[Federal Register Volume 67, Number 145 (Monday, July 29, 2002)]
[Rules and Regulations]
[Pages 49064-49132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18311]



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Part II





Federal Election Commission





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11 CFR Parts 100, et al.



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

  Federal Register / Vol. 67, No. 145 / Monday, July 29, 2002 / Rules 
and Regulations  

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FEDERAL ELECTION COMMISSION

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

[Notice 2002 -11]


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

AGENCY: Federal Election Commission.

ACTION: Final rules and transmittal of regulations to Congress.

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SUMMARY: The Federal Election Commission is revising 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 revisions 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 revised rules prohibit national parties from raising or 
spending non-Federal funds. They also permit State, district, and local 
party committees to fund certain ``Federal election activity,'' 
including certain voter registration and get-out-the-vote (``GOTV'') 
drives, with money raised pursuant to new limitations, prohibitions, 
and reporting requirements under BCRA, 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 Federal 
officeholders on behalf of political party committees, other 
candidates, and non-profit organizations. Further information is 
contained in the Supplementary Information that follows.

DATES: The effective date is November 6, 2002, except for 11 CFR 
106.7(a) which is effective January 1, 2003.

FOR FURTHER INFORMATION CONTACT: Mr. John C. Vergelli, Acting Assistant 
General Counsel; or Attorneys Mr. Anthony T. Buckley, Mr. Jonathan M. 
Levin, Ms. Dawn Odrowski, Ms. Anne A. Weissenborn, 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 rulemakings the Commission is 
undertaking this year in order to meet the rulemaking deadlines set out 
in BCRA. These rules address BCRA's new limitations on party, 
candidate, and officeholder solicitation and use of non-Federal 
funds.\1\
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    \1\ Future rulemakings will address: (1) Electioneering 
communications and issue ads; (2) coordinated and independent 
expenditures; (3) the so-called ``millionaires'' 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 rulemaking 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 impact on national nominating conventions 
will be addressed in a separate rulemaking.
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    Section 402(c)(2) 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 was June 25, 2002.\2\ The 
Commission promulgated these rules on June 22, 2002. The new rules will 
take effect on November 6, 2002, the day following the November 2002 
general election, except rules that take effect after the transition 
period. 2 U.S.C. 431 note.
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    \2\ BCRA's deadline for promulgation of the remaining rules is 
270 days after the date of enactment, or December 22, 2002.
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    Because of the extremely tight deadline for promulgating these 
rules, the Commission adhered to a shorter-than-usual timeline for 
receiving and considering public comments. The Notice of Proposed 
Rulemaking (``NPRM'') on which these rules are based was published in 
the Federal Register on May 20, 2002. 67 FR 35654 (May 20, 2002). 
Comments were received from the Alliance for Justice; the American 
Federation of Labor and Congress of Industrial Organizations (``AFL-
CIO''); the American Federation of State, County, and Municipal 
Employees (``AFSCME''); the Association of State Democratic Chairs 
(``ASDC''); Dr. Peter Bearse; the California Republican Party; the 
Campaign and Media Legal Center; the Center for Responsive Politics 
(``CRP'') and FEC Watch (joint comment); Common Cause and Democracy 21 
(joint comment); the Connecticut Republican State Central Committee; 
the Democratic National Committee (``DNC''), the Democratic Senatorial 
Campaign Committee (``DSCC'') and the Democratic Congressional Campaign 
Committee (``DCCC'') (joint comment); Development Strategies 
Corporation; Benjamin L. Ginsberg, Esq.; Ms. Janice P. Johnson; the 
Latino Coalition and National Taxpayer Network, Inc. (joint comment); 
the Michigan Democratic Party (``MDP''); Mindshare Internet Campaigns 
L.L.C.; the NAACP National Voter Fund (``NAACP NVF''); the National 
Republican Congressional Committee (``NRCC''); OMB Watch; Senators John 
S. McCain and Russell D. Feingold, and Representatives Christopher 
Shays and Marty Meehan (joint comment), and a supplemental comment from 
Senator McCain; Representative Bob Ney; Norman D. Petrick; and the 
Republican National Committee (``RNC'').
    The Commission held a public hearing on the NPRM on June 4 and 5, 
2002, at which it heard testimony from representatives of the ASDC; the 
AFL-CIO; the Campaign and Media Legal Center; Common Cause and 
Democracy 21; CRP and FEC Watch; the DNC, DSCC and DCCC; the Latino 
Coalition and the Taxpayer Network, Inc.; NAACP NVF; the MDP; the RNC, 
the RNCC, and the Republican State Chairmen; and Mr. Ginsberg. Please 
note that, for purposes of this document, the terms ``commenter'' and 
``comment'' cover both written comments and oral testimony at the 
public hearing.
    Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the 
Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), 
agencies must submit final rules to the Speaker of the House of 
Representatives and the President of the Senate and publish them in the 
Federal Register at least 30 calendar days before they take effect. The 
final rules on Prohibited and Excessive Contributions: Non-Federal 
Funds or Soft Money were transmitted to Congress on July 16, 2002.

Explanation and Justification

I. Terminology

    Because the term ``soft money'' is used by different people to 
refer to a wide variety of funds under different circumstances, the 
Commission is using the term ``non-Federal funds'' in the final rules 
rather than the term ``soft money.'' BCRA does not use the term ``soft 
money'' except in the heading of Title I and the headings within Title 
IV. Nonetheless, the Commission sought comment on whether use of the 
term ``soft money'' would in some instances be preferable.
    Not all commenters addressed this issue, and several of those who 
did not address the issue used the term ``soft money'' throughout their 
comments. Most of those who addressed this question, however, urged the 
Commission to use the terms ``Federal funds'' and ``non-Federal funds'' 
in

[[Page 49065]]

place of what they characterized as the often-misunderstood term ``soft 
money.'' One commenter urged the Commission to use the terms 
``regulated'' and ``unregulated'' funds, arguing that the terms 
``Federal'' and ``non-Federal'' funds are also confusing. However, the 
terms ``Federal'' and ``non-Federal'' have been used by the Commission 
for many years throughout the rules and are thus familiar to those 
active in this area. See, for example, 11 CFR 102.5 (``Federal'' and 
``non-Federal'' accounts); 11 CFR 106.5 (``Federal'' and ``non-
Federal'' disbursements). The terms ``regulated'' and ``unregulated'' 
could also be subject to different interpretations. Moreover, non-
Federal funds are regulated by State law. The Commission is, therefore, 
using the terms ``Federal'' and ``non-Federal'' throughout the text of 
the regulations and the accompanying Explanation and Justification.

II. The Statutory Framework

    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. Non-Federal funds 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 on 
non-Federal elections are 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).
    BCRA also requires State, district, and local political party 
committees to pay for ``Federal election activities,'' which is a new 
term introduced and defined by BCRA, 2 U.S.C. 431(20), with entirely 
Federal funds or, in some cases, a mix of Federal funds and a new type 
of non-Federal funds, which the rules call ``Levin funds.'' These two 
provisions are related in that the latter is intended to prevent 
evasion of the former. A State, district, or local political party 
committee may not evade the restrictions in BCRA by receiving funds 
transferred from a national party committee and spending those funds on 
Federal election activity. A State, district, or local party committee 
must spend Federal and Levin funds it raises itself on these 
activities. See 148 Cong. Rec. H408-409 (daily ed. Feb. 13, 2002) 
(statement of Rep. Shays).
    As discussed below, these new and revised rules partially supersede 
the following advisory opinions relating to preemption as to party 
office buildings: Advisory Opinions 2001-12, 2001-1, 1998-8, 1998-7, 
1997-14, 1993-9, 1991-5, and 1986-40. Other advisory opinions may no 
longer be relied upon to the extent they conflict with BCRA. Further 
guidance will be forthcoming in future advisory opinions and 
rulemakings.

III. Part 100--Scope and Definition

11 CFR 100.14  Definition of ``State Committee, Subordinate Committee, 
District, or Local Committee''

    Several provisions of BCRA refer to ``State, district, and local 
committees of a political party.'' See, e.g., the ``Levin Amendment,'' 
2 U.S.C. 441i(b)(2). In the NPRM, the Commission pointed out that the 
terms ``State committee,'' ``subordinate committee,'' and ``party 
committee,'' are already defined in the regulations, although 
``district committee'' and ``local committee'' are not. 11 CFR 100.14, 
100.5(e)(4); see also 2 U.S.C. 431(15).
    In paragraph (a) of section 100.14, status as a State committee is 
determined by reference to the party bylaws or State law. This 
provision, which did not draw comment, allows the 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 bylaws.
    The proposed regulation published in the NPRM provided, in 
paragraphs (a), (b), and (c), with regard to ``State committees,'' 
``subordinate committees,'' and ``district or local committees,'' 
respectively, that an organization must be ``part of the official party 
structure'' and be ``responsible for the day-to-day operation of the 
political party'' to meet the definition. Three commenters, including 
the principal Congressional sponsors of BCRA, objected to this 
conjunctive requirement. These commenters collectively believe that 
limiting the definition to organizations that are part of the 
``official party structure'' will open the door to purportedly 
``unofficial'' party organizations that would be able to avoid BCRA's 
requirement while ``manifestly engaged in party operations.'' Instead, 
they propose a disjunctive definition, which would provide that a party 
organization meets the respective definitions if it is part of the 
official party structure or responsible for the day-to-day operation of 
the party. The Commission has concluded that requiring a committee to 
be part of the official party structure before it satisfies the 
regulatory definition is an important safeguard, ensuring that BCRA's 
provisions sweep only as far as necessary to accomplish its ends. The 
Commission also believes that its definition of ``subordinate committee 
of a State, district, or local committee,'' which includes any 
organization that is directly or indirectly established, financed, 
maintained, or controlled by the State, district, or local committee 
fully addresses the sponsor's regulatory concerns in this area.
    Paragraph (b) is a new provision defining ``district or local 
committee.'' (This provision was labeled paragraph (c) in the NPRM, 
while subordinate committees were covered by paragraph (b). In the 
final rules, the Commission has covered subordinate committees in 
paragraph (c). This reordering of paragraphs within section 100.14 
reflects the priority given to district and local party committees in 
BCRA.) This definition largely parallels paragraph (a) but for 
political subdivisions below the State level, and encompasses those 
political party committees that do not necessarily operate formally 
under the ``control or direction'' of the State party committee. In the 
final rules, the Commission has deleted the phrase, ``including an 
entity that is directly or indirectly established, financed, 
maintained, or controlled by the district or local committee.''
    The principal Congressional sponsors of BCRA commented that the 
words, ``under State law,'' as they appeared in the NPRM, are redundant 
given the preceding reference to ``operation of State law.'' The 
Commission agrees, and has deleted the redundant words in the final 
rule.

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    Three commenters objected to adding language, ``as determined by 
the Commission,'' in paragraph (b) of section 100.14. An association of 
State party officials stated, referring to paragraph (b), ``there 
should be no discretion left to the Commission to decide whether a 
particular organization is a local party committee.'' A national party 
committee described status as a local committee as a ``quintessential 
State and local'' issue. The Commission has not included the phrase, 
``as determined by the Commission,'' in paragraph (b) of section 
100.14.
    With regard to subordinate committees, in paragraph (c) of section 
100.14, the phrase, ``as determined by the Commission,'' which was 
included in the proposed regulation published in the NPRM, has not been 
included in the final rules. The Commission has concluded that this 
language, which refers to the availability of the advisory opinion 
process, is not appropriate with regard to committees other than State 
committees, whose status as State party committees, as determined by 
the Commission, makes them eligible for higher contribution limits and 
permits them to make coordinated expenditures under FECA. The principal 
Congressional sponsors of BCRA commented that, as proposed in the NPRM, 
this definition did not, but should, include within the definition an 
entity that is directly or indirectly established, financed, 
maintained, or controlled by the subordinate committee. The Commission 
has included such a provision in paragraph (c) of section 100.14 of the 
final rules.

11 CFR 100.24  Definition of ``Federal Election Activity''

    Many of the operative provisions of Title I of BCRA use the term 
``Federal election activity'' (``FEA''). See, e.g., 2 U.S.C. 
441i(b)(1), (2), 2 U.S.C. 441i(d). Congress defined the term at 2 
U.S.C. 431(20). The Commission is adopting new regulation 11 CFR 100.24 
to implement the statutory definition.
    The definition of FEA proposed in the NPRM drew numerous comments 
urging divergent interpretations of key statutory terminology. Many of 
these comments focused on four important phrases that are used in the 
statutory definition at 2 U.S.C. 431(20). In light of these comments, 
the Commission has revised the regulation proposed in the NPRM by 
adding a new first paragraph, 11 CFR 100.24(a), which defines these 
four terms for the purposes of the rest of the regulation and for use 
in part 300 of chapter 1 of Title 11. These terms are ``voter 
registration activity'' (see 2 U.S.C. 431(20)(A)(i)), ``in connection 
with an election in which a candidate for Federal office appears on the 
ballot,'' ``get-out-the-vote activity'' (``GOTV''), and ``voter 
identification'' (see 2 U.S.C. 431(20)(A)(ii)).

A. Elections in Which Federal Candidates ``Appear on the Ballot''

    The statutory definition of FEA provides that certain activities 
are FEA if they are ``in connection with an election in which a 
candidate for Federal office appears on the ballot.'' 2 U.S.C. 
431(20)(A)(ii). Congress clearly intended to establish certain periods 
of time in which no candidates for Federal office appear on the ballot. 
The NPRM requested comment as to how to interpret this statutory 
provision. Several commenters, including the principal Congressional 
sponsors of BCRA, urged the Commission to construe this phrase to mean 
``starting at the beginning of a two-year Federal election cycle, 
except in states holding regularly scheduled state elections in odd-
numbered years.'' These commenters argued that this approach is 
``consistent with the Commission's current practice with respect to 
allocation of generic voter drive and administrative expenses,'' and 
comports with the plain meaning of the statute.
    In contrast, two commenters, a national party committee and a labor 
organization, urged the Commission to pick a date certain, January 1 of 
even-numbered years, to identify the time-frame that is ``in connection 
with an election in which a candidate for Federal office appears on the 
ballot.'' The commenters commended this approach as ``practical'' and 
``reasonable.'' One of these commenters suggested that the concept of 
even-numbered Federal election years is already familiar, and that 
party activities are ``more diverse'' in odd-numbered years, in that 
they are more focused on local and State activities. The Commission 
notes that a large number of State and local elections take place in 
odd-numbered years (e.g., mayoral elections in some large cities). 
Activities in connection with such elections are presumably not 
``conducted in connection with an election in which a candidate for 
Federal office appears on the ballot,'' even under the most expansive 
reading of the statute.
    A civil rights organization urged the Commission to interpret the 
term, ``in connection with an election in which a candidate for Federal 
office appears on the ballot,'' to mean that period of time beginning 
on the day on which a Federal candidate is actually certified for the 
ballot in a given jurisdiction. This commenter argues this 
interpretation is the plainest possible reading of the statute. This 
civil rights organization also cautioned that an overly broad 
definition of when a candidate ``appears on the ballot'' would unduly 
hamper their legitimate fundraising efforts, and thus impede many, if 
not all, of their non-partisan GOTV efforts. A Latino rights group and 
a taxpayers' organization suggested that the Commission interpret the 
statutory term to mean the earliest date on which a Federal candidate 
could qualify for the ballot in a given jurisdiction.
    Paragraph (a)(1) of 11 CFR 100.24 defines ``in connection with an 
election in which a candidate for Federal office appears on the 
ballot'' to mean two specific periods of time. The first begins on the 
earliest filing deadline for access to the primary election ballot for 
Federal candidates, as determined by State law, or in those States that 
do not conduct primaries, on January 1 of each even-numbered year. This 
time period ends on the date of the general election, up to and 
including the date of any general runoff. This definition of ``in 
connection with an election in which a candidate for Federal office 
appears on the ballot'' closely tracks the statutory language of 2 
U.S.C. 431(20)(A)(ii) by tying the definition to the actual date that 
Federal candidates appear on the ballot. Although this definition may 
result in all fifty States having different time-periods in which ``a 
candidate for Federal office appears on the ballot,'' for purposes of 
the Act, there will be only one relevant date in any particular State. 
Thus, this is not at all burdensome on State and local party 
committees, who are the primary actors affected by this clause, 
especially since many of these committees must already pay attention to 
State dates in order to file certain pre-election reports with the 
Commission. Finally, this definition harmonizes the rule for regularly 
scheduled Federal elections and special elections for Federal office 
held outside normal election time frames. (See next paragraph.)
    The second time-frame that is ``in connection with an election in 
which a candidate for Federal office appears on the ballot'' occurs in 
odd-numbered years in which a special election for a Federal office 
occurs. Paragraph (a)(1)(ii) prescribes that the period beginning on 
the date the special election date is set and ending on the day of the 
special election is considered to be ``in connection with an election 
in which a candidate for Federal office appears on the ballot.''

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B. Voter Registration Activity

    BCRA does not define ``voter registration activity,'' as that term 
is used in the statutory definition of ``Federal election activity,'' 
although ``voter registration activity'' is ``Federal election 
activity'' only when it is conducted 120 days or fewer before a 
regularly scheduled Federal election. 2 U.S.C. 431(20)(A)(i). Paragraph 
(a)(2) of section 100.24, in the final rules, defines voter 
registration activity to encompass individualized contact for the 
specific purpose of assisting individuals with the process of 
registering to vote. The definition in paragraph (a)(2) also includes 
the costs of printing and distributing voter registration information, 
such as registration forms, and voting information, for example, 
pamphlets of similar materials explaining the voter-registration 
process.
    The Commission has expressly rejected an approach whereby merely 
encouraging voter registration would constitute Federal election 
activity. The regulation requires concrete actions to assist voters, 
rather than mere exhortation. A more expansive definition would run the 
risk that thousands of political committees and grassroots 
organizations that merely encouraged voting as a civic duty, who have 
never been subject to Federal regulation for such conduct, would be 
swept into the extensive reporting and filing requirements mandated 
under Federal law.

C. Get-Out-the-Vote

    Based upon the comments received in response to the rules proposed 
in the NPRM, the testimony at the public hearing, and its own analysis 
of BCRA, the Commission has concluded that it must define GOTV in a 
manner that distinguishes the activity from ordinary or usual 
campaigning that a party committee may conduct on behalf of its 
candidates. Stated another way, if GOTV is defined too broadly, the 
effect of the regulations would be to federalize a vast percentage of 
ordinary campaign activity.
    The Commission received several comments on this topic. A State 
political party and an association of State party officials argued that 
the timing (i.e., relative to the election) should not be relevant to 
determining whether an activity is GOTV. Rather, both commenters 
suggested that GOTV ``should refer to actual communications with voters 
for the purpose of encouraging them to vote.'' Two public interest 
groups agreed that timing relative to the election is not relevant to 
determining whether an activity is GOTV. Neither group, however, 
suggests an actual definition of the term. The Congressional sponsors 
``strongly disagree with the suggestion that * * * voter contacts may 
constitute [GOTV] only if they occur `on Election day or shortly 
before.' Contacting voters to encourage voting is [GOTV] whenever it 
occurs.'' A labor organization suggested that timing is relevant, and 
urged that the Commission's definition of GOTV be limited to activities 
that occur on election day.
    In the final rules, at 11 CFR 100.24(a)(3), the Commission adopts a 
definition of ``GOTV activity'' as ``contacting registered voters * * * 
to assist them in engaging in the act of voting.'' This definition is 
focused on activity that is ultimately directed to registered voters, 
even if the efforts also incidentally reach the general public. Second, 
GOTV has a very particular purpose: assisting registered voters to take 
any and all necessary steps to get to the polls and cast their ballots, 
or to vote by absentee ballot or other means provided by law. The 
Commission understands this purpose to be narrower and more specific 
than the broader purposes of generally increasing public support for a 
candidate or decreasing public support for an opposing candidate.
    Paragraph (a)(3) provides a list of two examples of get-out-the-
vote activity that is intended to assist in applying the regulation to 
particular factual situations. The first example, in paragraph 
(a)(3)(i), is activity whereby an individual is provided specific 
information on voting within 72 hours of an election, such as the date 
of the election, the location of polling places, and the hours the 
polls are open. The second example, in paragraph (a)(3)(ii), is 
offering to transport or actually transporting voters to the polls.
    The regulation explicitly excludes ``any communication by an 
association or similar group of candidates for State and local office 
or of individuals holding State or local office if such communication 
refers only to one or more state or local candidates.'' Similar to the 
exclusion for voter identification discussed below, this exclusion 
keeps State and local candidates' grassroots and local political 
activity a question of State, not Federal law. Interpreting the statute 
to extend to purely State and local activity by State and local 
candidates would potentially bring into the Federal regulatory scheme 
thousands of State and local candidates that are currently outside the 
Federal system. The Commission declines to undertake such a vast 
federalization of State and local activity without greater direction 
from Congress.
    In the NPRM, the Commission posed several questions as to how the 
term ``get-out-the-vote'' activity should be interpreted in the 
statute. Among the issues raised was whether there should be an 
exception for ``non-partisan'' GOTV. In their comment, the principal 
Congressional sponsors of BCRA strongly opposed a non-partisan 
exception as ``flatly inconsistent with BCRA.'' They argued that the 
plain language of the statute does not permit such an exception. Three 
other commenters, all of whom are public interest groups, make the same 
general argument. These commenters, and the Congressional sponsors, 
each opposed regulations that might contemplate ``non-partisan'' voter-
drive activities by party committees and candidates, which one of the 
commenters labeled as ``oxymoronic.''
    In contrast, one commenter, a non-profit corporation, urged the 
Commission to adopt a ``non-partisan exception'' for non-profit 
organizations that engage in non-partisan voter-drive activities such 
as GOTV and voter registration. This group noted that the proposed 
regulations would restrict fundraising on behalf of a non-profit by 
political party committees and Federal candidates if the non-profit 
spent money for FEA. It contended that, if the Commission fails to 
distinguish between partisan and non-partisan voter-drive activities, 
the efforts of legitimate, non-partisan groups to encourage voting will 
be hampered, perhaps fatally, in the case of some organizations. This 
commenter also argued that the Commission should create a ``safe 
harbor'' to allow political party committees and Federal candidates to 
raise funds on behalf of section 501(c)(3) organizations that legally 
engage in non-partisan voter-drive activities.
    In Title I of BCRA, Congress expressly addressed party fundraising 
for tax-exempt organizations. Congress specifically provided that 
national, State, district, and local political party committees ``shall 
not solicit any funds for, or make or direct any donations to'' section 
501(c) organizations that spend money on Federal election activity. 2 
U.S.C. 441i(d)(1). The Commission does not discern, from the plain 
language of section 441i(d)(1), any authority to craft a regulatory 
exception to the definition of FEA that would modify the effect of 
section 441i(d)(1). This conclusion is supported by the fact that 
Congress did provide a limited exception for fundraising by Federal 
candidates on behalf of 501(c) organization that engage in FEA. See 2 
U.S.C. 441i(e)(4)(B)

[[Page 49068]]

(which provides that a Federal candidate is permitted to raise up to 
$20,000 per calendar year from individuals for a section 501(c) 
organization, even if the organization engages in certain FEA.) 
Clearly, Congress could have crafted a non-partisan exception, but did 
not do so with regard to party committees' GOTV drives. Therefore, the 
Commission declines to adopt a ``non-partisan'' exception in 11 CFR 
100.24 with regard to the definition of FEA.
    In the NPRM, the Commission solicited comments as to whether there 
should be a de minimis exception allowing a certain, nominal amount of 
GOTV related to a Federal election that would nonetheless not render 
these activities as FEA. The principal Congressional sponsors of BCRA 
and a public interest group commented that there is no basis in the 
statute for a de minimis exception, and that such an exception ``would 
be contrary to the plain meaning of the statute.'' A labor 
organization, a national party, and a State political party committee 
support the inclusion of a de minimis exception. The State party 
committee suggests a $5,000 exception, so that ``informal and 
occasional GOTV and grassroots activities do not invoke the full force 
of federal regulations.'' One of the labor organizations asserts the 
exception would prevent the regulation from having a ``strict 
liability'' aspect. The Commission declines to adopt a de minimis 
exception in 11 CFR 100.24.

