue ads; (2) coordinated and independent expenditures; (3) the so-
called ``millionaire's amendment,'' which increases contribution limits 
for congressional candidates facing self-financed candidates on a 
sliding scale, based on the amount of personal funds the opponent 
contributes to his or her campaign; (4) the increase in contribution 
limits; and (5) other new and amended provisions, including 
contribution prohibitions and reporting. This last NPRM will address 
contributions by minors, foreign nationals, and U.S. nationals; 
inaugural committees; fraudulent solicitations; disclaimers; personal 
use of campaign funds; and civil penalties. BCRA's deadline for 
promulgation of these remaining rules is 270 days after the date of 
enactment, or December 22, 2002. The Commission also plans to address 
BCRA's impact on national nominating conventions in a separate 
rulemaking.
    Because of the extremely tight deadline for promulgating these 
rules, the Commission must adhere to a shorter-than-usual timeline for 
receiving and considering public input on the proposed rules that 
follow. This schedule will be strictly adhered to. Comments on this 
NPRM must be received no later than May 29, 2002. Commenters who wish 
to testify at the June 4 and 5, 2002 public hearing must so indicate in 
their comments, also by May 29, 2002.

Introduction

    The Act limits the amount that individuals can contribute to 
candidates, political committees, and political parties for use in 
Federal elections. 2 U.S.C. 441a. The Act also prohibits corporations 
and labor organizations from contributing their general treasury funds 
for these purposes. 2 U.S.C. 441b. Contributions from national banks, 2 
U.S.C. 441b(a); government contractors, 2 U.S.C. 441c; foreign 
nationals, 2 U.S.C. 441e; and minors, new 2 U.S.C. 441k, as enacted by 
BCRA; as well as contributions made in the name of another, 2 U.S.C. 
441f; are also prohibited. These strictures regulate what is often 
referred to as ``hard money,'' or Federal funds.
    Some donations that do not meet the FECA hard money requirements, 
for example, corporate and labor organization general treasury 
contributions, may not be used for Federal elections, and are referred 
to as non-Federal funds.\1\ Non-Federal funds

[[Page 35655]]

may not be used for the purpose of influencing any election for Federal 
office. Funds raised that are used by State or local parties or State 
or local candidates wholly on non-Federal elections may be governed by 
State or local law. Prior to BCRA's revisions, the FECA permitted 
national party committees, Federal candidates, and officeholders to 
raise money not subject to some of the Act's source limitations and 
prohibitions. Beginning November 6, 2002, under BCRA, national party 
committees ``may not solicit, receive, or direct to another person a 
contribution, donation, or transfer of funds or any other thing of 
value, or spend any funds, that are not subject to the limitations, 
prohibitions, and reporting requirements of this Act.'' 2 U.S.C. 
441i(a).
---------------------------------------------------------------------------

    \1\ Because the term ``soft money'' is used by different people 
to refer to a wide variety of funds under different circumstances, 
the Commission has decided to use the term ``non-Federal funds'' in 
the rules rather than the term ``soft money.'' BCRA itself does not 
use the term except in the heading of Title I of BCRA and the 
headings within Title IV. Some donations that do not meet the Act's 
hard money requirements, for example, those from foreign nationals, 
national banks, and Federal corporations, may not be used at all. 
Nonetheless, the Commission seeks comment on whether use of the term 
``soft money'' would in some instances be a better approach.
---------------------------------------------------------------------------

    BCRA also provides that State, district, and local political party 
committees must pay for ``Federal election activities,'' which is a new 
term introduced and defined by BCRA, 2 U.S.C. 431(20), 441i(b)(1), with 
entirely Federal funds or, in some cases, a mixture of Federal funds 
and a new type of non-Federal funds, which the proposed rules call 
``Levin funds.'' These two provisions are related in that the latter is 
intended to prevent evasion of the former. A national political party 
committee may not evade the restrictions in BCRA by merely transferring 
its spending for Federal election activity to State, district, or local 
party committees. The State, district, and local party committees must 
spend Federal funds on these activities. See 148 Cong. Rec. H408-409 
(daily ed. Feb. 13, 2002) (statement of Rep. Shays).
    The ``Levin Amendment'' (named after Sen. Levin of Michigan who 
offered it) provides an exception or refinement to the requirement that 
State, district, and local party committees must spend only hard money 
for Federal election activities. The Levin Amendment provides that 
State, district, and local political party committees may use funds 
that do not meet all of the Act's limitations, prohibitions, and 
reporting requirements for a portion of certain Federal election 
activities if certain conditions are satisfied. See 2 U.S.C. 
441i(b)(2)(A). The proposed regulations refer to these funds, which are 
a subset of non-Federal funds, as ``Levin funds,'' a term which would 
be defined in the proposed regulations. BCRA does not permit national 
party committees, candidate committees, separate segregated funds, or 
nonconnected committees to raise or spend Levin funds.
    A State, district, or local political party committee may spend 
under the Levin Amendment if the expenditure or disbursement is 
allocated between Federal funds and Levin funds. BCRA contemplates that 
the Commission will adopt regulations prescribing the allocation 
requirements. 2 U.S.C. 441i(b)(2)(A). See below. Under BCRA, Federal 
candidates and officeholders may not solicit or receive non-Federal 
funds in connection with a Federal election, and may raise only limited 
amounts in connection with non-Federal elections. 2 U.S.C. 441i(e)(1) 
and (2). These far-reaching amendments affect many other aspects of the 
Act and the Commission's rules. For example, the prohibition on Federal 
candidate and officeholder solicitation of non-Federal funds, and 
national party committees' solicitation or receipt of non-Federal 
funds, applies to convention committees, which are established by 
national committees under 11 CFR 9008.3(a). These statutory changes 
could apply to other entities as well. See 2 U.S.C. 441i(a)(2). As 
noted above, BCRA's impact on national nominating conventions will be 
addressed in a separate rulemaking. It also will be necessary to 
rewrite the Commission's allocation rules at 11 CFR part 106. See 
below.
    The proposed rules are described and explained below. In several 
sections the Commission has identified specific questions, issues, or 
alternatives for which it seeks comments. In addition, the Commission 
welcomes comments that address issues not raised in this NPRM.

Scope, Effective Date, and Organization

    The Commission proposes to prescribe new rules for non-Federal 
funds of political party committees. The bulk of these rules would be 
in 11 CFR part 300. Proposed 11 CFR 300.1 addresses the scope of new 
part 300, sets forth the effective date of the provisions contained in 
the new part, and outlines the organization of the new part. 
Specifically, proposed paragraph (a) of section 300.1 states that 
proposed new part 300 would implement changes to the FECA, enacted by 
Title I of BCRA. It also notes that nothing in part 300 is intended to 
alter the definitions, restrictions, liabilities, and obligations 
imposed by sections 431-455 of Title 2 of the United States Code or in 
the regulations prescribed thereunder in 11 CFR parts 100-116.
    The effective date of BCRA, except where otherwise stated, is 
November 6, 2002. See 2 U.S.C. 431 note, section 402(a). Paragraph (b) 
of proposed section 300.1 states that part 300 would take effect on 
November 6, 2002, except for the following: (1) Where otherwise stated 
in part 300; (2) subpart B of part 300 relating to State, district, and 
local party committees will not apply with respect to runoff elections, 
recounts, or election contests resulting from elections held prior to 
November 6, 2002; (3) the increase in individual contribution limits to 
State party committees as set forth in proposed 11 CFR 110.1(c)(5) will 
apply to contributions made on or after January 1, 2003, and (4) 
national parties must spend any remaining non-Federal funds received 
before November 6 and in their possession on that date before January 
1, 2003, subject to the transition rules set forth in proposed 11 CFR 
300.12.
    Finally, paragraph (c) of section 300.1 indicates that part 300 
would be organized into five subparts, with each subpart addressing a 
specific category of persons affected by BCRA. Specifically, subpart A 
of part 300 prescribes rules pertaining to national party committees; 
subpart B prescribes rules pertaining to State, district, and local 
party committees and organizations; subpart C addresses rules affecting 
certain tax-exempt organizations; subpart D prescribes rules pertaining 
to Federal candidates and Federal officeholders; and subpart E 
prescribes rules pertaining to State and local candidates. BCRA also 
requires changes in these parts of Title 11 of the Code of Federal 
Regulations, which are also addressed in this rulemaking.

Definitions

    The proposed rules would amend an existing definition and add 
several new ones. Some of the new definitions would be added to current 
11 CFR part 100 because they would have general applicability in Title 
11 of the Code of Federal Regulations. The remaining new definitions 
would be added to proposed new 11 CFR part 300. The definitions are 
explained below.

1. Proposed 11 CFR 100.24  Definition of ``Federal Election Activity''

    BCRA amends 2 U.S.C. 431 by adding a new term, ``Federal election 
activity,'' which consists of certain activities that State and local 
committees of political parties must pay for with either Federal funds 
or a combination of Federal funds and Levin funds. As stated above, 
Levin funds are funds which are exempt from the restrictions and 
prohibitions of the Act, but which are limited, under BCRA, to $10,000 
per donor and which must comply with State law.
    The proposed definition of Federal election activity, which would 
be incorporated into proposed new 11 CFR

[[Page 35656]]

100.24, tracks BCRA by including in Federal election activity the 
following activities when they occur in close proximity to, or in 
connection with, a Federal election: Voter registration; voter 
identification; GOTV drives; and public communications that refer to 
clearly identified Federal candidates, even if candidates for State and 
local offices are also mentioned. (``Generic campaign activities'' are 
discussed below.)
    With respect to ``voter registration activity,'' which is addressed 
in proposed 11 CFR 100.24(a)(1), ``special elections'' are excluded, 
pursuant to BCRA. However, with regard to proposed 11 CFR 100.24(a)(2), 
which addresses other activities conducted in connection with an 
election, such as voter identification and GOTV activities, BCRA does 
not exclude ``special elections.'' Therefore, under proposed 11 CFR 
100.24(a)(2), voter identification and GOTV activities would constitute 
Federal election activity if conducted in connection with special 
elections.
    Proposed 11 CFR 100.24(a)(2)(i) would set forth examples of ``voter 
identification,'' such as activities designed to determine registered 
voters, likely voters, or voters indicating a preference for a 
candidate or political party. The Commission seeks comments as to 
whether those are appropriate examples of voter identification, or 
whether they are too broad or too narrow. Do efforts to identify 
potential voters for State or local candidates, without any mention of 
a Federal candidate, constitute Federal election activity? Should there 
be a de minimis level of voter identification activities related to 
Federal elections that would nonetheless not render certain activities 
``Federal election activities'' under BCRA? For example, would a State 
committee's purchase of a list of voters from a vendor for the purpose 
of State fundraising constitute ``Federal election activity''? Should 
``voter identification'' be read in conjunction with ``GOTV'' to reach 
only those activities intended to identify voters for GOTV purposes? 
Should there be a defined time period that distinguishes ``voter 
identification'' from GOTV activities? For example, is an activity 
designed to identify supporters of a gubernatorial candidate ``voter 
identification'' if conducted several weeks or months before an 
election, but ``GOTV'' if conducted within a week of the election? What 
other examples of ``voter identification'' should be included in the 
regulations?
    The Commission also notes that some examples of ``voter 
identification,'' such as activities designed to determine registered 
voters or likely voters, may sometimes be conducted on a nonpartisan 
basis. Nonpartisan activities intended to encourage individuals to vote 
or to register to vote appear to come within the definition of 
``Federal election activity'' under BCRA. Nevertheless, should non-
partisan GOTV drives be excluded from the definition of ``Federal 
election activity'' in 11 CFR 100.24? See 2 U.S.C. 431(9)(B)(ix). Is it 
appropriate to treat certain party or candidate-initiated or 501(c) 
activities as nonpartisan voter drives? If so, under what conditions?
    Proposed 11 CFR 100.24(a)(2)(iii) contains the following examples 
of GOTV activities: Transporting voters to the polls; contacting voters 
on election day or shortly before to encourage voting, but without 
referring to any clearly identified candidate for Federal office; and 
distributing printed slate cards, sample ballots, palm cards, or other 
printed listing(s) of three or more candidates for any public office. 
The Commission seeks comments as to whether there should be a de 
minimis level of GOTV activities related to Federal elections that 
would nonetheless not render these activities ``Federal election 
activities'' under BCRA.
    In addition, the Commission seeks comments concerning additional 
examples of GOTV activity for possible inclusion in the final version 
of this proposed rule. The Commission also seeks comments on whether 
printed slate cards, sample ballots, and palm cards should properly be 
considered GOTV activities or ``public communications.''
    The Commission notes that, although slate cards, sample ballots, 
and printed listings of three or more candidates are exempted from the 
Act's definitions of ``contribution'' and ``expenditure,'' (see 2 
U.S.C. 431(8)(b)(v) and (9)(b)(iv)), they could be viewed as falling 
within the term ``Federal election activities'' under BCRA. Should 
they?
    The Commission also notes that voter identification, GOTV, and 
generic campaign activity are only ``Federal election activities'' 
under BCRA when they are conducted in connection with an election in 
which a candidate for Federal office appears on the ballot (regardless 
of whether a candidate for State of local office also appears on the 
ballot.) The Commission seeks comments on how this requirement should 
be construed and implemented--specifically, during what period(s) of 
time should a Federal candidate be deemed to be on the ballot? Congress 
clearly intended to establish certain periods of time in which a 
Federal candidate is not deemed to be on the ballot. How should the 
Commission proceed in effectuating Congress' intent?
    The Commission notes that there are a variety of ways in which 
Federal candidates may qualify to have their names placed on the 
ballots of their States and that these processes are governed by State 
law. In addition, the method by which a candidate for Federal office 
obtains a position on the ballot is likely to differ for primaries and 
general elections. In some cases, one State political party may choose 
its candidate for Federal office before other State political parties 
choose their candidates. Should the Commission construe the statutory 
language ``on the ballot'' to encompass the period of time beginning on 
the earliest date that any Federal candidate could qualify for a 
position on the ballot according to the time periods specified in the 
applicable State law or should the time period begin on the day the 
filing period for Federal offices closes under State law? In the 
alternative, does this time period begin on January 1 of any Federal 
election year, that is, each even-numbered year? Or should the time 
period begin on the date that any individual has become a Federal 
candidate under the Act? See 2 U.S.C. 431(2) and 11 CFR 100.3(a)(1) 
through (4) regarding the definition of ``candidate'' for FECA 
purposes. In some States, most non-Federal elections are held in odd-
numbered years. Should the Commission only exempt from ``Federal 
election activity'' that voter identification, GOTV, and generic 
campaign activity that occurs in such States in odd-numbered years?
    Proposed 11 CFR 100.24(a)(3) follows new 2 U.S.C. 431(20) by 
providing that a public communication that refers to a clearly 
identified candidate for Federal office would constitute ``Federal 
election activity'' that must be paid for with Federal funds if the 
communication promotes, supports, attacks, or opposes any candidate for 
that Federal office. This is true even if a candidate for State or 
local office is also mentioned or identified. However, public 
communications that do not promote, support, attack, or oppose any 
Federal candidate, as well as certain contributions to State or local 
candidates, the costs of State, district, or local political 
conventions or similar meetings and conferences, and grassroots 
materials that refer only to non-Federal candidates would be 
specifically excluded from the definition of ``Federal election 
activity.''
    ``Public communication'' is defined in proposed 11 CFR 100.26, 
discussed

[[Page 35657]]

below. Thus, the definition of ``Federal election activity'' in 
proposed 11 CFR 100.24 and BCRA would extend beyond communications 
expressly advocating a vote for or against a candidate. Note that a 
proposed definition of ``promote or support or attack or oppose'' is 
set forth in proposed 11 CFR 300.2(l), which is discussed below.
    BCRA also crafted 2 U.S.C. 431(20) to exempt from the definition of 
``Federal election activity'' certain expenditures or disbursements by 
State, district, or local committees of political parties for certain 
activities which may be paid for with non-Federal funds. These 
activities are:
    (1) Public communications that refer to a clearly identified 
candidate for State or local office, provided that the public 
communications are not voter registration activity, voter 
identification, generic campaign activity, or GOTV activity, as those 
terms are defined in proposed 11 CFR 100.24(a). This exception does not 
apply, for example, to a telephone bank on the day before an election 
where there is a federal candidate on the ballot and where GOTV phone 
calls are made to over 500 voters where the calls only refer to a State 
or local candidate (proposed 11 CFR 100.24(b)(1)).
    (2) Contributions to candidates for State or local office, provided 
that the contributions are not for Federal election activities 
(proposed 11 CFR 100.24(b)(2)).
    (3) The costs of State, district, or local political conventions, 
meetings or conferences (proposed 11 CFR 100.24(b)(3)).
    (4) The costs of grassroots campaign materials, including buttons, 
bumper stickers, handbills, brochures, posters and yard signs, that 
name or depict no Federal candidate (proposed 11 CFR 100.24(b)(4)).
    (5) Voter registration activity before or after the dates during 
which this activity becomes Federal election activity (proposed 11 CFR 
100.24(b)(5)).
    (6) GOTV and voter identification activities in elections in which 
no candidate for Federal office appears on the ballot (proposed 11 CFR 
100.24(b)(6)).
    The Commission also seeks comments concerning additional examples 
of ``grassroots'' activities.

2. Proposed 11 CFR 100.25  Definition of ``Generic Campaign Activity''

    Proposed section 100.25 contains the new statutory definition of 
``generic campaign activity,'' which is campaign activity that promotes 
a political party, and not a candidate for Federal office or for non-
Federal office. The proposed rules would add to the statutory 
definition those activities that oppose a political party without 
opposing specific candidates. Activities in opposition to a particular 
party or candidate may be construed as a form of promoting the other 
party or other candidates. Unlike ``voter registration activity,'' as 
described in 11 CFR 100.24(a)(1), the Commission is proposing to 
interpret ``generic campaign activity'' to apply to special elections. 
In addition, the Commission seeks comment on the extent, if any, to 
which the exclusions for exempt activities in 11 CFR 100.7(b)(9), (15), 
(17) and 100.8(b)(8), (10), and (16), should apply to the definition of 
``generic campaign activity. ``

3. Proposed 11 CFR 100.26  Definition of ``Public Communication''

    BCRA amends 2 U.S.C. 431 by adding a new definition for the term 
``public communication.'' BCRA defines ``public communication'' to 
include communication by broadcast, cable, satellite, newspaper, 
magazine, outdoor advertising facility, mass mailing or telephone bank 
to the general public, or any other form of general public political 
advertising. In proposed 11 CFR 100.26, the Commission has not included 
the Internet as a form of ``general public political advertising'' 
because this provision of BCRA does not refer to the Internet. However, 
the Commission seeks comments as to whether the definition of ``public 
communication'' in proposed 11 CFR 100.26 should include or exclude 
communications provided through the use of World Wide Web sites 
available to the public, widely distributed electronic mail, or other 
uses of the Internet, such as ``Webcasts'' or the transmission of high-
quality voice, graphics, or video advertisements.
    A letter sent by Chairman Mason and Commissioner Smith requested 
that Congress clarify whether the term ``public communication'' was 
intended to encompass communications sent over the Internet. The letter 
noted that the definition included ``any other form of general public 
political advertising,'' and stated: ``The Commission has treated 
Internet web pages available to the public and widely-distributed e-
mail as forms of `general public political communication.' Thus, the 
new definition combined with the Commission's established 
interpretation of the FECA could command regulation of Internet and e-
mail communications.'' See 148 Cong. Rec. S2340 (daily ed. March 22, 
2002). Congress did not express agreement or disagreement with this 
interpretation.

4. Proposed 11 CFR 100.27  Definition of ``Mass Mailing''

    BCRA amends 2 U.S.C. 431 by adding a new definition of the term 
``mass mailing.'' This new definition, which is set out in proposed 11 
CFR 100.27, would include any mailing by United States mail or 
facsimile of more than 500 pieces of mail matter of an identical or 
substantially similar nature within any 30-day period.
    The term ``substantially similar'' is also used in the Commission's 
disclaimer regulations at 11 CFR 110.11(a)(3). When these rules were 
adopted in 1995, the Commission explained that technological advances 
now permit what is basically the same communication to be personalized 
to include the recipient's name, occupation, geographic location, and 
similar variables. Communications are considered ``substantially 
similar'' for purposes of the disclaimer rules if they would be the 
same but for such individualization. See Explanation and Justification 
for Regulations on Communications Disclaimer Requirements, 60 FR 52069, 
52070 (Oct. 5, 1995). The Commission is proposing that the term 
``substantially similar'' as used in proposed 11 CFR 100.27 have the 
identical meaning, and is including language to this effect in the text 
of the rule. However, it welcomes comments as to whether some other 
definition of ``substantially similar'' would be more appropriate in 
this context.

5. Proposed 11 CFR 100.28  Definition of ``Telephone Bank''

    BCRA amends 2 U.S.C. 431 by adding a new definition of the term 
``telephone bank.'' This new definition, which is set out in proposed 
11 CFR 100.28, would include more than 500 telephone calls of an 
identical or substantially similar nature within any 30-day period. The 
Commission is also proposing to address the meaning of ``substantially 
similar'' in the text of the rules. See discussion of proposed 11 CFR 
100.27, above.

6. Proposed 11 CFR 300.2  Definitions

    In proposed new section 300.2, the Commission seeks comments on 
draft definitions for the following terms: ``501(c) organization that 
makes expenditures or disbursements in connection with a Federal 
election''; ``agent''; ``directly or indirectly establish, finance, 
maintain, or control''; ``disbursement''; ``donation''; ``Federal 
account''; ``Federal funds''; ``Levin account''; ``Levin funds''; 
``non-Federal account''; ``non-Federal funds''; ``promote, support, 
attack, or oppose'';

[[Page 35658]]

and ``to solicit or direct.'' Several of these terms are adapted from 
existing rules.
    Several key terms are discussed in further detail below. In 
addition, the Commission notes that proposed 11 CFR 300.2 defines 
several phrases, such as ``directly or indirectly establish, finance, 
maintain, or control,'' ``to solicit or direct,'' and ``promote or 
support or attack or oppose,'' rather than attempting to define the 
individual words in each phrase. Comments are sought on this approach, 
and on the clarity and scope of these definitions.
A. Definition of ``Agent''
    With respect to the definition of ``agent,'' the Commission seeks 
comments as to when an agent is acting ``on behalf of'' a principal. 
Additionally, the Commission seeks comments as to the circumstances 
under which a principal, such as a party committee or a candidate, 
would be held liable for the actions of an agent, such as an individual 
soliciting funds on behalf of the committee for a 501(c) organization. 
For example, must such an individual be a paid employee of the 
principal (i.e., the candidate or officeholder) in order to qualify as 
an agent or would a vendor or independent consultant hired by a 
candidate or political committee qualify as an agent? Could a principal 
be held responsible for the actions of a volunteer who solicited 
impermissible funds if the volunteer was making solicitations pursuant 
to general written or oral instructions from the principal? Would a 
volunteer qualify as an agent if a principal had knowledge that a 
volunteer was making impermissible solicitations using the candidate's 
name without being specifically directed by the principal to do so? In 
addition, should a principal only be held liable if an agent has 
actual, as opposed to apparent, authority to engage in the alleged 
actions at issue? Similarly, should a principal only be held liable if 
an agent has express, rather than implied, authority to act? Or should 
the Commission not attempt to define agency concepts in this part of 
the regulations, but instead leave the concepts undefined for purposes 
of BCRA and rely on common law definitions? Please note that the latter 
approach would depart from the approach taken regarding the definition 
of agency in the current independent expenditure rules. See 11 CFR 
109.1(b)(5).
B. Definition of ``Directly or Indirectly Establish, Finance, Maintain, 
or Control''
    Proposed 11 CFR 300.2(c) would define ``directly or indirectly 
establish, finance, maintain, or control,'' a term that is used in 
several provisions of BCRA. (The phrase ``established, financed, 
maintained, or controlled'' already appears in the Commission's 
``affiliation'' regulation. See 2 U.S.C. 441a(a)(5), 11 CFR 100.5(g).) 
The term appears in BCRA in the context of State, district, and local 
political party committees (see, e.g., 2 U.S.C. 441i(b)(2)(B)(iii)) and 
of Federal candidates and officeholders (see, e.g., 2 U.S.C. 
441i(e)(1)).
    In BCRA, ``directly or indirectly establish, finance, maintain, or 
control'' is used in one context which seems to be akin to the current 
affiliation rule, that is, determining when ostensibly separate 
entities share a contribution limit. See 2 U.S.C. 441i(b)(2)(B)(iii). 
This usage would suggest that the existing affiliation regulation is 
helpful in understanding what is meant by ``directly or indirectly 
establish, finance, maintain, or control.'' The term, ``directly or 
indirectly establish, finance, maintain, or control,'' however, is also 
used in what seems to be a slightly different manner. For example, a 
State, district, or local committee of a political party must not use 
as ``Levin funds'' (a term that would also be defined in this section) 
any funds transferred to it from, among other persons, ``any other 
State, local, or district committee of any State party, * * * or * * * 
any entity directly or indirectly established, financed, maintained, or 
controlled [by the State party committee].'' 2 U.S.C. 
441i(b)(2)(B)(iv)(I), (IV); see also 2 U.S.C. 441i(e)(1). This latter 
usage suggests a different purpose, namely preventing the proliferation 
of committees or organizations as a means of evading the Levin 
Amendment transfer prohibition, as well as other BCRA prohibitions.
    The definition in proposed 11 CFR 300.2(c) would accommodate both 
of the usages of the term ``directly or indirectly establish, finance, 
maintain, or control.'' Proposed paragraph (c)(1) would begin by 
enumerating the persons to whom the regulation would apply, and would 
employ the shorthand ``sponsor'' to refer to these persons. Also in 
proposed paragraph (c)(1), the statutory concept of ``indirect'' 
establishment, financing, maintenance, or control would be addressed by 
including actions taken by a sponsor's agents, and those taken on 
behalf of the sponsor, or at the sponsor's behest, within the 
definition.
    Proposed paragraph (c)(1)(i) would provide that a sponsor 
``directly or indirectly establishes, finances, maintains, or 
controls'' an entity if the sponsor and the entity would be considered 
affiliated under 11 CFR 100.5(g).
    Given that the term, ``directly or indirectly establish, finance, 
maintain, and control,'' seems also to have a somewhat broader meaning 
in other contexts, proposed paragraphs (c)(1)(ii) through (c)(1)(vi) 
would go on to state other conditions in which a sponsor would 
``directly or indirectly establish, finance, maintain, or control'' an 
entity. The Commission seeks comment on whether this term should be 
interpreted to extend beyond the current affiliation standard.
    Proposed paragraph (c)(1)(ii) would focus on the establishment of 
entities by sponsors, and would extend to the conversion of an existing 
entity. Note that the proposed phrase, ``alone or in combination with 
others,'' would extend this provision to circumstances in which a 
sponsor (or its agent) was not solely responsible for the establishment 
of the entity, but worked with one or more other persons to establish 
the entity. The Commission seeks comment on whether this proposed 
paragraph should apply only to entities established by a sponsor after 
a given date (perhaps November 6, 2002, which is the effective date of 
BCRA), provided that the sponsor and the entity are not affiliated and 
do not satisfy the conditions in proposed paragraphs (c)(1)(iii) 
through (vi). In the alternative, should there be a rebuttable 
presumption that entities organized before a given date are not 
directly or indirectly established by a sponsor, provided that the 
sponsor and the entity are not affiliated and do not satisfy the 
conditions in proposed paragraphs (c)(1)(iii) through (vi)?
    Proposed paragraph (c)(1)(iii) would address financing of an entity 
by a sponsor. It would state that providing a ``significant amount of 
the entity's funding at any point'' would suffice to constitute 
``financing.'' The proposed paragraph would enumerate three factors to 
be used in gauging the ``significance'' of funding. These factors would 
go to the magnitude, frequency, and duration of funding, and to how 
recently or distantly (in time) the funding has been provided. For 
example, a sponsor that had provided a sizable, but one-time 
contribution to an entity many years earlier would be able to assert 
that the one-time nature of the contribution, combined with its