D. Slate Cards, Sample Ballots, and Other Exempt Activities

    In the NPRM, the Commission specifically sought comment as to the 
use of printed slate cards, sample ballots, palm cards, and similar 
listings of three or more candidates in the context of GOTV. The 
Commission also sought comment about the larger issue of the 
relationship of ``exempt activities'' to ``Federal election 
activities.'' 67 FR 35656.
    The term ``exempt activities'' refers to three types of spending by 
State and local party organizations, each of which is excluded from the 
statutory definitions of contribution and expenditure in 2 U.S.C. 
431(8) and (9). That is, a payment by a State or local party 
organization for an exempt activity is not a ``contribution,'' within 
the meaning of the Act, to a candidate benefited by the activity, nor 
an ``expenditure,'' within the meaning of the Act, by the party 
organization.
    Slate cards are one type of exempt activity. A payment for the 
``costs of preparation, display, or mailing or other distribution . . . 
with respect to a printed slate card or sample ballot, or other printed 
listing, of 3 or more candidates for any public office,'' is not a 
contribution or expenditure. The exclusion does not apply to spending 
for displaying the slate card ``on broadcast stations, or in 
newspapers, magazines, or similar types of general public political 
advertising.'' 2 U.S.C. 431(8)(B)(v) (contribution); 2 U.S.C. 
431(9)(B)(iv) (expenditure). See also 11 CFR 100.7(b)(9), 100.8(b)(10). 
Note that the exemption extends to the costs of a mass mailing of the 
slate card.
    ``The original intent of the slate card amendment was to allow 
parties to print slate cards, sample ballots, etc., to educate voters 
and encourage straight party voting without being subject to the 
disclosure provisions and contribution and expenditure limitations in 
Federal law.'' H.R. Rep. No. 93-1239, at 142 (1974) (House Committee on 
Administration Report on the Federal Election Campaign Act Amendments 
of 1974) (Supp. View of Rep. Frenzel). Other statements in the 
legislative history tend to confirm this view of the intent behind the 
provision. See, e.g., H.R. Rep. No. 93-1438, at 65 (1974) (Conference 
Report on Federal Election Campaign Act Amendments of 1974) (intent of 
provision ``is to allow State and local parties to educate the general 
public as to the identity of the candidates of the party.'')
    Several commenters have addressed the relationship between FEA and 
exempt activities, including slate cards. One State party committee 
commented that it understands BCRA to have ``clearly redefined all such 
* * * activities as Federal election activities that must be funded 
entirely by hard money.'' The principal Congressional sponsors of BCRA 
commented that slate cards, sample ballots, and palm cards should be 
included in GOTV. With regard to the larger issue of the relationship 
between all exempt activities and FEA, the principal sponsors urged 
that if an activity constitutes FEA, then it must be treated as such. A 
public interest group argues that ``federal election activity subsumes 
all previously allocable expenses,'' with certain exceptions not 
relevant here.
    In a joint comment, a national party committee and two 
Congressional campaign committees advocated the opposite conclusion: 
``Congress did not leave any suggestion in the legislative history that 
these important exceptions were somehow overridden * * * by BICRA.'' 
These commenters argued that the Commission's current treatment of 
exempt activities is consistent with BCRA because BCRA focuses on 
``soft money'' spending for ``issue advertising,'' whereas exempt 
activities are, by definition, at the grassroots level. Thus, they 
conclude, ``exempt activities should not be deemed to be `Federal 
election activity,' and that the costs of exempt activities should 
continue to be allocated between Federal and non-Federal funds,'' by 
which they mean non-Federal funds other than Levin funds. Another 
national party committee, a State party committee, and a labor 
organization made essentially the same points, agreeing that the 
definition of Federal election activity should exclude exempt 
activities.
    The Commission does not interpret the Act, as amended by BCRA, to 
permit blanket conclusions about the relationship of exempt activities 
and FEA, in the sense of asserting that all exempt activities are 
necessarily now FEA, or vice versa. It is clear that not all exempt 
activities are FEA. For example, voter registration activities 
undertaken by a State or local political party on behalf of the 
Presidential ticket more than 120 days before a regularly scheduled 
election is an exempt activity under 2 U.S.C. 431(8)(B)(xii) and 
(9)(B)(ix), but not a Federal election activity. 11 CFR 100.24(b)(1). 
It is also clear that some activities satisfy one of the definitions of 
exempt activities and simultaneously satisfy one of the definitions of 
FEA. For example, voter registration activities undertaken by a State 
or local political party on behalf of the Presidential ticket fewer 
than 120 days before a regularly scheduled election satisfy both the 
definition of exempt activity and of Federal election activity. 2 
U.S.C. 431(8)(B)(xii), (9)(B)(ix), and 20(A)(i).
    In cases where a given activity undertaken by a State, district, or 
local political party committee is both an exempt activity and a 
Federal election activity, the issue is how it may or must be paid for. 
On this point, BCRA and the Commission's pre-BCRA regulations appear to 
be in conflict. Under BCRA, as interpreted in these final rules, if the 
activity is deemed a FEA, it must be paid for with Federal funds, Levin 
funds, or with an allocated mix of Federal and Levin funds. See 11 CFR 
300.32(b). Under the Commission's pre-BCRA regulations, if the activity 
is deemed an exempt activity that is combined with non-Federal activity 
it may be paid for with an allocated mix of Federal and non-Federal 
funds. 11 CFR 100.7(b)(9), (15), (17), 100.8(b)(10), (16), (18), and 
106.5(a)(2)(iii). See Common Cause v. Federal Election Com'n, 692 
F.Supp. 1391, 1394-1396 (D.D.C. 1987). The Common Cause case directly 
addressed two of the three categories of exempt activities:

[[Page 49069]]

campaign materials used by volunteers (see 11 CFR 100.7(b)(15) and 
100.8(b)(16)) and voter registration and GOTV activities on behalf of 
the Presidential ticket (see 11 CFR 100.7(b)(17) and 100.8(b)(18)), 
establishing that allocation of payments for these activities between 
Federal and non-Federal funds was properly a matter for the Commission 
to address in its regulations. Common Cause, 692 F.Supp. at 1396. While 
not directly addressed in Common Cause, the allocation of the costs of 
slate cards is also addressed in the Commission's regulations, but not 
in FECA. Compare 2 U.S.C. 431(8)(B)(v) and (9)(B)(iv) (which does not 
specifically provide for allocation) with 11 CFR 100.7(b)(9) and 
100.8(b)(10) (which provides for allocation).
    Since the Commission's regulations may not override the Act, as 
amended by BCRA, if an activity undertaken by a State, district, or 
local political party committee simultaneously constitutes both exempt 
activity and Federal election activity, that activity must now be paid 
for as a Federal election activity, not as an exempt activity.
    The Commission emphasizes, however, that payments by a State, 
district, or local political party committee for an activity that is 
within one of the exempt activity categories remains excluded from the 
definitions of ``contribution'' and ``expenditure.'' That is, the 
conclusion explained in the preceding paragraph goes only to how the 
activity must be paid for, not to characterizing the payment as a 
contribution or expenditure under the Act.
    With these considerations in mind, the Commission sees no valid 
reason to handle slate cards differently from any other type of exempt 
activity with regard to the definition of Federal election activity. If 
a State, district, or local political party committee uses slate cards 
as part of GOTV activity, or in a public communication that promotes or 
supports, or attacks or opposes a Federal candidate, then the committee 
must pay for the costs of these slate cards as a Federal election 
activity (see 2 U.S.C. 431(20)(A)(ii), (iii)), although these payments 
are excluded from the definition of ``expenditure.'' On the other hand, 
if a State, district, or local political party committee uses slate 
cards mentioning Federal and non-Federal candidates in the course of 
campaigning that does not constitute Federal election activity, then it 
may allocate the costs of these slate cards between Federal and non-
Federal funds.

E. Voter Identification

    In BCRA, Congress included ``voter identification'' within the 
definition of ``Federal election activity.'' 2 U.S.C. 431(20)(A)(ii). 
In the NPRM, the Commission sought comment as to whether the proposed 
definition was too narrowly or broadly crafted, and, in the 
alternative, what activities should be incorporated into the definition 
of ``voter identification.'' A consortium of non-profit groups 
expressed concern that the term ``voter identification'' could be read 
too broadly by encompassing ``efforts to identify the shared interests 
of individuals for non-electoral purposes.'' They urged the Commission 
to restrict the definition to ``activities designed primarily to 
identify the political preferences of individuals in order to influence 
their voting.'' Similarly, a State political party commented that the 
definition in the proposed regulation was ``far too broad and instead 
should be defined to include only activity that involved actual contact 
of voters, by phone, in person or otherwise, to determine their 
likelihood of voting generally or their likelihood of voting for a 
specific Federal candidate.'' This State party committee specifically 
urged that the final definition exclude the costs of ``acquisition or 
enhancement of a list of voters, or the acquisition of publicly 
available demographic information regarding these voters,'' arguing 
that such functions are properly treated as administrative expenses 
because they are part of the party's ``fundamental functions.'' Several 
national party committees offered essentially similar views. A labor 
organization commented that ``voter identification'' should be defined 
as telephone calls or canvassing ``to identify voters for other Federal 
election activities,'' and agreed that gathering data about voters 
should be excluded. Another labor organization commented that ``voter 
identification'' should be limited to determining voter intent with 
regard to specific Federal candidates only.
    In contrast, the principal Congressional sponsors of BCRA commented 
that ``voter identification'' should include all activities designed to 
determine registered voters, likely voters, or voters indicating a 
preference for a specific candidate or party.'' They also commented 
that voter identification efforts should not be excluded simply because 
no mention is made of a Federal candidate. A public interest group 
commented that ``voter identification'' includes ``all efforts to 
identify voters, even if done in the name of state and local 
candidates.''
    With regard to the Commission's question, posed in the NPRM, about 
distinguishing voter identification from GOTV, the principal 
Congressional sponsors commented that the distinction ``makes no 
difference'' because both types of activity are covered under the same 
provision of BCRA (see 2 U.S.C. 431(20)(A)(ii)). A public interest 
group urged the Commission not to limit voter identification to efforts 
to identify voters for other Federal election activities, arguing that 
only a ``tortured reading'' of the statute allows [GOTV] activity to 
modify ``voter identification.'' A labor union disagreed, arguing that 
only voter identification for the purposes of GOTV should be included. 
Another public interest group argued against distinguishing the two 
activities according to proximity in time to the election. (See 
previous discussion under the discussion of GOTV.)
    The Commission requested comments as to whether the regulations 
should include a de minimis exception to voter identification 
activities. One labor union requested that there be a de minimis 
exception, particularly to allow for the maintenance and development of 
voter files during non-election years. Both the Congressional sponsors 
and a public interest group argued that such an exception would be 
contrary to the plain language and intent of BCRA.
    In paragraph (a)(4) of section 100.24, the Commission adopts a 
definition of ``voter identification'' that includes the costs of 
``creating or enhancing voter lists by verifying or adding information 
about the voters' likelihood of voting or likelihood of voting for 
specific candidates.'' The Commission notes that ``voter 
identification'' is one of the types of Federal election activity that 
will occur only during those times when a candidate for Federal office 
appears on the ballot. See 11 CFR 100.24(a)(1).
    The Commission recognizes that even during the period when a 
Federal candidate appears on the ballot, the act of acquiring a voter 
list in and of itself does not constitute voter identification. 
Committees have a number of reasons for acquiring voter lists, 
including fundraising and off-year party building activities. Such 
activity, on its face, does not constitute ``voter identification'' 
with respect to the statute, as there lacks a nexus between the 
activity and the statutory language that contemplates activity ``in 
connection with an election in which a candidate appears on the 
ballot.''
    The final rule excludes from the definition certain voter 
identification undertaken by groups or associations of State or local 
candidates or

[[Page 49070]]

officeholders, solely in reference to State or local candidates. The 
Commission included this exclusion because it finds it implausible that 
Congress intended to federalize State and local election activity to 
such an extent without any mention of the issue during the floor debate 
for BCRA. BCRA makes voter identification a subset of Federal election 
activity, and the regulatory implications of engaging in Federal 
election activity are significant. For the Commission to exercise its 
discretion so as to sweep within Federal regulation candidates for city 
council, or the local school board, who join together to identify 
potential voters for their own candidacies, the Commission would 
require more explicit instruction from Congress.

F. Definition of ``Federal Election Activity''

    Paragraph (b) of section 100.24 defines Federal election activity. 
Paragraph (b)(1) implements 2 U.S.C. 431(20)(A)(i) by including voter 
registration activity during the period that begins on the date that is 
120 calendar days before the date of a regularly scheduled Federal 
election. ``Special elections'' are not ``regularly scheduled,'' and 
therefore excluded from the definition. Paragraph (b)(2) of section 
100.24 implements 2 U.S.C. 431(20)(A)(ii) by including with the 
definition of Federal election activity voter identification, GOTV, and 
generic campaign activity when they are conducted in connection with an 
election in which a Federal candidate appears on the ballot.
    11 CFR 100.24(b)(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 entirely 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. ``Public communication'' is defined in 
proposed 11 CFR 100.26, discussed below. Public communications falling 
within this category of the definition of ``Federal election activity'' 
extend beyond communications expressly advocating a vote for or against 
a candidate.
    11 CFR 100.24(b)(4) implements 2 U.S.C. 431(20)(A)(iv) by providing 
that Federal election activity includes services provided during any 
month by an employee of a State, district, or local committee of a 
political party who spends over 25% of that individual's compensated 
time on activities in connection with a Federal election. There were no 
comments on this definition. A number of issues involving employees are 
discussed below in the Explanation and Justification for section 
300.33. The Commission has concluded that the statute is clear on its 
face, and therefore paragraph (b)(4) follows that statutory language 
without additional interpretation.

G. Activities Excluded From the Definition of ``Federal Election 
Activity''

    In BCRA, Congress specifically excluded certain activities from the 
definition of Federal election activity. 2 U.S.C. 431(20)(B). 
Activities falling within one of the exceptions may be paid for with 
entirely non-Federal funds. 11 CFR 100.24(c) implements these statutory 
exceptions. Paragraphs (c)(1) through (c)(4) of section 100.24 parallel 
the statutory exclusions at 2 U.S.C. 431(20)(B)(i) through (iv).
    Paragraph (c)(1) excludes a public Communication that refers solely 
to one or more clearly identified State or local candidates, and does 
not promote or support, or attack or oppose, a clearly identified 
candidate for Federal office, provided that the public communication is 
not a voter registration activity, or GOTV, or voter identification. 2 
U.S.C. 431(20)(B)(i). As an example of the application of this 
paragraph, this exception does not apply 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, even if the calls 
only refer to a State or local candidate. 2 U.S.C. 431(20)(B)(i); see 
11 CFR 100.24(b)(2).
    Paragraph (c)(2) excludes a contribution to a State or local 
candidate, provided that the contribution is not designated to pay for 
voter registration activity, voter identification, GOTV, generic 
campaign activity, a public communication promoting or supporting, or 
attacking or opposing, a clearly identified Federal candidate, or 
employee services as set forth in paragraphs (b)(1) through (b)(4) of 
section 100.24. 2 U.S.C. 431(20)(B)(ii). In the final rules, the 
Commission has added a reference to employee services as set forth in 
paragraph (b)(4) for the sake of completeness.
    Paragraph (c)(3) excludes the costs of State, district, or local 
political conventions, meetings, or conferences. The principal 
Congressional sponsors of BCRA commented that this approach was too 
broad, in that it included ``a meeting or conference,'' whereas the 
statutory provision it implemented, 2 U.S.C. 431(20)(B)(iii), refers 
only to ``conventions.'' These commenters failed to note, however, that 
meetings or conferences do not fall within the statutory definition of 
Federal election activity, and this remains true whether the Commission 
explicitly states it or not. Therefore, paragraph (c)(3) excludes the 
costs of a State, district, or local convention, meeting or conference. 
2 U.S.C. 431(20)(B)(iii). The principal Congressional sponsors 
otherwise supported paragraphs (c)(1) through (c)(4).
    Paragraph (c)(4) excludes the costs of grassroots campaign 
materials that name or depict only State and local candidates. 2 U.S.C. 
431(20)(B)(iv). The list of examples of such materials in paragraph 
(c)(4) includes certain items not mentioned in the statute. The 
Commission received no comments objecting to the additional items.
    In the version of the regulation published in the NPRM, the 
Commission included two additional exceptions that it has subsequently 
determined should not be listed as exceptions to the definition of 
Federal election activity in paragraph (c). These provisions would have 
covered voter registration activity at any time other than the period 
of time that is within 120 days of a regularly scheduled Federal 
election, and GOTV and voter identification in elections in which no 
Federal candidate appears on the ballot. While these activities are not 
Federal election activities, under certain circumstances payments for 
these activities must be allocated between Federal funds and non-
Federal funds. See 11 CFR 106.5. In this regard, these two types of 
activities differ from the activities described in paragraphs (c)(1) 
through (c)(4) of section 100.24, which always may be paid for with 
entirely non-Federal funds. Therefore, the Commission has removed these 
two provisions from the final regulation.

11 CFR 100.25  Definition of ``Generic Campaign Activity''

    Section 100.25 implements the statutory definition of ``generic 
campaign activity,'' which has been added to the Act by BCRA. ``Generic 
campaign activity'' is defined in BCRA as campaign activity ``that 
promotes a political party and does not promote a candidate or non-
Federal candidate.'' 2 U.S.C. 431(21).
    Generic campaign activity is a form of Federal election activity 
when it takes place in connection with an election in which a candidate 
for Federal office appears on the ballot. 11 CFR 100.24(b)(2)(ii). The 
Commission is defining ``in connection with an election in which a 
candidate for

[[Page 49071]]

Federal office appears on the ballot'' to include special elections 
fitting that description. 11 CFR 100.24(a)(1). Therefore, generic 
campaign activity may, in principle, occur in connection with a special 
election in which a candidate for Federal office appears on the ballot, 
provided, of course, that the elements of the definition are otherwise 
satisfied. An association of State party officials commented favorably 
on this approach. A public interest group pointed out that Advisory 
Opinion 1998-9, which was issued to a State party committee, addressed 
a special election in which only one Federal office was at stake, and 
thus only one candidate of the party on the ballot. The Commission 
opined that under such circumstances a candidate was clearly 
identified, and allocable ``generic activities'' by the party under 
pre-BCRA 11 CFR 106.5(a)(2)(iv) were thus not possible with regard to 
that special election. The final regulation is consistent with the 
reasoning of Advisory Opinion 1998-9 in defining ``generic campaign 
activity.''
    The final regulation elaborates on the statute by including within 
the definition of ``generic campaign activity'' those activities that 
oppose a political party without opposing a specific candidate. A labor 
organization commented that the regulation impermissibly goes beyond 
the statute by including activities in opposition to another party. In 
the Commission's experience, however, such activities in opposition to 
another party implicitly promote the party undertaking the activities, 
and are thus properly included in the definition. A national party 
committee also argued against the approach taken in the proposed 
regulation, characterizing it as ``confusing'' because it is framed in 
terms of promoting and opposing the party, which ``unnecessarily clouds 
the distinction of voter registration and GOTV activities.'' This 
commenter would have the Commission define ``generic campaign 
activity'' as an ``activity that promotes or opposes the particular 
party's ticket, without mentioning or referring to candidates by 
name.'' The Commission believes most of these concerns are addressed in 
the definitions of voter registration activity and GOTV at 11 CFR 
100.24(a)(2) and (3), respectively. Also, the distinction drawn by the 
commenter, that is, between promoting the party and promoting the 
party's ticket, is limited in practical application. Whether an 
activity is characterized as voter registration, GOTV, or generic 
campaign activity, it is treated as a Federal election activity when 
conducted in certain relation to a Federal election, see 100.24(b)(1) 
and (2), and is, in each case, a Federal election activity on which 
Levin funds may be spent, see 11 CFR 300.32(b)(1).
    In the version of the regulation proposed in the NPRM, ``generic 
campaign activity'' would have been defined as a ``campaign activity'' 
that promotes or opposes a political party but not a candidate. In the 
final rules, the definition instead refers to a ``public 
communication'' that promotes or opposes a political party but not a 
candidate. The Commission made this change to ensure that the 
definition encompasses only the external activities of a political 
party committee, that is, activities targeted to the public. This 
interpretation is also consistent with the plain meaning of the 
statutory provision, since it is difficult to envision how a campaign 
activity could effectively promote or oppose a political party without 
it taking the form of a public communication. This interpretation is 
also consistent with Advisory Opinion 1998-9, which dealt with numerous 
campaign activities that involved public communications.
    In the final rules, the Commission has added the words ``clearly 
identified'' to qualify the phrase, ``Federal candidate or a non-
Federal candidate.'' The intent of this addition is to remove ambiguity 
from the definition.
    In the NPRM, the Commission sought comment on the extent, if any, 
to which the exclusions for exempt activities in 11 CFR 100.7(b)(9), 
(15), and (17) and 100.8(b)(8), (10), and (16), should apply to the 
definition of ``generic campaign activity.'' A public interest group 
commented that ``exempt activities should not be excluded from the 
definition of `generic campaign activity. ''' An association of State 
party officials commented that there appears to be no overlap between 
exempt activities and generic campaign activities since the former, 
``by definition, reference a clearly identified Federal candidate,'' 
while the latter, by definition, may not.
    The Commission understands two of the categories of exempt 
activities, slate cards (see 11 CFR 100.7(b)(9) and 100.8(b)(8)) and 
voter registration on behalf of the Presidential ticket (see 11 CFR 
100.7(b)(17) and 100.8(b)(16)), to have no applicability to payments 
for generic campaign activity. This is so because these two types of 
exempt activities, by their nature, promote one or more candidates, and 
activities that promote a candidate are outside the scope of the 
definition of generic campaign activity. The remaining category of 
exempt activity--payments for certain campaign materials used by party 
volunteers (see 11 CFR 100.7(b)(15) and 100.8(b)(10))--may in certain 
circumstances also qualify as generic campaign activity under 11 CFR 
100.25. If the campaign materials used by the volunteers promote only 
the party, and do not promote a candidate, then this activity would be 
both exempt and a generic campaign activity. A public interest group 
included an essentially similar analysis of this point in their 
comment.

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 communications 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.
    The Commission did not include the Internet as a form of ``general 
public political advertising'' in proposed 11 CFR 100.26 because this 
provision of BCRA does not refer to the Internet. The Commission, 
however, sought comment 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.
    Many commenters addressed this issue. A national political party, 
an association of State party officials, an LLC that provides technical 
services to campaigns, a State political party, a public interest 
group, and a labor union urged the Commission not to include the 
Internet in the definition of ``public communication.'' Four commenters 
pointed to the lack of inclusion of the Internet in the list of modes 
of public communications, noting that Congress had had an opportunity 
to include the Internet in this definition, but declined to do so.
    A number of commenters argued that the Internet provides a low cost 
way for parties and other interested persons to disseminate their 
message widely, and the Commission should not attempt to regulate their 
doing so. The commenter who provides technical services to campaigns 
wrote, ``[the Internet] is an open, decentralized platform on which 
every user has the capacity to reach literally every other user. 
Candidates

[[Page 49072]]

and interest groups can and do use this medium to engage in meaningful, 
two-way dialogue * * *. Congress did not include other forms of two-way 
dialogue such as candidate forums, rallies, debates, or other events 
that are open to the public.''
    The same commenter noted the practical impossibility in fashioning 
restrictions on Internet communications given the rapidly changing 
environment: ``Although the Internet itself has been in existence since 
the early 1970s, it is only recently that the medium has emerged in the 
mainstream * * * Internet technology continues to evolve, and so does 
its application.''
    Other commenters were strongly opposed to the exclusion of the 
Internet from the media classified as public communications. The 
principal Congressional sponsors of BCRA and three public interest 
groups who support campaign finance reform argued that failure to 
include the Internet in this definition could carve out an exception 
for a widespread and growing form of political advertising. A public 
interest group echoed the words of the Congressional sponsors: ``A 
broad per se exclusion of that nature would be inadvisable because it 
could permit state and local party entities to exploit rapidly 
developing technology and new communications media to re-create or 
prolong the current soft money system.''
    The Commission has considered the issue of Internet communication, 
both in the context of this rulemaking, as well as in previous 
rulemakings and the advisory opinion process. The Commission concludes 
that excluding the Internet from the definition of ``public 
communication'' is consistent with the plain meaning of the statute, 
consistent with Congress' decision not to include the Internet in the 
statutory definition of ``public communication,'' and is the best 
policy decision with regard to implementation of BCRA.
    The Commission is convinced that the exclusion is appropriate from 
the perspective of statutory construction because the Internet is 
excluded from the list of media that constitute public communication 
under the statute. BCRA does not reference the ``Internet'' or 
``electronic mail'' in this section, although Congress used the terms 
``Internet,'' ``website,'' and ``World Wide Web address'' in other 
sections of BCRA. See, for example, 2 U.S.C. 434 note, enacted by BCRA 
section 201 (Federal Communications Commission to compile and maintain 
on its website information the FEC may need to carry out Title 2, 
Subtitle A, of BCRA, relating to electioneering communications); 2 
U.S.C. 438a, as enacted by BCRA section 502 (Commission to maintain a 
website of election reports). Congress has also used the terms 
``Internet'' and ``electronic mail'' in other statutes and 
distinguished them from ``telecommunications services.'' See 
Communications Decency Act of 1996, 47 U.S.C. Sec. 230(f)(1) (defining 
``Internet'') and 231(e)(4) (including ``electronic mail'' and 
excluding ``telecommunications services'' from definition of ``Internet 
access service''). BCRA does reference ``any other form of general 
public political advertising'' in the definition of ``public 
communication.'' General language following a listing of specific 
terms, however, does not evidence Congressional intent to include a 
separate and distinct term that is not listed, such as the Internet. 
See Sutherland Statutes and Statutory Construction, section 47; 17 
Ejusdem generis, Vol. 2A (6th ed. 2000). It is also noted that there is 
no indication in the legislative history that Congress contemplated 
including the Internet in the definition of public communication.
    Perhaps most important, there are significant policy reasons to 
exclude the Internet as a public communication. The Commission fails to 
see the threat of corruption that is present in a medium that allows 
almost limitless, inexpensive communication across the broadest 
possible cross-section of the American population. Unlike media such as 
television and radio, where the constraints of the medium make access 
financially prohibitive for the general population, the Internet is by 
definition a bastion of free political speech, where any individual has 
access to almost limitless political expression with minimal cost. As 
one public interest group who favors campaign finance reform argued: 
``There are good policy reasons for leaving the Internet out of the 
definition, as it is cheap and widely available. Internet 
communications are not part of the campaign finance problem, and should 
not be regulated as such unless Congress specifically mandates it.''

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'' at section 431(23). This definition, which is set out 
in new 11 CFR 100.27, includes 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. For the reasons 
explained in the Explanation and Justification for 11 CFR 100.26, the 
term ``mass mailing'' excludes communications sent over the Internet. 
It also excludes ``electronic mail.'' Cf. 47 U.S.C. 231(e)(4) 
(``electronic mail'' is included in the definition of ``Internet access 
service'').
    The term ``substantially similar'' is also used in the Commission's 
disclaimer regulations at 11 CFR 110.11(a)(3). When the disclaimer 
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 
proposed in the NPRM that the term ``substantially similar'' in 11 CFR 
100.27 have the identical meaning.
    Several commenters expressed the view that this definition of 
``substantially similar'' is too narrow as applied to mass mailings. 
They pointed out, for example, that the sponsoring group could change 
an internal sentence every 490 letters and thereby escape coverage 
under this definition. Also, many communications are largely identical 
but contain a separate paragraph addressing a targeted group, such as 
retired teachers or those with a particular hobby. The Commission has 
therefore revised the final rules to state that communications are 
considered substantially similar for purposes of this section if they 
include substantially the same template or language, but vary in non-
material respects such as communications customized by the recipient's 
name, occupation, or geographic location.

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'' at section 431(24). This definition, which is set 
out in new 11 CFR 100.28, includes more than 500 telephone calls of an 
identical or substantially similar nature within any 30-day period. A 
telephone bank does not include electronic mail sent over telephone 
lines. See 47 U.S.C. 231(e)(4) (distinguishing ``electronic mail'' from 
``telecommunications services''). Nor does it include Internet 
communications transmitted over telephone lines, for the reasons 
discussed above in the Explanation and Justification for 11 CFR 100.26.

[[Page 49073]]

    The Commission also proposed addressing the meaning of 
``substantially similar'' in the text of the rules. See discussion of 
11 CFR 100.27, above. As with the definition of ``mass mailing,'' 
discussed above, several commenters urged the Commission to broaden the 
definition of ``substantially similar'' contained in the proposed 
rules. They pointed out that, even more so than with mass mailings, 
phone conversations, even those where the caller is using a prepared 
script, are likely to vary somewhat from call to call. The Commission 
accordingly has revised the language of section 100.28 as proposed in 
the NPRM to provide that, consistent with the definition of ``mass 
mailing'' contained in section 100.27, communications are considered 
substantially similar for purposes of section 100.28 if they include 
substantially the same template or language, but vary in non-material 
respects such as communications customized by the recipient's name, 
occupation, or geographic location.

IV. Part 102--Registration, Organization, and Recordkeeping by 
Political Committees

11 CFR 102.5  Organizations Financing Political Activity in Connection 
With Federal and Non-Federal Elections, Other Than Through Transfers 
and Joint Fundraisers: Accounts and Accounting

    This section continues to set out requirements for accounts or 
accounting methods that must be established and maintained by 
organizations, including political committees, that fund activities in 
connection with Federal elections and non-Federal elections. The 
section has, however, been revised in several respects. 2 USC 441i(a) 
expressly prohibits national party committees from raising and spending 
non-Federal funds. Paragraph 102.5(c) addresses the application of this 
section to national party committees, while corresponding changes have 
been made to other portions of 11 CFR 102.5 to clarify that various 
provisions are now applicable to only State, district, and local party 
committees and organizations. While this section will continue to apply 
to all these party committees between November 6, 2002 and December 31, 
2002, after the latter date, national party committees will no longer 
be covered by its provisions.
    Paragraph (a)(1) remains largely unchanged except for the addition 
of language clarifying that State, district, and local party committees 
are the party organizations covered in these provisions, the addition 
of certain citations to other regulatory provisions, including 11 CFR 
part 300, and the separate discussions of administrative expenses 
incurred by party committees and by other political committees that are 
not party committees.
    Paragraph (a)(2) is revised to require committees to meet at least 
one of the three listed conditions for depositing contributions into 
their Federal accounts. The purpose of this regulation is to assure 
that funds placed in this account are from contributors who know the 
intended use of their contributions, and the Commission believes that 
this purpose can be fulfilled by means of either contributor 
designations, solicitations for express purposes, or solicitations or 
notifications that inform contributors that their contributions are 
subject to the prohibitions and limitations of the Act.
    New paragraph (a)(3) addresses the new category of ``Levin funds'' 
created by BCRA to be used by State, district, and local party 
committees for certain Federal election activity. These funds are 
subject to certain prohibitions and limitations pursuant to 11 CFR 
300.31 and may be used by these party committees to pay allocable 
shares of particular Federal election activities under particular 
circumstances, including voter registration, voter identification, get-
out-the-vote and generic campaign activities. See also 11 CFR 100.24 
and 11 CFR 300.32(b) and 300.33.
    The NPRM proposed requiring State, district, and local party 
committees to establish separate Levin accounts. Responses to the NPRM 
from the principal Congressional sponsors of BCRA urged retention of 
this requirement; however, several other responses, in particular those 
from party committees, requested the Commission to make such separate 
accounts an option rather than a requirement. One commenter stated that 
``although it would seem generally prudent to establish separate `Levin 
accounts,' imposing such a requirement in the regulations would be 
problematic,'' noting that some States prohibit party committees from 
establishing more than one depository account. In light of theses 
concerns, and because BCRA's statutory provisions do not mandate the 
creation of separate Levin accounts, revised paragraphs (a)(3)(i) and 
(ii) set out generally two alternative methods of accounting for Levin 
funds: a separate Levin account and the use of a reasonable accounting 
method approved by the Commission that will permit the committee to 
demonstrate that funds received and disbursed by the party committee in 
its existing non-Federal account meet the requirements of the Act as 
amended by BCRA. Paragraph (a)(3)(ii) also requires those party 
committees electing not to establish a separate Levin account to 
maintain records of funds used for Levin activities and to make these 
records available to the Commission upon request. Party committees 
intending to undertake activities pursuant to 11 CFR 300.32(b) are 
urged to consult 11 CFR 300.30(c) for more detailed rules regarding 
alternative required accounts and accounting methods.
    A comment submitted in response to the NPRM expressed concern that 
the draft regulations could have been construed as allowing Federal 
candidates and officeholders to solicit funds that would be excessive 
or prohibited under Federal law, if the solicitation being used stated 
that the funds would be used for a non-Federal purpose. To address this 
concern, paragraph (a)(4) has been added to emphasize that the 
restrictions on solicitations by Federal candidates and Federal 
officeholders in 11 CFR 300.31(e) and 11 CFR part 300, subpart D, apply 
to solicitations for State, district, and local party committees.
    The final rules also include a new paragraph (a)(5) that clarifies 
the permissibility of State, district, and local party committees and 
organizations creating separate allocation accounts to be used for 
funding Levin activities that are allocable between Federal and Levin 
funds pursuant to 11 CFR 300.33 and for funding other activities 
allocable between a committee's Federal and non-Federal funds pursuant 
to 11 CFR 106.7. See also the Explanation and Justification below for 
new 11 CFR 106.7 and for new 11 CFR 300.33.
    11 CFR 102.5(b) addresses organizations that are not political 
committees. Pursuant to paragraph (b)(1), when such organizations make 
contributions and expenditures or payments for exempt activities under 
11 CFR 100.7(b)(9), (15), and (17) and 100.8(b)(10), (16), and (18), 
they must maintain records of the related receipts and disbursements 
and must make those records available to the Commission upon request. 
These organizations must also be able to demonstrate through a 
reasonable accounting method that funds used to make contributions, 
expenditures, and payments for exempt activities meet the requirements 
of the Act.
    Paragraph (b)(2) of 11 CFR 102.5 applies to those State, district, 
and local party organizations that are not political committees but 
that wish to undertake Federal election activities pursuant to

[[Page 49074]]

11 CFR 300.32(b). Pursuant to 11 CFR 102.5(b)(2)(i) and (ii), these 
party organizations are given a choice of accounting methods: 
establishment of a separate Levin account or use of a reasonable 
accounting method approved by the Commission that will permit the 
organization to demonstrate that permissible funds from its existing 
accounts were used for permissible activities. They must also make 
their records of funds received and expended for these activities 
available to the Commission upon request. Party organizations that 
intend to undertake activities pursuant to 11 CFR 300.32(b) are urged 
to consult 11 CFR 300.30(c) for more detailed rules regarding 
alternative required accounts and accounting methods.

11 CFR 102.17  Joint Fundraising by Committees Other Than Separate 
Segregated Funds

    The ban on national party non-Federal fundraising affects the 
Commission's joint fundraising rules at 11 CFR 102.17. The Commission 
is, therefore, adding introductory language to this section, advising 
readers that ``[n]othing in this section shall supersede 11 CFR part 
300, which prohibits any person from soliciting, receiving, directing, 
transferring, or spending any non-Federal funds, or from transferring 
Federal funds for Federal election activities.'' Part 300 is discussed 
below.

V. Part 104--Reports by Political Committees

11 CFR 104.8 and 104.9  Uniform Reporting of Receipts and Disbursements

    As of November 6, 2002, BCRA prohibits national committees of 
political parties and entities directly or indirectly established, 
financed, maintained, and controlled by them, including their 
subordinate committees, from raising and spending non-Federal funds. 
BCRA further requires that national party committees, including 
subordinate committees thereof, dispose of all non-Federal funds by 
December 31, 2002 in accordance with 11 CFR 300.12, and report the 
disposition of those funds pursuant to section 300.13. Since national 
party committees will no longer maintain non-Federal accounts, 
including office building and facility accounts, the national party 
non-Federal account reporting rules at 11 CFR 104.8(e) and (f), and 11 
CFR 104.9(c), (d) and (e) will no longer be necessary. Therefore, the 
final rules covering receipts by non-Federal accounts at 11 CFR 
104.8(e) and (f), and disbursements in the form of transfers to State 
and local party committees at 11 CFR 104.9(e), have been amended so 
that they apply to reports covering non-Federal account activity 
through December 31, 2002. In contrast, the final rules governing 
disbursements of non-Federal funds at 11 CFR 104.9(c) and (d) are 
amended to remain in effect for reports covering activity on or before 
March 31, 2003, rather than December 31, 2002 as provided in the NPRM. 
This change is prompted by the Commission's decision to permit national 
party committees to refund to donors by December 31, 2002 any excess 
non-Federal funds as provided in 11 CFR 300.12(c) and (d). Any refund 
checks not cashed by February 28, 2003, must be disgorged to the United 
States Treasury by March 31, 2003. Consequently any such disgorgements 
must be reported in disclosure reports covering activity through that 
date.

11 CFR 104.10  Reporting by Separate Segregated Funds and Nonconnected 
Committees of Expenses Allocated Among Candidates and Activities

    Section 104.10 of the pre-BCRA regulations addressed 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, allocation with respect to certain 
mixed party activities has changed as a result of BCRA, notably in the 
introduction of the use of Levin funds. Some of the activity that was 
allocable under former 11 CFR 106.5 (allocation of mixed Federal/non-
Federal activities by party committees) is now Federal election 
activity under certain circumstances. In addition, most of the 
categories are now allocated according to specified percentages. 
Moreover, the use of non-Federal funds by national party committees has 
been eliminated.
    In view of these new circumstances, the rules for reporting of 
allocable expenses are being divided into three sections: 11 CFR 104.10 
applies to political committees that are separate segregated funds or 
nonconnected committees; new 11 CFR 104.17 applies to payments 
allocated between the Federal and non-Federal accounts of State, 
district, and local party committees; and new 11 CFR 300.36 covers 
payments allocated by those party committees between Federal funds and 
Levin funds, pursuant to 11 CFR 300.32(b)(1) and 300.33.
    Pre-BCRA section 104.10(a), which addressed payments entailing 
combined expenditures and disbursements on behalf of more than one 
clearly identified Federal and non-Federal candidate, is being changed 
very little at this point. Paragraph (a) is being amended to specify 
that it applies only to separate segregated funds and nonconnected 
committees, and to delete references to section 106.5(g) (now section 
106.7(f)), which addresses non-Federal to Federal transfers made by 
party committees for the purpose of mixed payments.
    Similar changes are being made to paragraph (b) of section 104.10. 
In view of the removal of party committees from this section, other 
adjustments are being made. In the discussion of itemization of 
allocated disbursements for administrative and generic voter drive 
expenses, the references to the Senate and House campaign committees of 
a political party are being deleted from paragraph (b)(1)(i) and (ii). 
In paragraph (b)(1)(ii), the specific reference to the types of 
committees using the funds expended method is being deleted because all 
committees addressed in this regulation would use the funds expended 
method for those two allocation categories. References to exempt 
activities are also deleted because those exemptions do not apply to 
the activities of separate segregated funds and nonconnected 
committees.
    The only specific comments received on section 104.10 were general 
expressions of support from the principal Congressional sponsors of 
BCRA and two commenters on behalf of State party committees. 
Consequently, the final rules follow the proposed rules, except for two 
small reversions back to the pre-BCRA regulation. Instead of citing to 
11 CFR 106.1 specifically as the regulation providing instructions on 
allocation for candidate support, the revised citation is to 11 CFR 
part 106 because 11 CFR 106.4 is applicable to the allocation of 
polling costs.

11 CFR 104.17  Reporting of Allocable Expenses by Party Committees

    As indicated in the Explanations and Justifications for 11 CFR 
104.10 and 106.1, pre-BCRA section 104.10 has been divided into two 
sections for the reporting of allocable payments. Section 104.10 now 
addresses reporting of allocable expenses by separate segregated funds 
and non-connected committees. Section 104.17, which had been a reserved 
section prior to the enactment of BCRA, now addresses reporting of 
allocable expenses by party committees.

[[Page 49075]]

    Paragraph (a) of new section 104.17 addresses allocation of the 
support of candidates, including Federal and non-Federal candidates, by 
national party committees and by State, district, and local party 
committees. As indicated below, national party committees must use all 
Federal funds, while State, district, and local party committees may 
use a mixture of Federal and non-Federal funds under certain 
circumstances. Paragraph (b) of this section addresses the reporting of 
the allocation of expenditures and disbursements for mixed Federal/non-
Federal activities that are not Federal election activities undertaken 
by State, district, and local party committees. These include, for 
example, administrative costs and the costs of exempt activities that 
do not fall within the definition of Federal election activity. 
Reporting requirements with regard to specific Federal election 
activities allocable between Federal and Levin funds pursuant to 11 CFR 
300.33 are addressed separately in 11 CFR 300.36.
    The NPRM included proposed 11 CFR 104.17(a) to address payments on 
behalf of more than one clearly identified candidate, including 
payments that entail an expenditure on behalf of one or more Federal 
candidates and a disbursement on behalf of one or more non-Federal 
candidates. The NPRM explained that all such payments must be made with 
Federal funds and must be reported.
    Proposed paragraphs (a)(1) and (a)(2) provided for the use of a 
unique identifying title or code for each program or activity conducted 
on behalf of more than one candidate and for the retention of records 
in accordance with 11 CFR 104.14. These requirements were in pre-BCRA 
11 CFR 104.10.
    The Commission sought comments on the proposed requirement that a 
State, district, or local party use only Federal funds for the combined 
payments on behalf of clearly identified Federal and clearly identified 
non-Federal candidates. As indicated in the Explanation and 
Justification of 11 CFR 106.1, a number of commenters noted that 
materials and communications that refer to both Federal and non-Federal 
candidates, but are not public communications and do not otherwise meet 
the definition of Federal election activity, should continue to be 
subject to allocation based on the time or space devoted to each 
candidate. Other commenters asserted that only Federal funds could be 
used.
    The final rule in 11 CFR 104.17 clarifies the issue as to the use 
of Federal funds. Paragraph (a) makes clear that, where a national 
party committee makes a payment that consists of both an expenditure on 
behalf of a Federal candidate and a disbursement on behalf of a non-
Federal candidate, the amounts attributed to each candidate must be 
disclosed, but only a Federal account may be used.
    Paragraph (a) changes the approach taken in the NPRM with respect 
to State, district, and local party committees, which, unlike national 
party committees, may have non-Federal accounts under BCRA. The 
application of the new Federal election activity provisions of BCRA 
means that many disbursements by State, district, and local party 
committees mentioning Federal candidates that in the past were 
allocable between Federal and non-Federal accounts pre-BCRA must now be 
paid solely with Federal funds. There will still be, however, other 
payments entailing expenditures by State, district, and local party 
committees on behalf of Federal candidates and disbursements by these 
committees on behalf of non-Federal candidates that will not be Federal 
election activities; these will continue to be allocable between 
Federal and non-Federal accounts.
    Accordingly, paragraph (a)(1) in the final rule generally follows 
pre-BCRA 11 CFR 104.10(a)(1), including the retention of the 
requirement of unique identifying titles or codes. All report entries 
that reflect the same allocable program or activity will share the same 
title or code to better track the particular program or activity. The 
use of unique identifiers for other various categories of mixed party 
activities is discussed below.
    Paragraphs (a)(2) and (a)(3) of 11 CFR 104.17 follow pre-BCRA 11 
CFR 104.10 with a minor citation change. Paragraph (a)(2) includes 
reporting of transfers to allocation accounts, which did not appear in 
either paragraph (a) or (b) of proposed 11 CFR 104.17. Proposed 
paragraph (a)(2), addressing recordkeeping, is re-numbered as (a)(4) in 
the final rules.
    Section 104.17(b) in the NPRM addressed the reporting of all 
allocations of disbursements for activities of State, district, and 
local party committees, including disbursements for allocable Federal 
election activities, i.e., certain activities eligible to be paid in 
part with Levin funds pursuant to 11 CFR 300.33. For purposes of 
clarity, the final rule covers only the reporting of disbursements for 
allocable party activities that are not Federal election activities. 
The reporting of allocable Federal election activities is subject to 
the rules in 11 CFR 300.36.
    Section 104.17(b) establishes that State, district, and local party 
committees that have set up Federal and non-Federal accounts, including 
any allocation accounts being used to make disbursements for allocable 
activities, must report all payments that are allocated pursuant to 11 
CFR 106.7.
    Paragraph (b)(1)(i) requires statements by State, district, and 
local party committees in their initial reports at the beginning of a 
calendar year of the percentages the committee will use for payments to 
be allocated between Federal and non-Federal accounts for specific 
categories of party activity. Paragraph (b)(1)(ii) requires a statement 
of the category for each allocable disbursement and the total amounts 
spent that year for each category. These requirements are similar to 
those contained in the pre-BCRA regulations.
    With regard to a requirement of unique identifiers in the reports 
of allocable activities, the NPRM asked for comments as to whether such 
identifying codes would be useful. The principal Congressional sponsors 
of BCRA in their comments left this decision to the Commission, 
although they stated that identifying codes would be of ``significant 
utility in greater specificity in reporting.'' Two of the comments from 
party committees argued against such a requirement, arguing that the 
purpose of the codes in the past had been to distinguish among 
activities that had differing allocation ratios and that use of the 
same allocation ratio made the codes unnecessary.
    The final rule at paragraph (b)(1)(iii) of 11 CFR 104.17 requires 
party committees to assign unique identifiers to certain allocable 
activities, excluding allocable administrative costs. This requirement 
follows requirements in the pre-BCRA regulations at 11 CFR 104.10(b)(2) 
with regard to the reporting of the direct costs of fundraising and the 
costs of exempt activities. Paragraph (b)(1)(iii) also specifies that 
unique identifying titles or codes are not required for salaries and 
wages under 11 CFR 106.7(c)(1) because salaries and wages are not 
allocable.
    The Commission recognizes that, as noted by certain party 
committees in their comments, the rules will now require use of the 
same set of percentages in a given year for almost all allocable party 
activity categories, thereby weakening one of the previous rationales 
for using unique identifiers for some categories of activities. Such 
identifying mechanisms are, however, still needed to enable reviewers 
of a party committee's reports, including members of the public, to 
track

[[Page 49076]]

accurately the specific transactions involved in a particular allocable 
activity. It is significant that party committees frequently make many 
disbursements to the same vendor for differing purposes and that a 
number of vendors may be paid for similar activities. Thus, the 
Commission is requiring that certain allocable activities or programs 
carry a unique identifying title or code. The Commission has also 
concluded that, while unique identifiers for administrative costs would 
be of some utility, it will continue the practice of not requiring them 
in order to avoid imposing an additional administrative burden on party 
committees. All entries of disbursements to pay for an allocated 
program or activity must include a reference to the unique identifier, 
if an identifier is required for that allocation category. In addition, 
each reporting entry of a transfer (from the non-Federal account to the 
Federal or allocation account) for a program or activity must include a 
reference to the unique identifier, if an identifier is required for 
that allocation category.
    Paragraph (b)(2) of 11 CFR 104.17 addresses the reporting of 
transfers from the non-Federal to the Federal account, or from both 
accounts into the allocation account, of funds to be used for allocable 
expenses. As did the pre-BCRA rules, this paragraph requires memo 
entries on reports as to the allocable expenses for which the transfer 
is being made and the date of the transfer. If more than one activity 
is covered by a transfer, the report must itemize the amounts 
designated for each category of expense. The Commission received no 
comments on this provision.
    Section 104.17(b)(3)(i) sets out the details required in the 
reporting of disbursements for allocable activity by State, district, 
and local committees of political parties.
    Section 104.17(b)(3)(ii) addresses the reporting of State, 
district, and local party disbursements for activity that is allocable 
between a committee's Federal and Levin funds by referring the reader 
to the requirements of 11 CFR 300.36.
    Section 104.17(b)(4) requires the retention of all documents 
supporting allocations of expenditures and disbursements for three 
years, consistent with FECA.