[[Page 35659]]

remoteness in time, make this funding not ``significant,'' as the term 
is used here.
    Proposed paragraph (c)(1)(iv) would address the maintenance of an 
entity by a sponsor. It would state that providing certain services to 
an entity would constitute ``maintaining'' the entity. The Commission 
seeks comment on whether there should be a de minimis exception to this 
provision. For example, if a party committee provides a de minimis 
amount of administrative services to a party-related organization, such 
as a governor's association, should this activity be included in this 
provision?
    Proposed paragraphs (c)(1)(v) and (c)(1)(vi) would go to control of 
an entity by a sponsor. Proposed paragraph (c)(1)(v) would focus on 
control, whether formal or informal, by the sponsor of solicitation of 
contributions and donations, and of making expenditures or 
disbursement, by the entity. Proposed paragraph (c)(1)(vi) would focus 
on more formal or structural decision-making relationships between the 
sponsor and the entity.
    The Commission seeks comment on several aspects of these 
conditions. In proposed paragraph (c)(1)(ii), a sponsor would 
``directly or indirectly establish, finance, maintain, or control'' an 
entity if the sponsor provided ``any funding'' for the formation or 
organization of the entity. The Commission seeks comment as to whether 
there should be a de minimis exception to the proposed ``any funding'' 
rule. Proposed paragraph (c)(1)(iii) would provide that a sponsor would 
``directly or indirectly establish, finance, maintain, and control'' an 
entity if the sponsor ``provides a significant amount of the entity's 
funding at any point in the entity's existence.'' The Commission seeks 
comment about whether ``at any point'' should be replaced with a 
temporal limit (e.g., ``within the past 5 years'').
    Proposed paragraph (c)(2) would provide a mechanism for a sponsor 
or an entity to request a determination by the Commission through the 
advisory opinion process that the sponsor is no longer deemed to 
finance, maintain, or control an entity, even if it established the 
entity.
C. Definition of ``Donation''
    BCRA uses but does not define the term ``donation.'' The Commission 
proposes to define a ``donation'' in 11 CFR 300.2(e) as a payment, 
gift, subscription, loan, advance, deposit, or anything of value given 
to a non-Federal candidate or party committee, but not including a 
contribution or transfer. Comments are sought on specifically excluding 
from ``donation'' some of the exemptions to ``contribution'' set forth 
in existing 11 CFR 100.7(b). Under this approach, the following would 
not be donations: Funds received solely for the purpose of determining 
whether an individual should become a Federal candidate (existing 11 
CFR 100.7(b)(1)(i)); any cost incurred in covering or carrying a news 
story, commentary, or editorial by any broadcasting station, newspaper, 
magazine, or other periodical publisher (existing 11 CFR 100.7(b)(2)); 
individual volunteer services provided without compensation to Federal 
candidates and political committees (existing 11 CFR 100.7(b)(3)); the 
costs of providing the use of residential premises or of church or 
community rooms in the course of volunteering personal services to 
candidates or political parties (existing 11 CFR 100.7(b)(4) and (5)); 
the cost of invitations, food, and beverages in accordance with 
existing 11 CFR 100.7(b)(6); unreimbursed transportation and 
subsistence costs under existing 11 CFR 100.7(b)(7); and the staging of 
candidate debates in accordance with existing 11 CFR 100.7(b)(20) and 
(21). The Commission seeks comments concerning whether each of these 
activities should be expressly exempted from the definition of 
``donation.'' What, if any, additional expenses should be excluded from 
the definition of ``donation''? For example, are there particular 
activities that have been recognized through the Commission's advisory 
opinion process as exempt from the definition of ``contribution'' 
(e.g., funds given to a candidate's legal defense fund) that should be 
exempt from the definition of ``donation'' as well?
D. Definitions of ``Levin Funds'' and ``Levin Accounts''
    As explained above, BCRA's Levin Amendment provides that State, 
district, and local political party committees may spend certain non-
Federal funds for Federal election activities if those funds comply 
with certain prohibitions, limitations, and reporting requirements 
added to the Act by BCRA. 2 U.S.C. 441i(b)(2)(A)(ii). Thus, these funds 
are unlike Federal funds, which are fully subject to the Act's 
requirements, and unlike ``regular'' non-Federal funds because they are 
subject to certain additional requirements under BCRA. Proposed 
paragraph (i) of proposed 11 CFR 300.2 would define these funds as 
``Levin funds,'' with the intention that ``Levin funds'' become a 
definite, unambiguous reference to such funds. Note that the proposed 
definition contemplates that a State, district, or local political 
party committee would be permitted to spend Levin funds on non-Federal 
activity or Federal election activity. As explained more thoroughly 
below in the discussion of proposed 11 CFR 300.32, the Commission seeks 
comment as to whether the Levin Amendment (2 U.S.C. 441i(b)(2)) should 
be interpreted to permit the spending of Levin funds for any purpose 
other than Federal election activity.
    The Commission is considering requiring State, district, and local 
political party committees to set up a separate account to handle Levin 
funds if they raise and spend such funds. Proposed paragraph (h) of 
proposed 11 CFR 300.2 would define ``Levin account'' as these separate 
accounts for handling Levin funds, which would be established under 
proposed 11 CFR 300.30. Again, the intention is that the term would 
become an unambiguous reference to such accounts. The Commission seeks 
comment as to whether a requirement for mandatory Levin accounts would 
be more or less burdensome than the alternative of allowing party 
committees to deposit and spend Levin funds from any non-Federal 
account. The alternative approach would include a requirement that the 
committee must be able to show by a reasonable accounting method that 
the non-Federal portion of an expenditure for Federal election 
activities under the Levin Amendment (see 2 U.S.C. 441i(b)(2)(A)) was 
comprised of lawful Levin funds.
E. Definition of ``Promote or Support or Attack or Oppose''
    BCRA uses the terms, ``promote,'' support,'' ``attack,'' and 
``oppose'' in both the Levin Amendment and elsewhere, but does not 
define these terms. The proposed rules at 11 CFR 300.2(l) include a 
definition, which incorporates the concept of ``unmistakably and 
unambiguously'' encouraging actions to elect or defeat a clearly 
identified candidate. Cf. Buckley v. Valeo, 424 U.S. 1, 43-44 (1976) 
(restricting the reach of former 18 U.S.C. 608(e)'s ``clearly 
identified'' to ``an explicit and unambiguous reference to the 
candidate.'') The Commission has also included language in section 
300.2(l) from its existing express advocacy regulations, 11 CFR 
100.22(a) and (b), but has broadened the scope of these provisions in 
order to effectuate BCRA's intention of enlarging the scope of 
regulated communications. The Commission seeks comments as to whether 
its proposed definition is too broad or too narrow, and why. 
Specifically, the Commission seeks

[[Page 35660]]

comments as to what definition is most likely to survive Constitutional 
scrutiny.
F. Definition of ``To Solicit or Direct''
    Lastly, proposed 11 CFR 300.2(m) contains a definition of ``to 
solicit or direct'' a contribution or donation. The draft definition 
would include a request, suggestion, or recommendation to make a 
contribution or donation, including those made through a conduit or 
intermediary. However, the definition does not construe advice or 
guidance as to applicable laws to constitute a ``solicitation.'' The 
Commission seeks comments as to how the concept of ``solicitation'' 
should be applied to a series of conversations which, taken together, 
constitute a request for contributions or donations, but which do not 
do so individually. Comment is also sought as to whether the proposed 
definition is too broad or narrow, as well as whether the term 
``direct'' in BCRA should be interpreted to follow the earmarking rules 
regarding contributions directed through a conduit or intermediary 
under 2 U.S.C. 441a(a)(8). Comment is also sought as to whether the 
passive providing of information in response to an unsolicited request 
for information should be specifically excluded from this definition.

National Party Committees

    BCRA prohibits national party committees from raising and spending 
non-Federal funds, that is, funds that are not subject to the 
prohibitions, limitations, and reporting requirements of the Act. See 2 
U.S.C. 441i(a). In explaining the purpose of this prohibition, BCRA co-
sponsor, Congressman Shays, stated: ``The purpose of these provisions 
is simple: to put the national parties entirely out of the soft money 
business.'' According to Congressman Shays, the corrupting dangers of 
funds raised outside the Act's prohibitions, limitations, and reporting 
requirements is present in the funding of national parties given that 
they operate at the national level and ``are inextricably intertwined 
with Federal officeholders and candidates, who raise money for them * * 
*'' 148 Cong. Rec. H408-409 (daily ed. February 13, 2002) (statement of 
Rep. Shays).
    The Commission is proposing to place the regulations that address 
this prohibition in a new part of the Code of Federal Regulations, 11 
CFR part 300, subpart A. In addition to proposing this new subpart, the 
Commission is also proposing to amend current 11 CFR 102.5 to conform 
with BCRA's prohibition on national party committees and Federal 
candidates and officeholders from raising and spending non-Federal 
funds.

1. Proposed 11 CFR 300.10  General Prohibitions

    The proposed rules at 11 CFR 300.10 track the language of BCRA in 
prohibiting national party committees from soliciting, receiving, or 
directing to another person ``a contribution, donation, or transfer of 
funds or any other thing of value,'' or spending funds that are not 
subject to the Act's prohibitions, limitations, and reporting 
requirements. Accordingly, national party committees would no longer be 
able to accept funds from corporations or labor organizations or funds 
from individuals and others that exceed the limitations of the Act. 
Further, all expenditures and disbursements made by a national party 
committee, including donations to State and local candidates and 
donations or transfers to State parties, would be made with Federal 
funds.
    The national party ban on raising and spending non-Federal funds 
has widespread application. BCRA expressly provides that the 
prohibition on raising and spending non-Federal funds also applies to 
the national party congressional committees (currently, the Democratic 
Senatorial Campaign Committee, the National Republican Senatorial 
Committee, the Democratic Congressional Campaign Committee, and the 
National Republican Congressional Committee), to officers and agents 
acting on behalf of a national party committee or a national party 
congressional committee, and to any entities directly or indirectly 
established, financed, maintained, or controlled by either. 2 U.S.C. 
441i(a)(1) and (2). ``The provision is intended to be comprehensive at 
the national party level. Simply put, the national parties and anyone 
operating on behalf of them are not to raise or spend nor [sic] to 
direct or control soft money.'' 148 Cong. Rec. H408-409 (daily ed. 
February 13, 2002) (statement of Rep. Shays).
    The proposed rules track the statutory language. See proposed 11 
CFR 300.10(a) and (c). Consequently, Federal candidates or Federal 
officeholders, or anyone else acting on behalf of a national party 
committee would not be able to raise or spend non-Federal funds or 
direct them to other persons. Similarly, party-created entities such as 
convention committees, which are established by a national party 
committee in accordance with 11 CFR 9008.3(a)(2) to conduct the daily 
operations of a party's national nominating convention, would not be 
able to raise or spend, or direct to other persons, funds from 
corporations or labor organizations, or funds from individuals or other 
entities in amounts that exceed the Act's contribution limitations. In 
a subsequent rulemaking, the Commission will seek comment on whether 
BCRA bans national party committees, and their officers and agents, 
from directing non-Federal funds to a host committee in light of the 
statutory language that they are not permitted to direct non-Federal 
funds to other persons. See 2 U.S.C. 441(i)(a)(1).
    The proposed rules also make clear that national parties cannot 
raise, spend, or direct to another person Levin funds. See proposed 11 
CFR 300.10(a)(3). The Commission seeks comments on whether the rules 
should contain specific examples of ``entities directly or indirectly 
established, maintained, financed, or controlled by a national party 
committee,'' and if so, what entities should be included.

2. Proposed 11 CFR 300.11  Prohibition on National Party Fundraising 
for Certain Tax-Exempt Organizations

    In addition to prohibiting national parties from raising and 
spending non-Federal funds, BCRA prohibits national party committees, 
their officers and agents, and entities directly or indirectly 
established, financed, maintained, or controlled by them from raising 
funds for, or making or directing donations to, certain tax-exempt 
organizations. 2 U.S.C. 441i(d)(1). BCRA's prohibition on this type of 
donor and fundraising activity extends only to tax-exempt organizations 
with a political purpose or that conduct activities in connection with 
a Federal election.
    Specifically, the party fundraising ban extends to organizations 
exempt from taxation under 26 U.S.C. 501(c) that ``[make] expenditures 
or disbursements in connection with an election for Federal office 
(including expenditures or disbursements for Federal election 
activity).'' 2 U.S.C. 441i(d)(1). (Organizations formed under 26 U.S.C. 
501(c) are referred to as ``501(c) organizations'' below.) The ban also 
extends to political organizations exempt from taxation under 26 U.S.C. 
527. These entities are defined in the Internal Revenue Code as 
parties, committees, associations, funds, or other organizations 
organized and operated primarily to directly or indirectly accept 
contributions and make expenditures for the ``exempt function'' of 
influencing or attempting to influence the selection, nomination, 
election or appointment of an individual to a Federal, State, or local 
public office, political organization office, or election of 
Presidential and

[[Page 35661]]

Vice Presidential electors. 26 U.S.C. 527(e)(1) and (2). BCRA excludes 
certain section 527 organizations from the prohibition: Political 
committees, State, district, and local party committees and the 
authorized committees of State and local candidates.
    Again, the proposed rules track the statute. See proposed 11 CFR 
300.11. A section 501(c) organization that ``makes expenditures or 
disbursements in connection with a Federal election'' is defined as an 
organization that operates, supports, finances, or controls a political 
committee, as defined under the Act, makes expenditures and 
disbursements in connection with Federal election activity, finances 
voter registration at any time, or finances voter guides, candidate 
surveys and candidate questionnaires that refer to one or more Federal 
candidates. See proposed 11 CFR 300.2(a). As explained above, the 
definition of ``Federal election activity'' would generally follow the 
statutory definition of that term. See proposed 11 CFR 100.24. This ban 
on party fundraising for certain tax-exempt organizations would ensure 
that national party committees could not direct non-Federal funds they 
formerly raised themselves to other organizations that engage in 
election activity that could directly or indirectly support Federal 
candidates.
    The Commission requests comment on whether any other types of 
disbursements and expenditures by 501(c) organizations should bring 
those organizations within the proposed 11 CFR 300.12 prohibition and 
whether the prohibition should contain a temporal requirement. For 
example, should the prohibition encompass a 501(c) organization that 
has made disbursements and expenditures in connection with a Federal 
election at any time in the past, within the past three election 
cycles, within the past three years, or within some other time frame? 
The Commission also seeks comments on whether the rules should include 
additional guidance as to how a national party committee, or anyone 
else, could determine whether a particular 501(c) organization falls 
within the prohibition.
    Comments are also sought as to whether a safe harbor provision 
should be provided for a national party committee that takes certain 
actions before fundraising for, or donating to, a 501(c) organization 
to determine that the organization does not engage in the election 
activity described? Examples of such actions could include: (1) A 
national party obtains a 501(c) organization's publicly available 
application for tax-exempt status or annual Form 990 tax returns and 
determines from that information that the organization has not reported 
making, or indicated plans to make, expenditures or disbursements in 
connection with a Federal election; or (2) with respect to future 
activity by a 501(c) organization or an organization that has applied 
for, but not yet obtained, tax-exempt status, obtains a certification 
from the organization indicating that it does not engage in or plan to 
engage in the type of election activity described.
    Finally, the Commission seeks comment on what it means for a 
national party to ``direct donations.'' Pursuant to proposed 11 CFR 
300.2(m), ``to direct'' a donation would mean to request, suggest, or 
recommend that another person donate something of value to a section 
501(c) or section 527 organization. So construed, could a national 
party committee or its agent respond to an unsolicited request for 
information about organizations that share a party's political, social, 
or philosophical goals?
    Please note that the proposed section 300.11 prohibition on 
national party fundraising for, and donating to, certain tax exempt 
organizations would extend to a broader group than the prohibition in 
proposed section 300.10 on non-Federal fundraising by national party 
committees. Both 300.10 and 300.11 apply to national party and national 
congressional committees, officers and agents acting on behalf of them, 
and entities indirectly or directly established, financed, maintained, 
or controlled by them. In accordance with the statute, the 300.11 
prohibition would also apply to officers and agents acting on behalf of 
entities directly or indirectly established, financed, maintained, or 
controlled by national party and national congressional campaign 
committees, and to entities directly or indirectly established, 
financed, maintained, or controlled by an agent of national party or 
congressional campaign committees. As is the case for the proposed 11 
CFR 300.10 prohibition, the Commission seeks comments on whether the 
final rules should provide examples of entities directly or indirectly 
established, financed, maintained, or controlled by an agent of 
national party or congressional campaign committees, as well as 
examples of officers and agents acting on behalf of them and of 
entities directly or indirectly established, financed, maintained, or 
controlled by an agent of national party committees or congressional 
campaign committees.

3. Proposed 11 CFR 300.12  Transition Rules

    BCRA's prohibitions on non-Federal funds raised and spent by 
national parties become effective on November 6, 2002. Accordingly, 
through November 5, 2002, a national party can use funds in non-Federal 
accounts in any way permissible under current law. Beginning on 
November 6, 2002, national parties can no longer accept non-Federal 
funds. Non-Federal funds that remain in a national party's possession 
after the November 5, 2002 general election are covered by BCRA's 
transition rules. See 2 U.S.C. 431 note, section 402(b)(2). Under these 
rules, non-Federal funds received by a national party before November 
6, 2002 must be used before January 1, 2003 solely to: (1) Retire 
outstanding non-Federal debts or non-Federal obligations incurred 
solely in connection with an election held before November 6, 2002; or 
(2) to pay non-Federal expenses or retire outstanding non-Federal debts 
or obligations incurred solely in connection with any run-off election, 
recount, or election contest resulting from an election held prior to 
November 6, 2002. See 2 U.S.C. 431 note, section 402(b)(2)(B)(i) and 
(ii). These remaining non-Federal funds could not be used for building 
fund expenses or for outlays that would qualify as ``expenditures'' 
under the Act. Non-Federal funds contained in national party building 
fund accounts are treated separately and are described below. Non-
Federal funds of State and local party committees would be covered by 
proposed 11 CFR part 300, subpart B.
    The proposed transition rules governing the use of non-Federal 
funds remaining in a national party's possession, other than non-
Federal funds contained in building funds, are set forth in 11 CFR 
300.12(a) through (c). The proposed rules track the statutory language. 
In addition, the proposed rules would also indicate that current 
allocation regulations applicable to national party non-Federal 
accounts will remain in effect during the transition period. See 
proposed 11 CFR 300.12(d).
    BCRA appears to restrict the use of excess non-Federal funds by 
national party committees to the specific purposes described above. It 
does not address what happens if national party committees have any 
non-Federal funds remaining after they have disbursed funds for those 
purposes. The Commission seeks comments as to whether any funds 
remaining may be disgorged to the United States Treasury or to a 
charitable organization or

[[Page 35662]]

whether they may be used in any other way.
    BCRA treats non-Federal funds contained in national party building 
fund accounts more stringently. Under current law, funds in a national 
party building fund account can be used only for the purchase or 
construction of the national party committees' office building or 
facility. Beginning November 6, 2002, however, any funds remaining in a 
national party building fund account cannot be used for any building 
fund purposes. See 2 U.S.C. 431 note, 402(b)(2)(B)(iii). Hence, the 
proposed 11 CFR 300.12(e) would require any funds on deposit in such 
accounts on November 6, 2002 to be either disgorged to the United 
States Treasury or donated to an organization described in 26 U.S.C. 
170(c) no later than December 31, 2002.

4. Proposed 11 CFR 300.13  Reporting

    BCRA requires national party committees, including national 
congressional campaign committees, and any subordinate committee of 
either, to report all receipts and disbursements during a reporting 
period. 2 U.S.C. 434(e). The proposed rules track the statutory 
language. See proposed 11 CFR 300.13(a). The Commission seeks comments 
on whether this provision is intended to require reporting by existing 
entities that currently are not required to report, and if so, the 
identification of such entities.
    The proposed rules would also require national party committees to 
file termination reports for their non-Federal accounts to disclose the 
disposition of all non-Federal funds. See proposed 11 CFR 300.13(b). 
Proposed 11 CFR 300.13(c) identifies the current reporting regulations 
applicable to non-Federal accounts, including building funds, which 
will remain in effect to accomplish this.

5. Effect on Joint Fundraising Rules

    The ban on national party non-Federal fundraising would affect the 
Commission's joint fundraising rules, found at 11 CFR 102.17 (FECA) and 
11 CFR 9034.8 (Presidential Primary Matching Payment Act). The 
Commission is, therefore, proposing to add introductory language to 
each of these sections, advising readers that ``[n]othing in this 
section shall permit any person to solicit, receive, direct, transfer, 
or spend'' any non-Federal funds prohibited under 11 CFR part 300.

State, District, and Local Party Committee, and Organizations

    While BCRA completely prohibits national party committees from 
receiving, soliciting, using, and transferring non-Federal funds after 
November 5, 2002, State, district, and local party committees and 
organizations may continue to solicit and use non-Federal funds, 
consistent with State law, for certain purposes. 2 U.S.C. 441i(b). 
Proposed 11 CFR part 300, subpart B, which is explained in more detail 
below, would implement the new statutory provisions governing these 
non-Federal funds that apply to State, district, and local party 
committees and party organizations that are not political committees 
under the FECA.

1. Proposed Revisions to 11 CFR 100.14  State, District, or Local 
Committee of a Political Party

    The Levin Amendment, as set out in 2 U.S.C. 441i(b)(2), refers to 
``State, district, and local committees of a political party.'' The 
Commission's regulations already define ``State committee'' and 
``subordinate committee,'' and ``party committee.'' 11 CFR 100.14, 
100.5(e)(4); see also 2 U.S.C. 431(15). The proposed rules that follow 
would amend section 100.14 to conform with the Levin Amendment, and to 
harmonize sections 11 CFR 100.14 and 100.5(e)(4).
    In proposed paragraph (a), status as a State committee would be 
determined by reference to the party by-laws or State law, with an eye 
to limiting the definition to organizations that are part of ``the 
official party structure.'' This change would create a parallel with 
the current 11 CFR 100.5(e)(4), and would allow the proposed amended 
regulation to cover those States in which party committee status is a 
matter of State law and those in which it is a matter of party by-laws. 
There would also be a grammatical correction.
    In proposed paragraph (b), there would be, in addition to a 
grammatical correction, the same change with regard to ``official party 
structure'' as in proposed paragraph (a), and the addition of the 
phrase, ``as determined by the Commission,'' to the end of the 
paragraph. This added language would standardize the treatment of 
``State committees'' and ``subordinate committees'' in the section 
(existing paragraph (a) already includes this statutory phrase). The 
added language would also give the Commission the necessary authority 
and flexibility to ensure that district and local committees are 
treated consistently and fairly.
    Proposed paragraph (c) would be a new provision defining ``district 
or local committee.'' This proposed definition would parallel proposed 
paragraph (a) but for political subdivisions below the State level, and 
would encompass those political party committees that do not 
necessarily operate formally under the ``control or direction'' of the 
State party committee. The key criterion for determining status as a 
district or local party committee would again be ``the official party 
structure,'' whether that is a matter of State law or the party's by-
laws.

2. Proposed Revisions to 11 CFR 106.5

    The creation of a new part 300 to cover all aspects of party 
committee activity has rendered considerable portions of present 
section 106.5 either outdated or duplicative. As presently constituted, 
the proposed revision of this section will state in broad terms the 
general principles that after December 31, 2002, (1) national party 
committees are no longer permitted to raise and spend non-Federal 
funds, and thus are unable to allocate expenses between Federal and 
non-Federal accounts, and (2) that State, district, and local party 
committees that make expenditures and disbursements in connection with 
both Federal and non-Federal elections must either use only Federal 
funds for these purposes or must establish separate accounts and 
allocate expenditures between or among those accounts pursuant to the 
requirements of part 300. References to Levin activities and accounts 
have been added and references to specific sub-sections of part 300 are 
included in the draft revisions.
    Although all references to ``exempt activities'' have been dropped 
from section 106.5, comments are solicited with regard to the 
relationship of such activities, as defined by 11 CFR 100.7(b)(9), (15) 
and (17) and 11 CFR 100.8(b)(10), (16) and (18), to the concept of 
``Federal election activity'' in BCRA. Do these exempt activities 
remain separate allocable categories of State, district, and local 
party expenditures, or are they subsumed within ``voter registration,'' 
``voter identification,'' ``get-out-the vote,'' and ``generic campaign 
activities'' now included in what are termed ``Levin activities'' in 
the proposed regulations? Would voter registration activity outside the 
time frame of 120 or fewer days before an election be an example of 
remaining ``exempt activity?'' Would solely volunteer participation in 
the distribution of campaign materials take

[[Page 35663]]

such activity out of ``Levin activity'' for purposes of the kinds of 
funds that would be permissible to make such expenditures?
    As discussed below, allocation accounts might be retained as they 
appear at present section 106.5.

3. Proposed 11 CFR 300.30  Accounts

    The Commission is considering whether or not to require State, 
district, and local party committees to maintain three separate 
accounts. These would include a Federal account to be used for both 
Federal and mixed Federal and non-Federal activities; a second account, 
known as a Levin account, to be used to meet Levin activities, i.e., 
certain costs of voter registration within a fixed time period, voter 
identification, GOTV, and generic campaign activity pursuant to 
proposed 11 CFR 300.32; and a third account to be used for State, 
district, and/or local activities. The perceived need for these three 
separate accounts is based upon BCRA's apparent separation of State, 
district, and local party campaign activity into three distinct 
categories for which there are three distinct sets of conditions as to 
the funds that may be used to pay for each type of activity.
    Consequently, the proposed rules in this section have been written 
to require that State, district, and local party committees maintain 
these three separate accounts. Comments are sought, however, as to 
whether, in the alternative, accounting procedures designed to track 
Levin receipts, expenditures, and disbursements could be adequate for 
purposes of enforcing BCRA with respect to these types of Federal 
election activities. Comments are also sought as to whether the 
requirement of a third account would serve as an unnecessary 
administrative burden or would it in fact create an accounting aid for 
the committees affected? Would it be more appropriate to leave to each 
committee the decision of whether or not to set up a separate Levin 
account? Would it be reasonable to require State party committees to 
maintain a separate Levin account, but only to recommend that district 
and local party committees do the same? Would three separate accounts 
promote greater transparency?
    The proposed regulations in section 300.30(a)(4) require that, in 
order for contributions to be deposited into a State, district, or 
local committee's Federal account, either the solicitation of the 
contributions must expressly state the committee's intent to use the 
contributions for Federal elections, or the solicitation must expressly 
state that only permissible contributions can be accepted into the 
Federal account, or the contributor must expressly designate the 
contribution for use in Federal elections. The Commission would presume 
that all contributions that meet these requirements, and are within the 
contribution limitations and prohibitions of the Act, may be deposited 
into the Federal account.
    The proposed regulations in section 300.30(a)(8) state that Federal 
funds may be used for non-Federal election activities, provided that 
the contributors of the Federal funds have been informed that their 
contributions would be subject to the limitations and prohibitions of 
the Act and provided that the disbursements are reported pursuant to 
section 300.36. (See, e.g., Advisory Opinion 2000-24 in which the 
Commission found the use of a non-Federal account to be permissive, not 
mandatory. See also the Explanation and Justification for revisions of 
the Commission's allocation regulations at 55 FR 26058 (June 26, 1990) 
and at 57 FR 8990, 8991 (March 13, 1992)).
    The proposed regulations at section 300.30(b) provide that a State, 
district, and local committee would be permitted to deposit into its 
Levin account only those donations solicited and received for that 
account pursuant to proposed 11 CFR 300.31, and would have to use this 
account to make disbursements and expenditures only for the activities 
permitted by proposed 11 CFR 300.32 or for other, non-Federal activity 
permitted by State law. Comments are sought on whether this permission 
to use Levin funds for non-Federal activities is in keeping with the 
intent of BCRA.
    In order for donations to be placed in the Levin account, either 
the solicitations for the donations would have to expressly state that 
donations will be subject to the special limitations and prohibitions 
of section 300.31, or there would have to be an express designation by 
the donors to the Levin account.
    The proposed regulations in 11 CFR 300.30(c) would clarify that 
State, district, and local party committees would also be able to 
maintain a non-Federal account to be used for State, district, or local 
election activities.
    The proposed regulations in section 300.30(a)(6) would continue the 
Commission's well-established requirement that State, district, and 
local party committees make all allocable expenditures and 
disbursements from their Federal accounts. Transfers into the Federal 
account from a non-Federal account of the non-Federal portions of 
allocable disbursements and expenditures would be permitted only within 
a specified period of time which is set out in 11 CFR 300.34. The same 
approach and time frame are being proposed for Levin activities with 
regard to the payment of non-Federal portions of Levin expenses.
    As an alternative to using the Federal account for all Federal and 
mixed expenditures, the Commission could also continue to permit, but 
not require, State, district, and local party committees to establish 
separate allocation accounts for purposes of making allocated 
expenditures for administrative and/or Levin expenses. Comments are 
sought on whether allocation accounts should still be permitted and 
whether there should be a second, separate Levin allocation account for 
use in financing Levin activities.

4. Proposed 11 CFR 300.31  Receipt of Levin Funds

    BCRA places several restrictions on how State, district, and local 
political party committees raise Levin funds. Proposed 11 CFR 300.31 
would implement these restrictions. Proposed paragraph (a) would state 
as a general proposition a key point in the statute: a State, district, 
or local political party committee that spends Levin funds must raise 
those funds solely by itself. 2 U.S.C. 441i(b)(2)(B)(iv).
    Proposed 300.31(b) would elaborate on the statutory requirement 
that Levin funds must be raised from donations that comply with the 
laws of the State in which the State, district, or local party 
committee is organized. 2 U.S.C. 441i(b)(2)(B)(iii). More specifically, 
proposed paragraph (c) would clarify the status of donations from 
sources that are permitted under State law, but prohibited by the Act. 
A prime example is donations from corporations and labor organizations. 
Under Section 441b of the Act, ``[i]t is unlawful * * * for any 
corporation whatever, or any labor organization, to make a contribution 
or expenditure in connection with any election'' for Federal office. 2 
U.S.C. 441b(a). Under the campaign finance laws of several States, 
however, donations by corporations or labor organizations to political 
party committees are legal. Proposed 300.31(c) would clarify that in 
such States, a political party committee may solicit and accept 
donations of Levin funds from corporations and labor organizations, 
subject to the other conditions of the Act. (Of course, if donations 
from corporations or labor organizations to a political party committee 
are illegal in a State, political party committees in that State would 
not be able to accept Levin fund donations from those sources.)

[[Page 35664]]

    Proposed paragraph (d) would address amount limitations on 
donations of Levin funds to a State, district, or local party 
committee. The Levin Amendment places a $10,000 per calendar year per 
donor limitation on donations to a State, district, and local political 
party committee intended for use as Levin funds. 2 U.S.C. 
441i(b)(2)(B)(iii). Proposed paragraph (d)(1) would clarify that this 
is an aggregate limit per recipient committee (i.e., the aggregate 
limit applies separately to each party committee). See discussion of 
proposed 11 CFR 300.31(d)(3), below. The amount limitation applies to a 
person, including ``any person established, financed, maintained, or 
controlled by such person.'' The Commission seeks comment on whether 
its current ``affiliation'' regulation (11 CFR 100.5(g)) would 
appropriately determine whether a person is ``established, financed, 
maintained, or controlled,'' within the meaning of this proposed 
paragraph.
    Proposed paragraph (d)(2) would address those cases where State law 
generally imposes an amount limitation on donations to a State, 
district, or local party committee that differs from the amount 
limitation in 2 U.S.C. 441i(b)(2)(B)(iii) and proposed paragraph 
(d)(1). Proposed paragraph (d)(2) would attempt to strike a balance 
between respect for State law and protecting the integrity of the Levin 
Amendment amount limitation. It would make clear that lower State law 
amount limitations control over the amount limitation in the Levin 
Amendment, but that the Levin Amendment amount limitation would control 
where State law amount limitations exceed the limitation in proposed 
paragraph (d)(1).
    A question may arise as to whether State, district, and local 
committees of the same political party would be affiliated for purposes 
of applying the donation amount limitation in proposed paragraph 
(d)(1). See generally 11 CFR 110.3. Proposed paragraph (d)(3) addresses 
this issue. The proposed paragraph would clarify that such committees 
are not considered affiliated only for the purpose of determining 
compliance with proposed paragraph (d)(1). See 148 Cong. Rec. H410 
(daily ed. Feb. 13, 2002) (statement of Rep. Shays).
    The Levin Amendment restricts the manner in which State, district, 
and local political party committees may raise Levin funds. Proposed 
paragraph (e) would restate these restrictions, clarifying that the 
Commission's joint fundraising regulation, 11 CFR 102.17, does not 
otherwise sanction this activity. Proposed paragraph (f) would operate 
similarly in implementing the Levin Amendment's prohibition against 
joint fundraising of Levin funds by more than one State, district, or 
local committee of a political party, including such parties from more 
than one State. The final sentence of proposed paragraph (f) would 
clarify that the mere use of common vendors by two or more State, 
district, or local political party committees would not in and of 
itself constitute joint fundraising within the meaning of the proposed 
paragraph.

5. Proposed 11 CFR 300.32  Expenditures and Disbursements

    Proposed 11 CFR part 300, subpart B would encompass political party 
committee expenditures and disbursements of Federal funds and of Levin 
funds. Proposed 11 CFR 300.32 would address both kinds of spending, and 
would clarify that BCRA does not affect spending of non-Federal funds 
for State or local political activity.
    Proposed paragraph (a)(1) would clarify that spending by a State, 
district, or local political party committee ``for the purpose of 
influencing'' a Federal election (see 11 CFR 100.8) must use Federal 
funds; that is, nothing in BCRA changes the existing requirements for 
that type of spending. See 148 Cong. Rec. H409 (daily ed. February 13, 
2002) (statement of Rep. Shays). In addition, this proposed paragraph 
would require that an association or similar group of candidates for 
State or local office, or an association of State or local 
officeholders, would have to make expenditures for Federal election 
activity solely with Federal funds. Comments are sought about whether 
or not this term should be further defined in the proposed regulations, 
and if so, about examples of such associations or groups to include in 
the regulations. Proposed paragraph (a)(2) would make clear that the 
general rule in BCRA is that a State, district, or local political 
party committee spending on Federal election activity must use Federal 
funds for that spending, except as provided in the Levin Amendment. 2 
U.S.C. 441i(b)(1).
    The proposed rules interpret BCRA as requiring that local party 
organizations that do not qualify as political committees are 
nonetheless subject to the requirement to use Federal funds for Federal 
election activity. (See also proposed 11 CFR 300.36(a) regarding 
recordkeeping for such local party organizations.) The Commission seeks 
comment on this interpretation and whether, alternatively, use of the 
term ``committee'' in 2 U.S.C. 441i(b)(1) should be read to exclude 
local party organizations which do not otherwise qualify as political 
committees under 2 U.S.C. 431(4).
    Proposed paragraphs (a)(3) and (a)(4) would address the costs of 
fundraising, providing that a State, district, or local committee of a 
political party must use exclusively Federal funds to pay for all costs 
of raising funds for its Federal account and its Levin account. See 2 
U.S.C. 441i(c). The Commission seeks comment on this interpretation of 
section 441i(c) with regard to Levin funds. In particular, the 
Commission seeks comment on (1) whether proposed paragraph (a)(4) could 
be limited to the direct costs (see current 11 CFR 106.5(a)(2)(ii)) of 
raising Levin funds; and (2) whether the costs of fundraising for Levin 
funds could be allocated between a party committee's Federal and non-
Federal accounts under the ``funds received'' method. See current 11 
CFR 106.5(f). Comments are also sought as to whether, generally, 
greater specificity should be provided in proposed section 300.32 as to 
the nature of fundraising costs in this section.
    Proposed paragraph (b) would list the types of activities for which 
a State, district, or local political party committee may spend Levin 
funds in accordance with this proposed part. Proposed paragraph (b)(1) 
would spell out expressly the two kinds of Federal election activity 
for which Levin funds may be spent, see 2 U.S.C. 441i(b)(2)(A), and 
provide that such spending must be made subject to the conditions set 
out in proposed paragraph (c). Proposed paragraph (b)(2) would provide 
that a State, district, or local political party committee may also 
spend Levin funds for any purpose that is lawful under State law, and 
that such spending need not comply with proposed paragraph (c). (See 
below.) The Commission seeks comment on proposed paragraph (b)(2), 
specifically whether this broader use of Levin funds is within the 
intended scope of 2 U.S.C. 441i(b)(2)(A).
    While the Levin Amendment would permit the spending of Levin funds 
as set out in proposed paragraph (b), it places restrictions and 
conditions on that spending when it is for Federal election activity. 
Proposed paragraph (c) would set out in one place important 
restrictions and conditions that are stated in different sections of 
BCRA. Proposed paragraph (c)(1) would implement the restriction that 
the Federal election activity paid for partly with Levin funds must not 
refer to a clearly identified Federal candidate. See 2 U.S.C. 
441i(b)(2)(B)(i). Proposed paragraph (c)(2) would implement the 
restriction that the Federal election

[[Page 35665]]

activity paid for partly with Levin funds must not be for any 
broadcasting, cable, or satellite communications, other than a 
communication that refers solely to a clearly identified candidate for 
State or local office. See 2 U.S.C. 441i(b)(2)(B)(ii). Proposed 
paragraph (c)(4) would implement the Levin Amendment's requirement that 
spending under its authority must be allocated between Federal funds 
and Levin funds pursuant to the proposed regulation covering 
allocation. See 2 U.S.C. 441i(b)(2)(A)(i), (ii); see proposed 11 CFR 
300.33, below. Finally, proposed paragraph (c)(3) would tie together 
the provisions of this proposed regulation with proposed 11 CFR 300.31 
on raising Levin funds, above.
    Proposed paragraph (d) would serve as a clarifying reminder that 
spending of non-Federal funds by a State, district, or local political 
party committee for State or local political activity, including the 
raising of solely non-Federal funds, remains a matter of State law. The 
proposed final sentence would clarify that a disbursement of non-
Federal funds made under State law by a State, district, or local 
political party committee that is not directed by the disbursing 
committee for the purpose of influencing a Federal election or for 
Federal election activity shall not be an expenditure under 11 CFR 
100.8 or an expenditure or disbursement for Federal election activity.

6. Proposed 11 CFR 300.33  Allocation of Expenses

    Section 441i(b)(1) of Title 2, United States Code, states that 
State, district, and local party committees must make all disbursements 
and expenditures for Federal election activity from their Federal 
accounts. This requirement holds even when the expenses involved are 
also related to non-Federal election activity. Generally, the costs of 
mixed Federal and non-Federal election activities cannot be allocated 
between Federal and non-Federal accounts. The only exception to the 
rule against the use of non-Federal funds in connection with Federal 
election activity involves activities to be funded from a Levin 
account, pursuant to Section 441i(b)(2).
    Section 441i(b)(2)(A) permits State, district, and local party 
committees, under certain conditions, to use Levin funds for particular 
categories of activity, including voter registration, voter 
identification, GOTV, and generic campaign activities, in connection 
with Federal and non-Federal elections. These funds must have been 
received pursuant to specific requirements, are to be used to meet 
expenses related to voter registration activity within 120 days of a 
Federal election and/or expenses related to voter identification, GOTV 
activities, and generic campaign activities when a Federal candidate 
appears on the ballot, and must be used in situations in which 
disbursements and expenditures for the permitted activities are 
allocated between a committee's Federal and Levin accounts. Section 
441i(b)(2)(A) permits the use of Levin funds for these purposes ``to 
the extent that'' the costs of the activities are allocated. Thus, if a 
committee wishes to use other than Federal funds for such costs, it 
must allocate a portion to its Federal account.
    Comments are sought with regard to the relationships between the 
activities for which Levin funds may be used and ``exempt activities'' 
as defined by 11 CFR 100.7(b)(9), (15) and (17) and 11 CFR 
100.8(b)(10), (16) and (18). In particular, information is requested on 
whether there remain exempt activities that should not be deemed 
``Federal election activity.'' For example, would voter registration 
activity outside the time frame of 120 or fewer days before an election 
be an example of remaining ``exempt activity'' that would be allocable 
between Federal and non-Federal accounts (as opposed to Federal and 
Levin accounts), but that would not count as an ``expenditure'' for 
purposes of political committee status? In the alternative, should 
voter registration activity outside the 120-day time frame be 
considered 100% non-Federal activity?
    With the exception of salaries, BCRA does not address 
administrative costs directly, either as a category of expenditures and 
disbursements or as allocable expenditures. BCRA defines ``Federal 
election activity'' at 2 U.S.C. 431(b)(20) as including specified 
categories of activity that do not include administrative costs.
    With regard to salaries, BCRA, for purposes of defining ``Federal 
election activity,'' distinguishes between salaries paid those who 
spend more than 25% of their compensated time in any given month on 
activities in connection with Federal elections, who must be paid only 
with Federal funds, and those who do not spend that amount of time on 
these activities. Therefore, proposed section 300.33 would require 
State, district, and local committees to use only Federal funds to pay 
the salaries of those employees who spend more that 25% of their time 
in a particular month on activities in connection with Federal election 
activity. The proposed regulations also require that the salaries of 
those employees who spend 25% or less of their time in a given month on 
activities in connection with a Federal election be allocated between 
the committee's Federal and non-Federal accounts. Salaries of those 
employees who spend no time in a given month on activities in 
connection with a Federal election could be paid solely from the non-
Federal account.
    Comments are sought as to whether State, district, and local party 
committees should be permitted to pay the salaries of employees who 
spend 25% or less of their time on Federal election activity with non-
Federal funds, rather than be required to allocate those payments. The 
100% non-Federal alternative is not set out in the proposed rules. For 
purposes of administering the 25% rule for salary payments, comments 
are sought as to whether the proposed regulations should require that 
any of the following three alternative methods be used by State, 
district, and local party committees to document decisions as to the 
accounts from which all or portions of employees' salaries have been 
paid. First, employees could be required to keep contemporary time logs 
documenting their Federal and non-Federal activities. Secondly, 
employees could be required at the end of each month to certify in 
writing the percentage or amount of time spent on Federal election 
activity. Or, thirdly, a responsible party official could keep a 
monthly tally sheet for the all employees. Please note that none of 
these options appear in the proposed rules that follow.
    In lieu of requiring 100% Federal payments for certain other 
administrative costs, the proposed rules would continue the 
Commission's policy of permitting the allocation of those costs between 
the Federal and non-Federal accounts of State, district, and local 
party committees, unless such expenses are directly attributable to a 
Federal candidate, in which case they would have to be paid only with 
Federal funds. Allocable administrative costs would include rent, 
office equipment (calculators, computers, copiers, facsimile machines, 
furniture), office supplies, postage for other than mass mailings, and 
utilities. Other allocable administrative costs would include routine 
building maintenance, upkeep and repairs.
    Comments are requested regarding whether the Commission should 
continue requiring allocation of administrative costs other than 
certain salaries, if a committee desires to use some non-Federal funds 
for these purposes. BCRA requires certain Federal election activities, 
fundraising costs and certain salaries to be paid with Federal funds. 
As a result, significant amounts

[[Page 35666]]

of activity that were once allocable will have to be paid for 
exclusively with Federal funds. BCRA also delineates which Federal 
election activities may be allocated between Federal funds and Levin 
funds. The Commission seeks comments on whether administrative expenses 
that are not identified in BCRA have a significant enough impact on 
Federal elections to require continued allocation of such expenses, or 
whether a State, district, or local committee should be able to pay 
administrative expenses, other than certain salaries, with 100% non-
Federal funds, depending upon applicable State law.
    The proposed rules address the issue of appropriate minimum amounts 
of Federal funds to be required both for administrative expenses, when 
allocable, and for the Federal portions of costs of the specified Levin 
activities for which the use of non-Federal funds is also permitted. 
One goal of the allocation regulations are to assure that activities 
deemed allocable are not paid for with a disproportionate amount of 
non-Federal or Levin funds. Another goal is to simplify the allocation 
process, in particular by establishing formulas that do not vary from 
State to State and that do not require measurements of time or space. 
Therefore, the proposed rules establish a fixed formula for all States 
that would vary only in terms of whether or not a Presidential campaign 
and/or a Senate campaign is to be held in a particular election year.
    The following formulas have been derived by taking averages of the 
ballot composition-based allocation percentages reported by State party 
committees in four groupings of States selected for their diversities 
of size and geographic location and for the particular elections held 
in each state in 2000 and 2002. The groupings were: (1) Six states 
(Alabama, Colorado, Illinois, New Hampshire, Oklahoma, and Oregon) in 
which there was a Presidential but no Senate campaign in 2000; (2) 10 
states (California, Delaware, Georgia, Florida, Michigan, New York, 
North Dakota, Texas, Vermont, and Wyoming) in which there were both a 
Presidential campaign and a Senate campaign in 2000; (3) six states 
(Delaware, Georgia, Michigan, Oklahoma, Texas and Wyoming) in which 
there will be a Senate campaign in 2002; and (4) six states 
(California, Florida, New York, North Dakota, Vermont and Washington) 
in which there will be no Senate campaign in 2002.
    In 2000, the Federal percentages for the two parties in six States 
with only a Presidential campaign ranged from 20%-33.33%, with an 
average of 28%, while the Federal percentages for the two parties in 
ten States which held both Presidential and Senate campaign that year 
ranged from 30% to 43%, with an average of 36%. In 2002, the Federal 
percentages for the two parties in six States with a Senate campaign 
range from 20% to 25%, with an average of 21%, while the Federal 
percentages for the two parties in six States with no Senate campaign 
range from 11.11% to 16.67, with an average of 15%.
    The proposed rules would apply the average percentages in each of 
the four groupings of States to all 50 states, resulting in the 
following proposed minimum percentages for Federal shares of 
administrative costs and for Federal shares of costs of the voter 
registration, voter identification, GOTV, and generic campaign 
activities permitted to be paid in part with Levin funds, pursuant to 2 
U.S.C. 441i(b)(2):

(i) Presidential only election year--28% of costs
(ii) Presidential and Senate election year--36% of costs
(iii) Senate only election year--21% of costs
(iv) Non-Presidential and Non-Senate election year--15% of costs.
    Comments are solicited as to whether a set percentage approach to 
allocation of both administrative and Levin expenses is preferable to a 
State-by-State ballot composition ratio approach, and as to whether the 
formula proposed by the Commission serves the purposes of the Act.
    Voter registration activities undertaken 120 days or less before an 
election and no later than the election itself are included among the 
activities for which Levin funds may be used by State, district, and 
local party committees. The proposed regulations assume that activity 
outside this time frame would fall outside the general provisions of 2 
U.S.C. 441i(b)(i), which prohibits the use of non-Federal funds for 
Federal election activities, including activities that are wholly or in 
part in connection with a Federal election. Therefore, the proposed 
regulations in 11 CFR 300.33(b)(3) state that the expenses of voter 
registration activity outside the 120-day time frame could be paid 
entirely with non-Federal funds or they could be allocated between 
Federal and non-Federal accounts.
    In the alternative, the regulations could state that, because voter 
registration activities undertaken more than 120 days before an 
election would be outside the time frame for the use of Levin funds, 
the expenses for such activities would fall within the general 
provisions of 2 U.S.C. 441i(b)(i), which prohibits the use of non-
Federal funds for Federal election activities, including activities 
that are wholly or in part in connection with a Federal election. Under 
this approach, expenses for voter registration activity outside the 
120-day time frame would have to be paid entirely with Federal funds.
    Comments are solicited as to which of these alternative approaches 
to expenses for voter registration activities more than 120 days before 
an election would most closely track the intent of BCRA.
    The proposed regulations in 11 CFR 300.33(c) set out the categories 
of costs that may not be allocated. These include the costs of 
activities that refer to clearly identified Federal candidates, the 
costs of activities that refer to both Federal and State or local 
elections and certain fundraising costs.
    Comments are sought as to whether fundraising costs would include a 
portion of a committee's overhead or only direct costs such as 
telephone banks, postage, printing, catering, banquet hall rental, and 
other such expenses related to a particular fundraising program. 
Comments are also sought as to whether costs related to raising funds 
only for non-Federal activity may be paid entirely from a non-Federal 
account.
    The proposed regulations at 11 CFR 300.33(d) address the issue of 
transfers from a State, district, or local party committee's non-
Federal account to cover the non-Federal portion of allocated 
administrative costs, and transfers from the committee's Levin account 
to meet that account's portion of the costs of allocated expenditures 
made pursuant to 2 U.S.C. 441i(b)(2). The proposed regulations employ 
the language of the present regulations at 11 CFR 106.5(g)(1)(i) and 
(2)(ii)(B), which require the use of the party committee's Federal 
account to pay the entire amounts of allocable expenses, with 
subsequent reimbursement by other accounts, and the limitation of such 
reimbursements to a set time frame of 10 days before and 60 days after 
the payment from the Federal account, unless a vendor requires an 
advance payment and the payment is based on a reasonable estimate. The 
proposed regulation continues the present rule's admonition at 11 CFR 
106.5(g)(2)(B)(iii) that any payment outside this time frame, absent 
the need for an advance payment of a reasonably estimated amount, would 
result in the presumption of a loan of non-Federal funds to the Federal 
account and a violation of the Act.