VI. Part 106--Allocations of Candidate and Committee Activities

11 CFR 106.1  Allocation of Expenses Between Candidates

    Pre-BCRA 11 CFR 106.1 addressed the allocation of expenditures and/
or disbursements among more than one candidate. Paragraph (a)(1) set 
out the general rule for allocation of an expenditure made on behalf of 
more than one clearly identified Federal candidate. It also addressed 
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. The proposed regulation 
in the NPRM added language indicating that a party committee must use 
only Federal funds for both kinds of situations, not just the first 
one. This was based on proposed 11 CFR 300.33(c)(1), which stated that 
only Federal funds could be used for activities that referred to a 
Federal candidate. It was also based on BCRA and proposed 11 CFR 
100.24(a)(3), which provided that only Federal funds may be used for a 
public communication that refers to a clearly identified Federal 
candidate and that promotes, attacks, supports, or opposes the 
candidate (regardless of whether a non-Federal candidate is also 
mentioned).
    The NPRM divided pre-BCRA section 104.10, which addressed reporting 
of allocation by nonconnected committees and separate segregated funds, 
as well as by party committees, into two sections: 11 CFR 104.10 for 
nonconnected committees and separate segregated funds, and 11 CFR 
104.17 for party committees. In view of this rearrangement, the 
proposed rules in paragraph (a)(2) of section 106.1 added a reference 
to 11 CFR 104.17(a) to cover party committee reporting. In addition, 
the pre-BCRA rules addressing allocation among Federal and non-Federal 
candidates was modified in the NPRM to delete the citation to party 
committee transfer procedures. This was premised on the position that 
such payments had to be made entirely with Federal funds.
    The NPRM proposed no changes to pre-BCRA paragraphs (b), (c), and 
(d) of 11 CFR 106.1. Paragraph (e) is a signpost to the sections that 
address allocation of specific types of mixed Federal/non-Federal 
activity, other than expenditures and/or disbursements on behalf of 
clearly identified candidates. The NPRM proposed to delete from this 
paragraph a reference to 11 CFR 106.5, to add a reference to 11 CFR 
300.33, and to amend the list of allocation categories to conform to 
other proposed regulations, including a deletion of exempt activities.
    The NPRM narrative asked whether the proposed 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. 
The NPRM also asked for comments on, and discussed whether exempt party 
activities \3\ for both Federal and non-Federal candidates (i.e., 
entailing disbursements for Federal candidates that were exempt from 
the definition of contribution or expenditure) still exist as an 
allocable category after passage of BCRA.
---------------------------------------------------------------------------

    \3\ For discussion of exempt activities, see Explanation and 
Justification for 11 CFR 100.24, above; see also 2 U.S.C. 
431(8)(B)(v), (ix), and (xi), and 431(9)(B)(iv),(viii), and (ix).
---------------------------------------------------------------------------

    Three commenters on behalf of party committees stated that not 
every activity that mentions a clearly identified Federal candidate 
must be paid for exclusively with Federal funds. They argued that 
materials and communications that refer to both Federal and non-Federal 
candidates but are not public communications and do not otherwise meet 
the definition of Federal election activity should continue to be 
subject to allocation based on time or space devoted to the Federal and 
non-Federal candidates as under the pre-BCRA regulations. One of these 
commenters also argued that the costs of ``non-communicative 
activities'' that result in an in-kind contribution and donation to 
Federal and non-Federal candidates respectively should continue to be 
allocable between Federal and non-Federal accounts.
    The principal Congressional sponsors of BCRA stated that BCRA 
required the proposed result for such payments by State, district, and 
local party committees. Another commenter referred to several specific 
provisions in BCRA to support the view that only Federal funds can be 
used for the payment on behalf of both a Federal and non-Federal 
candidate: (1) 2 U.S.C. 441i(b)(1), which provides that costs for 
Federal election activity shall be paid for with Federal funds; and (2) 
2 U.S.C. 441i(b)(2)(A) and (B), which allow for allocation of some 
Federal election activities but not when the activity refers to a 
clearly identified Federal candidate. A third commenter agreed that 
national party committees must use only Federal funds for payments 
involving both expenditures on behalf of a Federal candidate and 
disbursements on behalf of a non-Federal candidate but did not comment 
on State, district, or local party committees.
    The comments on the relationship of Federal election activities to 
exempt activities are summarized in the

[[Page 49077]]

Explanation and Justification of 11 CFR 100.24, above. Some commenters 
concluded that exempt activities should not be included within Federal 
election activity at all or that many exempt activities are not 
redefined as Federal election activity. Thus, they concluded that there 
are a number of exempt activities that are not Federal election 
activity. Others believe that exempt activities are nearly or 
completely subsumed by, or redefined as, Federal election activity. 
Within both groups, there was a variety of opinion as to the precise 
relationship.
    The final rule at 11 CFR 106.1 has been changed from the proposed 
regulation with respect to the use by a party committee of both Federal 
and non-Federal funds for a payment that is an expenditure on behalf of 
a clearly identified Federal candidate and a disbursement on behalf of 
a clearly identified non-Federal candidate. Any such payment that is 
for a Federal election activity requires the use of Federal funds only, 
as set out in 11 CFR 106.1(a)(2). The final rule, in paragraph (a)(2), 
also includes references to other sections to the effect that payments 
for Federal election activities that are also attributable to clearly 
identified candidates are subject to new 11 CFR 300.33 and that the 
allocation among the particular candidates must be reported, in 
accordance with 11 CFR 104.17(a).
    However, a payment that is not for Federal election activities but 
that is an expenditure on behalf of a clearly identified Federal 
candidate and also a disbursement on behalf of a clearly identified 
non-Federal candidate is either allocable between Federal and non-
Federal accounts or payable with Federal funds only. Hence, the last 
sentence of proposed paragraph (a)(1), indicating that only Federal 
funds can be used, is deleted from the final rules. In addition, the 
final rule does not include language from proposed paragraph (a)(2) to 
the effect that only separate segregated funds and nonconnected 
committees may make a payment that includes an expenditure of Federal 
funds on behalf of a Federal candidate and a disbursement on behalf of 
a non-Federal candidate. Moreover, the reference to party committee 
transfer procedures for allocable expenses is added back into paragraph 
(a)(2).
    Paragraph (a)(1) of the final rule includes also the appropriate 
method for attributing expenditures and disbursements among candidates 
in the case of a phone bank. This method is derived from pre-BCRA 11 
CFR 106.5(e) (re-numbered 11 CFR 106.7), which addressed Federal/non-
Federal allocation in the analogous situation of exempt activities. 
This method, which has provided guidance for allocation of expenditures 
and disbursements for direct candidate support, is no longer in the new 
regulations after December 31, 2002 for other mixed party activities. 
Therefore, the regulations at 11 CFR 106.1 directly address phone 
banks.
    Federal election activity includes some of the activities that also 
meet the definition of exempt activities. As indicated in the 
Explanation and Justification of 11 CFR 100.24, a Federal election 
activity that, pre-BCRA, would have been allocable as an exempt 
activity, is now a Federal election activity covered by the allocation 
rules at 11 CFR 300.33. Under 11 CFR 106.7, however, exempt activities 
still exist as an allocable category of expenses in a number of 
situations. Hence, a complete list of particular allocable costs other 
than those addressed in 11 CFR 106.1 should include exempt activities. 
The final rule at 11 CFR 106.1(e) does not list individual allocation 
categories but still serves as a signpost to sections addressing the 
allocation of mixed Federal/non-Federal or mixed Federal/Levin 
payments.
    Exempt party activities also relate to section 106.1 as follows. If 
an activity supporting clearly identified Federal and non-Federal 
candidates is a Federal election activity and is not also an exempt 
activity, the portion of the payment attributable to each Federal 
candidate is an expenditure for that candidate, and may constitute an 
in-kind contribution, an independent expenditure, or a coordinated 
expenditure. If the payment is for a Federal election activity that is 
also an exempt activity, the amounts are exempted from the definition 
of ``expenditure'' or ``contribution.'' Although the expense must be 
paid for entirely with Federal funds, only the amounts that are 
attributable to the Federal candidates or Federal elections (but using 
the new percentages in 11 CFR 106.7) count toward the political 
committee registration threshold at 2 U.S.C. 431(4)(C) for local party 
committees, which is more than $5,000 in exempt activity payments. See 
11 CFR 100.5(c) and the Explanation and Justification for 11 CFR 
100.24(a) and 11 CFR 300.36(a).

11 CFR 106.5  Allocation of Expenses Between Federal and Non-Federal 
Activities by National Party Committees

    The NPRM proposed amending 11 CFR 106.5 to explain the allocation 
rules for State, district, and local party committees. Proposed 
paragraph (a) also stated that because national party committees would 
no longer be able to raise and spend non-Federal funds, they would no 
longer be able to allocate their expenses between their Federal and 
non-Federal accounts. See 67 FR 35679. While this is true after 
December 31, 2002, national party committees will be able to spend non-
Federal funds for limited purposes during the transition period of 
November 6, 2002, through December 31, 2002. For discussion of the 
transition period, see the Explanation and Justification for 11 CFR 
300.12, below. The Commission realizes that the regulations need to 
contain allocation rules for national party committees during this 
transition period. Therefore, the final rules include several technical 
amendments to section 106.5 to make it applicable solely to national 
party committees and only during the transition period. The current 
allocation rules remain unchanged for national party committees. The 
final rules that apply to State, district, and local party committees, 
set out in proposed 11 CFR 106.5, are being designated as new 11 CFR 
106.7 in the final rules. See below.
    Consistent with this reorganization, the word ``national'' is 
placed before ``party committees'' in several places in 11 CFR 106.5, 
including the title of the section, to clarify that this section only 
applies to national party committees. A title is added to paragraph 
(a)(1) for consistency because all other paragraphs under paragraph (a) 
have titles. Paragraphs (a)(2)(iii), (d), and (e) are removed and 
reserved because they apply to State, district, and local party 
committees. Paragraph (h) is added to be a sunset provision. Paragraph 
(h) states that section 106.5 only applies during the transition period 
and will no longer be effective after December 31, 2002.

11 CFR 106.7  Allocation of Expenses Between Federal and Non-Federal 
Accounts by Party Committees, Other Than for Federal Election 
Activities

    Section 106.7 sets forth rules governing the allocation of certain 
expenses between the Federal and non-Federal accounts of political 
parties. Much of new section 106.7 covers topics formerly addressed in 
pre-BCRA 11 CFR 106.5. The final rules addressing allocation of 
expenditures and disbursements at 11 CFR 106.7 and 11 CFR 300.33 
separate between the two sections respectively those activities that 
are not ``Federal election activity'' and those that are. This 
reorganization is based in large part upon the need to clarify in the 
rules the relationship between ``exempt activities'' and ``Federal 
election activities,'' particularly given certain timing

[[Page 49078]]

parameters involved in the sub-set of Federal election activities that 
may be paid in part with Levin funds. See 11 CFR 300.32 and 300.33. 
Therefore, 11 CFR 106.7 addresses allocation of expenses for all State, 
district, and local party activity that falls outside the definition of 
Federal election activity, which are allocable between Federal and non-
Federal accounts. In contrast, 11 CFR 300.33 addresses the allocation 
of those types of Federal election activity that may be allocated 
between Federal and Levin accounts.

A. Allocable Activities That Are Not FEA

    The content of 11 CFR 106.7(a) and (b) remains much the same as the 
NPRM, when it was designated 11 CFR 106.5(a) and (b), although new 
language has been added to emphasize that these provisions address 
activities other than Federal election activities. These paragraphs 
state the general principles that after December 31, 2002: (1) National 
party committees are no longer permitted to raise and spend non-Federal 
funds,\4\ and thus are unable to allocate expenses between Federal and 
non-Federal accounts; and (2) State, district, and local party 
committees that make expenditures and disbursements for activities 
other than Federal election activities in connection with both Federal 
and non-Federal elections must either use only Federal funds for these 
purposes or must establish separate Federal and non-Federal accounts 
and allocate expenditures between or among those accounts.
---------------------------------------------------------------------------

    \4\ The actual ban on this activity takes effect on November 6, 
2002.
---------------------------------------------------------------------------

    The prohibitions on national party committee use of non-Federal 
funds has resulted in the complete elimination of pre-BCRA 11 CFR 
106.5(b) and (c). Thus, the provisions in new 11 CFR 106.7(b) through 
(f) only apply to State, district, and local party committees, and do 
not apply to national party committees.

B. Salaries and Wages

    Paragraph 106.7(c) addresses costs that must be either paid totally 
from Federal accounts or allocated by State, district, and local party 
committees between their Federal and non-Federal accounts. Under 
paragraph (c)(1), however, State, district, and local party committees 
must pay entirely with funds that comply with State law the salaries 
and wages of employees who spend 25% or less of their compensated time 
on Federal election activity or an activity in connection with Federal 
elections. The inclusion of ``wages'' is intended to include hourly 
employees. The compensation of other employees who spend more time on 
Federal election activity or activity in connection with Federal 
elections is addressed in paragraph (d)(1)(ii) and new 11 CFR 300.33. 
BCRA defines ``Federal election activity'' to include the cost of all 
services provided by an employee in any month in which the individual 
spends more than 25% of his or her compensated time on activities in 
connection with a Federal election. 2 U.S.C. 431(20)(A)(iv). This 
federalizes a high proportion of salary payments that were previously 
paid for with an allocation of Federal and non-Federal dollars. By 
requiring the salaries and wages related to many activities that are 
primarily, or even entirely, State or local in their orientation to be 
paid for with Federal funds, when the amount of time spent on them 
exceeds 25%, Congress clearly expressed its desire to federalize these 
costs. By implication, Congress appears to have concluded that salaries 
for employees spending 25% or less of their time on activities in 
connection with a Federal election or on Federal election activities do 
not have to be paid from any mix of Federal funds. Thus, this new 
regulation in 11 CFR 106.7(c) is in accord with Congressional intent, 
and it comports with Congress's expectation that the Commission would 
develop allocation regulations for Federal election activity paid for 
in part with Levin funds.
    The proposed regulations at 11 CFR 300.33(b)(1) would have required 
State, district, and local party committees to keep time records for 
all employees, the purpose being to provide documentation for 
allocation purposes. The NPRM set out three possible alternative 
methods by which a committee could collect such documentation. In 
response to the NPRM, a State party committee asserted that time sheets 
would be ``burdensome,'' that written certifications by employees would 
be ``equally impractical,'' but that a tally sheet kept by the employer 
would be ``more reasonable.'' The same commenter nonetheless urged the 
Commission not to require any particular method of documentation. For 
the reasons noted by the commenters, the final rule at 11 CFR 
106.7(d)(1) requires only that a monthly log be kept of the percentage 
of time each employee spends in connection with a Federal election.

C. Administrative Costs

    One category of allocable expenses in 11 CFR 106.7 is 
``administrative costs.'' Under paragraph (c)(2), these costs cover 
administrative expenses except for employee salaries and wages. The 
final rule requires allocation of these costs between a party 
committee's Federal and non-Federal accounts, unless they can be 
attributed to a clearly identified Federal candidate, in which case 
they are totally Federal costs to be paid with Federal funds.
    A number of the comments received in response to the NPRM argued 
that, because BCRA does not address administrative costs, State, 
district, and local party committees should be able to pay them totally 
out of their non-Federal accounts. One commenter representing a State 
party emphasized the many State and local elections and ballot 
initiatives with which his party is involved as compared to the number 
of Federal elections. Other commenters, however, including the 
principal Congressional sponsors of BCRA, argued that BCRA was never 
intended to change the allocations required by the pre-BCRA 
regulations, and that administrative costs should continue to be 
allocable between Federal and non-Federal accounts.
    While the Commission recognizes that non-Federal activity consumes 
a large portion of State party time and finances, there is no doubt 
that Federal candidates benefit from such party committees' efforts to 
reach and motivate potential voters. The Commission also agrees that 
nothing in BCRA or the legislative history suggests that Congress 
intended the Commission to abandon its longstanding allocation 
requirement for these expenses. Therefore, the final rules continue to 
require allocation of administrative costs under a simplified 
allocation method discussed below.

D. Exempt Activities

    Under the Act, as amended by BCRA, how the costs of voter 
registration, voter identification, get-out-the-vote (``GOTV'') and 
other campaign activities that may promote or oppose a political party 
without promoting or opposing a candidate are allocated depends on 
whether such activities come within the definition of ``Federal 
election activity'' or not. See 11 CFR 100.24(a), (b). Numerous 
commenters focused upon the relationship between the provisions in FECA 
and in the Commission's regulations that exempt certain party 
activities from the definitions of ``contribution'' and ``expenditure'' 
and the provisions in BCRA establishing ``Federal election activities'' 
as a general category, and activities for which Levin funds may be 
used. The comments and the Commission's determinations in this regard 
are discussed in the Explanation

[[Page 49079]]

and Justification for 11 CFR 100.24 defining ``Federal election 
activity.''
    The final rules in 11 CFR 106.7(c)(3) set out the permitted 
allocations of costs for categories of party expenditures and 
disbursements for activities that are exempt party activities but are 
not Federal election activities. The party committee must either pay 
the costs of this activity from its Federal account or allocate the 
costs between its Federal and non-Federal accounts.

E. Fundraising Costs

    11 CFR 106.7(c)(4) addresses the direct costs of a fundraising 
program or event when the State, district, or local party committee is 
raising both Federal and non-Federal funds for itself. The NPRM 
indicated that all direct fundraising costs must be paid from a Federal 
account, while other fundraising-related costs not directly related to 
particular fundraising programs or events could be allocated between 
Federal and non-Federal accounts as administrative costs.
    There was no consensus among the public comments addressing this 
topic. The principal Congressional sponsors of BCRA supported the 
proposed rules that would have required entirely Federal funds to be 
used for these purposes. A public interest group and a party committee 
urged the Commission to continue to use the previous funds received 
method for allocating these fundraising costs. Two party committees 
urged allocation of only those fundraising costs that are directly 
associated with a particular fundraising program or event.
    The Commission observes that BCRA requires the use by State, 
district, and local party committees of funds ``subject to the 
limitations, prohibitions, and reporting requirements of this Act.'' 2 
U.S.C. 441i(c). Thus, the Commission has concluded that not only 
Federal funds, but Levin funds as well, may be used to raise funds that 
are used, in whole or in part, for Federal election activities. See 11 
CFR 300.33(c)(3). Non-Federal funds may not be used. The reasons for 
this conclusion are set out in greater details in the Explanation and 
Justification for 11 CFR 300.32 below.
    With regard to fundraising purposes other than Federal election 
activity, the final rule at 11 CFR 106.7(c)(4) permits the direct costs 
of fundraising to be allocated between Federal and non-Federal funds, 
provided that none of the proceeds so raised will ever be used for 
Federal election activities. In addition, the rule requires the 
segregation of the proceeds in bank accounts that are never used for 
Federal election activity. Paragraph (c)(4) specifies that direct costs 
of fundraising include the solicitation costs and the costs of planning 
and administering a particular fundraising event or program.

F. Certain Voter Drive Activities

    11 CFR 106.7(c)(5), which did not appear in the version of the 
regulation published in the NPRM, addresses expenses, other than 
salaries and wages, for voter-drive activities and other party 
committee activities that are not candidate-specific and that do not 
qualify as Federal election activities. These may include, for example, 
certain voter identification, GOTV, or other activities that do not 
promote or oppose a Federal candidate or non-Federal candidate, and 
that do not qualify as Federal election activities because they are not 
in connection with an election in which a Federal candidate appears on 
the ballot. See 11 CFR 100.24(a)(1) and (b)(2). Paragraph (c)(5) 
provides that the costs of such activities may be allocated between the 
Federal and non-Federal accounts of the State, district, or local party 
committee.

G. Allocation Percentages and Recordkeeping

    One goal of the final rule is to assure that activities deemed 
allocable are not paid for with a disproportionate amount of non-
Federal funds. Another goal is to simplify the allocation process, in 
particular by establishing formulas that do not vary from State to 
State. Therefore, in lieu of the State-by-State ballot composition 
ratios for administrative costs and generic campaign activity and in 
lieu of the time or space method applied to exempt State activities, 
which were required by the pre-BCRA regulations, the rules at 11 CFR 
106.7(d)(2) and (3) establish fixed percentages for all States for 
certain activities. The percentages 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.
    In the NPRM, the Commission set out proposed required allocation 
percentages for the Federal shares of salaries and other compensation 
paid employees who spend 25% or less of their time on Federal 
elections, for administrative expenses, and for exempt party activities 
that are not Federal election activities. For the reasons explained 
above, the Commission has decided that no salaries and wages are to be 
allocated. With regard to administrative costs and exempt activities, 
State, district, and local party committees must allocate no less than 
the following amounts to their Federal accounts during the following 
years (and in the preceding year):
    (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.
    These figures were 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% to 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 
ranged from 20% to 25%, with an average of 21%, while the Federal 
percentages for the two parties in six States with no Senate campaign 
ranged from 11.11% to 16.67%, with an average of 15%. The rules apply 
the average percentages in each of the four groupings of States to all 
50 States.
    One comment on the proposed rules from a public interest 
organization addressed the Commission's proposed fixed percentages by 
providing two alternatives to the Commission's figures. The first 
alternative would have set a flat 33% requirement for Federal shares of 
what the commenter termed ``Levin expenditures'' (see 11 CFR 300.33) 
and for allocable costs other than administrative costs in odd-numbered 
years or in non-Presidential election years, and a flat 40% requirement 
for Federal shares of these same categories

[[Page 49080]]

of activities in Presidential election years. This alternative would 
also have required a 25% allocation for administrative costs in all 
years. The commenter based these percentages on what were termed ``the 
current assumption'' as to what State party committees spend in certain 
years.
    The second alternative urged by this commenter adopted the 
Commission's calculations, but called for the use of the higher 
percentages in the sample States for what the response termed ``Levin 
spending'' and for voter registration outside the 120 day period before 
an election, plus the average percentages for non-Levin expenses such 
as administrative costs. The commenter also urged the Commission to be 
clear that its allocation percentages apply to a two-year election 
cycle, not just to the year of a Federal election.
    The comment submitted on behalf of the principal Congressional 
sponsors of BCRA with regard to fixed allocation percentages was very 
similar to that of the public interest organization's response cited 
above in that, as one alternative approach, it called for at least a 
33% Federal allocation of what it termed ``Levin activities'' and of 
voter registration activities outside the 120 period before an 
election, plus 25% Federal allocations for administrative expenses. It 
also called for 40% Federal allocations of Levin activities and of 
voter registration activities that are not Federal election activities 
in Presidential election years. This alternative assumed the 
application of the percentages to two-year Federal election cycles. As 
a second alternative, this commenter also agreed to use of the 
Commission's percentages for administrative costs in a two year cycle, 
but urged the application over that cycle of the highest, not the 
average, Federal percentages for what it termed ``Levin activities and 
voter registration activities that are not `Federal election activity' 
* * * .'' Another comment from a public interest organization also 
called for use of the highest percentages in the identified States, not 
the average percentages.
    The comments received from party committees with regard to fixed 
percentages for Federal allocations ranged from support for the 
Commission's position to giving party committees a choice at the 
beginning of each cycle between the proposed formula and ballot 
composition ratios.
    The final rules at 11 CFR 106.7(d) include the phrase, ``and in the 
preceding year,'' to clarify that the allocation formula in this 
section apply to both years of a Federal election cycle.
    With regard to the amounts of the fixed minimum Federal 
allocations, the final rules adopt the percentages contained in the 
NPRM because they represent averages of actual allocation ratios used 
in specific States at specific times, not assumptions as to possible 
State, district, and local party behavior in the future. These 
percentages represent a clear, bright line test intended to be more 
easily understood and applied than the previous regulations, consistent 
with statutory intent. As noted above, the percentages apply throughout 
a two-year cycle--i.e., from January 1st of odd-numbered years through 
December 31st of even-numbered years.
H. Allocable Fundraising Costs
    The NPRM sought comment as to whether costs of fundraising, other 
than fundraising for Federal election activities, should be allocated 
under the ``funds received'' method in previous 11 CFR 106.5(f). Two 
commenters, a political party organization and a public interest 
organization, supported the idea of using the ``funds received'' method 
for fundraising where the funds raised are not used for Federal 
election activity.
    The Commission has decided to continue the use of the ``funds 
received'' method for allocating direct costs of fundraising. This is 
set out in a new 11 CFR 106.7(d)(4). Under this method, the State, 
district, or local party committee must allocate based on the ratio of 
funds received into the Federal account to the total receipts for the 
fundraising program or event. The ratio must be estimated prior to each 
such program or event based upon a reasonable prediction and, as 
provided in the rule, subsequent adjustments must be made, if 
necessary. New 11 CFR 106.7(e)(4) clarifies that fundraising costs for 
Federal election activities are governed by new 11 CFR 300.32.
I. Non-Allocable Costs
    Section 106.7(e) sets out those activities that are not allocable 
between Federal and non-Federal accounts. Paragraph (e)(1) requires 
that a payment for any activity that refers only to one or more 
candidates for Federal office must not be allocated between Federal and 
non-Federal accounts. These costs must be paid for entirely with funds 
from a Federal account. Paragraphs (e)(2) and (3) indicate that 
employee salaries and wages under certain conditions must not be 
allocated between Federal and non-Federal accounts, but must be paid 
for entirely with non-Federal funds.
J. Transfers
    Section 106.7(f), which addresses transfers to pay for allocable 
activities, is similar to the proposed rule, with the addition of 
language providing for allocation accounts as an alternative to the use 
of Federal accounts for initial payments of allocable expenditures and 
disbursements. This provision tracks for the most part the language and 
requirements of pre-BCRA 11 CFR 106.5(g). No comments addressed the 
continuation of this requirement. Reimbursements from a non-Federal 
account to a Federal account must take place within a specified number 
of days. The continuation of these timing provisions will ensure that 
party committees need not change this aspect of their operations.
    Section 106.7(f)(2)(ii), like former 11 CFR 106.5(g)(2)(B)(iii), 
explains that any payment outside this time frame, absent the need for 
an advance payment of a reasonably estimated amount, could result, 
depending on the circumstances, in a loan of non-Federal funds to the 
Federal account and a violation of the Act. No commenters addressed 
this provision.

VII. Part 108--Filing Copies of Reports and Statements With State 
Officers

11 CFR 108.7  Effect of State Law

    Section 108.7 addresses Federal preemption of State law based on 2 
U.S.C. 453(a) and its legislative history. Paragraph (c) lists the 
types of State laws that are not preempted or superseded by the Act and 
the regulations. BCRA amended the Act at 2 U.S.C. 453(b), providing for 
the application of State law to the use of non-Federal funds for the 
purchase or construction by a State or local party of its office 
building. Federal preemption continues to exist when Federal funds are 
used. This amendment is implemented in new section 300.35. Paragraph 
(c) of section 108.7 is therefore being amended to include the 
application of State law to the use of non-Federal funds for the 
purchase or construction of a State or local party office building in 
accordance with 11 CFR 300.35.

VIII. Part 110--Contribution and Expenditure Limitations and 
Prohibitions

11 CFR 110.1  Contributions by Persons Other than Multicandidate 
Political Committees

    BCRA amended 2 U.S.C. 441a(a)(1) to raise the amount that 
individuals may donate to State committees of political parties from 
$5,000 to $10,000 in any

[[Page 49081]]

calendar year. New 11 CFR 110.1(c)(5) incorporates this increased 
contribution limitation, which is effective January 1, 2003. The 
principal Congressional sponsors of BCRA included in their comment an 
emphasis upon the fact that this is an increase in the limitation on 
Federal funds. No other comments on this provision were received.

IX. Part 114--Corporate and Labor Organization Activity

11 CFR 114.1  Definitions

    The pre-BCRA text of 11 CFR 114.1(a)(2)(ix) follows the repealed 
statutory provision as to the purchase or construction by a national or 
State party committee of an office facility. It is therefore being 
deleted and replaced with an annotated cross-reference to new 11 CFR 
300.35 which describes how the purchase or construction of an office 
building by a State or local party committee may be funded. A national 
committee's office building must be purchased or constructed only with 
Federal funds. See new section 300.10. The texts of the regulations 
currently at 11 CFR 100.7(b)(12) and 100.8(b)(13), which are similar to 
the pre-BCRA text of section 114.1(a)(2)(ix), are the subject of a 
separate rulemaking. See Notice of Proposed Rulemaking, 67 FR 40881 
(June 14, 2002).

X. Part 300--Non-Federal Funds

11 CFR 300.1  Scope and Effective Date, and Organization

    The bulk of the new rules that address non-Federal funds of 
political party committees are contained in 11 CFR part 300. Section 
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, paragraph (a) of section 
300.1 states that new part 300 implements 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). Consistent 
with BCRA, paragraph (b) of section 300.1 states that part 300 takes 
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 does 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) applies 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 explains that part 300 is 
organized into five subparts, with each subpart addressing a specific 
category of persons affected by BCRA. 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. In addition, BCRA requires 
changes in other parts of Title 11 of the Code of Federal Regulations, 
which are also addressed in this rulemaking. One commenter supported 
the provisions of this section. The final rules follow the proposed 
rules, with the exception of minor revisions to clarify the scope of 
each subpart.