[[Page 35667]]

7. Conforming Amendments to 11 CFR 104.10 and 106.1

A. Allocation of Expenses Among Candidates and Activities
    Current section 104.10 addresses the reporting of expenses that are 
allocated among more than one clearly identified candidate (paragraph 
(a)) and expenses that are allocated among specific types of mixed 
Federal/non-Federal activities by political party committees and by 
separate segregated funds and nonconnected committees (paragraph (b)). 
However, BCRA has defined different categories of allocable expenses, 
including some of those areas falling within Federal election activity. 
Some of the allocable activity areas set out in current 11 CFR 106.5 
(allocation of mixed Federal/non-Federal activities by party 
committees) are now subsumed by Federal election activity. In addition, 
under BCRA, mixed fundraising activity must be done with Federal funds, 
and the use of non-Federal funds by national party committee has been 
eliminated. Hence, the Commission proposes to divide the rules for 
reporting of allocable expenses into three sections: 11 CFR104.10 would 
apply to political committees that are separate segregated funds or 
nonconnected committees; new 11 CFR 104.17 would address administrative 
expenses and some other activities by political committees that are 
State, district, or local party committees; and new 11 CFR 300.36 would 
cover reporting of payments allocated between Federal funds and Levin 
funds.
    BCRA has no impact on the support by separate segregated funds and 
nonconnected committees of one or more clearly identified Federal and 
non-Federal candidates or such committees' allocation of specific 
categories of mixed Federal/non-Federal activities. Thus, revised 
section 104.10(a), which addresses payments entailing combined 
expenditures and disbursements on behalf of more than one clearly 
identified Federal and non-Federal candidates, would be changed very 
little. It would be amended to clarify the type of committee subject to 
this section and would delete references to current section 106.5(g), 
which addresses non-Federal to Federal transfers made by party 
committees for the purpose of mixed payments.
    In revised section 104.10(b), the references to the Senate and 
House campaign committees of a political party would be deleted. In the 
discussion of itemization of allocated disbursements for administrative 
and generic voter drive expenses at proposed paragraph (b)(1)(ii), the 
specific reference to the types of committees using the funds expended 
method would be deleted because all committees addressed in this 
regulation would use the funds expended method for those two allocation 
categories. References to exempt activities would be deleted because 
separate segregated funds and nonconnected committees do not engage in 
those activities. References to various paragraphs in 11 CFR 106.5, 
which currently pertains to party committees, would also be deleted.
B. Allocation of Expenses Between Candidates
    Current section 106.1 addresses the allocation of expenses among 
more than one candidate. Paragraph (a)(1) sets out the general rule for 
allocation of an expenditure made on behalf of more than one clearly 
identified Federal candidate. It also addresses allocation of a payment 
involving both an expenditure made on behalf of one or more clearly 
identified Federal candidates and a disbursement on behalf of one or 
more non-Federal candidates. In view of the language of newly proposed 
section 300.33(c)(1), new language would be added to section 
106.1(a)(1) making it clear that a party committee must only use 
Federal funds in both types of situations. See also newly proposed 
section 100.24(a)(3). Comments are requested as to whether the 
requirement that a State, district, or local party committee use only 
Federal funds for all payments made on behalf of both clearly 
identified Federal and clearly identified non-Federal candidates is 
appropriate under BCRA. (See also the narrative for newly proposed 
section 104.17 which addresses reporting of such activity by party 
committees.)
    In view of the rearrangement and renumbering of the allocation 
reporting regulations, paragraph (a)(2) would be amended to conform to 
different section citations. It would also delete the citation to party 
committee transfer procedures in the event of a payment on behalf of 
clearly identified Federal and non-Federal candidates.
    Paragraph (e) refers to allocation of activities that entail 
specific types of mixed Federal/non-Federal activity, other than 
payments on behalf of clearly identified candidates. The paragraph 
would be amended to conform to the new allocation categories and new 
allocation citation.

8. Proposed 11 CFR 300.34  Transfers

    As explained above, the Levin Amendment permits spending on certain 
Federal election activity subject to certain restrictions and 
conditions, one of which is that the spending must be allocated between 
Levin funds and Federal funds. 2 U.S.C. 441i(b)(2)(A)(i), (ii). The 
Levin Amendment also requires that a State, district, or local 
committee must raise solely by itself all money spent under the Levin 
Amendment. 2 U.S.C. 441i(b)(2)(B)(iv). By the plain language of the 
last-cited provision, this restriction extends to the Federal funds 
component of the expenditure or disbursement allocated between Levin 
funds and Federal funds. See 148 Cong. Rec. H410 (daily ed. February 
13, 2002) (Rep. Shays).
    This provision of the Levin Amendment could cause confusion given 
the existing rule that party committees of the same political party may 
transfer Federal funds among themselves without limit on amount. See 11 
CFR 102.6(a)(1)(ii). Proposed paragraph (a) of proposed section 300.34 
would make clear that 11 CFR 102.6(a)(1)(ii) does not override the 
Levin Amendment as to transfers of Federal funds. Specifically, the 
committee must not use such transferred Federal funds to pay the 
Federal portion of Federal election activity that may be funded with a 
mixture of Federal funds and Levin funds under proposed 11 CFR 300.32 
and 300.33. The Commission emphasizes that revisions to section 
102.6(a) regarding transfers may be forthcoming in a future rulemaking 
to implement changes to 2 U.S.C. 441a(d) made by BCRA. The present 
discussion and this rulemaking extend only to Title I of BCRA. Pub L. 
107-155, March 27, 2002. The proposed final sentence would state as a 
positive requirement that a State, district, or local political party 
committee that spends Levin funds must raise the Federal funds 
component of those funds by itself. As already mentioned above, the 
Levin Amendment imposes this fundraising requirement. 2 U.S.C. 
441i(b)(2)(B)(iv).
    In the same provision, the Levin Amendment specifically forbids 
certain transfers of Levin funds; that is, a State, district, or local 
party committee may not use as Levin funds any funds transferred to it 
by certain persons. 2 U.S.C. 441i(b)(2)(B)(iv)(I) through (IV). 
Proposed 11 CFR 300.34(b)(1) and (b)(2) would implement these transfer 
prohibitions by expressly identifying these persons.

9. Proposed 11 CFR 300.35  Office Buildings

    BCRA repealed the provision at 2 U.S.C. 431(8)(B)(viii) exempting 
from the definition of contribution any donation of money or anything 
of value,

[[Page 35668]]

or loan, to a national or State party committee that is 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.'' In the technical amendments, however, Congress provided for 
the use of funds that were not subject to the limitations and 
prohibitions of the Act for the purchase or construction of a State or 
local party committee office building. This provision, which is an 
addition to the section on preemption at 2 U.S.C. 453, states: 
``Notwithstanding any other provision of this Act, a State or local 
committee of a political party may, subject to State law, use 
exclusively funds that are not subject to the prohibitions, 
limitations, and reporting requirements of the Act for the purchase or 
construction of an office building for such State or local committee.'' 
2 U.S.C. 453(b).
    The current text of 11 CFR 114.1(a)(2)(ix) follows the repealed 
statutory provision and would be deleted and replaced with an annotated 
cross-reference to proposed new 11 CFR 300.35. The texts of the 
regulations currently at 11 CFR 100.7(b)(12) and 100.8(b)(13), which 
are similar to the current text of section 114.1(a)(2)(ix), would be 
deleted in a separate rulemaking that the Commission is publishing 
concurrently with this rulemaking. The receipt and use of funds for the 
purchase or construction of a national party committee's office 
building would be addressed in proposed section 300.10, which would 
allow only federal funds to be used for such purpose.
    Proposed new section 300.35 would address four areas in 
implementing 2 U.S.C. 453(b)(1). First, it would provide for the 
application of State law to the activities, and would provide that 
generally Federal law will not preempt the application of State law. 
Second, it would explain the meaning of ``purchase or construction of a 
party office building.'' Third, it would provide that, if the funds are 
not used for the purpose as defined, they are to be treated as 
disbursements for other purposes and Federal law would apply. Finally, 
it would address the transitional requirements for the current State 
party office facility funds established under the repealed statutory 
section.
A. Application of State Law
    Senator McConnell, the principal speaker in support of the 
technical amendments after their introduction in the Senate, described 
the party office building provision as ``[r]especting the primacy of 
State law in financing State and local party buildings.'' 148 Cong. 
Rec. S2339 (daily ed. March 22, 2002) (statement of Sen. McConnell). 
During floor debate prior to Senate passage of the main bill, in 
anticipation of the adoption of technical amendments, Senator Feingold 
described the proposal as providing that Federal law would no longer 
allow a State or local party committee to receive non-Federal donations 
to purchase or construct an office building where such donations 
violated State law, that State law governs the receipt and disbursement 
of non-Federal donations by State or local parties for such purpose, 
and that there is no ``required match consisting of Federal 
contributions.'' 148 Cong. Rec. S2143-2144 (daily ed. March 20, 2002) 
(statement of Sen. Feingold).
    Paragraph (a) of proposed section 300.35 would set out the basic 
provision that funds raised outside the limits and prohibitions of the 
Act may be used, and that State law would govern whether they may be 
raised and used for the purchase or construction of a State or local 
party office building. Paragraph (a) would also incorporate language 
from the repealed statute and deleted regulations to the effect that 
the exemptions from Federal limits and prohibitions are premised on the 
idea that the building is not purchased or constructed for the purpose 
of any particular Federal candidacy. The building is being purchased or 
constructed for the functioning of the party, which entails the support 
of most or all of the party's candidates over a number of years; this 
concept did not change with the repeal of 2 U.S.C. 431(8)(B)(viii) and 
the enactment of 2 U.S.C. 453(b). The purchase or construction of the 
building for a particular Federal candidacy would entail the use of 
impermissible funds in a manner contrary to the basic purpose of the 
Federal law.
    Paragraph (b) of section 300.35 would explain the coverage of State 
law. Paragraph (b)(1) would provide that Federal law will not preempt 
State law as to the non-Federal account activity, except where the 
funding does not fit the definition of the purchase or construction of 
an office building and would be another type of disbursement. 
Commission advisory opinions have addressed the question of whether the 
repealed contribution exemption, which permitted donations to a 
building fund from such Federally impermissible sources as 
corporations, preempted State law prohibitions on the use of such funds 
for campaign purposes. Advisory Opinions 2001-12, 1998-8, 1998-7, 1997-
14, 1993-9, 1991-5, and 1986-40. The Commission stated in these 
opinions that Congress decided not to place restrictions on the subject 
even though it could have determined that the purchase of the facility 
was for the purpose of influencing a Federal election, that Congress 
took the affirmative step of deleting the receipt and disbursement of 
funds for such activity from the proscriptions of the Act, and that 
there was no indication that Congress intended to limit the preemptive 
effect to some allocable portion of the purchase costs. Proposed new 
section 300.35, in effect, would supersede these Commission decisions 
as to Federal preemption with respect to the purchase or construction 
of an office building. Corporate donations and donations that would be 
excessive under Federal law may be used for the purchase or 
construction of a State party office building where State law permits 
(and this has been expanded to local party office buildings), but if 
the State law forbids corporate donations and donations in excess of a 
particular amount, Federal law would not preempt that law and such 
donations could not be made for that purpose.
    Paragraph (b)(2) would provide that funds contributed to a Federal 
account that are then used to purchase or construct a State or local 
party office building must still comply with the limits and 
prohibitions of the Act. The committee's reports filed with the 
Commission would disclose the Federal account's receipts and 
disbursements that were used for the building purchase or construction 
as contributions received and disbursements made. Although this 
proposed section would address the use of Federal account funds, State 
law is the primary determinant as to the financing of these buildings 
and would still control whether such funds may be used. Thus, the 
Federal law would not preempt a State regulatory attempt to determine, 
using a reasonable accounting method, whether the Federal account funds 
used for the purchase or construction originated from contributions 
that would be impermissible or excessive under State law. Consistent 
with this State coverage, a State would be able to require the 
committees to file reports disclosing the Federal account's receipts 
and disbursements of funds used for the building purchase or 
construction. This would not entail a replication of the Federal 
reports; it would merely entail the disbursements for the activity 
covered by this section and the contributions that, under a reasonable

[[Page 35669]]

accounting method, were the source of such disbursements.
    Although receipts and disbursements from the non-Federal accounts 
would have to be in compliance with State law, and both Federal and 
State law would apply to the permissibility of receipts and 
disbursements from the Federal account, proposed new section 300.35 
would not contemplate a Commission enforcement action against a party 
committee for violating State law. Such an action, which would 
interpret and apply State law, would be the State's responsibility. 
Moreover, although the new provision would not require the 
establishment of a separate bank account or book account for the 
receipt and disbursement of funds for purchase or construction of the 
office building, Federal law would not preempt a State law requirement 
to establish such an account.
    Under paragraph (b)(3), Levin funds would be usable for the 
purchase or construction of an office building provided that State law 
permits the use of such funds.
    In accordance with these provisions as to the application of State 
law, current section 108.7(c), which lists types of State laws that are 
not superseded by the Act and the regulations, would be amended to 
include the application of State law to the purchase or construction of 
a State or local party office building in accordance with proposed 
section 300.35.
B. Definition of ``Purchase or Construction of an Office Building''
    In view of the Commission's prior advisory opinions interpreting 
the scope of the repealed exception, it is necessary to delineate more 
precisely the scope of the activity covered under the new exception. In 
order to explain the scope of activities under which the funds would 
not be subject to the limitations and prohibitions of the Act (except 
for contributions to Federal accounts) and would be subject to State 
law, the proposed rules would define three terms: office building, 
purchase, and construction.
    Section 453(b) of FECA refers to the purchase or construction of an 
``office building'' rather than an ``office facility'' as found in the 
repealed section. The term ``building'' is a narrower term that 
indicates a more restricted range of covered expenses. In recent 
advisory opinions applying the repealed section, the Commission has 
stated that expenses that would be considered capital expenditures 
under the Internal Revenue Code would be payable from the building 
fund. See Advisory Opinions 2001-12, 2001-01, and 1998-7; see also 26 
CFR 1.263(a)-(1) and 1.263(a)-(2). This has been interpreted by some to 
mean that the building fund may pay for the purchase of office 
machinery, equipment, and furniture. See Advisory Opinion 2001-12. The 
proposed rules interpret the use of the term ``building'' instead of 
``facility'' as a basis for ensuring that this proposed section would 
not include what are more appropriately administrative expenses for the 
operation of the party, rather than the purchase or construction of an 
office building.
    Specifically, proposed paragraph (c)(1) would ensure that items 
such as office equipment, machinery, and furniture would not be 
considered a part of the building and that the exemption afforded by 
this section would not extend to such payments; such payments would 
instead be allocable administrative expenses. The definition of 
``building'' would extend only to the building itself and accompanying 
land, but this definition would not be meant to exclude a portion of 
the building, such as an office suite or one or more floors of a 
building, that a committee may purchase instead of an entire building. 
Although structural components and certain other fixtures, as described 
in proposed paragraph (c)(1), would not by themselves constitute a 
building, they would appear in the proposed regulation to convey the 
idea of what would be part of the building's structure, as opposed to 
the office equipment and machinery and similar items. The term 
``structural component'' would be derived from the tax regulations, at 
26 CFR 1.148-1; it would apply to such features as interior walls, 
floors, ceilings, windows, doors, stairwells and elevators, central air 
conditioning or heating systems, sprinkler systems, plumbing and 
plumbing fixtures, and electrical and data transmission wiring and 
lighting fixtures. There may be other fixtures that are not strictly 
``structural components'' that are essential to the operation or 
appearance of the building. (See the discussion below as to when the 
installation of a significant number of structural components as part 
of a major restoration or renovation will qualify as construction of an 
office building.)
    One particularly relevant illustration of the distinction between a 
structural component and an item that would not be part of the building 
pertains to audio-visual production facilities. Although a studio with 
special lighting, acoustical paneling, and special wiring in the walls 
may be built during the general construction of the building and would 
be considered part of the building, equipment such as recording 
equipment and cameras that are placed in the studio would not be part 
of the building's structure for the purposes of the proposed 
regulation.
    The Commission seeks comment on whether the proposed definition of 
``building'' should include, rather than explicitly exclude, items such 
as office equipment, machinery, or furniture. More generally, the 
Commission seeks comment on whether BCRA's use of the term ``building'' 
instead of ``facility'' contemplated a narrowing of the range of 
expenses falling within the exemption.
    Proposed paragraph (c)(1) would also refer to the purpose of the 
party's use of the building, which is solely for its own party 
administration and election campaign support purposes. A party office 
building would not include floors or offices within the building or 
portions of the underlying land that are not used, or set aside for 
use, for party committee purposes. A party would be able to purchase a 
portion of a building such as a floor or suite to be its office 
building, but a party owning an entire building would not be able to 
rent or sell space in the building to others. The Commission seeks 
comment on whether a State or local party committee should be permitted 
to purchase an entire building and lease parts of it at fair market 
rates in order to generate income. In addition, the Commission seeks 
comment on whether the sources of the funds used to purchase or 
construct the office building should govern or guide the Commission in 
the determination of the lawful uses of such income. For example, would 
the purchase of a building with non-Federal funds require that the 
rental income generated be deposited in a non-Federal account and only 
used for non-Federal purposes? Would the purchase of the building with 
Federal funds allow rental income to be deposited in a Federal account 
and used for Federal purposes? What approach should be taken when 
revenue is generated from a building that was purchased with proceeds 
from a building fund that contains both Federal and non-Federal funds?
    In the definition of ``purchase'' at proposed paragraph (c)(2), the 
payment to acquire the sole legal title would, of course, include down 
payments and mortgage payments. The proposed rule would draw from 
advisory opinions that limited the kinds of payments that would fall 
within the repealed exception. These opinions excluded payments for 
ongoing ``operating expenses'' such as property taxes and assessments 
(Advisory Opinion 1983-8)

[[Page 35670]]

or administrative expenses such as rent, building maintenance, 
utilities, and ``office equipment expenses.'' Advisory Opinions 2001-
12, 2001-01 and 1988-12.
    In defining ``construction,'' proposed paragraph (c)(3) would 
distinguish between expenses that constitute the erection of the 
building or the extensive renovation of a building on one hand, and 
costs for the upkeep, repair, or more piecemeal replacement of 
structural components. This distinction is derived from Advisory 
Opinion 1998-7 where the Commission, drawing from the tax code, 
distinguished the cost of incidental repairs that do not materially add 
to the property's value nor appreciably prolong its life, but ``keep it 
in an ordinary efficient operating condition'' from ``repair work 
[that] reaches a level to constitute wholesale restoration or 
renovation of a structure.'' The distinction may be illustrated by the 
following examples:
    Example A--Expansion of the size of the building (i.e, changing the 
size or position of the outer perimeter of the structure) would 
constitute ``construction.''
    Example B--A single large scale project (with a specific time 
deadline) entailing the replacement of a number of various structural 
components throughout the building to improve the building's 
habitability and function; for example, expanding, contracting, or 
altering the configuration of a significant number of rooms within the 
building coupled with replacements of a significant number of other 
structural components throughout the building such as installation of 
new electrical wiring throughout the building, and new climate control 
and plumbing systems would also constitute ``construction.''
    Example C--The replacement on a periodic basis of structural 
components where such replacement is not part of a single large scale 
renovation project with a specific time deadline would not constitute 
``construction'' under this section.
    The definitions in proposed paragraph (c) may not include all of 
the possibilities for expenses for the purchase or construction of a 
party office building. In seeking comments on this proposed regulation, 
the Commission asks whether more examples should be included in what is 
or is not included in the particular sub-definitions, or whether the 
advisory opinion process would best serve that purpose. For example, 
should payments for a long-term lease with an option to purchase the 
rented building be included within the definition of purchase? More 
generally, the Commission seeks comment on what constitutes the 
purchase or construction of a party office building.
C. Office Building-Related Expenses Not Qualifying Under Proposed 
Paragraph (c)
    An expense that is not included within the definition of the 
purchase or construction of an office building would most likely be an 
administrative expense of the party. Depending on the circumstances, 
such an expense may be support for a particular candidate or in some 
other category, rather than an administrative expense. If the expense 
is an administrative expense, it would be allocable under proposed 11 
CFR 300.33 and a sufficient amount of Federal account funds would have 
to be used for the expense. In addition, the provisions of the Act 
would apply to the sources that are properly used for allocable expense 
purposes. The Commission notes that the portion of this NPRM describing 
the allocation rules at proposed section 300.33 asks for comments on 
whether administrative expenses should be allocable between Federal and 
non-Federal accounts, or whether such funds should be considered as 
entirely Federal or entirely non-Federal.
D. Transitional Provisions for State Party Building or Facility Account
    Up to and including November 5, 2002, the funds in a State party 
office facility account can be used only for the purchase or 
construction of a State party office facility. Starting on November 6, 
those funds, if used for the purchase or construction of the office 
building, would be subject to State law, and State law may determine 
that the funds may not be used for that purpose, as would be provided 
in proposed new section 300.35. The proposed rule would also state what 
the funds may not be used for.

10. Proposed 11 CFR 300.36  Reporting Federal Election Activity; 
Recordkeeping

    BCRA establishes certain reporting requirements for State, 
district, and local committees that finance Federal election 
activities. See 2 U.S.C. 434(e)(2). This requirement extends generally 
to all receipts and disbursements for Federal election activities if 
the aggregate amount of receipts and disbursements for such activity is 
$5,000 or more per calendar year, 2 U.S.C. 434(e)(2)(A), and 
specifically extends to receipts and disbursements of Levin funds. 2 
U.S.C. 434(e)(2)(B). Because spending under the Levin Amendment is 
allocated between Federal funds and non-Federal funds not otherwise 
subject to the Act's prohibitions, limitation, and reporting 
requirements (i.e., Levin funds), Congress has specifically required 
Federal disclosure of certain otherwise non-Federal receipts and 
disbursements of State, district, and local committees (i.e., the Levin 
funds).
    Proposed paragraph (a) of this section would apply to State, 
district, and local political party committees that have not qualified 
as political committees under 11 CFR 100.5. Although such an 
organization would not have reporting requirements under BCRA (see 2 
U.S.C. 434(e)(2)), it would be required under proposed paragraph (a)(1) 
to demonstrate through a reasonable accounting method that it had 
sufficient Federal funds on hand to pay the required Federal portion of 
the costs of Federal election activity under proposed 11 CFR 300.32 and 
300.33. Proposed paragraph (a)(1) would also require such a party 
organization to keep records of Federal receipts and disbursements and 
to make those records available to the Commission upon request.
    Proposed paragraph (a)(2) would clarify that a payment of Federal 
funds for the costs of Federal election activity, or for the Federally 
allocated portion of the costs of Federal election activity, would 
constitute an expenditure, within the meaning of 11 CFR 100.8, unless 
an exclusion from the definition of expenditure in 11 CFR 100.8(b) 
applies. Thus, such payments would constitute expenditures for purposes 
of determining whether or not a State, district, or local political 
party organization becomes a political committee, under 11 CFR 100.5. 
The Commission seeks comment on this interpretation and whether, 
alternatively, disbursements for Federal election activity that do not 
otherwise qualify as ``expenditures'' or ``exempt activities'' should 
be excluded from the threshold for determining political committee 
status. Proposed paragraph (a)(2) would also state that a payment of 
Federal funds for the costs of Federal election activity, or for the 
Federally allocated portion of the costs of Federal election activity, 
that meets the definition of ``exempt activities'' (see 11 CFR 
100.8(b)(10), (16), and (18)) would be treated as exempt activities in 
accordance with applicable provisions of the current (i.e., pre-BCRA) 
regulations.
    Proposed paragraph (b) of proposed section 300.36 would apply to 
State, district, and local political party committees that have 
qualified as political committees under 11 CFR

[[Page 35671]]

100.5. Proposed paragraph (b)(1) would provide that such committees 
must report all receipts and disbursements of Federal funds for all or 
part of the costs of Federal election activity. Proposed paragraph 
(b)(1) would go on to state that this requirement holds even if the 
committee has less than $5,000 of aggregate receipts and disbursements 
for Federal election activity. See 2 U.S.C. 434(e)(2)(A). The final 
sentence of proposed paragraph (b)(1) would provide that a disbursement 
of Federal funds for the costs of, or for the Federally allocated 
portion of the costs of, Federal election activity is reportable as an 
expenditure, unless an exclusion in 11 CFR 100.8(b) applies.
    Proposed paragraph (b)(2) would implement the broader reporting 
provisions of 2 U.S.C. 434(e)(2)(A) and (B). The proposed first 
sentence would state the basic rule that all receipts and disbursements 
for Federal election activity must be reported if the political 
committee has had an aggregate of $5,000 or more of such receipts and 
disbursements in a calendar year. The proposed second sentence would 
make it clear that this basic reporting rule extends to the otherwise 
non-Federal funds spent for Federal election activity under the Levin 
Amendment (that is, to the Levin funds).
    Proposed paragraph (b)(2)(i) would spell out the requirements for 
reporting payments for the costs of Federal election activity that are 
allocated between Federal funds and Levin funds. It would identify 
certain information, such as name, address, amount, and description of 
purpose, which must be provided for each reportable payment. Proposed 
paragraph (b)(2)(i) would require activity-by-activity itemization of a 
reportable payment that covers the costs of more than one Federal 
election activity. Proposed paragraph (b)(2)(ii) would implement BCRA's 
itemization provision for receipts and disbursements to or from any 
person of more than $200 in a calendar year. See 2 U.S.C. 434(e)(3).
    Proposed paragraph (b)(3) is intended to alert the reader to the 
rules for reporting payments allocated between Federal funds and non-
Federal funds that are not covered in proposed paragraph (b)(2). As 
explained above, proposed paragraph (b)(2) would apply only to payments 
for Federal election activity allocated between Federal funds and Levin 
funds under proposed 11 CFR 300.33. The reporting regulation for other 
payments allocated between Federal funds and non-Federal funds would be 
contained in proposed new 11 CFR 104.17. For example, section 104.17 
would address reporting of administrative expenses and salaries of 
employees who spend 25% of their time, or less, on Federal elections.
    Proposed paragraph (c) would implement BCRA's new requirement for 
monthly filing by party committees that come under new section 434(e) 
of the Act. This would be accomplished by referring to the Commission's 
existing regulation specifying monthly reporting, i.e., 11 CFR 
104.5(c)(3). The Commission seeks comments on the applicability of the 
$50,000 annual threshold for electronic filing to receipts and 
disbursements for Federal election activities. See 11 CFR 104.18.
    Finally, proposed paragraph (d) would support the disclosure 
provisions outlined above by adding a recordkeeping requirement. This 
would be accomplished by referring to the Commission's existing 
regulation on recordkeeping, 11 CFR 104.14. This requirement is 
necessary to ensure that sufficient documentation exists to ensure 
compliance with the disclosure provisions of BCRA.
    With regard to reporting and recordkeeping, the Commission seeks 
comments about what, if any, reporting requirements an association or 
similar group of candidates for, or holders of, State and local office 
(see 2 U.S.C. 441i(b)(1)) that is not a political committee has under 2 
U.S.C. 434(e)(2).

11. Proposed 104.17  Reporting of Allocable Expenses by Party 
Committees

    As indicated in the description of section 104.10, the proposed 
rules would divide the present regulations at that section into several 
regulations to cover reporting of specific allocation areas by specific 
types of reporting entities. New section 104.17, which is currently 
reserved space, would address reporting by party committees of 
allocable expenses. Reporting requirements with regard to activity 
allocated between Federal and Levin accounts pursuant to 11 CFR 300.30 
and 11 CFR 300.33 are also addressed in 11 CFR 300.36.
    Proposed 11 CFR 104.17(a) would address payments on behalf of more 
than one clearly identified candidate, including non-Federal 
candidates. Current section 104.10 provides for allocated Federal/non-
Federal spending when a combined payment is made on behalf of both 
Federal and non-Federal clearly identified candidates. Under BCRA and 
as provided in the proposed revisions of section 106.1(a), however, it 
appears that all such payments must be made entirely from Federal 
funds. Hence, proposed 11 CFR 104.17(a) would provide for the reporting 
of all allocations between or among clearly identified Federal and non-
Federal candidates as Federal activity. Comments are solicited as to 
whether this requirement that State, district and local committees of 
political parties use Federal funds for activity on behalf of clearly 
identified Federal and clearly identified non-Federal candidates is 
appropriate under BCRA. (See also 11 CFR 300.30).
    Proposed 11 CFR 104.17(b)(1) would require explanations of the 
percentages used to allocate payments for specific categories of State, 
district and local party activity. The Commission is also contemplating 
requiring the assignment of unique identifying codes to some allocable 
activities as is required in current 11 CFR 104.10(b)(2). (For example, 
the reporting of exempt costs now requires such identifiers.) Comments 
are sought as to whether such unique identifying codes for activities 
would be of utility in tracking any of the allocable expenditures for 
activities. Also, should activities that have been included under 
exempt costs (now apparently subsumed by other categories) require such 
identifiers?
    Proposed 11 CFR 104.17(b)(2) would address the reporting of 
transfers between State, district and local party accounts for 
allocable expenses, while proposed 11 CFR 104.17(b)(3) would set out 
the details required in the reporting of disbursements for allocable 
activity by State, district and local committees of political parties.

12. Proposed 11 CFR 300.37  Prohibitions on Fundraising for and 
Donating to Certain Tax Exempt Organizations

    Just as it prohibits national parties from fundraising for, or 
making or directing donations to, certain tax exempt organizations, 
BCRA also prohibits State, district, and local party committees, their 
officers and agents acting on their behalf, and entities directly or 
indirectly established, maintained, financed, or controlled by them 
from doing so. 2 U.S.C. 441i(d)(i). Thus, the proposed rules at 11 CFR 
300.37 relating to State, district, and local party committees would 
mirror the proposed rules at 11 CFR 300.11 relating to national party 
committees. See discussion above.
    The Commission seeks comments on one component of the proposed 
rules as they apply to State, district, and local party committees. 
Proposed 11 CFR 300.37(a)(3), like proposed 11 CFR 300.11(a)(3), would 
mirror 2 U.S.C. 441i(d) in extending the prohibition on fundraising 
for, or donating to, section 527 organizations ``except for a political 
committee; a State, district, or local

[[Page 35672]]

committee of a political party; or the authorized campaign committee of 
a State or local candidate.'' The proposed rules would interpret 
``political committee'' as it is currently defined in 11 CFR 100.5. 
Under this construction, State, district, and local party committees 
could fundraise for, or donate to, a section 527 organization that is a 
Federal political committee under the Act, but they could not do so for 
a section 527 organization that is a State-registered political action 
committee (``PAC'') that supports only non-Federal candidates. The 
Commission seeks comment as to whether another interpretation of 
``political committee'' is warranted that would permit State, district, 
and local party committees to donate to this type of State-registered 
section 527 organization.

Tax-Exempt Organizations

    For the convenience of readers interested in locating rules 
pertaining to fundraising and donations to tax-exempt organizations, 
subpart C of new part 300 would combine in a single place the 
prohibitions on national, State, district, and local party committee 
donations to, and fundraising for, certain 501(c) and 527 tax-exempt 
organizations and the rules governing fundraising by Federal candidates 
and officeholders for 501(c) organizations. Proposed 11 CFR 300.50 
would mirror proposed rule 11 CFR 300.11. Proposed 11 CFR 300.51 would 
mirror proposed rule 300.37. Proposed 11 CFR 300.52 would mirror 
proposed 11 CFR 300.65. See the discussion in proposed 11 CFR 300.11 
and 300.37 above and 300.65 below.

Federal Candidates and Officeholders

    BCRA places limits on the amounts and types of funds that can be 
raised by Federal candidates and officeholders for both Federal and 
State candidates. See 2 U.S.C. 441i(e). The Commission is proposing to 
place the regulations that address these limitations in 11 CFR part 
300, subpart D.

1. General Prohibitions

    The restrictions apply to Federal candidates and officeholders, 
their agents, and entities directly or indirectly established, 
maintained, or controlled by, or acting on behalf of, any such 
candidate(s) or officeholder(s). As defined in 2 U.S.C. 431(3) and 
existing 11 CFR 100.4, ``Federal office'' means the office of President 
or Vice President of the United States, Senator or Representative in, 
or Delegate or Resident Commissioner to, the Congress of the United 
States. There is a similar definition of ``Federal officeholder'' in 11 
CFR 113.1(c). Please note that these restrictions encompass candidate 
PACs and leadership PACs. Persons covered by these restrictions may not 
``solicit, receive, direct, transfer or spend'' non-Federal funds 
unless certain requirements are satisfied.
    BCRA prohibits any Federal candidate or officeholder, his or her 
agent, or any entity described above, from raising non-Federal funds in 
connection with an election for Federal, State, or local office. 2 
U.S.C. 441i(e)(1)(A) and (B); proposed 11 CFR 300.61. These 
prohibitions encompass raising money for section 527 organizations, 
whether or not such organizations are Federal political committees. 
With limited exceptions, such persons may raise and spend Federal money 
in connection with a non-Federal election only in amounts and from 
sources that are consistent with State law, and that do not exceed the 
Act's contribution limits or come from prohibited sources under the 
Act. 2 U.S.C. 441i(e)(1)(B); proposed 11 CFR 300.62.
    The prohibitions in 11 CFR 300.61 and 300.62 encompass 
``leadership'' and ``candidate'' PACs since these PACs are entities 
directly or indirectly established, financed, maintained, or controlled 
by, Federal candidates and/or officeholders. Specifically, leadership 
PACs and candidate PACs are political organizations set up by 
congressional leaders and other Federal candidates and officeholders as 
a way to support other candidates' campaigns. In 2001, at least 110 
members of Congress had leadership PACs.
    As Senator McCain explained in the Senate debate, ``A Federal 
officeholder or candidate is prohibited from soliciting contributions 
for a Leadership PAC that do not comply with the Federal hard money 
source and amount limitations.'' See 148 Cong. Rec. S2140 (Daily ed. 
March 20, 2002) (statement of Sen. McCain). Consequently, under 
proposed 11 CFR 300.61, Federal candidates, Federal officeholders, and 
their leadership PACs and candidate PACs cannot solicit, receive, 
direct, transfer, or spend funds for a Federal account of a leadership 
or candidate PAC unless the funds are subject to the prohibitions, 
limitations, and reporting requirements of the Act. Similarly, Federal 
candidates, Federal officeholders, and their leadership PACs and 
candidate PACs cannot solicit, receive, direct, transfer, or spend 
funds for a non-Federal account of a leadership PAC or candidate PAC 
unless the funds are subject to the prohibitions and limitations of the 
Act. Thus, neither the Federal nor non-Federal accounts of a Federal 
candidate's leadership PAC or candidate PAC could receive or spend 
corporate treasury or labor organization funds or funds from 
individuals and political committees that exceed the limitations of the 
Act. Additionally, funds in the non-Federal account of these PACs must 
not be used for Federal election activities or in connection with a 
Federal election. See 148 Cong. Rec. S2140 (Daily ed. March 20, 2002) 
(statement of Sen. McCain).

2. Exceptions for State and Local Candidates and for Fundraising Events

    An exception applies when a Federal candidate or Federal 
officeholder is also a candidate for State or local office. Such 
candidates may raise and spend non-Federal funds for their State 
campaign, as long as their activities are consistent with State law and 
refer only to their status as a State or local candidate, to other 
candidates for that same office, or both. 2 U.S.C. 441i(e)(2); proposed 
11 CFR 300.63. Please note that if a State or local candidate is 
simultaneously a candidate for Federal office, he or she must raise and 
spend only Federal funds in connection with the Federal campaign.
    BCRA contains a further exemption, for Federal candidates and 
officeholders who attend, speak, or appear as a featured guest at a 
State, district, or local party committee fundraising event. See 2 
U.S.C. 441i(e)(3); proposed 11 CFR 300.64. The Commission seeks comment 
on how it should construe and implement this provision, particularly in 
light of the separate general prohibition on Federal candidates and 
officeholders from soliciting non-Federal funds in connection with an 
election for Federal, State, or local office.
    Sen. McCain explained in the Senate debate that ``[t]he rule here 
is simple: Federal candidates and officeholders cannot solicit soft 
money funds, funds that do not comply with Federal contribution limits 
and source prohibitions, for any party committee--national, State, or 
local.'' 148 Cong. Rec. S2139 (daily ed. March 20, 2002) (statement of 
Sen. McCain). Thus, under the proposed rules, while such individuals 
may attend, speak, or be a featured guest at a State or local party 
fundraising event, they cannot solicit funds at any such event.
    However, the Commission seeks comments on whether the fundraising 
event provision is a total exemption from the general solicitation ban, 
whereby Federal candidates and officeholders and their agents may 
attend and speak freely at such events without restriction or 
regulation. In

[[Page 35673]]

addition, the Commission seeks comments on how it should construe 
BCRA's phrase permitting Federal candidates and officeholders to 
``attend, speak, or be a featured guest'' at a fundraising event. 
Specifically, the phrase ``featured guest'' strongly suggests that 
State, district, or local party committees may publicize in advance 
that a Federal candidate or officeholder will be attending and speaking 
at an event. Does this mean that Federal candidates and officeholders 
may be referred to in invitation materials for the event? May they 
appear as members of a host committee of an event? May they be honored 
at the event? Should the general solicitation bar be construed to mean 
that Federal candidates and officeholders are strictly prohibited from 
doing anything that would constitute a ``solicitation'' under the 
Internal Revenue Code that would trigger IRS disclaimer obligations?

3. Exception for Tax-Exempt Organizations

    BCRA also addresses solicitations on behalf of 501(c) organizations 
that are made by Federal candidates, Federal officeholders, and 
individuals who are agents of either. 2 U.S.C. 441i(e)(4). BCRA makes 
clear that these individuals may make general solicitations on behalf 
of 501(c) organizations, without regard to the source or amount 
solicited, as long as the solicitation does not specify how the funds 
will or should be spent and as long as the solicitation is not for a 
501(c) organization whose principal purpose is to conduct certain 
Federal election activity as described in 11 CFR 300.2(a), such as 
voter registration, voter identification, GOTV activities, or generic 
campaign activity. BCRA prohibits these individuals from specifically 
soliciting funds for the above-described Federal election activity, or 
for 501(c) organizations whose principal purpose is to conduct those 
Federal election activities, unless the solicitation is made to an 
individual and the amount solicited does not exceed $20,000 per year. 
No solicitations may be made on behalf of 501(c) organizations for 
funds to use for public communications that refer to a clearly 
identified Federal candidate and that promote, support, attack, or 
oppose the candidate. See 148 Cong. Rec. H408 (daily ed. February 13, 
2002) (statement of Rep. Shays). Thus, for example, a Federal candidate 
may make a general solicitation to a corporation or labor organization 
on behalf of the Red Cross, but may not solicit a corporation or labor 
organization for GOTV activities conducted by a 501(c)(4) organization. 
These provisions also apply to organizations that have applied for 
501(c) tax exempt status, where the application is still pending. The 
proposed rules track these provisions. See 11 CFR 300.65.
    The BCRA provision relating to candidate/officeholder solicitations 
on behalf of 501(c) organizations specifically applies only to 
individuals described in 2 U.S.C. 441i(e)(1). Section 441i(e)(1) of 
FECA applies to Federal candidates, individual holding Federal office, 
their agents, and entities directly or indirectly established, 
financed, maintained, or controlled by, or acting on behalf of either 
Federal candidates and Federal officeholders. Thus, the proposed rules 
construe BCRA to permit only individuals to make the solicitations--
that is, Federal candidates, Federal officeholders, and individuals 
acting as their agents. An entity acting as a candidate's agent or an 
entity directly or indirectly established, financed, maintained, or 
controlled by a candidate could not make these general or specific 
solicitations on behalf of a 501(c) organization. However, the 
Commission seeks comments as to whether another interpretation is 
warranted.
    The Commission also notes that the language encompassing an 
``agent'' of Federal candidates and officeholders in Section 
441i(e)(1), unlike the ``agent'' language in Sections 441i(a)(2) and 
441i(d), does not include the limiting phrase, ``agent acting on behalf 
of.'' The Commission seeks comment as to whether Section 441i(e)(1) 
should be similarly construed as applying to an agent acting on behalf 
of a Federal candidate or officeholder or whether the absence of this 
limiting language was intended to confer a different meaning on the use 
of the term ``agent'' in this provision.
    The Commission also seeks comments on whether the proposed rules 
should address how to identify organizations whose principal purpose is 
to conduct the described Federal election activity. Should a 501(c) 
organization's major activities, as identified in publicly available 
information such as its application for tax-exempt status or annual 
Form 990 tax returns, be used to determine whether an organization's 
principal purpose is to conduct Federal election activity? Although 
those publicly available tax forms would reveal the past major 
activities of an organization or the major activities planned by the 
organization at the time it applied for tax exempt status, additional 
information would be needed to determine the principal purpose of an 
organization that has applied for, but not yet obtained, tax exempt 
status, and to ascertain the current major activities of a 501(c) 
organization. Thus, should Federal candidates and officeholders be 
required to obtain a certification from an organization on whose behalf 
the candidate or officeholder wants to solicit funds that its principal 
purpose is not to conduct the described Federal election activity? 
Should the rules include a knowledge standard prohibiting solicitations 
for unlimited funds from any source if a Federal candidate, Federal 
officeholder, or individual acting on their behalf has knowledge that 
an organization is planning to conduct the described Federal election 
activity?
    Finally, the Commission seeks comments on whether the rules should 
further address a Federal candidate's or Federal officeholder's 
responsibility when specifically soliciting individuals for funds for a 
501(c) organization to use in conducting Federal election activity. For 
example, if a Federal candidate is soliciting a donation of $20,000 
from an individual who serves as the CEO of a major corporation, should 
the candidate be required to inform the individual that personal funds 
are being solicited and not funds from the individual's corporation?

Communications by State and Local Candidates

    Proposed Subpart E would implement two provisions of BCRA regarding 
State and local candidates. BCRA prohibits State and local candidates 
and officeholders from funding certain public communications with non-
Federal funds. See 2 U.S.C. 441i(f)(1); proposed 11 CFR 300.71. They 
may, however, use Federal funds for these communications. The 
prohibition on use of non-Federal funds encompasses communications that 
refer to a clearly identified candidate for Federal office, if the 
communication promotes, supports, attacks, or opposes any candidate for 
that Federal office, regardless of whether the communication expressly 
advocates voting for or against any candidate.
    In addition, BCRA contains an exception that permits State and 
local candidates to use non-Federal funds for communications that 
merely refer to Federal candidates in another context. 2 U.S.C. 
441i(f)(2); proposed 11 CFR 300.72. For example, State and local 
candidates may note that they have been endorsed by Federal candidates, 
or that they agree or disagree with a Federal candidate's position on a 
certain issue. See 148 Cong. Rec. S2142-43 (daily ed. March 20, 2002) 
(statement of Sen.

[[Page 35674]]

Feingold). They would also be able to use non-Federal funds to refer to 
a bill or law by its popular name where that name happens to include 
the name of a Federal candidate. These examples are included in 
proposed 11 CFR 300.2(l)(ii), the definition of ``promote, support, 
attack, or oppose,'' which is cross-referenced in proposed 11 CFR 
300.72.
    A State or local candidate or officeholder may also use non-Federal 
funds for communications made in connection with an election for State 
or local office, that refer only to the sponsoring individual or to any 
other candidate for the State or local office held or sought by that 
individual, or both. Id.

Certification of No Effect Pursuant to 5 U.S.C. 605(b)

[Regulatory Flexibility Act]

    The Commission certifies that the attached proposed rules, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. The basis for this certification 
is that the national, State, and local party committees of the two 
major political parties are not small entities under 5 U.S.C. 601, and 
the number of other small entities to which the rules would apply is 
not substantial.

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 102

    Political committees and parties, reporting and recordkeeping 
requirements.

11 CFR Part 104

    Campaign funds, political committees and parties, reporting and 
recordkeeping requirements.

11 CFR Part 106

    Campaign funds, political committees and parties, political 
candidates.

11 CFR Part 108

    Elections, reporting and recordkeeping.

11 CFR Part 110

    Campaigns, political parties and committees.

11 CFR Part 114

    Business and industry, elections, labor.

11 CFR Part 300

    Campaign funds, nonprofit organizations, political committees and 
parties, political candidates, reporting and recordkeeping 
requirements.

11 CFR Part 9034

    Campaign funds, reporting and recordkeeping requirements.
    For reasons set out in the preamble, Subchapters A, B and F of 
Chapter I of title 11 of the Code of Federal Regulations would be 
amended as follows:

PART 100--SCOPE AND DEFINITIONS (2 U.S.C. 431)

    1. The authority citation for 11 CFR part 100 would continue to 
read as follows:

    Authority: 2 U.S.C. 431; 434(a)(11), 438(a)(8).

    2. Section 100.14 would be revisied to read as follows:


Sec. 100.14  State committee, subordinate committee, district, or local 
committee (2 U.S.C. 431(15)).

    (a) State committee means the organization that by virtue of the 
bylaws of a political party or the operation of state law is part of 
the official party structure, and is responsible for the day-to-day 
operation of the political party at the State level, including an 
entity that is directly or indirectly established, financed, 
maintained, or controlled by that organization, as determined by the 
Commission.
    (b) Subordinate committee of a State committee means any 
organization that is part of the official party structure, and is 
responsible for the day-to-day operation of the political party at the 
level of city, county, neighborhood, ward, district, precinct, or any 
other subdivision of a State or any organization under the control or 
direction of the State committee, as determined by the Commission.
    (c) District or local committee means any organization that by 
virtue of the bylaws of a political party or the operation of State law 
is part of the official party structure, and is responsible, under 
State law, for the day-to-day operation of the political party at the 
level of city, county, neighborhood, ward, district, precinct, or any 
other subdivision of a State, including an entity that is directly or 
indirectly established, financed, maintained, or controlled by the 
district or local committee, as determined by the Commission.
    3. Section 100.24 would be added to read as follows:


Sec. 100.24  Federal election activity (2 U.S.C. 431(20)).

    (a) Federal election activity means--
    (1) Voter registration activity during the period that begins on 
the date that is 120 calendar days before the date that a regularly 
scheduled Federal election is held and ends on the date of the 
election. For purposes of voter registration activity, the term 
``election'' does not include any special election;
    (2) The following activities conducted in connection with an 
election in which one or more candidates for Federal office appears on 
the ballot (regardless of whether one or more candidates for State or 
local office also appears on the ballot):
    (i) Voter identification, including canvassing, and other 
activities designed to determine registered voters, likely voters, or 
voters indicating a preference for a specific candidate or political 
party; or
    (ii) Generic campaign activity, as defined in 11 CFR 100.25;
    (iii) Get-out-the-vote activity. Examples of get-out-the-vote 
activity include transporting voters to the polls, contacting voters on 
election day or shortly before to encourage voting but without 
referring to any clearly identified candidate for Federal office, and 
distributing printed slate cards, sample ballots, palm cards, or other 
printed listing(s) of three or more candidates for any public office;
    (3) A public communication that refers to a clearly identified 
candidate for Federal office, regardless of whether a candidate for 
State or local election is also mentioned or identified and that 
promotes, supports, attacks, or opposes any candidate for Federal 
office. This paragraph applies regardless of whether the communication 
expressly advocates a vote for or against a Federal candidate; or
    (4) Services provided during any month by an employee of a State, 
district, or local committee of a political party who spends more than 
25 percent of that individual's compensated time during that month on 
activities in connection with a Federal election.
    (b) Exceptions. Federal election activity does not include any 
amount expended or disbursed by a State, district, or local committee 
of a political party for:
    (1) A public communication that refers solely to one or more 
clearly identified candidates for State and local office. This 
exception does not apply to a public communication that is voter 
registration activity, voter identification, generic campaign activity, 
or get-out-the-vote activity under paragraphs (a)(1) or (a)(2) of this 
section;
    (2) A contribution to a candidate for State or local office, 
provided the contribution is not designated to pay for

[[Page 35675]]

voter registration activity, voter identification, generic campaign 
activity, get-out-the-vote activity, or a public communication as set 
forth in paragraphs (a)(1) through (4) of this section;
    (3) The costs of a State, district, or local political convention 
or other similar meeting or conference;
    (4) The costs of grassroots campaign materials, including buttons, 
bumper stickers, handbills, brochures, posters and yard signs, that 
name or depict only candidates for State or local office;
    (5) Voter registration activity at any time other than the period 
of time that is 120 days before the date that a regularly scheduled 
Federal election is held through the date of the election; and
    (6) Get-out-the-vote and voter identification activities in 
elections in which no candidate for Federal office appears on the 
ballot.
    4. Section 100.25 would be added to read as follows:


Sec. 100.25  Generic campaign activity (2 U.S.C. 431(21)).

    Generic campaign activity means a campaign activity that promotes 
or opposes a political party and does not promote or oppose a Federal 
candidate or a non-Federal candidate.
    5. Section 100.26 would be added to read as follows:


Sec. 100.26  Public communication (2 U.S.C. 431(22)).

    Public communication means a communication by means of any 
broadcast, cable or satellite communication, newspaper, magazine, 
outdoor advertising facility, mass mailing or telephone bank to the 
general public, or any other form of general public political 
advertising.
    6. Section 100.27 would be added to read as follows:


Sec. 100.27  Mass mailing (2 U.S.C. 431(23)).

    Mass mailing means a mailing by United States mail or facsimile of 
more than 500 pieces of mail matter of an identical or substantially 
similar nature within any 30-day period. For purposes of this section, 
substantially similar means communications that have been personalized 
to include the recipient's name, occupation, geographic location, or 
similar types of individualization.
    7. Section 100.28 would be added to read as follows:


Sec. 100.28  Telephone bank (2 U.S.C. 431(24)).

    Telephone bank means more than 500 telephone calls of an identical 
or substantially similar nature within any 30-day period. For purposes 
of this section, substantially similar means communications that have 
been personalized to include the recipient's name, occupation, 
geographic location, or similar types of individualization.


Secs. 100.29-100.50  [Added and Reserved]

    8. Sections 100.29 through 100.50 would be added and reserved.
    9. Sections 100.1 through 100.50 would be designated as subpart A--
General Definitions, and Subpart B would be added and reserved.

PART 102--REGISTRATION, ORGANIZATION, AND RECORDKEEPING BY 
POLITICAL COMMITTEES (2 U.S.C. 433)

    10. The authority citation for part 102 would continue to read as 
follows:

    Authority: 2 U.S.C. 432, 433, 434(a)(11), 438(a)(8), 441d.

    11. Section 102.5 would be revised to read as follows:


Sec. 102.5  Organizations financing political activity in connection 
with Federal and non-Federal elections, other than through transfers 
and joint fundraisers.