11 CFR 300.2  Definitions

A. 11 CFR 300.2(a)  Definition of ``501(c) organization that makes 
expenditures or disbursements in connection with a Federal Election''
    New 11 CFR 300.2(a) defines a 501(c) organization ``that makes 
expenditures or disbursements in connection with a Federal election.'' 
BCRA prohibits national and State party committees, their officers and 
agents, and certain entities associated with them, from soliciting any 
funds for, or making or directing any donations to, 501(c) 
organizations that fit this definition.
    The NPRM sought comments on whether the definition of 501(c) 
organizations affected by the prohibition on party fundraising and 
donations should contain a temporal requirement so that this 
prohibition is not overbroad and does not encompass, for example, an 
organization that made expenditures and disbursements in connection 
with a Federal election many years ago but has not done so recently and 
does not plan to do so in the future.
    Commenters were in general agreement that a temporal requirement 
was a good idea. Several commenters suggested that the prohibition 
should encompass organizations that have made expenditures and 
disbursements in connection with a Federal election during the past 
three election cycles, or six years. Other commenters stated that the 
definition was overbroad without a temporal requirement but offered no 
suggestion for a specific time frame.
    The final rule at 11 CFR 300.2(a) defines a 501(c) organization 
``that makes expenditures or disbursements in connection with a Federal 
election'' as one that plans to make such expenditures or 
disbursements, including for Federal election activity, within the 
current election cycle or plans to pay a debt incurred in a prior 
election cycle for making such expenditures or disbursements. Because 
BCRA uses the present tense in referring to affected 501(c) 
organizations, the Commission believes that the prohibition on party 
fundraising should only apply to Section 501(c) organizations that 
undertake such spending within the current two-year election cycle. The 
definition in new 11 CFR 300.2(a) also includes organizations that plan 
to pay debts incurred in a prior election cycle for such expenditures 
or disbursements. This will prevent, for example, an organization from 
certifying that it does not plan to make expenditures or disbursements 
in connection with a Federal election in the current 2-year election 
cycle, if it receives donations or fundraising assistance from a party 
committee and uses those funds to pay off debt incurred for such 
expenditures or disbursements relating to a prior election cycle.
    The proposed definition in the NPRM would have also delineated the 
types of activity that constitute expenditures or disbursements in 
connection with a Federal election. One commenter expressed support for 
this proposed rule. The final rule does not, however, set out specific 
activities that constitute such expenditures or disbursements. Federal 
election activity is defined at new 11 CFR 100.24 so that one component 
of the definition is clear. Moreover, the Commission believes that 
advisory opinions and closed enforcement matters provide guidance as to 
what constitutes activities in connection with a Federal election. 
Attempting to include specific activities in the definition in 11 CFR 
300.2(a) might result in an overbroad definition.
B. 11 CFR 300.2(b)  Definition of ``Agent''
    Many of the prohibitions and restrictions of BCRA apply to a 
principal entity, such as a political party

[[Page 49082]]

committee or a candidate, and to the ``agents'' of such principals 
where they act on behalf of those principals. See, e.g., 2 U.S.C. 
441i(a)(1), (2); 2 U.S.C. 441i(b)(1); 2 U.S.C. 441i(e)(1). Congress did 
not define the term, ``agent,'' in BCRA. In the NPRM, the Commission 
proposed a regulatory definition framed in terms of ``a person who has 
actual express oral or written authority'' to act on behalf of a 
principal. This definition would have defined ``actual authority'' as 
``instructions, either oral or written,'' from the principal. The 
Commission solicited comments on several aspects of this proposed 
definition, such as the potential applicability of the definition to 
volunteers, whether the principal's actual knowledge of the putative 
agent's activities is relevant, and the potential applicability of the 
concept of apparent authority.
    The Commission received many comments on the proposed definition of 
agent. Several commenters found the proposed definition ``too narrow.'' 
One described the requirement that an agent's authority must be actual 
and express to be a ``loophole that would utterly swallow the rule,'' 
arguing that in the ``real world'' fundraising is accomplished largely 
through agents without express authority in a ``technical'' or 
``legal'' sense. The principal Congressional sponsors of BCRA commented 
that the proper definition of ``agent'' is critical to prevent evasion 
of the ``soft-money'' prohibitions at the center of Title I of BCRA. 
The definition, they believe, should encompass ``anyone who has an 
agency relationship under common law,'' including apparent authority. 
The principal Congressional sponsors and a public interest group 
commented that the new definition should not be narrower than the 
definition of agent currently used by the Commission in regulating 
independent expenditures. See 11 CFR 109.1(b)(5). The sponsors also 
commented that the Commission should not exclude volunteers and vendors 
per se. A public interest group also urged the Commission to include 
apparent authority within the definition. This group argued that 
``bestowing'' a title or position on an individual implies that the 
individual is working on behalf of the principal who bestowed the title 
or position.
    In contrast, other commenters, comprised of national and State 
political party committees and labor organizations, applauded the 
proposed rule's conjunctive requirement that the agent's authority must 
be actual and express. Three national party committees commented that 
the definition should be further limited to individuals with 
``substantive decision-making authority.'' Many of these commenters 
stressed that the Commission should consider two issues in implementing 
the regulatory definition of ``agent.'' The first issue is the nature 
of an agent's ``individual liability'' for his or her own actions. The 
second issue is the perceived ``vicarious liability'' of the principal. 
With regard to the first issue, several commenters, including a State 
party committee, an association of State party officials, and several 
national party committees, suggested the Commission use 11 CFR 
109.1(b)(5) as a model for the new definition, presumably modified to 
provide that authority must be actual and express. Regarding the second 
issue, several commenters urged the Commission to give full effect to a 
requirement that the agent must be acting on behalf of the principal 
before the principal incurs liability derived from the agent's actions. 
Two labor organizations commented that the principal's derivative 
liability should not extend beyond activities the agent has been 
specifically authorized to conduct. Two national party committees 
commented that the final definition must impose liability only when a 
principal exercises actual control over the actions of the agent, 
arguing that it would be unfair to impose liability for actions beyond 
the principal's control. Another commenter, a State party committee, 
framed its suggestion in terms of limiting a principal's liability to 
actions taken by an agent on the principal's ``explicit instructions.''
    The final rules define ``agent'' for purposes of Title I of BCRA as 
``any person who has actual authority, either express or implied.'' The 
final rules make clear that the definition of ``agent'' is limited to 
those individuals who have actual authority, express or implied, to act 
on behalf of their principals and does not apply to individuals who do 
not have any actual authority to act on their behalf, but only 
``apparent authority'' to do so. The final regulation thus differs from 
the regulation proposed in the NPRM. The Commission makes this change 
for reasons articulated by the United States Supreme Court. In 
Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739 (1989) 
the High Court held that the defining of statutory terms should be 
guided by ``settled meaning under * * * the common law * * * unless the 
statute otherwise dictates.'' In this regard, the Commission notes that 
under the common law of agency, an ``agent's authority may be actual or 
apparent.'' Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 
865-866 (7th Cir. 1998) (quoting Restatement (Second) of Agency, 26). 
But the Supreme Court has made it equally clear that not every nuance 
of agency law should be incorporated into Federal statutes where full 
incorporation is not necessary to effect the statute's underlying 
purpose. See Faragher v. City of Boca Raton, 524 U.S. 775, 802 n.3 
(1998) (The ``obligation is not to make a pronouncement of agency law 
in general or to transplant [the Restatement (Second) of Agency into a 
Federal statute, but] is to adapt agency concepts to the [statute's] 
practical objectives.'')
    For these reasons, the definition of ``agent'' in the final 
regulation does not incorporate apparent authority. ``[A]pparent 
authority to do an act is created as to a third party by written or 
spoken words or any other conduct of the principal which, reasonably 
interpreted, causes the third party to believe that the principal 
consents to have the act done on his behalf by the person purporting to 
act for him.'' Restatement (Second) of Agency, 27. As has been noted by 
commenters, apparent authority is largely a concept created to protect 
innocent third parties who have suffered monetary damages as a result 
of reasonably relying on the representations of individuals who 
purported to have, but did not actually have, authority to act on 
behalf of principals. Unlike other legislative areas, such as consumer 
protection and anti-fraud legislation, BCRA does not affect individuals 
who have been defrauded or have suffered economic loss due to their 
detrimental reliance on unauthorized representations. Rather, the 
Commission interprets Title I of BCRA to use agency concepts to prevent 
evasion or avoidance of certain prohibitions and restrictions by 
individuals who have actual authority and who do act on behalf of their 
principals. In this light, apparent authority concepts are not 
necessary to give effect to BCRA.
    It is necessary, however, to define ``agent'' to include implied 
and express authority in order to fully implement Title I of BCRA. 
Otherwise, agents with actual authority would be able to engage in 
activities that would not be imputed to their principals so long as the 
principal was careful enough to confer authority through conduct or a 
mix of conduct and spoken words. The comments and testimony received by 
the Commission perhaps reveal some confusion about the term ``implied 
authority.'' Implied authority is a form of actual authority. Moriarty, 
supra, 155 F.3d at 865-866 (7th Cir. 1998) (quoting Restatement 
(Second) of Agency, 26)

[[Page 49083]]

(actual authority may be express or implied). Implied authority should 
not be confused with apparent authority, which is a distinct concept. 
Restatement (Second) of Agency, 8, cmt a. It is well settled that 
whether an agent has implied authority is within the control of the 
principal. Thus, the Commission emphasizes that a principal may not be 
held liable, under an implied actual authority theory, unless the 
principal's own conduct reasonably causes the agent to believe that he 
or she had authority. For example, a party committee cannot be held 
liable for the actions of a rogue or misguided volunteer who purported 
to act on behalf of the committee, unless the committee's own written 
or spoken word, or other conduct, caused the volunteer to reasonably 
believe that the committee desired him or her to so act. Once an agent 
has actual authority, however, ``[u]nless otherwise agreed, authority 
to conduct a transaction includes authority to do acts which are 
incidental to it, usually accompany it, or are reasonably necessary to 
accomplish it.'' Restatement (Second) of Agency, 35; see U.S. v. 
Flemmi, 225 F.3d 78, 85 (1st Cir. 2000).
    Title I of BCRA refers to ``agents'' in order to implement specific 
prohibitions and limitations with regard to particular, enumerated 
activities on behalf of specific principals. The final regulation 
limits the scope of the definition accordingly in paragraphs (b)(1) 
through (b)(4). Each provision in paragraphs (b)(1) through (b)(4) is 
tied to a specific provision in Title I of BCRA that relies on agency 
concepts to implement a specific prohibition or limitation. The 
Commission emphasizes that, under the Commission's final regulation, a 
principal cannot be held liable for the actions of an agent unless (1) 
the agent has actual authority, (2) the agent is acting on behalf of 
his or her principal, and (3) the agent is engaged in one of the 
specific activities described in paragraphs (b)(1) through (4).
    Paragraph (b)(1) limits a national party committee's liability to 
an agent's authorized actions with regard to two activities. The first 
is soliciting, directing, or receiving any contribution, donation, or 
transfer of funds on behalf of the national party committee. 2 U.S.C. 
441i(a)(1), (2). The second is soliciting funds for, or making or 
directing donations to, section 501(c) and 527 organizations. 2 U.S.C. 
441i(d).
    Paragraph (b)(2) limits the liability of State, district, or local 
political party committees to the actions of an agent who has actual 
authority in four particular areas. The first is to make expenditures 
or disbursements of any funds for Federal election activity on behalf 
of the State, district or local party committee. 2 U.S.C. 441i(b)(1). 
The second is to transfer, or to accept a transfer of, funds to make 
expenditures or disbursements for Federal election activity on behalf 
of the State, district or local party committee. 2 U.S.C. 
441i(b)(2)(B)(iv). The third is to engage in joint fundraising 
activities on behalf of the State, district or local party committee 
with any person if any part of the funds raised are used, in whole or 
in part, to pay for Federal election activity. 2 U.S.C. 441i(b)(2)(C). 
The fourth is to solicit funds for, or to make or direct donations to, 
section 501(c) and 527 organizations. 2 U.S.C. 441i(d).
    Paragraph (b)(3) limits the liability of a Federal candidate to the 
actions of an agent who has actual authority to solicit, receive, 
direct, transfer, or spend funds in connection with any election on 
behalf of the Federal candidate. 2 U.S.C. 441i(e)(1). The Commission 
notes that the exception to 2 U.S.C. 441i(e)(1)'s general rule found in 
paragraph (e)(2) of that section also applies to agents of such Federal 
candidates who are or were State or local candidates.
    Paragraph (b)(4) applies to State candidates, and limits their 
liability to actions taken by their agents who have actual authority to 
spend funds for public communications on their behalf. 2 U.S.C. 
441i(f).
    Under the Commission's final rules defining ``agent,'' a principal 
can only be held liable for the actions of an agent when the agent is 
acting on behalf of the principal, and not when the agent is acting on 
behalf of other organizations or individuals. Specifically, it is not 
enough that there is some relationship or contact between the principal 
and agent; rather, the agent must be acting on behalf of the principal 
to create potential liability for the principal. This additional 
requirement ensures that liability will not attach due solely to the 
agency relationship, but only to the agent's performance of prohibited 
acts for the principal. In light of the foregoing, it is clear that 
individuals, such as State party chairmen and chairwomen, who also 
serve as members of their national party committees, can, consistent 
with BCRA, wear multiple hats, and can raise non-Federal funds for 
their State party organizations without violating the prohibition 
against non-Federal fundraising by national parties.
C. 11 CFR 300.2(c)  Definition of ``Directly or Indirectly Established, 
Financed, Maintained, or Controlled''
    11 CFR 300.2(c) defines ``directly or indirectly establish, 
finance, maintain, or control,'' a term that is used in several 
provisions of BCRA. The term appears in BCRA in the context of national 
party committees (see 2 U.S.C. 441i(a)(2)), 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 Federal 
officeholders (see, e.g., 2 U.S.C. 441i(e)(1)). The phrase 
``established, financed, maintained, or controlled,'' without the 
modifier ``directly or indirectly,'' was already used in the anti-
proliferation provisions of the FECA and in the Commission's 
``affiliation'' regulation. See 2 U.S.C. 441a(a)(5); 11 CFR 100.5(g), 
and 110.3.
    Paragraph (c)(1) of section 300.2 enumerates the persons to whom 
the regulation applies, and employs the shorthand ``sponsor'' to refer 
collectively to these persons. A public interest group commented that 
the regulation should apply to national, as well as to State, district, 
and local political party committees. Accordingly, given that the term, 
``directly or indirectly established, financed, maintained, or 
controlled,'' is applied to national party committees in 2 U.S.C. 
441i(a)(2), the Commission is incorporating this suggestion in the 
final regulation. Another commenter suggested that agents should be 
included in the description of the term ``sponsor,'' rather than 
addressed in another part of the rule. The final rules also adopt this 
suggestion. In paragraph (c)(1), the statutory concept of ``indirect'' 
establishment, financing, maintenance, or control is addressed by 
including actions taken by a sponsor's agents on behalf of the sponsor.
    The version of 11 CFR 300.2(c) proposed in the NPRM defining the 
term ``directly or indirectly establish, finance, maintain, or 
control'' included factors that extended beyond the affiliation 
provisions of 11 CFR 100.5(g). Several commenters, including an 
association of State party officials, several national party 
committees, and two State party committees, objected to this portion of 
the regulation proposed in the NPRM, and suggested uniformly that the 
final regulation should be based solely upon the existing affiliation 
regulation in 11 CFR 100.5(g), which one commenter described as 
``relatively well-established and well-understood.'' A Latino rights 
group and a taxpayers' organization concurred with this approach. In 
addition, a civil rights

[[Page 49084]]

organization stated that the regulation proposed in the NPRM was ``not 
only vague as to provide no practical guidance, but also is likely to 
deem entities as being 'controlled' by a party committee when the BCRA 
never intended to reach such entities.'' On the other hand, two public 
interest groups supported the Commission's proposed use of factors 
extending beyond the reach of 11 CFR 100.5(g), one of whom argued that 
Congress used the term, ``directly or indirectly established, financed, 
maintained, or controlled,'' in several contexts to ``make it clear 
that Congress wanted to move beyond the current affiliation rules.''
    The Commission has concluded that the affiliation factors laid out 
in 11 CFR 100.5(g) properly define ``directly or indirectly 
established, financed, maintained, or controlled'' for purposes of 
BCRA. Therefore, in paragraph (c)(2), the affiliation factors found at 
11 CFR 100.5(g)(4)(ii) have been recast in the terminology demanded by 
the BCRA context. Paragraphs (c)(2)(i) through (x) of section 300.2 
generally correspond to paragraphs (g)(4)(ii)(A) through (J) of section 
100.5. This change in terminology, for example, substituting ``entity'' 
for ``committee,'' and ``sponsor'' for ``sponsoring organization,'' 
recognizes that affiliation concepts are being applied in a different 
context. Besides the changes in terminology, the words ``and otherwise 
lawfully'' have been added to the phrase about joint fundraising in 
paragraphs (c)(2)(vii) and (viii) of section 300.2(c). This addition is 
intended to preclude any confusion that might arise between these 
provisions and the joint fundraising restrictions in subpart B of part 
300.
    In the NPRM, the Commission sought comment on whether this 
regulation should be based on the actions and activities of entities 
occurring solely after November 6, 2002, the effective date of BCRA. 
The Commission considered taking this course of action to prevent a 
retroactive application of BCRA or, specifically, to prevent the 
actions and activities of entities before November 6, 2002, that are 
legal under current law from creating potential legal liability based 
on the new requirements of BCRA, which do not take effect until after 
November 5, 2002. The Commission also asked, alternatively, whether 
there should 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. 67 FR 
35658.
    The principal Congressional sponsors of BCRA and two public 
interest groups opposed these options. The principal Congressional 
sponsors stated, ``There is nothing in the statutory language that 
permits the term * * * to apply only to entities established after the 
effective date of the Act * * *.'' Such a rebuttable presumption, they 
continued, would ``create an obvious loophole for organizations 
established or controlled by members of Congress that are currently 
raising soft money.'' One of the public interest groups commented that 
``grandfathering'' existing entities would ``effectively prop the 
[soft-money] loophole open.'' The other public interest group opposing 
this idea said: ``This would, as a practical matter, allow the activity 
sought to be regulated by BCRA to continue on an unregulated basis 
through the preexisting entity.''
    A non-profit organization commented that the Commission should not 
apply the new regulation to existing entities that may have been 
directly or indirectly established, financed, maintained, or controlled 
by a sponsor because, ``otherwise, the rule would go against any 
conceivable precept of the BCRA having an effective date after the 2002 
general elections.'' This organization asserted, ``the only relevant 
question * * * is whether an entity is controlled by a sponsor after 
the effective date of BCRA.'' This organization supported the idea of a 
rebuttable presumption. Several party committees urged the Commission 
to apply the regulation if there is affiliation ``on or after the 
effective date of BCRA.'' Notably, a civil rights organization 
concluded that ``the only relevant question for the purposes of BCRA is 
whether an entity is controlled by a sponsor after the effective date 
of BCRA.'' The civil rights organization further stated that ``we agree 
with the Commission's suggestion that there should be a rebuttable 
presumption that entities `organized' before a given date are not 
directly or indirectly established by a sponsor. [To proceed otherwise] 
would go against any conceivable precept of the BCRA having an 
effective date after the 2002 elections.''
    For the foregoing reasons, the Commission has concluded that BCRA 
should not be interpreted in a manner that penalizes people for the way 
they ordered their affairs before the effective date of BCRA. This will 
help ensure that BCRA is not enforced in a retroactive manner with 
respect to activities that were legal when performed. Therefore, the 
Commission has added, in the final rules, a new paragraph (c)(3). The 
paragraph, under the heading, ``safe harbor,'' provides that on or 
after November 6, 2002 (the effective date of BCRA), an entity shall 
not be deemed to be directly or indirectly established, maintained, or 
controlled by another entity unless, based on the entities' actions and 
activities solely after November 6, 2002, they satisfy the requirements 
of 11 CFR 300.2(c). The Commission notes that financing, within the 
meaning of this definition, presents special considerations. Therefore, 
with regard to financing, paragraph (c)(3) provides that if an entity 
receives funds from another entity prior to November 6, 2002, and the 
recipient entity disposes of the funds prior to November 6, 2002, the 
receipt of such funds prior to November 6, 2002 shall have no bearing 
on determining whether the recipient entity is financed by the 
sponsoring entity within the meaning of 11 CFR 300.2(c). If funds 
received from another entity prior to November 6, 2002, are spent by 
the recipient entity on or after that date, that fact will be relevant 
to a determination under section 300.2(c).
    In the NPRM, the Commission sought comment as to whether there 
should be an exception for a de minimis level of funding by a sponsor. 
67 FR 35659. Only one commenter, a State party committee, supported 
this idea and suggested $5,000 for this purpose. The Commission has not 
included a de minimis exception in the final regulation. Such an 
exception does not square with the overall, situation-specific approach 
of the regulation, which is to weigh factors such as ``[w]hether a 
sponsor or its agent provides funds or goods in a significant amount or 
on an ongoing basis to the entity'' ``in the context of the overall 
relationship between sponsor and the entity.'' See 11 CFR 300.2(c)(2), 
(c)(2)(vi). Nor does a de minimis exception appear to be supported by 
the plain language of the statute.
    Paragraph (c)(4) (which was labeled (c)(2) in the version of the 
regulation proposed in the NPRM) provides 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 the sponsor 
established the entity. There have been several changes from the 
version of the regulation published in the NPRM. In paragraph 
(c)(4)(i), the Commission has clarified that the requestor of an 
advisory opinion must demonstrate that the entity is not directly or 
indirectly financed, maintained, or controlled by the sponsor. Under 
paragraph (c)(4)(ii) of the final rules, the requestor must demonstrate 
that all material connections between the sponsor and

[[Page 49085]]

the entity have been severed for two years.
    The Commission notes that nothing in paragraph (c)(4) should be 
construed to require any given entity that has not directly or 
indirectly established, financed, maintained, or controlled another 
entity to obtain a determination to that effect before the two entities 
may operate independently of each other. Therefore, in the final rules, 
the Commission has added a new paragraph (c)(4)(iii), which provides 
that nothing in section 300.2(c) should be construed to require 
entities that are separate organizations on November 6, 2002, to obtain 
an advisory opinion to operate separately from one another.
D. 11 CFR 300.2(d) Definition of ``Disbursement''
    Both FECA and BCRA use the term ``disbursement,'' but do not 
provide a definition. The NPRM contained a proposed definition of 
``disbursement'' as ``any purchase or payment made by a political 
committee or organization that is not a political committee.'' One 
commenter pointed out that this term should not be limited to payments 
by political parties or organizations, since it covers spending by 
individuals or entities that do not constitute political parties or 
organizations. See, for example, 2 U.S.C. 441i(b)(1), which refers to 
disbursements by (among others) ``an association or similar group of 
candidates * * * or of individuals.'' The Commission, therefore, is 
revising the proposed definition in the final rule to clarify that it 
covers purchases and payments by a political party or other person, 
including an organization that is not a political committee, that is 
nevertheless subject to FECA or BCRA.
E. 11 CFR 300.2(e)  Definition of ``donation''
    In BCRA, Congress uses but does not define the term ``donation.'' 
The Commission proposed in the NPRM 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, party committee, 
501(c) organization, or 527 organization, but not including a 
contribution or transfer.
    Comments were sought on specifically excluding from ``donation'' 
some of the exemptions to ``contribution'' set forth in existing 11 CFR 
100.7(b). The comments were split on this approach.
    The Commission did not include these exemptions, or any others, in 
the final rule, because donations in many cases will be essentially a 
matter of State law, and thus the inclusion or exclusion of certain 
payments should be left to State campaign finance law. For example, in 
the Levin Amendment, donations of Levin funds must be in accordance 
with State law, with one Federal limitation: a $10,000 amount 
limitation per year per donor. 2 U.S.C. 441i(b)(2)(B)(iii). The 
Commission believes States should be free to craft their own exemptions 
to donations of Levin funds, subject only to the $10,000 overall 
limitation imposed by BCRA.
    Several commenters asked the Commission to specifically incorporate 
additional exemptions, such as money spent for redistricting, election 
recounts, FECA civil penalties, and legal defense funds. The exemption 
for recounts is addressed in the Commission's current rules at 11 CFR 
100.7(b)(20); as are payments for civil penalties, cf. 11 CFR 
9034.4(b)(4). The Commission's interpretations on the raising and 
spending of funds for the purposes of redistricting were done in the 
context of Advisory Opinions that interpreted the terms 
``contribution'' and ``expenditure.'' See Advisory Opinions 1990-23 and 
1982-37. The question of legal defense funds implicates not only the 
definition of ``contribution,'' but also the Commission's personal use 
regulations at 11 CFR 113.1(g) in the case of a candidate legal defense 
fund. With respect to legal defense funds or any other legal expenses 
incurred by national party committees, the Commission does not 
interpret the broad language of 2 U.S.C. 441i(a) to permit the receipt 
or use of any non-Federal funds for such purposes.
    As with the exemptions in 11 CFR 100.7(b), discussed above, State 
laws may address each of these payments in a variety of different ways. 
In addressing these issues, the Commission does not believe it is 
appropriate to require States to follow the Commission's precedents, 
which were established to implement the specific, detailed provisions 
of the FECA regarding ``contributions'' and ``expenditures'' for the 
purpose of influencing Federal elections. Moreover, to do so could 
present issues involving the preemption of State law.
    Several commenters suggested that the definition of ``donation'' be 
expanded to include anything of value given to a ``person,'' to conform 
with the use of this term in 11 CFR 300.10, 300.11, 300.37, 300.50, and 
300.51. The Commission has made this change to 11 CFR 300.2(e), given 
the broad statutory reach of the term ``donation'' in 2 U.S.C. 
441i(a)(1). The Commission has also deleted the reference to 
``transfers,'' because those are covered elsewhere in these rules. See 
11 CFR 300.34.
F. 11 CFR 300.2(f)  Definition of ``Federal Account''
    Paragraph (f) of section 300.2 defines ``Federal account'' as an 
account at a campaign depository that contains funds to be used in 
connection with a Federal election. The term ``financial depository 
institution'' proposed in the NPRM has been changed to the more 
accurate term ``campaign depository.'' See 2 U.S.C. 432(h) and 11 CFR 
103.2.
    Some commenters asked the Commission to include in this definition 
the requirement that only Federal funds and funds transferred for the 
purpose of paying the non-Federal share of allocated expenditures may 
be deposited into these accounts. This topic is treated elsewhere in 
the Commission's rules and in this rulemaking. See 11 CFR 103.3, 
106.5(g), 300.30, and 300.33.
G. 11 CFR 300.2(g)  Definition of ``Federal Funds''
    Paragraph (g) of section 300.2 defines ``Federal funds'' to mean 
funds that comply with the limitations, prohibitions, and reporting 
requirements of the FECA. The Commission received no comments regarding 
this definition.
H. 11 CFR 300.2(h)  Definition of ``Levin Account''
    Section 300.2(h) defines ``Levin account'' as 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(b). The Commission revised 
the definition proposed in the NPRM to clarify that these accounts must 
be established at a campaign depository in accordance with 2 U.S.C. 
432(h).
    The NPRM raised substantive questions on the operation of these 
accounts. The comments that addressed these questions are discussed in 
connection with 11 CFR 300.30, below.
I.11 CFR 300.2(i)  Definition of ``Levin Funds''
    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 requirements. 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 ordinary non-Federal funds because they are 
subject to certain additional requirements under BCRA.