    (a) Organizations that are political committees under the Act, 
other than National Party committees.
    (1) Each organization, including a State, district, or local party 
committee, that finances political activity in connection with both 
Federal and non-Federal elections and that qualifies as a political 
committee under 11 CFR 100.5 shall either:
    (i) Establish a separate Federal account in a depository in 
accordance with 11 CFR part 103. Such account shall be treated as a 
separate Federal political committee which shall comply with the 
requirements of the Act including the registration and reporting 
requirements of 11 CFR part 102 and 104. Only funds subject to the 
prohibitions and limitations of the Act shall be deposited in such 
separate Federal account. All disbursements, contributions, 
expenditures, and transfers by the committee in connection with any 
Federal election shall be made from its Federal account, except as 
otherwise permitted for State, district, and local party committees by 
11 CFR part 300. No transfers may be made to such Federal account from 
any other account(s) maintained by such organization for the purpose of 
financing activity in connection with non-Federal elections, except as 
provided by 11 CFR 300.34 and 106.6(e). Administrative expenses for 
political committees other than party committees shall be allocated 
pursuant to 11 CFR part 106 between such Federal account and any other 
account maintained by such committee for the purpose of financing 
activity in connection with non-Federal elections. Administrative 
expenses for State, district, and local party committees are subject to 
11 CFR part 300; or
    (ii) Establish a political committee which shall receive only 
contributions subject to the prohibitions and limitations of the Act, 
regardless of whether such contributions are for use in connection with 
Federal or non-Federal elections. Such organization shall register as a 
political committee and comply with the requirements of the Act.
    (2) Only contributions meeting the conditions set forth in 
paragraphs (a)(2)(i), (ii), or (iii) of this section may be deposited 
in a Federal account established under 11 CFR 102.5(a)(1)(i) or may be 
received by a political committee established under 11 CFR 
102.5(a)(1)(ii).
    (i) Contributions designated for the Federal account;
    (ii) Contributions that result from a solicitation which expressly 
states that the contribution will be used in connection with a Federal 
election; or
    (iii) Contributions from contributors who are informed that all 
contributions are subject to the prohibitions and limitations of the 
Act.
    (3) Any party committee solicitation that makes reference to a 
Federal candidate or a Federal election shall be presumed to be for the 
purpose of influencing a Federal election, and contributions resulting 
from that solicitation shall be subject to the prohibitions and 
limitations of the Act. This presumption may be rebutted by 
demonstrating to the Commission that the funds were solicited with 
express notice that they would not be used for Federal election 
purposes.
    (b) Organizations that are not political committees under the Act. 
Any organization that makes contributions or expenditures but does not 
qualify as a political committee under 11 CFR 100.5, including any 
State, district, or local party organization that makes contributions, 
expenditures and exempted payments under 11 CFR 100.7(b)(9), (15) and 
(17) and 11 CFR 100.8(b)(10), (16) and (18), or payments for certain 
Federal election activities under 11 CFR 300.32(b), shall either:
    (1) Establish separate accounts to which only funds subject to the 
prohibitions and limitations of the Act, and only funds solicited for 
activities undertaken pursuant to 11 CFR 300.32, shall be deposited and 
from which contributions, expenditures, exempted payments, and payments 
for certain

[[Page 35676]]

Federal activities shall be made. Such organization shall keep records 
of deposits to and disbursements from such accounts and, upon request, 
shall make such records available for examination by the Commission; or
    (2) Demonstrate through a reasonable accounting method that 
whenever such organization makes a contribution, expenditure, exempted 
payment or payment for certain Federal election activities, that 
organization has received sufficient funds subject to the limitations 
and prohibitions of the Act or to the requirements of 11 CFR 300.31 to 
make such contribution, expenditure or payment. Such organization shall 
keep records of amounts received or expended under this subsection and, 
upon request, shall make such records available for examination by the 
Commission.
    (c) National party committees. National party committees are 
prohibited from raising and spending non-Federal funds. Therefore, 
these committees are not included in this section.
    12. Section 102.17 would be amended by adding introductory language 
to paragraph (a) to read as follows:


Sec. 102.17  Joint fundraising by committees other than separate 
segregated funds.

    (a) General. Nothing in this section shall permit any person to 
solicit, receive, direct, transfer, or spend any non-Federal funds 
prohibited under 11 CFR part 300.
* * * * *

PART 104--REPORTS BY POLITICAL COMMITTEES (2 U.S.C. 434)

    13. The authority citation for part 104 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434, 
438(a)(8), 438(b), 439a.

    14. Section 104.8 would be amended by revising paragraphs (e) and 
(f) to read as follows:


Sec. 104.8  Uniform reporting of receipts.

* * * * *
    (e) For reports covering activity on or before December 31, 2002, 
national party committees shall disclose in a memo Schedule A 
information about each individual, committee, corporation, labor 
organization, or other entity that donates an aggregate amount in 
excess of $200 in a calendar year to the committee's non-Federal 
account(s). This information shall include the donating individual's or 
entity's name, mailing address, occupation or type of business, and the 
date of receipt and amount of any such donation. If a donor's name is 
known to have changed since an earlier donation reported during the 
calendar year, the exact name or address previously used shall be noted 
with the first reported donation from that donor subsequent to the name 
change. The memo entry shall also include, where applicable, the 
information required by paragraphs (b) through (d) of this section.
    (f) For reports covering activity on or before December 31, 2002, 
national party committees shall also disclose in a memo Schedule A 
information about each individual, committee, corporation, labor 
organization, or other entity that donates an aggregate amount in 
excess of $200 in a calendar year to the committee's building fund 
account(s).
    This information shall include the donating individual's or 
entity's name, mailing address, occupation or type of business, and the 
date of receipt and amount of any such donation. If a donor's name is 
known to have changed since an earlier donation reported during the 
calendar year, the exact name or address previously used shall be noted 
with the first reported donation from that donor subsequent to the name 
change. The memo entry shall also include, where applicable, the 
information required by paragraphs (b) through (d) of this section.
    15. Section 104.9 would be amended by revising paragraphs (c), (d), 
and (e) to read as follows:


Sec. 104.9  Uniform reporting of disbursements.

* * * * *
    (c) For reports covering activity on or before December 31, 2002, 
national party committees shall report in a memo Schedule B the full 
name and mailing address of each person to whom a disbursement in an 
aggregate amount or value in excess of $200 within the calendar year is 
made from the committee's non-Federal account(s), together with the 
date, amount and purpose of such disbursement, in accordance with 11 
CFR 104.9(b). As used in 11 CFR 104.9, purpose means a brief statement 
or description as to the reasons for the disbursement. See 11 CFR 
104.3(b)(3)(i)(A).
    (d) For reports covering activity on or before December 31, 2002, 
national party committees shall report in a memo Schedule B the full 
name and mailing address of each person to whom a disbursement in an 
aggregate amount or value in excess of $200 within the calendar year is 
made from the committee's building fund account(s), together with the 
date, amount and purpose of such disbursement, in accordance with 11 
CFR 104.9(b). As used in 11 CFR 104.9, purpose means a brief statement 
or description as to the reasons for the disbursement. See 11 CFR 
104.3(b)(3)(i)(A).
    (e) For reports covering activity on or before December 31, 2002, 
national party committees shall report in a memo Schedule B each 
transfer from their non-Federal account(s) to the non-Federal 
account(s) of a State or local party committee.
    16. Section 104.10 would be revised to read as follows:


Sec. 104.10  Reporting by separate segregated funds and nonconnected 
committees of expenses allocated among candidates and activities.

    (a) Expenses allocated among candidates. A political committee that 
is a separate segregated fund or a nonconnected committee making an 
expenditure on behalf of more than one clearly identified candidate for 
Federal office shall allocate the expenditure among the candidates 
pursuant to 11 CFR 106.1. Payments involving both expenditures on 
behalf of one or more clearly identified Federal candidates and 
disbursements on behalf of one or more clearly identified non-Federal 
candidates shall also be allocated pursuant to 11 CFR 106.1. For 
allocated expenditures, the committee shall report the amount of each 
in-kind contribution, independent expenditure, or coordinated 
expenditure attributed to each Federal candidate. If a payment also 
includes amounts attributable to one or more non-Federal candidates, 
and is made by a political committee with separate Federal and non-
Federal accounts, then the payment shall be made according to the 
procedures set forth in 11 CFR 106.6(e), as appropriate, but shall be 
reported pursuant to paragraphs (a)(1) through (a)(4), as follows:
    (1) Reporting of allocation of expenses attributable to specific 
Federal and non-Federal candidates. In each report disclosing a payment 
that includes both expenditures on behalf of one or more Federal 
candidates and disbursements on behalf of one or more non-Federal 
candidates, the committee shall assign a unique identifying title or 
code to each program or activity conducted on behalf of such 
candidates, shall state the allocation ratio calculated for the program 
or activity, and shall explain the manner in which the ratio was 
derived. The committee shall also summarize the total amounts 
attributed to each candidate, to date, for each joint program or 
activity.
    (2) Reporting of transfers between accounts for the purpose of 
paying expenses attributable to specific Federal

[[Page 35677]]

and non-Federal candidates. A political committee that pays allocable 
expenses in accordance with 11 CFR 106.6(e) shall report each transfer 
of funds from its non-Federal account to its Federal account or to its 
separate allocation account for the purpose of paying such expenses. In 
the report covering the period in which each transfer occurred, the 
committee shall explain in a memo entry the allocable expenses to which 
the transfer relates and the date on which the transfer was made. If 
the transfer includes funds for the allocable costs of more than one 
program or activity, the committee shall itemize the transfer, showing 
the amounts designated for each program or activity conducted on behalf 
of one or more clearly identified Federal candidates and one or more 
clearly identified non-Federal candidates.
    (3) Reporting of allocated disbursements attributable to specific 
Federal and non-Federal candidates. A political committee that pays 
allocable expenses in accordance with 11 CFR 106.6(e) shall also report 
each disbursement from its Federal account or its separate allocation 
account in payment for a program or activity conducted on behalf of one 
or more clearly identified Federal candidates and one or more clearly 
identified non-Federal candidates. In the report covering the period in 
which the disbursement occurred, the committee shall state the full 
name and address of each person to whom the disbursement was made, and 
the date, amount, and purpose of each such disbursement. If the 
disbursement includes payment for the allocable costs of more than one 
program or activity, the committee shall itemize the disbursement, 
showing the amounts designated for payment of each program or activity 
conducted on behalf of one or more clearly identified Federal 
candidates and one or more clearly identified non-Federal candidates. 
The committee shall also report the amount of each in-kind 
contribution, independent expenditure, or coordinated expenditure 
attributed to each Federal candidate, and the total amount attributed 
to the non-Federal candidate(s). In addition, the committee shall 
report the total amount expended by the committee that year, to date, 
for each joint program or activity.
    (4) Recordkeeping. The treasurer shall retain all documents 
supporting the committee's allocation on behalf of specific Federal and 
non-Federal candidates, in accordance with 11 CFR 104.14.
    (b) Expenses allocated among activities. A political committee that 
is a separate segregated fund or a nonconnected committee and that has 
established separate Federal and non-Federal accounts under 11 CFR 
102.5(a)(1)(i) shall allocate between those accounts its administrative 
expenses and its costs for fundraising and generic voter drives 
according to 11 CFR 106.6, as appropriate, and shall report those 
allocations according to paragraphs (b) (1) through (5), as follows:
    (1) Reporting of allocation of administrative expenses and costs of 
generic voter drives.
    (i) In the first report in a calendar year disclosing a 
disbursement for administrative expenses or generic voter drives, as 
described in 11 CFR 106.6(b), the committee shall state the allocation 
ratio to be applied to these categories of activity according to 11 CFR 
106.6(c), and the manner in which it was derived.
    (ii) In each subsequent report in the calendar year itemizing an 
allocated disbursement for administrative expenses or generic voter 
drives:
    (A) The committee shall state the category of activity for which 
each allocated disbursement was made, and shall summarize the total 
amount spent by the Federal and non-Federal accounts that year, to 
date, for each such category.
    (B) The committees shall also report in a memo entry the total 
amounts expended in donations and direct disbursements on behalf of 
specific State and local candidates, to date, in that calendar year.
    (2) Reporting of allocation of the direct costs of fundraising. In 
each report disclosing a disbursement for the direct costs of a 
fundraising program, as described in 11 CFR 106.6(b), the committee 
shall assign a unique identifying title or code to each such program or 
activity, shall state the allocation ratio calculated for the program 
or activity according to 11 CFR 106.6(d), and shall explain the manner 
in which the ratio was derived. The committee shall also summarize the 
total amounts spent by the Federal and non-Federal accounts that year, 
to date, for each such program or activity.
    (3) Reporting of transfers between accounts for the purpose of 
paying allocable expenses. A political committee that pays allocable 
expenses in accordance with 11 CFR 106.6(e) shall report each transfer 
of funds from its non-Federal account to its Federal account or to its 
separate allocation account for the purpose of paying such expenses. In 
the report covering the period in which each transfer occurred, the 
committee shall explain in a memo entry the allocable expenses to which 
the transfer relates and the date on which the transfer was made. If 
the transfer includes funds for the allocable costs of more than one 
activity, the committee shall itemize the transfer, showing the amounts 
designated for administrative expenses and generic voter drives, and 
for each fundraising program, as described in 11 CFR 106.6(b).
    (4) Reporting of allocated disbursements. A political committee 
that pays allocable expenses in accordance with 11 CFR 106.6(e) shall 
also report each disbursement from its Federal account or its separate 
allocation account in payment for a joint Federal and non-Federal 
expense or activity. In the report covering the period in which the 
disbursement occurred, the committee shall state the full name and 
address of each person to whom the disbursement was made, and the date, 
amount, and purpose of each such disbursement. If the disbursement 
includes payment for the allocable costs of more than one activity, the 
committee shall itemize the disbursement, showing the amounts 
designated for payment of administrative expenses and generic voter 
drives, and for each fundraising program, as described in 11 CFR 
106.6(b). The committee shall also report the total amount expended by 
the committee that year, to date, for each category of activity.
    (5) Recordkeeping. The treasurer shall retain all documents 
supporting the committee's allocated disbursements for three years, in 
accordance with 11 CFR 104.14.
    17. Part 104 would be amended by adding section 104.17 to read as 
follows:


Sec. 104.17  Reporting of allocable expenses by party committees.

    (a) Expenses allocated among candidates. A national party committee 
making an expenditure on behalf of more than one clearly identified 
candidate for Federal office must report the allocation between or 
among the named candidates pursuant to 11 CFR 106.1. A national party 
committee making expenditures and disbursements on behalf of one or 
more clearly identified Federal candidates and on behalf of one or more 
clearly identified non-Federal candidates must report the allocation 
among all named candidates pursuant to 11 CFR 106.1. A State, district 
or local party committee making expenditures and disbursements for 
Federal election activity as defined at 11 CFR 100.24 on behalf of one 
or more clearly identified Federal and one or more clearly identified 
non-Federal candidates must make the payments from its Federal account 
and must report the allocation among all named

[[Page 35678]]

candidates. For allocated expenditures, the committee must report the 
amount of each in-kind contribution, independent expenditure, or 
coordinated expenditure attributed to each candidate.
    (1) Reporting of allocation of expenses attributable to specific 
Federal and non-Federal candidates. In each report disclosing an 
expenditure and/or disbursement that reflects payments on behalf of one 
or more Federal candidates and/or on behalf of one or more non-Federal 
candidates, the committee must assign a unique identifying title or 
code to each program or activity conducted on behalf of such 
candidates, and shall state and explain the manner in which the 
percentage of costs applied to each candidate was derived, pursuant to 
11 CFR 106.1. The committee must also summarize the total amounts 
attributed to each candidate, to date, for each program or activity.
    (2) Recordkeeping. The treasurer must retain all documents 
supporting the committee's allocations on behalf of specific Federal 
and non-Federal candidates, in accordance with 11 CFR 104.14.
    (b) Expenses allocated among activities. A State, district or local 
committee of a political party that has established separate Federal 
and Levin accounts under 11 CFR 300.30 must report, pursuant to 11 CFR 
300.36, all payments that are allocable between these accounts pursuant 
to the allocation rules at 11 CFR 300.33(a) and (b). A State, district 
or local committee of a political party that has established separate 
Federal and non-Federal accounts under 11 CFR 102.5 and 11 CFR 300.30 
must report all payments that are allocable between these accounts 
pursuant to the allocation rules at 11 CFR 300.33(a) and (b).
    (1) Reporting of allocations of expenses for activities.
    (i) In the first report in a calendar year disclosing a 
disbursement allocable pursuant to 11 CFR 300.33, a State, district or 
local committee must state and explain the allocation percentage to be 
applied to each category of activity (e.g., 36% Federal/64% non-Federal 
in Presidential and Senate election years) pursuant to 11 CFR 
300.33(b).
    (ii) In each subsequent report in the calendar year itemizing an 
allocated disbursement, the State, district or local party committee 
must state the category of activity for which each allocated 
disbursement was made, and must summarize the total amounts expended by 
the Federal and non-Federal accounts that year, to date, for each such 
category.
    (iii) In each report disclosing disbursements for allocable 
activity as described in 11 CFR 300.33, the State, district or local 
party committee must assign a unique identifying code to each such 
activity.
    (2) Reporting of transfers between the accounts of State, district 
and local party committees for allocable expenses. A State, district or 
local committee of a political party that pays allocable expenses in 
accordance with 11 CFR 300.33(d) must report each transfer of funds 
from its non-Federal account or its Levin account to its Federal 
account for the purpose of payment of such expenses. In the report 
covering the period in which each transfer occurred, the committee must 
explain in a memo entry the allocable expenses to which the transfer 
relates and the date on which the transfer was made. If the transfer 
includes funds for the allocable costs of more than one activity, the 
committee must itemize the transfer, showing the amounts designated for 
each category of expense, as described in 11 CFR 300.33(b).
    (3) Reporting of allocated disbursements. A State, district or 
local committee of a political party that pays allocable expenses in 
accordance with 11 CFR 300.33(d) must report each allocable 
disbursement from its Federal account (see 11 CFR 300.36). In the 
report covering the period in which the disbursement occurred, the 
committee must state the full name and address of each individual or 
vendor to which the disbursement was made, the date, amount and purpose 
of each such disbursement, and the amounts allocated between Federal 
and Levin accounts or Federal and non-Federal accounts. If the 
disbursement includes payment for the allocable costs of more than one 
activity, the committee shall itemize the disbursement, showing the 
amounts designated for payments of certain salaries, of other 
administrative costs and of costs for voter registration outside 120 
days before an election, as described in 11 CFR 300.33. The committee 
must also report the total amount expended by the committee that year, 
to date, for each category of activity.
    (4) Recordkeeping. The treasurer must retain all documents 
supporting the committee's allocations of expenditures and 
disbursements for the costs and activities cited at paragraph (b) of 
this section, in accordance with 11 CFR 104.14.

PART 106--ALLOCATIONS OF CANDIDATE AND COMMITTEE ACTIVITIES

    18. The authority citation for part 106 would continue to read as 
follows:

    Authority: 2 U.S.C. 438(a)(8), 441a(b), 441a(g).

    19. Section 106.1 would be amended by revising paragraphs (a)(1), 
(a)(2), and (e) to read as follows:


Sec. 106.1  Allocation of expenses between candidates.

    (a) General rule.
    (1) Expenditures, including in-kind contributions, independent 
expenditures, and coordinated expenditures made on behalf of more than 
one clearly identified Federal candidate shall be attributed to each 
such candidate according to the benefit reasonably expected to be 
derived. For example, in the case of a publication or broadcast 
communication, the attribution shall be determined by the proportion of 
space or time devoted to each candidate as compared to the total space 
or time devoted to all candidates. In the case of a fundraising program 
or event where funds are collected by one committee for more than one 
clearly identified candidate, the attribution shall be determined by 
the proportion of funds received by each candidate as compared to the 
total receipts by all candidates. These methods shall also be used to 
allocate payments involving both expenditures on behalf of one or more 
clearly identified Federal candidates and disbursements on behalf of 
one or more clearly identified non-Federal candidates. Party committees 
must use only Federal funds for such payments. See 11 CFR 100.24(a)(5).
    (2) An expenditure made on behalf of more than one clearly 
identified Federal candidate shall be reported pursuant to 11 CFR 
104.10(a) or 104.17(a), as appropriate. A payment by a separate 
segregated fund or a nonconnected committee that also includes amounts 
attributable to one or more non-Federal candidates, and that is made by 
a political committee with separate Federal and non-Federal accounts, 
shall be made according to the procedures set forth in 11 CFR 106.6(e), 
but shall be reported pursuant to 11 CFR 104.10(a).
* * * * *
    (e) Party committees, separate segregated funds, and nonconnected 
committees that make disbursements for certain salaries, other 
administrative expenses, fundraising, generic voter drives, Levin 
activities, or certain voter registration activities, in connection 
with both Federal and non-Federal

[[Page 35679]]

elections, shall allocate their expenses in accordance with 11 CFR 
106.6 or 300.33, as appropriate.
    20. Section 106.5 would be revised to read as follows:


Sec. 106.5  Allocation of expenses between Federal and non-Federal 
activities by party committees.

    (a) National party committees are prohibited from raising or 
spending non-Federal funds. Therefore, these committees shall not 
allocate expenditures and disbursements between Federal and non-Federal 
accounts. Only Federal accounts may be used.
    (b) State, district, and local party committees that make 
expenditures and disbursements in connection with Federal and non-
Federal elections shall make those expenditures and disbursements 
entirely from funds subject to the prohibitions and limitations of the 
Act, or from accounts established pursuant to 11 CFR 102.5 and 11 CFR 
300.30. Political committees that have established separate Federal, 
Levin and/or non-Federal accounts under 11 CFR 102.5(a)(1)(i) and 11 
CFR 300.30 shall allocate expenses according to 11 CFR 300.33. Party 
organizations that are not political committees but have established 
separate Federal, Levin and/or non-Federal accounts under 11 CFR 
102.5(b)(1)(i) and 11 CFR 300.30, or that make Federal and non-Federal 
disbursements from a single account under 11 CFR 102.5(b)(1)(ii) and 
any Levin payments from a separate account, shall also allocate their 
Federal and non-Federal expenses according to 11 CFR 300.33.

PART 108--FILING COPIES OF REPORTS AND STATEMENTS WITH STATE 
OFFICERS (2 U.S.C. 439)

    21. The authority citation for part 108 would continue to read as 
follows:

    Authority: 2 U.S.C. 434(a)(2), 438(a)(8), 439, 453.

    22. Section 108.7 would be amended by revising paragraphs (c)(4) 
and (c)(5) and adding paragraph (c)(6) to read as follows:


Sec. 108.7  Effect on State law (2 U.S.C. 453).

* * * * *
    (c) * * *
    (4) Prohibition of false registration, voting fraud, theft of 
ballots, and similar offenses;
    (5) Candidate's personal financial disclosure; or
    (6) Application of State law to the funds used for the purchase or 
construction of a State or local party office building to the extent 
described in 11 CFR 300.35.

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    23. The authority citation for part 110 would continue to be read 
as follows:

    Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d(a)(8), 
438(a)(8), 441a, 441b, 441d, 441e, 441f, 441g, 441h.

    24. Section 110.1 would be amended by adding new paragraph (c)(5) 
to read as follows:


Sec. 110.1  Contributions by persons other than multicandidate 
political committees (2 U.S.C. 441a(a)(1)).

* * * * *
    (c) * * *
    (5) On or after January 1, 2003, no person shall make contributions 
to a political committee established and maintained by a State 
committee of a political party in any calendar year that, in the 
aggregate, exceed $10,000.
* * * * *

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

    25. The authority citation for part 114 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 434(a)(11), 
437d(a)(8), 438(a)(8), 441b.

    26. Section 114.1 would be amended by revising paragraph (a)(2)(ix) 
to read as follows:


Sec. 114.1  Definitions.

    (a) * * *
    (2) * * *
    (ix) Donations to a State or local party committee used for the 
purchase or construction of its office building are subject to 11 CFR 
300.35. No exception applies to contributions or donations to a 
national party committee that are made or used for the purchase or 
construction of any office building or facility; or
* * * * *
    27. Part 300 would be added to subchapter B read as follows:

PART 300--NON-FEDERAL FUNDS

Sec.
300.1   Scope, effective date, and organization.
300.2   Definitions.
Subpart A--National Party Committees
300.10   General prohibitions on raising and spending non-Federal 
funds (2 U.S.C. 441(i)(a) and (c)).
300.11   Prohibition on fundraising for and donating to certain tax-
exempt organizations, (2 U.S.C. 441i(d)).
300.12   Transition rules.
300.13   Reporting (2 U.S.C. 431 note and 434(e)).
Subpart B--State, District, and Local Party Committees and 
Organizations
300.30   Accounts.
300.31   Receipt of Levin funds.
300.32   Expenditures and disbursements.
300.33   Allocation.
300.34   Transfers.
300.35   Office buildings.
300.36   Reporting Federal election activity; recordkeeping.
300.37   Prohibitions on fundraising for and donating to certain 
tax-exempt organizations (2 U.S.C. 441i(d)).
Subpart C--Tax-exempt Organizations
300.50   Prohibited fundraising by national party committees (2 
U.S.C. 441i(d)).
300.51   Prohibited fundraising by State, district, and local party 
committees (2 U.S.C. 441i(d)).
300.52   Fundraising by Federal candidates and Federal officeholders 
(2 U.S.C. 441i(e)(4)).
Subpart D--Federal Candidates and Officeholders
300.60  Scope (2 U.S.C. 441i(e)(1)).
300.61   Federal elections (2 U.S.C. 441i(e)(1)(A)).
300.62   Non-Federal elections (2 U.S.C. 441i(e)(1)(B)).
300.63   Exception for State party candidates (2 U.S.C 441i(e)(2)).
300.64   Exemption for attending or speaking at fundraising events.
300.65   Exceptions for certain tax-exempt organizations.
Subpart E--State and Local Candidates
300.70   Scope (2 U.S.C. 441i(f)(1)).
300.71   Federal funds required for certain public communications (2 
U.S.C. 441i(f)(1)).
300.72   Federal funds not required for certain communications (2 
U.S.C. 441i(f)(2)).

    Authority: 2 U.S.C. 434(e), 438(a)(8), 441a(a)(i), 441i, 453.


Sec. 300.1  Scope, effective date, and organization.

    (a) Introduction. This part implements changes to the Federal 
Election Campaign Act of 1971, as amended (``FECA'' or the ``Act''), 
enacted by Title I of the Bipartisan Campaign Finance Reform Act of 
2002 (``BCRA''), Public Law 107-155. Unless expressly stated to the 
contrary, nothing in this part alters the definitions, restrictions, 
liabilities, and obligations imposed by sections 431-455 of Title 2, 
United States Code, or regulations prescribed thereunder (11 CFR parts 
100-116).
    (b) Effective dates.
    (1) Except as otherwise specifically provided in this part, this 
part shall take effect on November 6, 2002; however, subpart B of this 
part shall not apply with respect to runoff elections, recounts, or 
election contests resulting from elections held prior to such date. See 
11 CFR 300.12 for transition rules applicable to subpart A of this 
part.