[[Page 49086]]

Section 300.2(i) defines these funds as ``Levin funds,'' with the 
intention that ``Levin funds'' become a definite, unambiguous reference 
to such funds. The Commission has slightly modified the definition 
proposed in the NPRM for streamlining purposes, but has made no 
substantive changes.
    One commenter requested that the Commission use a ``functionally 
descriptive'' term, such as ``specially allocated,'' for these funds, 
rather than the name of their legislative sponsor. It proved difficult, 
however, to draft a term that clearly and unambiguously includes these 
funds, while excluding all others. For that reason, the Commission has 
retained the term ``Levin funds'' in the final rules.
    Two commenters suggested that the definition should include the 
limits on the use of the term ``Levin funds'' found at 2 U.S.C. 
441i(b)(2)(A). These restrictions go to the use of the funds, and are 
implemented in 11 CFR 300.32, to which the definition in 11 CFR 
300.2(i) already expressly refers. Therefore, these restrictions are 
not repeated in this definitional paragraph.
J. 11 CFR 300.2(j)  Definition of ``Non-Federal Account''
    Section 300.2(j) defines ``non-Federal account'' as an account that 
contains funds to be used in connection with a State or local election 
or allocable expenses under 11 CFR 106.7, 300.30, or 300.33. The term 
``financial depository institution'' proposed in the NPRM has been 
deleted because non-Federal accounts are not required to comply with 2 
U.S.C. 432(h).
    Consistent with the revisions to 11 CFR 106.7 discussed above, the 
definition has been expanded to include accounts used for payment of 
certain allocable activities. The account may also serve as a 
depository for Levin funds, provided that the committee complies with 
the requirements of 11 CFR 300.30, below.
    No commenters addressed this paragraph.
K. 11 CFR 300.2(k)  Definition of ``Non-Federal Funds''
    This section defines ``non-Federal funds'' as funds that are not 
subject to the limitations and prohibitions of the Act. No commenters 
addressed this definition.
L. 11 CFR 300.2(m) and (n)  Definitions of ``To Solicit,'' and ``To 
Direct''
    The NPRM proposed a definition of ``to solicit or direct'' a 
contribution or donation, which would be located at 11 CFR 300.2(m). 
The proposed definition included a request, suggestion, or 
recommendation to make a contribution or donation, including those made 
through a conduit or intermediary. The Commission's final rule defines 
``to solicit'' as ``to ask another person to make a contribution or 
donation, or transfer of funds, or to provide anything of value, 
including through a conduit or intermediary.'' Similarly, the 
Commission defines ``to direct'' as ``to ask a person who has expressed 
an intent to make a contribution, donation, or transfer of funds, or to 
provide anything of value, to make that contribution, donation, or 
transfer of funds, or to provide that thing of value, including through 
a conduit or intermediary.''
    Comment was sought as to whether the proposed definition was too 
broad or narrow, as well as to 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 was 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.
    Two commenters, a labor organization and a public interest 
organization, expressed qualified support for the proposed rule. The 
labor organization stated that it concurred with the proposed rule, and 
that it particularly endorsed the express acknowledgment that the mere 
provision of information or guidance as to applicable legal 
requirements does not fall within the statutory language. The public 
interest organization stated that the proposed rule was ``generally 
consistent'' with the letter and spirit of BCRA. For purposes of 
clarity, it suggested that the proposed rule be revised to read: 
``Merely providing information or guidance as to the requirements of 
applicable law is not a solicitation.''
    In contrast, five commenters argued that the proposed rule was too 
vague or broad. A group representing certain State parties stated that 
the phrase ``request, suggest and recommend'' is an invitation for 
endless Commission investigation. This commenter urged that ``solicit'' 
be limited to an explicit request that a person make a contribution. 
This commenter also supported including examples in the Explanation and 
Justification of what is not soliciting or directing. Likewise, 
national party political organizations asserted that the final rule 
should not contain a reference to ``suggestion'' because that is too 
vague a term, and compels inquiry into whether a communication conveys 
a sense, or creates an impression, of a solicitation. These commenters 
believed BCRA's rules should be concrete. This group further urged that 
clear exclusions should be provided, such as for inquiries into 
positions or issues, as well as political speech or commentary to an 
audience who may respond with contributions in the absence of an 
express request for them.
    Another commenter, a public interest organization, stated that 
``ambiguous standards'' such as ``suggest[ion]'' or ``series of 
conversations'' will merely lead to confusion. This commenter suggested 
that the Commission look to past advisory opinions for guidance. 
Similarly, a State and a national political party argued that 
``request, suggest and recommend'' is unconstitutionally vague and 
potentially overbroad, as it would involve an investigation into what a 
person meant in a series of conversations, and would thus chill 
political speech. A Latino rights group and a taxpayers' organization 
commented that in light of the ``severe restrictions now imposed by 
BCRA,'' there need to be ``clear definitive guidelines'' in this area. 
Specifically, the Latino rights group and the taxpayers' organization 
argued that ``[a]mbiguous standards such as `suggestion' or a `series 
of conversations which taken together constitute a request for a 
contribution or donation, but which do not do so individually' will 
lead to more confusion and allegations of violations.'' Several party 
committee commenters argued that solicitation should be confined to an 
explicit request that an entity make a contribution.
    Three commenters argued that the proposed rule was too lenient. One 
public interest organization stated that the discussion should include 
scenarios where a person suggests where a contributor, who has already 
decided to make a contribution, should send their contribution. This 
commenter read the proposed rule as confining itself to candidates, 
committees and nonprofits, and suggested it should also apply to 
solicitations from individuals, partnerships, labor organizations, and 
corporations. Another public interest organization agreed with the 
first point of the previous response. The sponsors of BCRA stated that 
the proposed definition failed to capture the plain meaning of the 
words and to effectuate the central goal of the law. They supported the 
position regarding suggestions to already-willing contributors. These 
commenters read the proposed rule in the same manner as the public 
interest organization, as if

[[Page 49087]]

it only applies to candidates, committees and nonprofits. They stated 
that, ``certain provisions in the Act apply to soliciting contributions 
from any `person,' which would obviously include individuals and 
corporations.'' They urged that the rule be modified to reflect this.
    The Commission has determined that the concepts of ``to solicit'' 
and ``to direct'' embody different activity, and they thus should be 
separately defined. Accordingly, 11 CFR 300.2(m) defines ``to 
solicit,'' and 11 CFR 300.2(n) contains the definition of ``to 
direct.'' Both definitions include ``transfer of funds'' and ``anything 
of value'' in addition to ``contribution'' and ``donation,'' because 
the phrases ``transfer of funds'' and ``anything of value'' or ``any 
other thing of value'' appear several times in seriatim with 
``contribution'' and ``donation'' in applicable rules. See, e.g., 11 
CFR 300.2(b)(1)(i).
    Comments were sought as to whether the concept of soliciting should 
apply to a series of conversations which, when taken together, 
constitute a request for contributions or donations. BCRA's sponsors 
and several public interest organizations supported applying the 
definition to a series of conversations if, when taken as a whole, they 
are consistent with a solicitation, stating that, otherwise, 
restrictions will be easily circumvented. One group of national 
political party organizations opposed applying the rule to a series of 
conversations, stating that it would involve heavy government 
involvement in deciphering political speech and that the Commission 
should look only at express statements.
    The Commission does not believe it is appropriate to promulgate a 
regulation that would require examination of a private conversation to 
impute intent when the conversation is not clear on its face. The 
Commission is concerned that the ability to impute intent could lead to 
finding a violation when the individual who made the comment may have 
had no intention whatever of soliciting a contribution. Such a result 
is not dictated by BCRA's statutory language, and would raise 
constitutional concerns.
    For the reasons set forth above, the Commission is not defining 
``to solicit'' in terms of a series of conversations.
    Regarding the definition of the term ``to direct,'' the Commission 
sought comment as to whether it should be interpreted to follow 
earmarking rules under 2 USC 441a(a)(8). A group of State party leaders 
supported limiting ``to direct'' to the definition at 11 CFR 
110.6(b)(2), as did one of the national political parties. One of the 
public interest organizations opposed this approach, stating that this 
was inconsistent with BCRA and far too narrow an approach. None of the 
commenters explained their criticisms in detail.
    This issue of the meaning of ``to direct'' is also tied to another 
question asked by the Commission: whether the passive providing of 
information in response to an unsolicited request for information 
should be specifically excluded in this definition. Two commenters, a 
public interest organization and the sponsors, felt that the Commission 
should not exclude providing information if that information includes 
the names of organizations to which contributions can be made. One 
commenter, a national political party, said that such information 
should be excluded, because any other approach would be unworkable and 
would lead to endless accusations and investigations.
    The Commission concludes that a precise definition in this context 
is necessary to avoid vague and overbroad application of the term. 
Therefore, the regulation defines ``to direct'' as ``to ask a person 
who has expressed an intent to make a contribution, donation, or 
transfer of funds, or to provide anything of value, to make that 
contribution, donation, or transfer of funds, or to provide that thing 
of value.''
    The final rules in 11 CFR 300.2(m) and (n) each include a statement 
indicating that merely providing information or guidance as to the 
requirements of particular law is not solicitation or direction. Each 
rule confines itself to defining the term as it appears in part 300 of 
the Commission's regulations.
M. 11 CFR 300.2(o)  Definition of ``Individual Holding Federal Office''
    New section 300.2(o), which parallels 11 CFR 100.4 (definition of 
``Federal office'') and 11 CFR 113.1(c) (definition of ``Federal 
officeholder''), has been added for the reader's convenience. 
Consistent with those sections and 2 U.S.C. 431(3), it states that 
``individual holding Federal office'' means an individual elected to or 
serving in the office of President or Vice President of the United 
States; or a Senator or a Representative in, or Delegate or Resident 
Commissioner to, the Congress of the United States. It does not, 
however, include officeholders who are appointed to positions such as 
the secretaries of departments in the executive branch, or other 
positions that are not filled by election.

Subpart A--National Party Committees

11 CFR 300.10  General Prohibitions on Raising and Spending Non-Federal 
Funds

    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). The Commission is placing 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 this new subpart, the 
Commission is amending several sections of its current rules to conform 
to these prohibitions. See Explanation and Justification for 11 CFR 
102.5 and 106.5.
    Paragraph (a) of new section 300.10 tracks the language of BCRA, 
which prohibits 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, as of November 6, 2002, BCRA's effective 
date, national party committees must not receive or solicit or direct 
to another person contributions or donations from corporations, labor 
organizations or other prohibited sources, and must not receive or 
solicit or direct to another person contributions or donations from 
individuals and others that exceed the amount limitations of the Act. 
Additionally, after a brief transition period set forth in 11 CFR 
300.12, discussed below, all expenditures and disbursements made by a 
national party committee, including donations to State and local 
candidates and donations and transfers to State party committees, must 
be made with funds that comply with the limitations, prohibitions, and 
reporting requirements of the Act.
    BCRA's ban on the raising and spending of non-Federal funds by 
national party committees has widespread application. Tracking the 
language in 2 U.S.C. 441i(a)(1) and (2), 11 CFR 300.10(a) and (c) 
provide that the ban on raising and spending non-Federal funds also 
applies to the national congressional campaign 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 
congressional campaign committee, and

[[Page 49088]]

to any entities directly or indirectly established, financed, 
maintained, or controlled by either. As noted by one of BCRA's 
congressional co-sponsors during the congressional debate, ``[t]he 
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 to direct or control, soft money.'' 148 
Cong. Rec. H408-409 (daily ed. February 13, 2002) (statement of Rep. 
Shays).
    Thus, under BCRA and 11 CFR 300.10, a Federal candidate or a 
Federal officeholder acting on behalf of a national congressional 
campaign committee must not solicit or direct to any person funds from 
corporations or labor organizations, or funds from individuals or 
entities in amounts that exceed the Act's contribution limits.
    Section 300.10(a)(3) makes clear that national parties cannot 
raise, spend, or direct to another person Levin funds. See 2 U.S.C. 
441i(b)(2)(A) and (B) and 11 CFR 300.31, discussed below.
    Section 300.10(b) tracks the statutory language at 2 U.S.C. 
441i(c). It provides that national parties and others covered by 
section 300.10(a) must use only Federal funds to finance Federal 
election activity.
    The NPRM noted that the Commission would address in a subsequent 
rulemaking whether BCRA bans national party committees, and their 
officers and agents, from directing non-Federal funds to a host 
committee for a national party convention in light of the statutory 
language that they are not permitted to direct non-Federal funds to 
other persons. See 2 U.S.C. 441i(a)(1). In comments submitted to the 
NPRM, BCRA's sponsors stated that since BCRA prohibits national parties 
and their agents from soliciting or directing non-Federal funds to any 
person, they could not raise or direct non-Federal funds to host 
committees. 2 U.S.C. 431(11) of FECA defines ``person'' to include ``a 
committee * * *  or any other organization or group of persons * * * '' 
It has also been suggested that no further rulemakings are necessary, 
as a host committee would be treated as any other 501(c) organization 
under the Act. The Commission has decided that the sponsor's 
interpretation of BCRA and additional issues concerning BCRA's effect 
on conventions will be addressed, if necessary, in a future rulemaking 
on national party conventions.
    Virtually all of the commenters opined that the definition of 
``agent'' was critically important to many of BCRA's provisions, 
including 11 CFR 300.10.
    The breadth of the national party non-Federal funds prohibition is 
limited in 2 U.S.C. 441i(a)(2) and in 11 CFR 300.11(c) to the extent 
that the prohibition applies to officers and agents ``acting on 
behalf'' of national parties. This limiting construction appears in 
other Federal statutes and indeed, in some State campaign finance laws. 
The Commission also has decided to limit the definition of ``agent'' to 
those individuals who have actual authority to act on behalf of their 
principals. See Explanation and Justification for 11 CFR 300.2(b) 
above.
    Several party committee commenters expressed the view that, despite 
BCRA's broad prohibition on national parties' raising and spending non-
Federal funds, the Commission should consider a rule that would permit 
national parties to continue to maintain non-Federal accounts devoted 
specifically to support State and local candidates as long as funds 
raised for such an account meet the source and contribution limits of 
the Act. The party committees' position is based on the NPRM's 
discussion of ``leadership PACs'' maintained by Federal candidates and 
on statements made by a principal BCRA sponsor during the Senate 
debate. 148 Cong. Rec. S2140 (daily ed. February 20, 2002) (statement 
of Senator McCain). Specifically, Senator McCain interpreted 2 U.S.C. 
441i(e)(1)(A) and (B) (see 11 CFR 300.61 and 300.62) to permit a 
Federal candidate or officeholder to raise funds for both a Federal and 
non-Federal account of a leadership PAC, provided that the funds raised 
for the non-Federal account met the source and contribution limits of 
the Act. The party committees' comments specifically referenced another 
statement made by Senator McCain suggesting that an officeholder could 
solicit a donation up to the Act's contribution limits for the non-
Federal account of a leadership PAC, even if the donor had already 
contributed to the PAC's Federal account. The application of these 
statutory provisions to leadership PACs and candidate PACs is discussed 
below. See Explanation and Justification for 11 CFR 300.62. Regardless 
of the application of BCRA to leadership PACs and candidate PACs under 
2 U.S.C. 441i(e)(1), however, the plain language of the ban on national 
party non-Federal fundraising at 2 U.S.C. 441i(a) cannot be plausibly 
construed to allow party committees to continue to raise non-Federal 
funds for any purpose. The language is broad in prohibiting a national 
party committee 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 
limitation, prohibitions, and reporting requirements. A separate ``non-
Federal'' account, even if it contained funds that complied with the 
prohibitions of the Act, would not contain funds complying with the 
amount limitations of the Act, if for example, individuals gave $20,000 
per year to a national party's account and also gave another $20,000 to 
the party's ``non-Federal'' account as suggested by the party committee 
commenters.
    The legislative history supports this statutory interpretation. As 
noted above, a primary sponsor of BCRA in the House specifically 
explained the national party non-Federal funds ban as follows: ``The 
soft money provisions of the Shays-Meehan bill regarding the national 
political parties operate in a straight-forward way. The national 
parties are prohibited entirely from raising or spending any soft money 
* * * The purpose of these provisions is simple: to put the national 
parties entirely out of the soft money business.'' 148 Cong. Rec. H408 
(daily ed. February 13, 2002) (statement of Rep. Shays). According to 
Congressman Shays, the prohibition ``covers all activities of the 
national party committees, even those that might appear to affect only 
non-federal elections.'' Shays further explained the reason for the 
ban: ``Because the national parties operate at the national level, and 
are inextricably intertwined with Federal officeholders and candidates, 
who raise money for the national party committees, there is a close 
connection between the funding of the national parties and the 
corrupting dangers of soft money on the federal political process.'' 
Id. at H409.
    In addition, a comment by one of BCRA's principal sponsors stated 
that Congress' intent was absolutely clear that BCRA prohibits national 
party committees from raising, spending or directing non-Federal funds. 
He further pointed out that an amendment that would have allowed party 
committees to continue to raise ``soft money'' subject to limits on the 
amounts and purposes failed. The Commission notes that a House 
amendment that would have continued to permit national parties to raise 
non-Federal funds for certain activities in amounts not exceeding 
$20,000 per year per person was defeated. See 148 Cong. Rec. H459-H465 
(daily ed. February 13, 2002).
    Finally, the party committee commenters also maintained that the 
Commission should define the term ``donation,'' which is not defined in 
BCRA, to exclude funds received by

[[Page 49089]]

national party committees for certain purposes such as funds provided 
for redistricting, legal expense funds, and the payment of civil 
penalties for violations of the Act. The parties argued that the 
Commission has, over time, recognized these activities as wholly exempt 
from the reach of FECA.
    As discussed in the Explanation and Justification for the 
definition of ``donation'' at 300.2(e), the plain language of BCRA, 
supported by the legislative history, indicates that the ban on 
national party raising and spending non-Federal funds was intended to 
be broad, prohibiting a party from raising, receiving, or directing to 
another person `` a contribution, donation or transfer of funds, or any 
other thing of value'' or spending ``any funds'' that are not subject 
to the Act's limitations, prohibitions, and reporting requirements 
(emphasis added). Consequently, neither 11 CFR 300.10 nor the 
definition of ``donation'' in 11 CFR 300.2(e) contains a sweeping 
exclusion of donations that would permit national parties to raise 
funds for these purposes under any and all circumstances. See the 
Explanation and Justification for 11 CFR 300.2(e) (definition of 
``donation'').

11 CFR 300.11  Prohibitions on Fundraising for and Donating to Certain 
Tax-Exempt Organizations

    BCRA prohibits national party committees, their officers and 
agents, and entities directly or indirectly established, financed, 
maintained, or controlled by them from raising any funds for, or making 
or directing any donations to, certain tax-exempt organizations. 2 
U.S.C. 441i(d). 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, this prohibition 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).'' Id. (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 (referred to as ``section 527 organizations'' below). 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 
Vice Presidential electors. 26 U.S.C. 527(e)(1) and (2). BCRA excludes 
from the prohibition certain section 527 organizations as discussed 
below.
    The regulations implementing this provision are set forth in new 11 
CFR 300.11. A parallel provision of this regulation, 11 CFR 300.50, and 
others affecting tax-exempt organizations that appear elsewhere in part 
300, have been placed together in subpart C for the convenience of 
those interested in locating rules pertaining to fundraising and 
donations to tax-exempt organizations.
    Section 300.11 as proposed closely tracked the language of BCRA. 
The final rule has taken into account comments received on questions 
posed in the NPRM, as discussed below. The Commission also notes that 
since 11 CFR 300.37 contains a comparable provision applicable to 
State, district, and local party committees, the discussion below also 
applies to those entities unless otherwise indicated.
A. General Prohibition
    Paragraphs (a)(1) and (2) of the final rules in section 300.11 
remain unchanged from the proposed rule except for minor language 
changes to the description of national congressional campaign 
committees to conform with other formulations of the phrase.
    Paragraph (a)(3) of the final rules implements BCRA's prohibition 
on national party committee fundraising for, and donating to, a section 
527 organization unless the organization is a ``political committee,'' 
a State or local party committee, or an authorized committee of a State 
or local candidate. In the context of a parallel provision in 11 CFR 
300.37 applicable to State, district, and local party committees, the 
NPRM asked whether ``political committee'' should mirror the definition 
of that term in 2 U.S.C. 431(4), which would encompass only 
organizations that make contributions and expenditures in connection 
with Federal elections, or whether the term should be interpreted to 
also encompass State-registered political committees that support only 
State and local candidates.
    As discussed in the Explanation and Justification for 11 CFR 
300.37, commenters supported a broader interpretation of ``political 
committee'' in the context of donations by State and local party 
committees. None of the commenters addressed this issue in the context 
of the national party prohibition, however. The Commission concludes 
that the broad prohibition applicable to national party fundraising and 
spending in 2 U.S.C. 441i(a) (see 11 CFR 300.10) prevents a broader 
construction of ``political committee'' in 11 CFR 300.11. Thus, 2 
U.S.C. 441i(a) prohibits national party committees from soliciting or 
directing to another person ``a contribution, donation or transfer of 
funds or any other thing of value'' or spending any funds that are not 
subject to the limitations, prohibitions and reporting requirements of 
the Act. Funds solicited or directed by a national party committee to a 
State-registered section 527 organization are not subject to the 
reporting requirements of the Act. Accordingly, in the final rules, 
paragraph (a)(3)(i) of 11 CFR 300.11 prohibits national party 
committees from soliciting funds for, or making donations to a section 
527 ``political committee'' unless the organization is a ``political 
committee'' as defined in 11 CFR 100.5.
    Paragraph (b) of 11 CFR 300.11, which describes the other persons 
and entities to whom the prohibition applies, remains unchanged from 
the proposed rule. The NRPM asked whether the final rule should provide 
examples of the types of persons and entities covered by this 
provision, and sought specific examples that might illuminate the scope 
of this provision. Although many commenters expressed approval for 
including examples as to who is covered by the provision, none provided 
specific examples. The final rule does not include specific examples.
    The NPRM also sought comments on whether the regulations should 
contain a temporal requirement so that the prohibition on national and 
State party fundraising and donations to non-profits is appropriately 
circumscribed and does not encompass, for example, an organization that 
made expenditures and disbursements in connection with a Federal 
election many years ago but has not done so recently and does not plan 
to do so in the future. After further consideration, the Commission has 
determined that a temporal requirement is unnecessary because the 
statutory language, ``makes expenditures and disbursements * * * '' is 
in the present tense. Thus, the final rules do not contain a temporal 
requirement. The definition of a 501(c) organization ``that makes 
expenditures and disbursements in connection with a Federal election'' 
at 11 CFR 300.2(a) encompasses an organization's activities in the 
current two-year election cycle only. See the

[[Page 49090]]