[[Page 35680]]

    (2) The increase in individual contribution limits to State 
committees of political parties, as described in 11 CFR 110.1(c)(5), 
shall apply to contributions made on or after January 1, 2003.
    (c) Organization of part. Part 300, which generally addresses non-
Federal funds and closely related topics, is organized into five 
subparts. Each subpart is oriented to the perspective of a category of 
persons facing issues related to non-Federal funds.
    (1) Subpart A of this part prescribes rules pertaining to national 
party committees, including general non-Federal funds prohibitions, 
fundraising, and donation prohibitions with regard to certain tax-
exempt organizations, transition rules as BCRA takes effect, and 
reporting.
    (2) Subpart B of this part pertains to State, district, and local 
political party committees and organizations. Subpart B of this part 
focuses on the so-called ``Levin Amendment'' to BCRA, ``building fund'' 
issues, and fundraising and donation prohibitions with regard to 
certain tax-exempt organizations.
    (3) Subpart C of this part addresses non-Federal funds issues from 
the perspective of tax-exempt organizations, setting out rules about 
prohibited fundraising for certain tax-exempt organizations by national 
party committees, State, district, and local party committees, and 
Federal candidates and officeholders.
    (4) Subpart D of this part includes regulations about non-Federal 
funds issues facing Federal candidates and officeholders in Federal and 
non-Federal elections, and exceptions for those who are also State 
candidates, for attending and speaking at fundraising events, and with 
regard to certain tax-exempt organizations.
    (5) Subpart E of this part focuses on State and local candidates, 
including regulations about the Federal funds for certain public 
communications, and exceptions for entirely non-Federal communications.
    (6) For rules pertaining to convention and host committees, see 11 
CFR part 9008.


Sec. 300.2  Definitions.

    (a) A 501(c) organization that makes expenditures or disbursements 
in connection with a Federal election includes an organization that:
    (1) Establishes, finances, maintains, supports, or controls a 
political committee;
    (2) Makes expenditures or disbursements for Federal election 
activity;
    (3) Finances voter registration at any time; or
    (4) Finances voter guides, candidate questionnaires, or candidate 
surveys that refer to one or more candidates for Federal office.
    (b) Agent means any person who has actual express oral or written 
authority to act on behalf of a candidate, officeholder, or a national 
committee of a political party, or a State, district or local committee 
of a political party, or an entity directly or indirectly established, 
financed, maintained, or controlled by a party committee. An agent has 
actual authority if he or she has instructions, either oral or written, 
from the candidate or a committee official.
    (c) Directly or indirectly establish, maintain, finance, or 
control. This paragraph applies to State, district, or local committees 
of a political party, candidates, and holders of Federal office, which 
shall be referred to as ``sponsors'' in this paragraph.
    (1) A sponsor directly or indirectly establishes, finances, 
maintains, or controls an entity if one or more of the following 
conditions are satisfied as a result of actions taken by the sponsor, 
or by an officer, employee, or agent of the sponsor acting on behalf of 
the sponsor or at the sponsor's behest:
    (i) The sponsor and the entity are affiliated under 11 CFR 
100.5(g).
    (ii) The sponsor, alone or in combination with other persons, 
forms, organizes, or otherwise creates the entity, including providing 
any of the funds used to form, organize or create the entity. As used 
in this paragraph, ``forms, organizes, or otherwise creates'' includes 
the conversion, reorganization, or redirection of a pre-existing 
entity.
    (iii) The sponsor provides a significant amount of the entity's 
funding at any point in the entity's existence, whether by contribution 
(including in-kind contribution), donation (including in-kind 
donation), transfer, or other means. In determining whether or not this 
condition is satisfied, one or more of the following factors, any one 
of which may be dispositive, may be considered:
    (A) The percentage of the entity's total funding in a given 
calendar year represented by the amount of funding provided by the 
sponsor.
    (B) Whether the sponsor provided funding to the entity on a one-
time basis or more systematically over a period of time, including the 
frequency, regularity, and duration of funding.
    (C) The amount of time that has elapsed since the sponsor last 
provided funding to the entity.
    (iv) The sponsor provides or has provided legal, accounting, 
consulting, administrative, or other services to the entity.
    (v) The sponsor, alone or in combination with other persons, sets 
or has set policies for soliciting contributions or donations to the 
entity or for the making of expenditures or disbursements by the 
entity.
    (vi) The same person or persons has or has had decision-making 
authority over the management of both the sponsor and the entity.
    (2) Determinations by the Commission.
    (i) A sponsor or entity may request an advisory opinion of the 
Commission to determine whether the sponsor is no longer directly or 
indirectly financing, maintaining, or controlling the entity for 
purposes of this part. The request for such an advisory opinion must 
meet the requirements of 11 CFR part 112.
    (ii) Notwithstanding the fact that a sponsor may have established 
an entity within the meaning of paragraph (c)(1)(ii) of this section, 
the committee or the entity may request an advisory opinion of the 
Commission determining that the relationship between the sponsor and 
the entity has been severed. The request for such an advisory opinion 
must meet the requirements of 11 CFR part 112, and must specifically 
include a complete description of all facts relevant to showing that 
all connections between the sponsor and the entity have been severed 
for at least five years.
    (d) Disbursement means any purchase or payment made by a political 
committee or organization that is not a political committee.
    (e) For purposes of part 300, donation means a payment, gift, 
subscription, loan, advance, deposit, or anything of value given to a 
non-Federal candidate, a party committee, 501(c) organization, or a 
section 527 organization, but does not include contributions or 
transfers.
    (f) Federal account means an account at a financial depository 
institution or other account that contains funds to be used in 
connection with a Federal election.
    (g) Federal funds mean funds that comply with the limitations, 
prohibitions, and reporting requirements of the Act.
    (h) Levin account means an account established by a State, 
district, or local committee of a political party pursuant to 11 CFR 
300.30 for purposes of making expenditures or disbursements for Federal 
election activity or non-Federal activity (subject to State law) under 
11 CFR 300.32.

[[Page 35681]]

    (i) Levin funds mean non-Federal funds that comply with the 
limitations, prohibitions, and reporting requirements set out in 
subpart B of this part, which are or will be disbursed by a State, 
district, or local committee of a political party for Federal election 
activity or non-Federal activity (subject to State law) under 11 CFR 
300.32.
    (j) Non-Federal account means an account at a financial depository 
institution or other account which contains funds to be used in 
connection with a State or local election.
    (k) Non-Federal funds mean funds that are not subject to the 
limitations and prohibitions of the Act.
    (l) Promote, support, attack, or oppose.
    (1) A communication promotes, supports, attacks, or opposes a 
candidate if, when taken as a whole and with limited reference to 
external events, such as the proximity to the election, the 
communication:
    (i) Expressly advocates the election or defeat of that clearly 
identified candidate; or
    (ii) Unmistakably and unambiguously encourages action to elect or 
defeat a clearly identified candidate, even if it also encourages some 
other kind of action.
    (2) For purposes of paragraph (l)(1), a communication does not 
promote, support, attack, or oppose a candidate for Federal office if:
    (i) The communication is made in connection with an election for 
State or local office, and does not refer to any candidate for Federal 
office; or
    (ii) The communication refers to a candidate for Federal office but 
the reference to the Federal candidate consists only of:
    (A) The fact that the Federal candidate endorsed another Federal, 
State, or local candidate;
    (B) The fact that another Federal, State, or local candidate agrees 
or disagrees with the Federal candidate's position on an issue or on 
legislation; or
    (C) A reference to a bill or law by its popular name where that 
name includes the name of the Federal candidate.
    (m) To solicit or direct means to request or suggest or recommend 
that another person make a contribution or donation, including through 
a conduit or intermediary, to a candidate, a political committee, or a 
political organization described in 26 U.S.C. 527 or a tax-exempt 
organization described in 26 U.S.C. 501(c). A solicitation does not 
include merely providing information or guidance as to the requirements 
of applicable law.

Subpart A--National Party Committees


Sec. 300.10  General prohibitions on raising and spending non-Federal 
funds (2 U.S.C. 441(i)(a) and (c)).

    (a) Prohibitions. A national committee of a political party, 
including a national party congressional campaign committee, must not:
    (1) Solicit, receive, or direct to another person a contribution, 
donation, or transfer of funds, or any other thing of value that are 
not subject to the prohibitions, limitations and reporting requirements 
of the Act; or
    (2) Spend any funds that are not subject to the prohibitions, 
limitations, and reporting requirements of the Act; or
    (3) Solicit, receive, direct or transfer to another person, or 
spend, Levin funds.
    (b) Fundraising costs. A national committee of a political party, 
including a national party congressional campaign committee, must use 
only Federal funds to raise funds that are used, in whole or in part, 
for expenditures and disbursements for Federal election activity.
    (c) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a national party 
committee or a national party congressional campaign committee; and
    (2) An entity that is directly or indirectly established, financed, 
maintained, or controlled by a national party committee or a national 
congressional campaign committee.


Sec. 300.11  Prohibitions on fundraising for and donating to certain 
tax-exempt organizations (2 U.S.C. 441i(d)).

    (a) Prohibitions. A national committee of a political party, 
including a national party congressional campaign committee, must not 
solicit any funds for, or make or direct any donations to the following 
organizations:
    (1) An organization that is described in 26 U.S.C. 501(c) and 
exempt from taxation under section 26 U.S.C. 501(a) and that makes 
expenditures or disbursements in connection with an election for 
Federal office, including expenditures or disbursements for Federal 
election activity;
    (2) An organization that has submitted an application for tax-
exempt status under section 26 U.S.C. 501(c) and that makes 
expenditures or disbursements in connection with an election for 
Federal office, including expenditures or disbursements for Federal 
election activity; or
    (3) An organization described in 26 U.S.C. 527, except for a 
political committee; a State, district, or local committee of a 
political party; or the authorized campaign committee of a State or 
local candidate.
    (b) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a national party 
committee, including a national party congressional committee;
    (2) An entity that is directly or indirectly established, financed, 
maintained, or controlled by a national party committee, including a 
national party congressional committee, or an officer or agent acting 
on behalf of such entity; and
    (3) An entity that is directly or indirectly established, financed, 
maintained, or controlled by an agent of a national committee of a 
political party, including a national party congressional committee.


Sec. 300.12  Transition rules.

    (a) Permissible uses of excess non-Federal funds. Non-Federal funds 
received before November 6, 2002, by a national committee of a 
political party, including a national party congressional campaign 
committee, must be used before January 1, 2003. Subject to the 
restrictions in paragraphs (b) and (e) of this section, such funds may 
be used only as follows:
    (1) To retire outstanding debts or obligations that were incurred 
solely in connection with an election held prior to November 6, 2002; 
or
    (2) To pay expenses, retire outstanding debts, or pay for 
obligations incurred solely in connection with any run-off election, 
recount, or election contest resulting from an election held prior to 
November 6, 2002.
    (b) Prohibited uses of non-Federal funds. Non-Federal funds 
received by a national committee of a political party, including a 
national party congressional campaign committee, before November 6, 
2002, and in its possession on that date, may not be used for the 
following purposes:
    (1) To pay any expenditure as defined in 2 U.S.C. 431(9);
    (2) To retire outstanding debts or obligations that were incurred 
for any expenditure; or
    (3) To defray the costs of the construction or purchase of any 
office building or facility.
    (c) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a national party 
committee or a national party congressional campaign committee; and
    (2) An entity that is directly or indirectly established, financed,

[[Page 35682]]

maintained, or controlled by a national party committee or a national 
congressional campaign committee.
    (d) Treatment of Federal and non-Federal accounts during transition 
period. The following provisions applicable to the allocation of, and 
payment for, expenses between Federal and non-Federal accounts of 
national party committees shall remain in effect between November 6 and 
December 31, 2002: 11 CFR 106.5(a), 106.5(b), 106.5(c), 106.5(f) and 
106.5(g).
    (e) National party committee office building or facility accounts. 
Before November 6, 2002, the national committee of a political party, 
including a national party congressional campaign committee, may accept 
funds into its party office building or facility account, established 
pursuant to repealed Sec. 431(8)(B)(viii), and may use the funds in the 
account only for the construction or purchase of an office building or 
facility. After November 5, 2002, the national committees may no longer 
accept funds into such an account and must not use such funds for the 
purchase or construction of a national party office building or 
facility. Funds on deposit in any party office building or facility 
account on November 6, 2002, must be either disgorged to the United 
States Treasury or donated to an organization described in 26 U.S.C. 
170(c) no later than December 31, 2002.


Sec. 300.13  Reporting (2 U.S.C. 431 note and 434(e)).

    (a) In general. The national committee of a political party, a 
national party campaign committee, and any subordinate committee of 
either, shall report all receipts and disbursements during the 
reporting period.
    (b) Termination report for non-Federal accounts. Each committee 
described in paragraph (a) of this section shall file a termination 
report disclosing the disposition of all funds in all non-Federal 
accounts and building fund accounts by January 31, 2003.
    (c) Transitional reporting rules.
    (1) The reporting requirements in 11 CFR 104.9(c) for national 
party committee non-Federal accounts shall remain in effect for the 
report covering activity between November 6 and December 31, 2002.
    (2) The reporting requirements in 11 CFR 104.8(e) for national 
party committee non-Federal accounts shall remain in effect for the 
report covering activity between November 6 and December 31, 2002.
    (3) The reporting requirements in 11 CFR 104.8(f) and 104.9(d) for 
national party committee building fund accounts shall remain in effect 
for the report covering activity between November 6 and December 31, 
2002.

Subpart B--State, District, and Local Party Committees and 
Organizations


Sec. 300.30  Accounts.

    (a) Federal Account.
    (1) Each State, district, and local party organization that 
qualifies as a political committee under 11 CFR 100.5 and that finances 
political activity in connection with both Federal and non-Federal 
elections shall:
    (i) Establish a Federal account in a depository, in accordance with 
11 CFR part 103, which shall be treated as a separate political 
committee and be required to comply with the requirements of the Act 
including the registration and reporting requirements of 11 CFR part 
102 and part 104; or
    (ii) Establish a separate Federal political committee that shall 
register As a political committee and comply with the requirements of 
the Act.
    (2) Each State, district, and local party organization that does 
not qualify as a political committee under 11 CFR 100.5 and that 
finances political activity in connection with both Federal and non-
Federal elections shall--
    (i) Establish a Federal account in a depository; or
    (ii) Demonstrate by a reasonable accounting method that whenever 
such organization makes a contribution or expenditure, that 
organization has received sufficient funds that are permissible under 
the Act to make such contribution or expenditure. Such organization 
shall keep records of amounts received or expenditures under this 
subsection and, upon request, shall make such records available for 
examination by the Commission.
    (3) Only contributions that are permissible pursuant to the 
limitations and prohibitions of the Act shall be deposited into any 
Federal account established pursuant to paragraphs (a)(1) or (2) of 
this section, regardless of whether such contributions are for use in 
connection with Federal and non-Federal elections.
    (4) Only contributions solicited and received pursuant to the 
following conditions may be deposited in a Federal account established 
under paragraph (a)(1) or (2) of this section:
    (i) Contributions must be designated by the contributors for the 
Federal account;
    (ii) The solicitation must expressly state that contributions may 
be used wholly or in part in connection with a Federal election; or
    (iii) The solicitation must expressly state that all contributions 
are subject to the prohibitions and limitations of the Act.
    (5) All disbursements, contributions, and expenditures by a State, 
district, or local party committee made wholly or in part in connection 
with a Federal election must be made from the committee's Federal 
account, except as permitted by 11 CFR 300.32.
    (6) Expenditures and disbursements for costs that are allocable 
pursuant to 11 CFR 300.33 must be made from the Federal account in 
their entirety, with the shares of a non-Federal account or of a Levin 
account being then transferred to the Federal account pursuant to 11 
CFR 300.34.
    (7) No transfers may be made to such Federal account from any other 
account(s) maintained by a State, district, or local party committee or 
from any other party committee at any level for the purpose of 
financing activity in connection with Federal elections, except as 
provided by 11 CFR 300.33 and 11 CFR 300.34.
    (8) State, district, and local party committees may choose to make 
non-Federal disbursements from the Federal account, provided that such 
disbursements are reported pursuant to 11 CFR part 104 and provided 
that contributors of the Federal funds so used were notified that their 
contributions were subject to the limitations and prohibitions of the 
Act.
    (b) Levin account.
    (1) Any State, district, or local party committee, whether or not 
it qualifies as a political committee under the Act and including any 
organization that is directly or indirectly established, financed, 
maintained, or controlled by a State, district, or local committee of a 
political party and any officer or agent of such a committee or 
organization, that intends to engage in voter registration, voter 
identification, get-out-the-vote activity, and/or generic campaign 
activity pursuant to 11 CFR 300.32 must maintain a separate account in 
a depository for this purpose. This account shall be known as a Levin 
account.
    (2) Only donations solicited and received pursuant to either of the 
following conditions may be deposited in a Levin account established 
under paragraph (b)(1) of this section:
    (i) Donations must be designated by the donors for the Levin 
account; or
    (ii) Donors have been informed that donations will be subject to 
the special donation limitations and prohibitions of 2 U.S.C. 
441i(b)(2)(B) and 11 CFR 300.31(c) and (d).
    (3) A State, district, or local party committees may use its Levin 
account to make expenditures or disbursements for

[[Page 35683]]

the categories of activities described at 11 CFR 300.32 or for other, 
non-Federal activities permissible under State law.
    (4) A State, district, or local party committee may use its Levin 
account to make expenditures or disbursements only if all of the 
following conditions are met:
    (i) The expenditure or disbursement does not pay for an activity 
that refers to a clearly identified candidate for Federal office;
    (ii) The expenditure or disbursement does not pay for any part of 
the costs of any broadcasting, cable, or satellite communication, other 
than a communication that refers solely to a clearly identified 
candidate for State or local office; and
    (iii) The Levin funds used for the expenditure or disbursement have 
been solicited, donated, received, and deposited in accordance with 
this part.
    (c) Non-Federal account.
    (1) Any State, district, or local party committee that makes 
disbursements solely in connection with State or local elections must 
establish a separate non-Federal account in a depository. The funds 
deposited into this account may be governed by State law.
    (2) Disbursements, contributions, and expenditures made wholly or 
in part in connection with Federal elections must not be made from any 
non-Federal account, except as permitted by 11 CFR 300.33 and 11 CFR 
300.34.


Sec. 300.31  Receipt of Levin funds.

    (a) General rule. Levin funds expended or disbursed by any State, 
district, or local committee must be raised solely by the committee 
that expends or disburses them.
    (b) Compliance with State law. Each donation of Levin funds 
solicited or accepted by a State, district, or local committee of a 
political party must be lawful under the laws of the State in which the 
committee is organized.
    (c) Donations from sources permitted by State law but prohibited by 
the Act. If the laws of the State in which a State, district, or local 
committee of a political party is organized permit donations to the 
committee from a source prohibited by the Act and this chapter, the 
committee may solicit and accept donations of Levin funds from that 
source, subject to paragraph (d) of this section.
    (d) Donation amount limitation.
    (1) General rule. A State, district, or local committee of a 
political party must not solicit or accept from any person (including 
any person established, financed, maintained, or controlled by such 
person) one or more donations of Levin funds aggregating to more than 
$10,000 in a calendar year.
    (2) Effect of different State limitations. If the laws of the State 
in which a State, district, or local committee of a political party is 
organized limit donations to that committee to less than the amount 
specified in paragraph (d)(1) of this section, then the State law 
amount limitations shall control. If the laws of the State in which a 
State, district, or local committee of a political party is organized 
permit donations to that committee in amounts greater than the amount 
specified in paragraph (d)(1) of this section, then the amount 
limitations in paragraph (d)(1) of this section shall control.
    (3) No affiliation of committees for purposes of this paragraph. 
For purposes of determining compliance with paragraph (d) of this 
section only, State, district, and local committees of the same 
political party shall not be considered affiliated. A person (including 
any person established, financed, maintained, or controlled by such 
person) may donate up to $10,000 per calendar year to each State, 
district, and local committee of political party.
    (e) No Levin funds from a national party committee or a Federal 
candidate or officeholder. A State, district, or local committee of a 
political party disbursing Levin funds pursuant to 11 CFR 300.32 must 
not accept or use for those purposes any donations or other funds that 
are solicited, received, directed, transferred, or spent by or in the 
name of any of the following persons:
    (1) A national committee of a political party (including a national 
congressional campaign committee of a political party). Notwithstanding 
11 CFR 102.17, a State, district, or local committee of a political 
party must not raise Levin funds by means of joint fundraising with a 
national committee of a political party.
    (2) A Federal candidate, individual holding Federal office, or an 
entity directly or indirectly established, financed, maintained, or 
controlled by or acting on behalf of one or more candidates or 
individuals holding Federal office. Notwithstanding 11 CFR 102.17, a 
State, district, or local committee of a political party must not raise 
Levin funds by means of joint fundraising with a Federal candidate, 
individual holding Federal office, or an entity directly or indirectly 
established, financed, maintained, or controlled by or acting on behalf 
of one or more candidates or individuals holding Federal office. A 
Federal candidate or individual holding Federal office may attend, 
speak, or be a featured guest at a fundraising event for a State, 
district, or local committee of a political party at which Levin funds 
are raised. See 11 CFR 300.64.
    (f) Certain joint fundraising prohibited. Notwithstanding 11 CFR 
102.17, a State, district, or local committee of a political party must 
not raise Levin funds by means of joint fundraising with any other 
State, district, or local committee of any political party, or the 
agent of such a committee. This prohibition includes State, district, 
and local committees of a political party organized in another State. 
The use of a common vendor for fundraising by more than one State, 
district, or local committee of a political party, or the agent of such 
a committee, shall not, by itself, be deemed joint fundraising for 
purposes of this paragraph.


Sec. 300.32  Expenditures and disbursements.

    (a) Federal funds.
    (1) A State, district, or local committee of a political party that 
makes an expenditure or disbursement for the purpose of influencing a 
Federal election must use Federal funds for the expenditure, subject to 
the provisions of this chapter. An association or similar group of 
candidates for State or local office, or an association or similar 
group of individuals holding State or local office, must make any 
expenditures or disbursements for Federal election activity solely with 
Federal funds.
    (2) Except as provided in this part, a State, district, or local 
committee of a political party that makes expenditures or disbursements 
for Federal election activity must use Federal funds for that purpose, 
subject to the provisions of this chapter.
    (3) State, district, and local party committees that engage in 
fundraising for Federal activities must pay all costs related to such 
fundraising only with Federal funds.
    (4) State, district, and local party committees that engage in 
fundraising for a Levin account must pay all costs related to raising 
such funds only with Federal funds.
    (b) Levin funds. A State, district, or local committee of a 
political party may spend Levin funds in accordance with this part on 
the following types of activity:
    (1) Subject to the conditions set out in paragraph (c) of this 
section, the following types of Federal election activity:
    (i) Voter registration activity during the period that begins on 
the date that is 120 days before the date a regularly scheduled Federal 
election is held and ends on the date of the election; and

[[Page 35684]]

    (ii) Voter identification, get-out-the-vote activity, or generic 
campaign activity conducted in connection with an election in which a 
candidate for Federal office appears on the ballot (regardless of 
whether a candidate for State of local office also appears on the 
ballot).
    (2) Any use that is lawful under the laws of the State in which the 
committee is organized. A disbursement of Levin funds under this 
paragraph need not comply with paragraph (c) of this section, except as 
required by State law.
    (c) Conditions and restrictions on spending Levin funds for Federal 
election activity.
    (1) The Federal election activity for which the expenditure or 
disbursement is made must not refer to a clearly identified candidate 
for Federal office.
    (2) The expenditure or disbursement must not pay for any part of 
the costs of any broadcasting, cable, or satellite communication, other 
than a communication that refers solely to a clearly identified 
candidate for State or local office.
    (3) The expenditure or disbursement must be made from funds raised 
in accordance with 11 CFR 300.31.
    (4) The expenditure or disbursement must be allocated between 
Federal funds and Levin funds according to 11 CFR 300.33.
    (d) Non-Federal funds. A State, district, or local committee of a 
political party that makes disbursements for non-Federal activity may 
make those disbursements from its Federal or non-Federal funds, subject 
to the laws of the State in which it is organized. A State, district, 
or local party committee that engages in fundraising for solely non-
Federal funds may pay the costs related to such fundraising from any 
account, subject to State law, including a Federal account. A 
disbursement of non-Federal funds made under State law by a State, 
district, or local committee of a political party that is not directed 
by the disbursing committee for the purpose of influencing a Federal 
election or for Federal election activity shall not be an expenditure 
under 11 CFR 100.8 or an expenditure or disbursement for Federal 
election activity.


Sec. 300.33  Allocation.