Explanation and Justification of 11 CFR 300.2(a) for further 
discussion.
    One non-profit organization urged the Commission to exclude 
501(c)(3) organizations from the party committee fundraising/donation 
prohibition. This commenter argued that because 501(c)(3) organizations 
are required by tax law to undertake only election-related activity 
that cannot benefit any particular candidate or party, they should not 
be subject to the prohibition. However, the plain language of BCRA 
applies to all 501(c) organizations that make disbursements or 
expenditures in connection with Federal elections, including 
expenditures and disbursements for Federal election activity. Financing 
certain voter registration and GOTV activities are considered Federal 
election activities under BCRA and new 11 CFR 100.24. Moreover, even 
nonpartisan voter registration and GOTV activities are capable of 
having an impact on Federal elections. Indeed, BCRA's co-sponsors 
specifically indicated in their comments that nonpartisan voter 
registration drives or GOTV activities were not intended to be excluded 
from the definition of Federal election activity. The Commission notes 
that this provision does not prohibit non-profit organizations from 
undertaking any type of voter registration or GOTV activities. Because 
Congress clearly could have excluded 501(c)(3) organizations from this 
provision but chose not to do so, the final rules do not include any 
such exclusion or exemption.
B. Safe Harbor Provisions
    The NPRM asked whether a safe harbor provision should be provided 
so that a national or State party committee and others affected by the 
prohibition may raise funds for or make donations to a section 501(c) 
or a section 527 organization if they take certain steps to ensure that 
the organization is not one that falls within the prohibition. The NPRM 
listed examples of possible safe harbors such as requiring party 
committees to: (1) Obtain and examine a 501(c) organization's 
application for tax-exempt status or annual IRS Form 990 returns to 
determine whether the organization has reported making, or indicates 
plans to make, expenditures or disbursements in connection with a 
Federal election, or (2) with respect to current or planned activity, 
obtain and examine a certification from the organization that indicates 
it does not make, or plan to make, such expenditures.
    The commenters agreed that the regulations should provide a safe 
harbor for national and State party committees. The commenters split, 
however, on what the safe harbor should be. The primary sponsors of 
BCRA and one public interest group suggested that section 501(c) and 
section 527 organizations be required to file sworn certifications with 
the Commission, enforceable under 18 U.S.C. 1001, upon which a party 
committee could rely in determining whether it could solicit funds for, 
or make or direct donations to, such organizations. The sponsors of 
BCRA urged that party committees be held strictly liable for any 
violations of the Act if, in the absence of such a certification, an 
organization misrepresents itself.
    Without addressing the concept of a safe harbor, another public 
interest group commented that a party committee should be required to 
obtain a sworn certification from a section 501(c) or a section 527 
organization for whom it wishes to solicit or to whom it wishes to 
donate or direct funds.
    Several party committee commenters expressed approval for a safe 
harbor that would permit a party committee to obtain and rely on 
applications for tax-exempt status or IRS Form 990 returns to determine 
whether it could permissibly fundraise for, or donate to, a tax-exempt 
organization. One commenter suggested that party committees be given a 
choice between obtaining certifications or relying upon publicly 
available tax documents. A labor organization argued that the 
regulations should not require party committees to investigate non-
profits it wishes to donate to or assist. Rather, this commenter urged 
that the Commission adopt specific language that a party committee 
could use, presumably in a cover letter, when it makes a donation to a 
501(c) to serve as a safe harbor ``from prosecution.'' The commenter 
suggested that the party committee merely be required to state to the 
section 501(c) organization that any funds it donated cannot be used 
for activities that would ``constitute an expenditure in a Federal 
election.''
    In considering how to implement these BCRA provisions, the 
Commission has concluded that a safe harbor is an appropriate way to 
help ensure that party committees, and others to whom 11 CFR 300.11 and 
300.37 apply, comply with the Act. The Commission believes that 
requiring a 501(c) organization to file a certification with the 
Commission would be burdensome. However, requiring party committees and 
others covered by this provision to obtain a written certification from 
an official with knowledge of an organization's activities is the best 
way to ensure that the party committee or other person has information 
as to whether a particular organization engages in certain election-
related activities. IRS Form 990s may not clearly show whether an 
organization has undertaken specific election-related activities. 
Moreover, these forms do not provide information on current activities. 
Accordingly, new paragraph (c) of the final rule provides that a party 
committee may obtain and rely upon a certification from a section 
501(c) organization to determine whether it may permissibly raise funds 
for, or make or direct donations to, the organization.
    New paragraph (d) of the final rule sets forth specific criteria a 
certification must include. These criteria are: (1) That the 
certification is a signed written statement by an officer or other 
authorized representative with knowledge of the organization's 
activities; (2) that the certification states that, within the current 
two-year election cycle, the organization has not made, and does not 
intend to make, expenditures or disbursements in connection with an 
election for Federal office (including for Federal election activity); 
and (3) that the certification states that the organization does not 
intend to pay debts incurred from the making of expenditures or 
disbursements in connection with an election for Federal office 
(including for Federal election activity) in a prior two-year election 
cycle. The Commission believes that a requirement that the 
certification be sworn to is unnecessary and that a certification is 
sufficiently reliable if it is made in writing by an official of a tax-
exempt organization with knowledge of the organization's activities. 
Moreover, requiring that the certification contain a statement that an 
organization does not intend to pay Federal-election related debts from 
a prior cycle will help ensure that the prohibition is not evaded.
    New paragraph (e) states that a certification cannot be relied upon 
if a national party committee, its officers or agents, or others 
covered by the prohibition has actual knowledge that the certification 
is false.
    Finally, the NPRM sought comments on whether it would be considered 
``directing'' a donation if a party committee responded to an 
unsolicited request for information about organizations that share a 
party's political, social, or philosophical goals. Commenters who 
addressed this point stated that sharing such information would be 
permissible. One party commenter opined that it would be 
unconstitutional to try to prohibit this sharing of information as well 
as

[[Page 49091]]

difficult to enforce. A public interest group commenter noted that 
responding to such requests was permissible but would amount to 
``directing'' a donation if the donor's request or the party's response 
was in connection with a proposed ``or potential'' donation.
    The Commission agrees that a rule prohibiting this type of 
information-sharing is not necessary to enforce BCRA and would create 
significant constitutional concerns. Therefore, new paragraph (f) of 
the final rules states that it is not prohibited for a national party 
or its agents to respond to a request for information about a tax-
exempt group that shares the party's political or philosophical goals.

11 CFR 300.12  Transition Rules

    One of the BCRA amendments to the FECA prohibits national party 
committees from raising and spending non-Federal funds after November 
5, 2002, the effective date of BCRA.\5\ 2 U.S.C. 431 note. BCRA, 
however, created a transition period between November 6, 2002 and 
December 31, 2002, that permits national party committees to spend non-
Federal funds in their accounts as of November 5, 2002, for certain 
expenses and debts. The rules governing the use of non-Federal funds by 
national party committees, including national congressional campaign 
committees, during this transition period are set forth in 11 CFR 
300.12.
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    \5\ The raising and spending of non-Federal funds by State, 
district, and local committees or organizations are addressed in 11 
CFR part 300, subpart B, discussed below.
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A. Permissible Uses of Excess Non-Federal Funds During the Transition 
Period
    Paragraph (a) of section 300.12 describes the two permissible uses 
of funds in a national committee's non-Federal accounts, other than an 
office building or facility account, as of November 5, 2002. They are: 
(1) To 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. BCRA expressly provides that, 
subject to the restrictions incorporated into paragraph (b) of 11 CFR 
300.12, these non-Federal funds must be used solely for the two 
enumerated purposes and must be spent before January 1, 2003. 2 U.S.C. 
431 note.
    The NPRM sought comments on whether the use of the word ``solely'' 
in the enumeration of the permissible uses of non-Federal funds in 
paragraph (a) during the transition period precluded permitting any 
funds remaining thereafter to be disgorged to the United States 
Treasury or donated to a charitable organization. The Commission 
received several comments on this issue as well as suggestions for 
other permissible uses under paragraph (a).
    The commenters split on whether the Commission should permit 
remaining non-Federal funds in any non-Federal account to be donated to 
charity. BCRA's sponsors and one public interest group stated that BCRA 
provides no statutory basis for transferring any non-Federal funds as 
of November 6, 2002, to non-profit organizations and doing so could 
undermine a central purpose of the law which is to prohibit national 
party non-Federal funds from being used in the 2004 elections. Since 
charitable organizations under section 170 include section 501(c)(3) 
organizations, the sponsors pointed out that there is a potential that 
any donated funds could be used for Federal election purposes in the 
next election. Section 501(c)(3) organizations are permitted to engage 
in voter registration, get-out-the-vote activities, and other 
activities defined as ``Federal election activities'' in BCRA.
    The sponsors suggested, instead, that any funds remaining in a 
national party committee's non-Federal accounts be either disgorged to 
the United States Treasury or refunded to donors on a pro rata basis. 
Another commenter concurred with this suggestion, pointing out that 
because the statutory language only permitted specific uses during the 
transition period, any funds remaining thereafter must be disgorged or 
refunded.
    On the other hand, other commenters believed that permitting 
donations to at least some charitable organizations was permissible. A 
public interest group commented that the Commission could require 
disgorgement or permit donations to charitable organizations as long as 
the charitable organization is not one that the national parties would 
be prohibited from donating to under 11 CFR 300.10(b). A commenter from 
a non-profit organization maintained that BCRA should be construed to 
permit national parties to use any non-Federal funds remaining after 
payment of non-Federal election-related debts for any purpose currently 
permitted under FECA. According to this commenter such a construction 
is warranted because BCRA is silent as to the disposition of funds 
during the transition period after permissible debts are paid under 
paragraph (a) of 11 CFR 300.12, and only specific uses are prohibited 
in paragraph (b). The commenter further stated that the rules should 
permit national parties to transfer non-Federal funds remaining after 
non-Federal debt is paid to 501(c) organizations because these 
organizations are required to engage in non-partisan charitable or 
social welfare activity under tax law. None of the party committee 
commenters addressed this issue.
    The final rules address the disposal of excess non-Federal funds in 
new paragraph (c), discussed below. Other minor changes made to 
paragraph (a) in the final rules include: the word ``only'' has been 
changed to ``solely'' to better track the language used in BCRA and a 
reference to paragraph (e) has been deleted. Changes in the 
organization of 11 CFR 300.12 are discussed below.
B. Prohibited Uses of Non-Federal Funds After November 5, 2002
    BCRA provides that the permissible uses of non-Federal funds 
enumerated in paragraph (a) are subject to certain restrictions. The 
final rules at 11 CFR 300.12(b) set forth these restrictions. 
Specifically, paragraph (b) states that national party committees will 
no longer be able to use non-Federal funds for any of the following 
activities after November 5, 2002: (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. The final rules track the language in the proposed rules. The 
Commission did not receive any comments concerning this paragraph, 
other than those pertaining to building funds, which are discussed 
below.
C. Disposal of Remaining Non-Federal Funds
    New paragraph (c) provides that any non-Federal funds remaining 
after payment for permissible debts and obligations described in 
paragraph (a) must be either disgorged to the United States Treasury or 
returned by check to the donors by December 31, 2002. This approach 
gives effect to the use of the word ``solely'' in 2 U.S.C. 431 note, 
and to the legislative intent to prohibit national party non-Federal 
money from being used in future Federal elections. The Commission did 
not adopt the suggestion that refunds must be made to contributors on a 
pro rata basis. National party committees have the

[[Page 49092]]

option of making these refunds on a last-in, first-out (LIFO) or first-
in, first-out (FIFO) basis. Paragraph (c) further provides that all 
refund checks not cashed by donors by February 28, 2003 must be 
disgorged to the United States Treasury by March 31, 2003. The latter 
provision ensures that the national party committees do not make use of 
any uncashed refund checks. Requiring either disgorgement to the United 
States Treasury or refunds to donors is consistent with the 
Commission's practice in enforcement matters when a contributor has 
made, and a political committee has accepted, funds prohibited under 
the Act.
D. National Party Committee Office Building or Facility Accounts
    BCRA treats non-Federal funds contained in national party building 
fund accounts more stringently than non-Federal funds in the national 
party committees' other non-Federal accounts. Under current law, funds 
in a national party building fund account may 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 must not be used 
for the purchase or construction of any office building or facility. 
See 2 U.S.C. 431 note. Consequently, the Commission proposed requiring 
that funds on deposit in any party office building or facility account 
be disgorged to the United States Treasury or donated to a organization 
described in 26 U.S.C. 170(c) no later than December 31, 2002.
    As discussed above, although some commenters suggested that 
national party committees be permitted to donate the remaining non-
Federal funds to a charitable organization, other commenters noted that 
such organizations include organizations exempt under 26 U.S.C. 
501(c)(3) which could result in non-Federal funds making their way into 
future Federal elections since 501(c)(3) organizations may engage in 
Federal election activity such as voter registration and get-out-the-
vote activities. For this reason, the final rule in 11 CFR 300.12(d) 
follows the approach taken in paragraph (c) for disposal of excess non-
Federal funds: Paragraph (d) requires that non-Federal funds remaining 
in national party building and office facility accounts on November 6, 
2002 be disgorged or refunded to donors by December 31, 2002. As in 
paragraph (c), any refund checks not cashed by donors by February 28, 
2003, must be disgorged to the United States Treasury by March 31, 
2003.
    Additionally, in their comments, the sponsors pointed out that 
while the proposed rule only prohibited excess building funds from 
being used to construct or purchase a national party office building, 
the statutory language prohibits the use of such funds to defray 
construction or purchase costs for ``any'' office building or facility. 
See 2 U.S.C. 431 note. Paragraph (d) of the final rules also 
incorporates this change.
E. Application
    The final rule at 11 CFR 300.12(e) clarifies that the transition 
rules apply to officers and agents acting on behalf of a national party 
committee or a national congressional campaign committee, and to 
entities that are directly or indirectly established, financed, 
maintained, or controlled by a national party committee or a national 
congressional campaign committee. The Commission did not receive any 
comments relating to this provision. The final rule follows the 
proposed rule at 300.12(c) except that it has been redesignated as 
paragraph (e).
F. Allocation and Payment of Expenses During the Transition Period
    Section 300.12(f) clarifies that the allocation rules applicable to 
national party non-Federal and Federal accounts in revised 11 CFR 106.5 
remain in effect during the transition period. No comments addressed 
this provision. The final rules in paragraph (f) are identical to 
proposed paragraph (d).

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 regular 
reporting periods. 2 U.S.C. 434(e). New 11 CFR 300.13(a) tracks the 
statutory language.
    The NPRM sought comment on whether this provision of BCRA was 
intended to require reporting by existing entities that currently are 
not required to report and sought the identity of any such entities. 
The primary sponsors of BCRA commented that the term ``subordinate 
committee'' was intended to ensure that any new committees created by 
the national party committees would file required reports for all 
receipts and disbursements. The sponsors further stated that this 
provision requires existing entities that are subordinate to the 
national parties to report all of their receipts and disbursements 
whether or not they are required to do so under current law. The 
sponsors and several other public interest group commenters identified 
the College Democrats and College Republicans as subordinate committees 
of the national parties. None of the party committee commenters 
addressed this point.
    Although neither BCRA nor FECA contains a definition of a 
``subordinate committee'' of a national political party, the phrase is 
used in 2 U.S.C. 441a(a)(4). That provision states that limitations on 
contributions do not apply to transfers between and among political 
committees that are national, State, district, or local committees of 
the same political party ``including any subordinate committee 
thereof.'' In Advisory Opinion 1976-112, the Commission concluded that 
Democrats Abroad was a subordinate committee of the Democratic National 
Committee for purposes of 2 U.S.C. 441a(a)(4). The advisory opinion 
noted that the group was ``an organization of American citizens living 
overseas who support the basic principles of the National Democratic 
Party,'' had a central office in London, and local clubs in several 
countries that anticipated reaching political committee status. The 
Commission concluded that Democrats Abroad functioned as a part of the 
official structure of the Democratic Party and represented the 
Democratic Party to Americans living in foreign countries. Factors 
relied upon in this conclusion included: the group held fundraisers, 
the proceeds of which were donated to the DNC; the Democratic Party 
charter authorized a voting delegate from the group to participate at 
the 1976 party convention; the Call to Convention gave the group three 
votes to be cast by six delegates elected by group members in 
accordance with the rules of the party's Compliance Review Commission; 
the group was allowed representation on the Standing Committee of the 
Democratic Party; and the group functioned as a party committee by 
participation in voter registration and GOTV drives for the Democratic 
Party in 1976. The Commission specifically rejected the conclusion that 
Democrats Abroad was the equivalent of a State party committee based on 
the statutory definitions of ``State committee'' and ``State.''
    Based on the prior construction of the term in Advisory Opinion 
1976-112, the Commission concludes that a ``subordinate committee'' of 
a national party committee is one that is affiliated with, and 
participates in, the official party structure of the national party 
committee. As applied to a particular group, whether an organization is 
a subordinate committee of a national party is a factual determination. 
Based on the broad legislative intent to

[[Page 49093]]

prohibit national parties from raising and spending non-Federal funds, 
however, the Commission further concludes that a subordinate committee 
for purposes of 11 CFR 300.13(a) is an entity that is directly or 
indirectly established, financed, maintained, or controlled by a 
national committee of a political party.
    Since national party committees and entities directly or indirectly 
established, financed, maintained, or controlled by them cannot 
solicit, receive, direct, or spend non-Federal funds as of November 6, 
2002, and must dispose of all funds in their non-Federal accounts as of 
December 31, 2002, 11 CFR 300.13(b) requires national party committees 
and their subordinate committees to file termination reports for all 
non-Federal accounts, whether or not a subordinate committee was 
required to file disclosure reports under FECA prior to BCRA. Paragraph 
(b) of the final rule also takes into consideration the Commission's 
determination that excess non-Federal funds must be either refunded to 
donors or disgorged to the United States Treasury. If a national party 
committee does not issue refund checks, the national party committee 
must file a termination report for all non-Federal accounts, including 
building fund accounts by January 31, 2003. If a national party 
committee issues refund checks to donors, it must file a termination 
report covering the period ending March 31, 2003 disclosing the refunds 
and the disgorgement of any refund checks not cashed by February 28, 
2003.
    Paragraph (c) of Sec. 300.13 makes clear that the reporting 
regulations at 11 CFR 104.8 and 104.9 applicable to non-Federal 
accounts, including building funds, will remain in effect during the 
transition period. Paragraph (c)(2) provides that reporting 
requirements at 11 CFR 104.9(c) and (d) covering disbursements from 
non-Federal account and building fund accounts remain in effect for 
reports covering the period through March 31, 2003. In contrast, under 
paragraph (c)(1), the reporting requirements at 11 CFR 104.8(e) and 
(f), covering receipts of non-Federal and building fund accounts and 11 
CFR 104.9(e) covering non-Federal account transfers to State party 
committees, remain in effect only until December 31, 2002.

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

11 CFR 300.30  Accounts

    Under proposed 11 CFR 300.30 in the NPRM, State, district, and 
local party organizations would have been required to maintain certain 
separate Levin accounts in depositories if they paid for the costs of 
voter registration within a fixed time period or for certain voter 
identification, GOTV, and generic campaign activity pursuant to 11 CFR 
100.24 and 300.32(b)(1). Several of the comments received in response 
to the NPRM agreed with the proposal that all State, district, and 
local party committees and organizations be required to maintain 
separate Levin accounts, no matter the organization's size, level of 
activity and political committee status, if they desired to undertake 
certain Federal election activities pursuant to 11 CFR 300.32(b). Other 
comments raised directly or indirectly the issue of whether the 
Commission should or even could require such accounts, particularly in 
light of laws in certain States either limiting the number of non-
Federal accounts that a State party organization may hold or, more 
often, requiring numerous such accounts for varying purposes. It was 
also argued that the number of non-Federal accounts held by a party 
committee or party organization is a State, not a Federal issue.
    The final rules do not require a separate Levin account. Instead, 
State, district, and local party organizations that decide to undertake 
activities pursuant to 11 CFR 300.32(b) may deposit Levin funds in 
either a separate Levin account or their non-Federal account. If a 
committee's non-Federal account also functions as its Levin account, it 
must demonstrate through a reasonable accounting method approved by the 
Commission (including any method embedded in software provided or 
approved by the Commission) that it has sufficient Levin funds to cover 
the non-Federal share of any disbursement it makes for allocable 
Federal election activity.
    The Commission recognizes that some States already require multiple 
accounts, while a few may prohibit more than one account for all 
activity. Most importantly, the Commission is very aware of, and 
concerned about, the complexities of FECA as amended by BCRA, and wants 
to provide party organizations with procedural flexibility to 
facilitate compliance with the substantive conditions and restrictions 
arising from the Levin Amendment.
    The NPRM proposed a requirement that, in order for donations to be 
placed in a Levin account, either the solicitations for the donations 
must have expressly stated that donations will be subject to the 
special limitations and prohibitions of section 300.31, or there must 
have been an express designation to the Levin account by the donors. 
Several commenters objected to these requirements, arguing that they 
are not in BCRA and would be unnecessary, inappropriate, and could make 
it difficult for State, district and local party committees to engage 
in bona fide Levin activities. The Commission agrees, and the final 
rules contain no such requirement.
    Paragraph (a) provides an overview of the section and specifies 
that 11 CFR 300.30 applies to any State, district, or local committee 
or organization of a political party that has receipts or makes 
disbursements for Federal election activity, whether or not such 
committee is a political committee under 11 CFR 100.5.
    Paragraph (b) describes the requirements for four different types 
of accounts: Federal accounts, Levin accounts, non-Federal accounts, 
and allocation accounts. Paragraph (b)(1) provides for the use of non-
Federal accounts by State, district, and local party committees, to the 
extent permitted by State law, and lists the provisions under which 
non-Federal funds may be used in connection with Federal elections. 
Paragraph (b)(2) provides for an account solely for Levin funds, and 
references 11 CFR 300.31 and 300.32(b), which track the statutory 
requirements for raising Levin funds and disbursing Levin funds, 
respectively.
    Paragraph (b)(3)(i) requires that only contributions permissible 
under the Act be deposited into a State, district, or local party 
committee's Federal account, even when such funds may be used in 
connection with both Federal and non-Federal elections. It also 
provides a cross-reference to 11 CFR 103.3, which explains the 
procedure for dealing with impermissible funds. Paragraph (b)(3)(ii) 
describes the information that must be provided to or received from 
contributors regarding contributions deposited in a Federal account. 
Paragraph (b)(3)(iii) requires that only Federal accounts or allocation 
accounts be used to make disbursements, contributions, or expenditures 
in connection with Federal elections. This procedure tracks the 
longstanding requirements at 11 CFR 106.5 for transfers to Federal 
accounts or to allocation accounts for shared Federal and non-Federal 
activity.
    Paragraph (b)(3)(iv) provides that, when a Federal rather than an 
allocation account is to be used to make allocable expenditures, the 
initial payment must be made from the Federal account with timely 
reimbursements from other accounts involved in a transaction. Paragraph 
(b)(3)(v) prohibits transfers

[[Page 49094]]

into a party committee's Federal account from other accounts of the 
same party committee or from other party committees or party 
organizations to pay for Federal election activity, except as permitted 
by 11 CFR 300.30(b)(3)(iv), 300.33, and 330.34. The language of this 
paragraph in the NPRM has been changed to better track the requirements 
of BCRA.
    The NPRM requested comments on whether the Commission should 
continue to permit the use of allocation accounts for purposes of 
making allocable expenditures. The consensus of those responding to 
this question was in the affirmative. Therefore, a new paragraph (b)(4) 
is being added expressly permitting the establishment of such 
allocation accounts in lieu of making all allocated expenditures from a 
Federal account and setting out the requirements for the use of such 
allocation accounts. Paragraphs (b)(4)(i) and (ii) state that only 
certain funds may be deposited in each allocation account, depending 
upon whether the purpose of the account is to make expenditures and 
disbursements that have been allocated between a party committee's 
Federal and non-Federal accounts or to make expenditures and 
disbursements that have been allocated between its Federal and Levin 
accounts. This rule is necessitated by the requirements in BCRA that 
define the specific funds that can and cannot be used for such 
activities. Paragraph (b)(4)(iii) requires that, once allocation 
accounts are established, they must be used for all allocable expenses 
so long as the accounts are maintained. Pursuant to paragraph 
(b)(4)(iv) and (v), only the amount needed to meet the allocable share 
of expenses may be transferred into these allocation accounts and no 
funds from these accounts may be transferred out to other accounts.
    Paragraph (c) provides three different options for paying for 
Federal election activity. Paragraph (c)(1) requires that one or more 
Federal account be established, which would need to be used to pay for 
Federal election activity that is not allocable, as well as to pay the 
Federal portion of Federal election activity that is allocable. 
Paragraph (c)(1) also allows Federal funds to be used in non-Federal 
elections, provided that the contributors of the Federal funds have 
been informed that their contributions will be subject to the 
limitations and prohibitions of the Act and provided that the 
disbursements are reported pursuant to section 300.36. The phrase 
``subject to State law'' has been added in response to a comment on the 
NPRM.
    Paragraph (c)(2) provides the option of having at least three 
separate accounts: one or more Federal, Levin, and non-Federal 
accounts.
    Paragraph (c)(3) provides that if a committee opts not to have a 
separate Levin account, but instead uses its non-Federal account for 
depositing and disbursing Levin funds, the committee must demonstrate 
through a reasonable accounting method approved by the Commission 
(including any method embedded in software provided or approved by the 
Commission) that the committee has sufficient Levin funds on hand to 
cover disbursements for Levin activity.
    Paragraph (d) requires all party organizations to keep records and 
to make them available to the Commission upon request.