    (a) Costs allocable by State, district, and local party committees.
    (1) Salaries. State, district, and local party committees may 
allocate the salaries of employees who spend 25% or less of their time 
in any given month on Federal election activity between the committee's 
Federal and non-Federal accounts. The salaries of those employees who 
spend more than 25% of their time in any given month on Federal 
election activity must be paid only with Federal funds.
    (2) Administrative costs. State, district, and local party 
committees may allocate administrative costs, including rent, 
utilities, office equipment, office supplies, postage for other than 
mass mailings, and routine building maintenance, upkeep and repair, 
between their Federal and non-Federal accounts, except that any such 
expenses directly attributable to a clearly identified Federal 
candidate must be paid only from the Federal account.
    (3) Costs of voter registration within a certain time period, voter 
identification, get-out-the-vote, and generic campaign activity. State, 
district, and local party committees that have established a Federal 
account and a separate Levin account pursuant to 11 CFR 300.30(b), must 
allocate disbursements or expenditures between these two accounts for:
    (i) Voter registration activity during the period that begins on 
the date that is 120 days before the date of a regularly scheduled 
Federal election and that ends on the date of the election, provided 
that the activity does not clearly identify a Federal candidate; and
    (ii) Voter identification, get-out-the-vote activity, or generic 
campaign activities conducted in connection with an election in which a 
candidate for Federal office is on the ballot.
    (b) Allocation percentages, ratios and record-keeping.
    (1) Salaries. Committees must keep time records for all employees 
for purposes of determining the percentage of time spent on activities 
in connection with a Federal election. Allocations of salaries will be 
undertaken as follows:
    (i) Salaries of employees who spend more than 25% of their 
compensated time in a given month on activities in connection with a 
Federal election must be paid 100% from the Federal account.
    (ii) Salaries of employees who spend 25% or less of their 
compensated time in a given month on activities in connection with a 
Federal election shall be allocated between the committee's Federal and 
non-Federal account.
    (iii) Salaries of employees who spend no time in a given month on 
activities in connection with a Federal election may be paid solely 
from the non-Federal account.
    (2) Administrative costs. State, district, and local party 
committees that choose to allocate administrative expenses may do so 
subject to the following requirements:
    (i) Presidential election years. In any year in which a 
Presidential candidate, but no Senate candidate appears on the ballot, 
State, district, and local party committees must allocate at least 28% 
of administrative expenses to their Federal accounts.
    (ii) Presidential and Senate election year. In any year in which a 
Presidential candidate and a Senate candidate appear on the ballot, 
State, district, and local party committees must allocate at least 36% 
of administrative expenses to their Federal accounts.
    (iii) Senate election year. In any year in which a Senate 
candidate, but no Presidential candidate, appears on the ballot, State, 
district and local party committees must allocate at least 21% of 
administrative expenses to their Federal account.
    (iv) Non-Presidential and non-Senate year. In any year in which 
neither a Presidential nor a Senate candidate appears on the ballot, 
State, district and local party committee must allocate at least 15% of 
administrative expenses to their Federal account.
    (3) Levin activities--Voter registration, voter identification, 
get-out-the-vote, and generic campaign activity. State, district, and 
local party committees that choose to make expenditures and 
disbursements in connection with activities described in paragraph 
(a)(3) of this section must allocate such expenditures and 
disbursements between their Federal and Levin accounts. The allocation 
must result in the following minimum percentages to their Federal 
accounts:
    (i) Presidential election years. In any year in which a 
Presidential candidate, but no Senate candidate appears on the ballot, 
State, district, and local party committees must allocate at least 28% 
of expenses for activities described in paragraph (a)(2) of this 
section to their Federal account.
    (ii) Presidential and Senate election year. In any year in which a 
Presidential candidate and a Senate candidate appear on the ballot, 
State, district, and local party committees must allocate at least 36% 
of expenses for activities described in paragraph (a)(2) of this 
section to their Federal account.
    (iii) Senate election year. In any year in which a Senate 
candidate, but no Presidential candidate, appears on the ballot, State, 
district, and local party committees must allocate at least 21% of 
expenses for activities described in paragraph (a)(2) of this section 
to their Federal account.
    (iv) Non-Presidential and non-Senate year. In any year in which 
neither a Presidential nor a Senate candidate appears on the ballot, 
State, district, and local party committee must allocate at least 15% 
of expenses for activities

[[Page 35685]]

described in paragraph (a)(2) of this section to their Federal account.
    (4) Other voter registration activities. Expenses for voter 
registration activities undertaken by a State, district, or local party 
committee outside the period beginning 120 days before an election and 
ending on the date of the election may be paid with 100% non-Federal 
funds, or they may be allocated between the committee's Federal and 
non-Federal accounts.
    (5) Other get-out-the-vote activities when no Federal candidate is 
on the ballot. Expenses for voter identification, get-out-the-vote, and 
generic campaign activity when no Federal candidate is on the ballot 
that are undertaken by a State, district, or local party committee may 
be paid with 100% non-Federal funds, or they may be allocated between 
the committee's Federal and non-Federal accounts.
    (c) Costs not allocable by State, district, and local party 
committees. The following costs incurred by State, district, and local 
party committees shall be paid only with Federal funds:
    (1) Activities that refer to clearly identified Federal candidates. 
Disbursements by State, district, and local party committee for 
activities that refer to a clearly identified candidate for Federal 
office must not be allocated between or among Federal, non-Federal and 
Levin accounts. Only Federal funds may be used.
    (2) Activities that refer to Federal and to State and/or local 
elections. With the exception of activities described in paragraph 
(a)(3) of this section, disbursements by State, district, and local 
party committee for activities that do not refer to a clearly 
identified Federal candidate, but that are wholly or in part in 
connection with Federal elections, must not be allocated between or 
among Federal, non-Federal and Levin accounts. Only Federal funds may 
be used.
    (3) Fundraising costs. Disbursements for fundraising costs incurred 
by State, district, and local party committees for funds to be used, in 
whole or in part, for Federal election activity, including the 
activities described at paragraph (a)(3) of this section, must not be 
allocated between or among Federal, non-Federal and Levin accounts. 
Only Federal funds may be used. However, if such disbursements are for 
solely non-Federal fundraising costs, non-Federal funds may be used.
    (d) Transfers between accounts to cover allocable expenses. State, 
district, and local party committees may transfer funds from their non-
Federal or Levin accounts to their Federal accounts solely to meet 
allocable expenses and only pursuant to the following requirements:
    (1) Payments from Federal accounts. State, district, and local 
party committees must pay the entire amount of an allocable expense 
from their Federal accounts and must transfer funds from their non-
Federal account to the Federal account for administrative expenses or 
from their Levin account for expenses related to activities identified 
in paragraph (a)(2) of this section.
    (2) Timing.
    (i) State, district, and local party committees must transfer funds 
from their non-Federal or Levin accounts to their Federal accounts to 
meet allocable expenses no more than 10 days before and no more than 60 
days after the payments for which they are designated are made from a 
Federal account, except that transfers may be made more than 10 days 
before a payment is made from the Federal account if advance payment is 
required by the vendor(s) and if such payment is based on a reasonable 
estimate of the activity's final costs as determined by the committee 
and the vendor(s) involved.
    (ii) Any portion of a transfer from a committee's non-Federal 
account to its Federal account that does not meet the requirement of 
paragraph (d)(2)(i) of this section shall be presumed to be a loan or 
contribution from the non-Federal account or the Levin account to the 
Federal account, in violation of the Act.


Sec. 300.34  Transfers.

    (a) Federal funds. Notwithstanding 11 CFR 102.6(a)(1)(ii), a State, 
district, or local committee of a political party must not use any 
Federal funds transferred to it from, or otherwise accepted by it from, 
any of the persons enumerated in paragraphs (b)(1) and (b)(2) of this 
section as the Federal component of an expenditure for Federal election 
activity under 11 CFR 300.32. A State, district, or local committee of 
a political party must itself raise the Federal component of an 
expenditure allocated between Federal funds and Levin funds under 11 
CFR 300.32 and 300.33.
    (b) Levin funds. Levin funds must be raised solely by the State, 
district, or local committee of a political party that expends or 
disburses the funds. A State, district, or local committee of a 
political party must not use as Levin funds any funds transferred or 
otherwise provided to the committee by:
    (1) Any other State, district, or local committee of any political 
party, any officer or agent acting on behalf of such a committee, or 
any entity directly or indirectly established, financed, maintained or 
controlled by such a committee; or,
    (2) The national committee of any political party (including a 
national congressional campaign committee of a political party), any 
officer or agent acting on behalf of such a committee, or any entity 
directly or indirectly established, financed, maintained or controlled 
by such a committee.
    (c) Allocation transfers. Transfers of Levin funds between the 
accounts of a State, district, or local committee of a political party 
for allocation purposes must comply with 11 CFR 300.33.


Sec. 300.35  Office buildings.

    (a) General provision. A State or local party committee may raise 
and spend funds for the purchase or construction of its office 
building, and such funds are not subject to the limitations, 
prohibitions, and disclosure provisions of the Act. Funds raised and 
spent for the purchase or construction of an office building are 
subject to State law. An office building must not be purchased or 
constructed for the purpose of influencing the election of any 
candidate in any particular election for Federal office. For purposes 
of this section, the term local party committee shall include a 
district party committee.
    (b) Application of State law. Amounts raised and spent by a State 
or local party committee for the purchase or construction of its office 
building are subject to State law as set forth in paragraphs (b)(1) and 
(b)(2) of this section.
    (1) Non-Federal account. If a State or local party committee uses 
non-Federal funds, Federal law does not preempt or supersede State law 
as to the source of funds used, the permissibility of the 
disbursements, or the reporting of the receipt and disbursement of such 
funds, except as provided in paragraph (d) of this section.
    (2) Federal account. If a State or local party committee uses funds 
from its accounts containing only Federal funds, Federal law does not 
supersede or preempt State law as to the permissibility of the 
disbursements, except as provided in paragraph (d) of this section. 
Federal law also does not preempt or supersede any State law that 
purports to prohibit or limit the source of the funds, as ascertained 
by application of a reasonable accounting method prescribed under State 
law.
    (3) Levin funds. Levin funds may be used for the purchase or 
construction of a State or local party committee office building, if 
permitted by State law.
    (c) Definition of ``purchase or construction of an office 
building.''
    (1) Office building means a structure and the land underlying the 
structure, comprised of structural components and

[[Page 35686]]

fixtures essential to the operation or appearance of the building, and 
that is lawfully occupied and used by a State or local party committee 
solely for its own party administration and election campaign support 
purposes. The term does not include office furnishings, furniture, 
equipment and machinery (such as computers, file cabinets, photocopiers 
or audio-visual production equipment).
    (2) Purchase means any payment to acquire the sole legal title to 
the building, including fees directly related to the acquisition of the 
building, such as sales commissions and real estate closing or 
settlement fees. Purchase does not include payments for the rent or 
leasing of an office building, property taxes and similar assessments, 
building maintenance, utility services, and office equipment.
    (3) Construction includes the design and erection of the structure 
of a building. Construction does not include the maintenance or repair 
of the building or its structural components, unless the repair work 
reaches a level to constitute major restoration or renovation of the 
building.
    (d) Allocation of expenses not within the definition of ``purchase 
or construction of an office building.'' If funds raised by a State or 
local party committee are used for an expense for its office building 
and the expense does not fall within the definitions in paragraph (c) 
of this section, the expense is an allocable administrative expense 
unless it falls within another category, such as support for a Federal 
or non-Federal candidate. If the expense is an allocable administrative 
expense, 11 CFR 300.33 applies, and the administrative expense is 
subject to the limitations and prohibitions of the Act.
    (e) Transitional Provisions for State Party Building or Facility 
Account. Up to and including November 5, 2002, the State committee of a 
political party may accept funds into its party office building or 
facility account, established pursuant to repealed 2 U.S.C. 
431(8)(B)(viii), and use the funds in the account only for the 
construction or purchase of an office building or facility. Starting on 
November 6, 2002, the funds in the account will be subject to the 
provisions of paragraphs (a) through (c) of this section if used for a 
State party office building. They may not be used for Federal account 
or Levin account purposes. They may be used for any non-Federal 
purposes, as permitted under State law.


Sec. 300.36  Reporting Federal election activity; recordkeeping.

    (a) Requirements for a State, district, or local committee of a 
political party that is not a political committee.
    (1) A State, district, or local committee of a political party that 
is not a political committee (see 11 CFR 100.5) must demonstrate 
through a reasonable accounting method that whenever it makes a payment 
of Federal funds for Federal election activity (see 11 CFR 300.32 and 
300.33) it has received sufficient funds subject to the limitations and 
prohibitions of the Act to make the payment. Such an organization must 
keep records of amounts received or expended under this paragraph and, 
upon request, shall make such records available for examination by the 
Commission.
    (2) A payment of Federal funds for Federal election activity shall 
constitute an expenditure for purposes of determining whether a State, 
district, or local committee of a political party qualifies as a 
political committee under 11 CFR 100.5, unless the payment is excluded 
from the definition of expenditure under 11 CFR 100.8. A payment of 
Federal funds for Federal election activity that meets the criteria of 
100.8(b)(10), (16), or (18) (exempt activities) shall be treated as a 
payment for exempt activity in accordance with all applicable 
provisions of this chapter, including, but not limited to, 11 CFR 
100.5(c).
    (b) Requirements for a State, district, or local committee of a 
political party that is a political committee.
    (1) Reporting disbursements of Federal funds for Federal election 
activity. A State, district, or local committee of a political party 
that is a political committee (see 11 CFR 100.5) must report all 
disbursements of Federal funds for Federal election activity, including 
the Federally allocated portion of a payment for Federal election 
activity. This requirement applies whether or not the committee's 
aggregate total receipts and disbursements for Federal election 
activity is $5,000 or more during the calendar year. For purposes of 
this paragraph, a disbursement of Federal funds for Federal election 
activity (see 11 CFR 300.32 and 300.33) by a State, district, or local 
committee of a political party that is a political committee shall be 
deemed an expenditure and reported as such, unless the disbursement is 
excluded from the definition of expenditure under 11 CFR 100.8.
    (2) Reporting all receipts and disbursements for Federal election 
activity; threshold. In addition to the requirements of paragraph 
(b)(1) of this section, a State, district, or local committee of a 
political party that is a political committee must report all receipts 
and disbursements made for Federal election activity if the aggregate 
amount of such receipts and disbursements is $5,000 or more during the 
calendar year. The disclosure required by this paragraph must include 
receipts and disbursements of Federal funds and of Levin funds used for 
Federal election activity, notwithstanding the otherwise non-Federal 
nature of the Levin funds.
    (i) Reporting of payments for Federal election activity allocated 
between Federal funds and Levin funds. A State, district, or local 
committee of a political party that makes a payment for Federal 
election activity that is allocated between Federal funds and Levin 
funds (see 11 CFR 300.33) must report for each such payment the full 
name and address of each person to whom the payment was made, the date 
of the payment, amount and purpose of the payment, and the amount of 
and explanation for the allocation percentage used for the payment, as 
provided in 11 CFR 104.17(b). If the payment is for the allocable costs 
of more than one Federal election activity, the committee must itemize 
the payment, showing the amounts designated for each Federal election 
activity. The committee must also report the total amount paid for 
Federal election activity that calendar year, to date, for each Federal 
election activity.
    (ii) Itemization. The disclosure required by paragraph (b)(2) of 
this section must include, in addition to any other applicable 
reporting requirement of this chapter, the itemized disclosure of 
receipts and disbursements of $200 or more to or from any person for 
Federal election activities, as provided in part 104.
    (3) Reporting of other payments allocated between Federal funds and 
non-Federal funds. A State, district, or local committee of a political 
party that makes a payment for costs allocable between Federal and non-
Federal funds, other than the costs of Federal election activity that 
is allocated between Federal funds and Levin funds under 11 CFR 300.33, 
must comply with 11 CFR 104.17.
    (c) Filing Schedule. A State, district, or local committee of a 
political party that must file reports under paragraph (b) of this 
section must comply with the monthly filing schedule in 11 CFR 
104.5(c)(3).
    (d) Recordkeeping. A State, district, or local committee of a 
political party that must file reports under paragraph (b) of

[[Page 35687]]

this section must comply with the requirements of 11 CFR 104.14.


Sec. 300.37  Prohibitions on fundraising for and donating to certain 
tax-exempt organizations (2 U.S.C. 441i(d)).

    (a) Prohibitions. A State, district, or local committee of a 
political party must not solicit any funds for, or make or direct any 
donation to:
    (1) An organization that is described in 26 U.S.C. 501(c) and 
exempt from taxation under section 26 U.S.C. 501(a) and that makes 
expenditures or disbursements in connection with an election for 
Federal office, including expenditures or disbursements for Federal 
election activity;
    (2) An organization that has submitted an application for tax 
exempt status under 26 U.S.C. 501(c) and that makes expenditures or 
disbursements in connection with an election for Federal office, 
including expenditures or disbursements for Federal election activity; 
or
    (3) An organization described in 26 U.S.C. 527 except for a 
political committee; a State, district, or local committee of a 
political party; or the authorized campaign committee of a state or 
local candidate.
    (b) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a State, district or 
local committee of a political party;
    (2) An entity that is directly or indirectly established, financed, 
maintained or controlled by a State, district or local committee of a 
political party or an officer or agent acting on behalf of such entity; 
and
    (3) An entity that is directly or indirectly established, financed, 
maintained or controlled by an agent of a State, district or local 
committee of a political party.

Subpart C--Tax-Exempt Organizations


Sec. 300.50  Prohibited fundraising by national party committees (2 
U.S.C. 441i(d)).

    (a) Prohibitions on fundraising and donations. A national committee 
of a political party, including a national party congressional campaign 
committee, must not solicit any funds for, or make or direct any 
donations to:
    (1) An organization that is described in 26 U.S.C. 501(c) and 
exempt from taxation under section 26 U.S.C. 501(a) and that makes 
expenditures or disbursements in connection with an election for 
Federal office, including expenditures or disbursements for Federal 
election activity;
    (2) An organization that has submitted an application for tax-
exempt status under 26 U.S.C. 501(c) and that makes expenditures or 
disbursements in connection with an election for Federal office, 
including expenditures or disbursements for Federal election activity; 
or
    (3) An organization described in 26 U.S.C. 527, except for a 
political committee; a State, district, or local committee of a 
political party; or the authorized campaign committee of a State or 
local candidate.
    (b) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a national party 
committee, including a national party congressional committee;
    (2) An entity that is directly or indirectly established, financed, 
maintained or controlled by a national party committee, including a 
national party congressional committee, or an officer or agent acting 
on behalf of such an entity; or
    (3) An entity that is directly or indirectly established, financed, 
maintained, or controlled by an agent of a national committee of a 
political party, including a national party congressional committee.


Sec. 300.51  Prohibited fundraising by State, district, and local party 
committees (2 U.S.C. 441i(d)).

    (a) Prohibitions. A State, district, or local committee of a 
political party must not solicit any funds for, or make or direct any 
donation to:
    (1) An organization that is described in 26 U.S.C. 501(c) and 
exempt from taxation under section 26 U.S.C. 501(a) and that makes 
expenditures or disbursements in connection with an election for 
Federal office, including expenditures or disbursements for Federal 
election activity;
    (2) An organization that has submitted an application for tax-
exempt status under 26 U.S.C. 501(c) and that makes expenditures or 
disbursements in connection with an election for Federal office, 
including expenditures or disbursements for Federal election activity; 
or
    (3) An organization described in 26 U.S.C. 527, except for a 
political committee; a State, district, or local committee of a 
political party; or the authorized campaign committee of a State or 
local candidate.
    (b) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a State, district, or 
local committee of a political party;
    (2) An entity that is directly or indirectly established, financed, 
maintained or controlled by a State, district, or local committee of a 
political party or an officer or agent acting on behalf of such an 
entity; and
    (3) An entity that is directly or indirectly established, financed, 
maintained or controlled by an agent of a State, district, or local 
committee of a political party.


Sec. 300.52  Fundraising by Federal candidates and Federal 
officeholders (2 U.S.C. 441i(e)(4)).

    (a) General solicitations. A Federal candidate, an individual 
holding Federal office, and an individual who is an agent of either may 
make a general solicitation of funds on behalf of any organization 
described in 26 U.S.C. 501(c) and exempt from taxation under 26 U.S.C. 
501(a), or an organization that has submitted an application for 
determination of tax-exempt status under 26 U.S.C. 501(c), without 
regard to the source or amount of funds, only if all of the following 
conditions apply:
    (1) The solicitation does not specify how the funds will or should 
be spent;
    (2) The solicitation is not for a 501(c) organization whose 
principal purpose is to conduct:
    (i) Voter registration activity during the period that begins on 
the date that is 120 days before the date a regularly scheduled Federal 
election is held and ends on the date of the election; or
    (ii) Voter identification, get-out-the-vote activity or generic 
campaign activity conducted in connection with an election in which a 
Federal candidate appears on the ballot even if a candidate for State 
or local office also appears on the ballot; and
    (3) The solicitation is not for the activities described in 
paragraph (a)(2) of this section.
    (b) Specific solicitations.
    (1) A Federal candidate, an individual holding Federal office, and 
an individual who is an agent of either may make a solicitation 
explicitly to obtain funds to carry out the activities described in 
paragraph (a)(2) of this section, only if the following conditions are 
met:
    (i) The solicitation is made only to individuals; and
    (ii) The amount solicited from any individual during any calendar 
year does not exceed $20,000.
    (2) A Federal candidate, an individual holding Federal office, and 
an individual who is an agent of either may make a solicitation 
explicitly for an entity whose principal purpose is to conduct any of 
the activities described in paragraph (a)(2) of this section, only if 
the following conditions are met:
    (i) The solicitation is made only to individuals; and

[[Page 35688]]

    (ii) The amount solicited from any individual during any calendar 
year does not exceed $20,000.

Subpart D--Federal Candidates and Officeholders


Sec. 300.60  Scope (2 U.S.C. 441i(e)(1)).

    This subpart applies to:
    (a) Federal candidates,
    (b) Individuals holding Federal office,
    (c) Agents of a Federal candidate or individual holding Federal 
office, and
    (d) Entities that are directly or indirectly established, financed, 
maintained, or controlled by, or acting on behalf of, one or more 
Federal candidates or individuals holding Federal office.


Sec. 300.61  Federal elections (2 U.S.C. 441i(e)(1)(A)).

    No person described in 11 CFR 300.60 shall solicit, receive, 
direct, transfer, or spend funds in connection with an election for 
Federal office, including funds for any Federal election activity as 
defined in 11 CFR 100.24, unless the amounts consist of Federal funds 
that are subject to the limitations, prohibitions, and reporting 
requirements of the Act.


Sec. 300.62  Non-Federal elections (2 U.S.C. 441i(e)(1)(B)).

    No person described in 11 CFR 300.60 shall solicit, receive, 
direct, transfer, or spend or disburse funds in connection with any 
non-Federal election, unless the amounts consist of Federal funds that 
are subject to the limitations and prohibitions of the Act.


Sec. 300.63  Exception for State party candidates (2 U.S.C. 
441i(e)(2)).

    Section 300.62 shall not apply to a Federal candidate or individual 
holding Federal office who is a candidate for State or local office, if 
the solicitation, receipt or spending of funds is permitted under State 
law; and refers only to that State or local candidate, to any other 
candidate for that same State or local office, or both. If an 
individual is simultaneously running for both Federal and State or 
local office, the individual must raise, accept, and spend only Federal 
funds for the Federal election.


Sec. 300.64  Exemption for attending or speaking at fundraising events 
(2 U.S.C. 441i(e)(3)).

    Notwithstanding the provisions of 11 CFR 100.24, 300.61 and 300.62, 
a Federal candidate or individual holding Federal office may attend, 
speak, or be a featured guest at a fundraising event for a State, 
district, or local committee of a political party, including a 
fundraising event at which Levin funds are raised, or at which non-
Federal funds are raised. Such candidate or individual holding Federal 
office shall not solicit, receive, direct, transfer, or spend funds or 
participate in any other fundraising aspect of any such event.


Sec. 300.65  Exceptions for certain tax-exempt organizations.

    (a) General solicitations. A Federal candidate, an individual 
holding Federal office, and an individual who is an agent of either may 
make a general solicitation of funds on behalf of any organization 
described in 26 U.S.C. 501(c) and exempt from taxation under 26 U.S.C. 
501(a), or an organization that has submitted an application for 
determination of tax-exempt status under 26 U.S.C. 501(c), without 
regard to the source or amount of funds, only if all of the following 
conditions apply:
    (1) The solicitation does not specify how the funds will or should 
be spent;
    (2) The solicitation is not for a 501(c) organization whose 
principal purpose is to conduct:
    (i) Voter registration activity during the period that begins on 
the date that is 120 days before the date a regularly scheduled Federal 
election is held and ends on the date of the election; or
    (ii) Voter identification, get-out-the-vote activity or generic 
campaign activity conducted in connection with an election in which a 
Federal candidate appears on the ballot even if a candidate for State 
or local office also appears on the ballot; and
    (3) The solicitation is not for the activities described in 
paragraph (a)(2) of this section.
    (b) Specific solicitations.
    (1) A Federal candidate, an individual holding Federal office, and 
an individual who is an agent of either may make a solicitation 
explicitly to obtain funds to carry out the activities described in 
paragraph (a)(2) of this section, only if:
    (i) The solicitation is made only to individuals; and
    (ii) The amount solicited from any individual during any calendar 
year does not exceed $20,000.
    (2) A Federal candidate, an individual holding Federal office, and 
an individual who is an agent of either may make a solicitation 
explicitly for an entity whose principal purpose is to conduct any of 
the activities described in paragraph (a)(2) of this section only if:
    (i) The solicitation is made only to individuals; and
    (ii) The amount solicited from any individual during any calendar 
year does not exceed $20,000.

Subpart E--State and Local Candidates


Sec. 300.70  Scope (2 U.S.C. 441i(f)(1)).

    This subpart applies to any candidate for State or local office, 
individual holding State or local office, or an agent of any such 
candidate or individual. For example, this subpart applies to an 
individual holding Federal office who is a candidate for State or local 
office. This subpart does not apply to an association or similar group 
of candidates for State or local office or of individuals holding State 
or local office.


Sec. 300.71  Federal funds required for certain public communications 
(2 U.S.C. 441i(f)(1)).

    No individual described in 11 CFR 300.70 shall spend any amounts 
for a public communication that refers to a clearly identified 
candidate for Federal office (regardless of whether a candidate for 
State or local office is also mentioned or identified), and that 
promotes or supports any candidate for that Federal office, or attacks 
or opposes any candidate for that Federal office (regardless of whether 
the communication expressly advocates a vote for or against a 
candidate) unless the amounts consist of Federal funds that are subject 
to the limitations, prohibitions, and reporting requirements of the 
Act. See definition of public communication at 11 CFR 100.26.


Sec. 300.72  Federal funds not required for certain communications (2 
U.S.C. 441i(f)(2)).

    The requirements of section 11 CFR 300.71 shall not apply if the 
communication:
    (a) Is in connection with an election for State or local office, 
and refers to one or more candidates for State or local office or to a 
State or local officeholder but does not promote, support, attack, or 
oppose any candidate for Federal office; or
    (b) Comes within the scope of 11 CFR 300.2(l)(2)(ii).

PART 9034--ENTITLEMENTS

    28. The authority citation for Part 9034 would continue to read as 
follows:


    Authority: 26 U.S.C. 9034 and 9039(b).

    29. Section 9034.8 would be amended by adding introductory language 
to paragraph (a) to read as follows:


Sec. 9034.8  Joint fundraising.

    (a) General. Nothing in this section shall permit any person to 
solicit, receive, direct, transfer, or spend any non-Federal funds 
prohibited under 11 CFR part 300.
* * * * *


[[Page 35689]]


    Dated: May 10, 2002.
David. M. Mason,
Chairman, Federal Election Commission.
[FR Doc. 02-12177 Filed 5-15-02; 10:13 am]
BILLING CODE 6715-01-P