11 CFR 300.31  Receipt of Levin Funds

    In BCRA, Congress placed several restrictions on how State, 
district, and local political party committees raise Levin funds. New 
11 CFR 300.31 implements these statutory restrictions. Paragraph (a) 
states 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).
    Paragraphs (b) and (c) of section 300.31 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). Paragraph (b) 
states this as a general requirement. More specifically, paragraph (c) 
clarifies 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 2 U.S.C. 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. Section 
300.31(c) clarifies 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.)
    Three commenters expressed concern that section 300.31(c), as 
published in the NPRM, could be misinterpreted to allow donations from 
foreign nationals. One of these commenters suggested adding the phrase, 
``other than 2 U.S.C. 441e,'' after the word ``chapter.'' Although the 
sweeping nature of the 2 U.S.C. 441e as amended by BCRA seems to 
preclude the possibility that a donation by a foreign national to a 
party committee could be lawful under any State law, the Commission has 
revised paragraph (c) of section 300.31 as suggested.
    The principal Congressional sponsors commented that paragraph (c) 
should not be misinterpreted to allow a donation of Levin funds to a 
State, district, or local political party committee from a person 
established, financed, maintained, or controlled by a person forbidden 
from providing Levin funds to the committee. The Commission has 
addressed this concern in paragraphs (e) and (f) of section 300.31. 
(See discussion below.)
    Paragraph (d), in general, addresses amount limitations on 
donations of Levin funds to a State, district, or local party 
committee. In the Levin Amendment, Congress placed a $10,000 per 
calendar year per donor limitation on donations to a State, district, 
and local political party committee to be used as Levin funds. This 
statutory amount limitation applies to a person, including ``any person 
established, financed, maintained, or controlled by such person.'' 2 
U.S.C. 441i(b)(2)(B)(iii). Paragraph (d)(1) clarifies that this is an 
aggregate limit per recipient committee (i.e., the aggregate limit 
applies separately to each party committee) and, therefore, a person 
may contribute to an unlimited number of State, district, and local 
committees of a political party. See discussion of 11 CFR 300.31(d)(3), 
below. Paragraph (d)(1) did not draw comment. In the NPRM, the 
Commission sought 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 paragraph. The Commission received no comments on 
this point. The Commission, in this rulemaking, is adopting 11 CFR 
300.2(c), which is based on 11 CFR 100.5(g), which should be applied to 
determine whether certain persons share a $10,000 per year per 
committee contribution amount limitation under paragraph (d)(1).

[[Page 49095]]

    Paragraph (d)(2) addresses those cases in which State law 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 paragraph (d)(1). Paragraph (d)(2) strikes a 
balance between respect for State law and protecting the integrity of 
the Levin Amendment amount limitation. It makes clear that lower State 
law amount limitations prevail over the $10,000 limitation in the Levin 
Amendment, but that the Levin Amendment $10,000 limit controls where 
State law amount limitations exceed $10,000. There were no public 
comments on paragraph (d)(2).
    Paragraph (d)(3) of section 300.31 addresses the question of 
whether State, district, and local committees of the same political 
party are affiliated for purposes of applying the donation amount 
limitation as set forth in paragraphs (d)(1) and (d)(2) of section 
300.31. See generally 11 CFR 110.3. The paragraph clarifies that such 
committees are not considered affiliated only for the purpose of 
determining compliance with paragraph (d)(1). See 148 Cong. Rec. H410 
(daily ed. Feb. 13, 2002) (statement of Rep. Shays).
    The last sentence of paragraph (d)(3) is intended to make clear 
that there is no limit to the number of State, district, and local 
committees to which a person may donate Levin funds. The phrase 
``individually or together with'' in paragraph (d)(3) is intended to 
clarify that the amount limitations in paragraphs (d)(1) and (d)(2) 
apply collectively to the amounts donated to a particular party 
committee by a person and by any entities established, financed, 
maintained, or controlled by such person.
    Three commenters discussed paragraph (d)(3). A national party 
committee supported the provision. Another commenter suggested that 
there should be a ``rebuttable presumption'' of affiliation of party 
organizations ``at the same political or geographic unit'' in order to 
prevent a possible proliferation of party organizations each with its 
own $10,000 per donor limit. The legislative history indicates, 
however, that Congress contemplated the possibility of such a 
proliferation of party committees and chose to address it by imposing a 
ban on transfers of Levin funds between party committees rather than by 
affiliating the committees under a single contribution limit. 148 Cong. 
Rec. H410 (daily ed. Feb. 13, 2002) (statement of Rep. Shays); see 2 
U.S.C. 441i(b)(2)(B)(iv). Therefore, the Commission has not adopted 
this suggestion.
    As mentioned above in the discussion of paragraph (a) of section 
300.31, a key point made in the statute is that expenditures and 
disbursements of Levin funds by a State, district, or local political 
party committees must be ``made solely from funds raised by the * * * 
committee which makes such expenditure or disbursement * * *.'' 2 
U.S.C. 441i(b)(2)(B)(iv). Congress elaborated on this fundamental 
requirement by specifically providing that Levin funds must not be 
``solicited, received, directed, transferred, or spent by or in the 
name of'' a national committee of a political party, including a 
national Congressional campaign committee, or a Federal candidate or 
individual holding Federal office. 2 U.S.C. 441i(b)(2)(C)(i). This 
statutory prohibition extends to an agent acting on behalf of a 
national party committee or a candidate or Federal officeholder, and to 
any entity that is directly or indirectly established, financed, 
maintained, or controlled by a national party committee or a candidate 
or Federal officeholder. 2 U.S.C. 441i(a)(2), and (e)(1); see 2 U.S.C. 
441i(b)(2)(C).
    Paragraph (e) of section 300.31 implements these specific statutory 
restrictions. Paragraph (e)(1) provides that a State, district, or 
local political party committee must not ``accept or use'' as Levin 
funds any funds ``solicited, received, directed, transferred or spent'' 
by a national committee of a political party, including a national 
Congressional campaign committee. Paragraph (e)(2) extends the same 
prohibition to funds ``solicited, received, directed, transferred or 
spent'' by a Federal candidate or officeholder. Two commenters pointed 
out that paragraphs (e)(1) and (e)(2), as published in the NPRM, did 
not consistently or expressly refer to agents of, or to entities 
directly or indirectly established, financed, maintained, or controlled 
by, national party committees and Federal candidates and officeholders. 
The prohibition in paragraph (e)(1) has been revised in the final 
regulation to extend explicitly to agents of, and to entities directly 
or indirectly established, financed, maintained, or controlled by, 
national party committees and by Federal candidates and officeholders. 
Similarly, paragraph (e)(2) has been revised to refer expressly to 
agents of Federal candidates and officeholders.
    Confusion could arise about the relationship of the Commission's 
long standing joint fundraising regulation, 11 CFR 102.17, and the 
restrictions imposed in paragraphs (e)(1) and (e)(2) of section 300.31. 
Therefore, both paragraphs (e)(1) and (e)(2) explicitly provide that 11 
CFR 102.17 does not permit joint fundraising of Levin funds by a State, 
district, or local political party committee, and a national party 
committee or a Federal candidate or officeholder. Paragraph (e)(1) also 
clarifies that a State, district, or local political party committee 
may jointly raise, under 11 CFR 102.17, Federal funds not to be used 
for Federal election activity.
    Congress specifically addressed other joint fundraising of Levin 
funds by providing that a State, district, or local political party 
committee must not use as Levin funds any amounts ``solicited, 
received, or directed through fundraising activities conducted jointly 
by two or more State, local, or district committees of any political 
party or their agents.'' 2 U.S.C. 441i(b)(2)(C)(ii). This prohibition 
extends across State lines. Ibid. New paragraph (f) implements this 
statutory 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. Paragraph (f) also 
clarifies that nothing in BCRA forbids two or more State, district, or 
local political party committees from jointly raising Federal funds 
that are not to be used for Federal election activity.
    The provisions of paragraphs (e)(1), (e)(2), and (f) of section 
300.31 regarding joint fundraising drew several comments. A national 
party committee suggested that the Commission clarify that these joint 
fundraising prohibitions extend only to Levin funds. In response, the 
Commission emphasizes that the section heading and the language in the 
introduction to paragraph (e) explicitly limit the scope of these 
provisions to ``Levin funds.'' Similarly, the Commission emphasizes 
that paragraph (f) explicitly refers to ``Levin funds.''
    One commenter approved of the scope of joint fundraising provisions 
of paragraphs (e)(1), (e)(2), and (f), stating that the joint 
fundraising prohibition should extend beyond particular ``events'' to 
all fundraising activities for Levin funds that are conducted jointly. 
Conversely, three commenters, a national party committee, a State party 
committee, and an association of State party officials, urged the 
Commission to limit the reach of the joint fundraising prohibition in 
paragraphs (e)(1), (e)(2), and (f) to ``specific joint fundraising 
events,'' in contrast to joint fundraising ``activities.'' They urge 
that such joint fundraising ``activities'' for Levin funds should be 
permitted. In support, they quote Rep. Shays, who said, ``joint 
fundraisers between state committees or state and local committees are 
not

[[Page 49096]]

permitted * * * The joint fundraising prohibition will prevent a single 
fundraiser for multiple state and local party committees.'' 148 Cong. 
Rec. H410 (daily ed. Feb. 13, 2002). These commenters apparently have 
focused upon Rep. Shays' use of the term ``single fundraiser,'' which 
they seem to interpret to mean a dinner, a speech, or similar 
``event.'' Presumably, a fundraising ``activity,'' such as a direct 
mail campaign, would be permitted under the commenters' suggested 
interpretation. In response, the Commission notes that statements by 
any member of Congress during the floor debate should not be used to 
contradict the plain language of the statute. BCRA itself broadly 
refers to ``fundraising activities conducted jointly'' by State, 
district, or local political party committees. 2 U.S.C. 
441i(b)(2)(C)(ii) (emphasis added). In addition, the specific statement 
made by Rep. Shays, referring to a ``single fundraiser,'' could easily 
encompass either a dinner or a specific direct mail campaign.
    In the final rules, the Commission has added as a separate 
paragraph (g) a rule stated in the NPRM as the final sentence of 
paragraph (f). Paragraph (g), under the heading ``Safe harbor,'' 
provides that the use of a common vendor by more than one State, 
district, or local political party committees does not constitute joint 
fundraising within the meaning of section 300.31. In the version of the 
regulation published in the NPRM (then in paragraph (f)), the rule 
would have provided that the use of a common vendor would not, by 
itself, be deemed joint fundraising. The Commission revised this 
language in order to provide a ``bright-line'' rule. The principal 
Congressional sponsors of BCRA, responding to the NPRM, agreed with 
this provision in principle, but noted that use of a common vendor may, 
in some circumstances, be a means of carrying out actual `joint 
fundraising' schemes. The sponsors urged the Commission to be ``highly 
attentive'' to this practice.

11 CFR 300.32  Expenditures and Disbursements

    11 CFR part 300, subpart B, generally addresses expenditures and 
disbursements of Federal funds and of Levin funds for Federal election 
activities. 11 CFR 300.32 specifically addresses both kinds of spending 
by a State, district, or local political party committee, and clarifies 
that BCRA does not affect spending of non-Federal funds for purely 
State or local activity. 11 CFR 300.32 also implements part of 2 U.S.C. 
441i(b)(1), which requires that an association or similar group of 
candidates for State or local office, or an association of State or 
local officeholders, must make expenditures or disbursements for 
Federal election activity solely with Federal funds.
    In the NPRM, the Commission solicited comments about the term, 
``association or similar group of candidates for State or local office, 
or an association of State or local officeholders,'' specifically 
asking whether it should be further defined in the regulations, and if 
so, about examples of such associations or groups to include in the 
final regulations. The Commission received no comments on this point, 
nor did the Commission receive any other comments about paragraph 
(a)(1).
    Paragraph (a)(1) requires that an association or similar group of 
candidates for State or local office, or an association of State or 
local officeholders, must make expenditures or disbursements for 
Federal election activity solely with Federal funds. Paragraph (a)(2) 
makes 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 2 
U.S.C. 441i(b)(1). The Commission received no comments regarding this 
provision.
    Paragraphs (a)(3) and (a)(4) address how State, district, or local 
party committees must pay the costs of raising funds used to pay for 
Federal election activities. In BCRA, Congress required that spending 
by a State, district, or local committee of a political party ``to 
raise funds that are used, in whole or in part, for expenditures and 
disbursements for a Federal election activity shall be made from funds 
subject to the limitations, prohibitions, and reporting requirements of 
this Act.'' 2 U.S.C. 441i(c). As published in the NPRM, paragraphs 
(a)(3) and (a)(4) sought to implement section 441i(c) as it applied to 
Federal funds raised for Federal election activity and Levin funds 
raised for Federal election activity, respectively.
    In the NPRM, the Commission sought comment about section 441i(c) 
with regard to Levin funds. In particular, the Commission sought 
comment on (1) whether proposed paragraph (a)(4) could be limited to 
the direct costs (see pre-BCRA 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 pre-BCRA 11 CFR 
106.5(f). Comments were 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. 67 FR 35664.
    The Commission received several comments about paragraphs (a)(3) 
and (a)(4). The principal Congressional sponsors of BCRA and a public 
interest group suggested that both paragraphs (a)(3) and (a)(4) should 
be clarified by including the statutory language, ``in whole or in 
part.'' The Commission has included this suggestion in the final 
regulation. The added language better conforms the scope of the 
regulation to the scope of the statute.
    Another commenter suggested that both paragraphs (a)(3) and (a)(4) 
should be limited to the direct costs of raising funds to be spent for 
Federal election activity, in contrast to the regulation proposed in 
the NPRM, which would have covered all costs of fundraising. The 
Commission has included this suggestion in the final rules. The 
purposes of 2 U.S.C. 441i(c) are adequately served by regulating only 
the direct costs of raising funds for Federal election activity. This 
limitation also avoids unnecessary confusion about allocation of 
administrative costs in the fundraising context in that covering the 
direct costs of fundraising is consistent with the Commission's 
longstanding regulation of fundraising costs. Given this change in the 
final regulation, the Commission has imported language from its pre-
BCRA allocation regulation describing what constitutes direct costs.
    A public interest group supported paragraph (a)(4) of the NPRM, 
while a State party committee objected to paragraph (a)(4) to the 
extent that it forbids a State, district, or local political party 
committee from spending Levin funds to raise Levin funds. This 
commenter suggests that Levin funds are subject to the limitations, 
prohibition, and reporting requirements of the Act, as specified in 2 
U.S.C. 441i(c).
    The Commission notes that 2 U.S.C. 441i(b)(2)(A), which addresses 
the use of Levin funds for certain Federal election activity, refers to 
``amounts which are not subject to the limitations, prohibitions, and 
reporting requirements of this Act (other than any requirements of this 
subsection).'' Although that statutory phrase is somewhat incomplete, 
in that it omits any reference to the reporting requirements for Levin 
activity that are found in a different section of the Act (2 U.S.C. 
434(e)), it is nonetheless a recognition that Levin funds are subject 
to requirements of the Act.
    Yet even without this phrase, the Commission would find that Levin

[[Page 49097]]

funds are subject to the limitations and prohibitions found in the Act 
at 2 U.S.C. 441i(b)(2), and the reporting requirements found in the Act 
at 2 U.S.C. 434(e)(2)(A). The Commission notes that 2 U.S.C. 
441i(b)(2)(B) places a $10,000 limit on Levin funds donated to any one 
State, district, or local committee of a political party, which is 
greater than the amount limitation for contributors to authorized 
committees under 2 U.S.C. 441a(a)(1)(A), but less than the amount 
limitation for contributors to national committees under 2 U.S.C. 
441a(a)(1)(B). The Commission finds that even though there are 
different amount limitations that apply to different contexts in the 
Act, that does not cause any of those limitations to not be limitations 
``of the Act.'' Similarly, 2 U.S.C. 441i(b)(2)(B) and 441i(b)(2)(C)--
which, among other things, prohibit the use of Levin funds for activity 
that refers to a Federal candidate and prohibit the receipt of Levin 
funds raised by other party committees--contain different prohibitions 
than other sections of the Act (see, e.g., 2 U.S.C. 441b), but are 
prohibitions ``of the Act'' nonetheless. And finally, reporting 
requirements under the Act can vary depending on the amount and nature 
of the receipt or disbursement, as well as on the nature of the entity 
that is receiving and disbursing the amount at issue. See 2 U.S.C. 434. 
The same variables apply to the reporting requirements for funds raised 
and disbursed for Federal election activity. See 2 U.S.C. 434(e). In 
light of the statutory limitations, prohibitions and reporting 
requirements to which Levin funds are subject, the Commission concludes 
that State, district, and local party committees or organizations may 
spend Levin funds to raise Levin funds.
    Paragraph (b) of section 300.32 lists the types of activities for 
which a State, district, or local political party committee may spend 
Levin funds. Paragraph (b)(1) spells out the two kinds of Federal 
election activity for which Levin funds may be spent, see 2 U.S.C. 
441i(b)(2)(A), and provides that such spending must be made subject to 
the conditions set out in paragraph (c) of section 300.32. The 
principal Congressional sponsors of BCRA suggested that the word 
``only'' be included to preclude any possible misinterpretation of the 
provision. The Commission has adopted this suggestion in the final 
regulation.
    Paragraph (b)(2) of section 300.32, as proposed in the NPRM, drew 
several comments. A national party committee and a State party 
committee supported the provision. The principal Congressional sponsors 
of BCRA and a public interest group expressed concern that paragraph 
(b)(2) could be misinterpreted to allow spending of Levin funds for the 
Federal election activities described in 2 U.S.C. 431(20)(A)(iii) and 
(iv). In response to this concern, the Commission has added the 
language, ``other than the Federal election activities defined in 11 
CFR 100.24(b)(3) and (4),'' which implement section 431(20)(A)(iii) and 
(iv).
    As published in the NPRM, paragraph (b)(2) of section 300.32 would 
have allowed a State, district, or local political party committee to 
spend Levin funds for any purposes allowed by State law, and would have 
also provided that such spending was not subject to paragraph (c) (see 
below). The principal Congressional sponsors of BCRA expressed concern 
that the latter provision could be misinterpreted to allow fundraising 
and unallocated spending of Levin funds otherwise forbidden in other 
regulations. The Commission agrees. Therefore, the final rule, 
paragraph (b)(2), exempts spending of Levin funds for purposes 
permissible under State law from only paragraphs (c)(1) and (c)(2) of 
section 300.32 because those two paragraphs are specifically focused on 
spending for Federal election activities. As revised, the final rule 
subjects all spending of Levin funds to paragraphs (c)(3) and (c)(4). 
The heading for paragraph (c) has been changed slightly in the final 
rule to conform with this change.
    While the Levin Amendment permits the spending of Levin funds for 
the purposes set out in paragraphs (b)(1) and (2), it places 
restrictions and conditions on that spending when it is for Federal 
election activity. Paragraph (c) sets out in one place important 
restrictions and conditions that are stated in different sections of 
BCRA. Paragraph (c)(1) implements 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). 
Paragraph (c)(2) implements the restriction that the Federal election 
activity paid for partly with Levin funds must not be for any 
broadcast, 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). Paragraph (c)(3) 
ties together the provisions of this regulation with 11 CFR 300.31, 
which covers the raising of Levin funds. Paragraph (c)(4) requires 
allocable Federal election activity (i.e., voter registration, voter 
identification, GOTV, or generic campaign activity that does not refer 
to a clearly identified Federal candidate and is not a broadcast, 
cable, or satellite communication) that exceeds in the aggregate $5,000 
in a calendar year to be paid for either entirely with Federal funds, 
or with a combination of Federal funds and Levin funds pursuant to the 
allocation percentages set forth in 11 CFR 300.33. Disbursements that 
aggregate $5,000 or less in a calendar year for this restricted 
category of Federal election activity may be paid for entirely with 
Federal funds, entirely with Levin funds, or pursuant to the allocation 
percentages set forth in 11 CFR 300.33.
    In implementing 2 U.S.C. 441i(b)(2)(A), the Commission chose to 
permit a greater amount of Levin funds to be used when disbursements 
for allocable Federal election activity do not exceed in the aggregate 
$5,000 in a calendar year for several reasons. First, the Commission 
notes that the reporting requirements for Federal election activity 
contain an exception for activity below $5,000 in the aggregate in a 
calendar year. See 2 U.S.C. 434(e)(2)(A). While that exception applies 
to aggregate receipts and disbursements, rather than just aggregate 
disbursements, it does suggest that Congress did not take a rigid 
approach to low levels of Federal election activity. Second, the 
Commission is particularly sensitive to the nature of the Federal 
election activity to which this provision applies: Grassroots 
activities for which references to Federal candidates are prohibited. 
There is a far weaker nexus between Federal candidates and this 
category of Federal election activity than other types of Federal 
election activity for which Levin funds are prohibited. Finally, the 
Commission notes that $5,000 is only half of what any single donor may 
donate (subject to State law) to each and every State, district, and 
local party committee under 2 U.S.C. 441i(b)(2), so there is no danger 
that allowing a committee to use entirely Levin funds for allocable 
Federal election activity that aggregates $5,000 or less in a calendar 
year will somehow lead to circumvention of the amount limitations set 
forth in 2 U.S.C. 441i(b)(2). The distinction in paragraph (c)(4) 
between allocable Federal election activity below $5,000 and allocable 
Federal election activity above $5,000 reflects these considerations.
    Paragraph (d) serves 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 non-
Federal funds, remains a matter of State law. In response to

[[Page 49098]]

several comments, the Commission is making two minor clarifications to 
this paragraph in the final rules. First, the paragraph heading has 
been changed to refer to ``activities,'' rather than ``funds,'' as it 
read in the NPRM, to be more descriptive of the actual subject of the 
paragraph. Second, the first sentence of the paragraph now refers to 
spending ``Federal, Levin, or non-Federal'' funds to conform this 
paragraph with paragraph (b)(2) of section 300.32.

11 CFR 300.33  Allocation of Costs of Federal Election Activity

    The final regulations in this section address only the allocations 
of expenditures and disbursements by State, district, and local party 
committees for Federal election activity, pursuant to the requirements 
of BCRA. The requirements for allocations by these committees of other 
categories of expenditures and disbursements that are not Federal 
election activity are to be found at 11 CFR 106.7. This division of 
rules represents an attempt to clarify how different categories of 
activities are addressed with regard to allocation, depending upon 
their nature, timing and, in certain instances, the presence or absence 
of a Federal candidate on the ballot, i.e., whether they come or do not 
come within the definition of ``Federal election activity'' at 11 CFR 
100.24. Provisions at proposed 11 CFR 300.33 that addressed activities 
not within the definition of Federal election activity now appear in 
new 11 CFR 106.7. See also the Explanation and Justification for 11 CFR 
106.7.
    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 with Federal funds, with 
one exception. This requirement holds even when the expenses involved 
are also related to activities in connection with non-Federal 
elections. The exception to the required use of Federal funds in 
connection with Federal election activity involves certain activities 
to be paid in part with Levin funds, pursuant to 2 U.S.C. 441i(b)(2).
    Section 441i(b)(2)(A) permits State, district, and local party 
committees, under certain conditions, to use Levin funds from a Levin 
or non-Federal account for particular categories of activity, including 
voter registration, voter identification, get-out-the-vote (``GOTV''), 
and generic campaign activities during the time periods when they 
constitute Federal election activity. These funds must have been 
received by a party committee pursuant to specific limitations, and are 
to be used to meet expenses related to voter registration activity that 
takes place within 120 days of a Federal election and/or expenses 
related to voter identification, GOTV activities, and generic campaign 
activities that are conducted when a Federal candidate appears on the 
ballot. Such activities must not refer to a clearly identified 
candidate for Federal office. 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. Levin funds may also be used for non-Federal 
purposes permissible under State law. See 11 CFR 300.32(b)(2).
    Paragraphs 300.33(a)(1) and (2) of the proposed regulations, which 
addressed the costs of salaries and wages paid to employees who spend 
less than 25% of their time in connection with Federal elections and of 
other administrative costs, are being replaced by new 11 CFR 
106.7(c)(1) and (d)(1) for the reasons explained in the Explanation and 
Justification for that section.
    In the final rules, 11 CFR 300.33(a) addresses costs that may be 
allocated between Federal and Levin funds. Paragraphs (a)(1) and (a)(2) 
represent a division of the proposed rule into two parts, the first 
addressing voter registration within 120 days of the date of an 
election and the second the costs of voter identification, GOTV, and 
generic campaign activities occurring during time periods when they 
constitute Federal election activity. The relevant time periods for the 
latter categories of activity are set out at 11 CFR 100.24(a)(1). Both 
paragraphs (a)(1) and (a)(2) are subject to 11 CFR 300.32(c), which 
permits committees to fund these activities entirely with Levin funds 
only when the disbursements for the activities do not exceed $5,000 in 
the aggregate in a calendar year.
    Paragraph (b) of section 300.33 sets out fixed minimum amounts of 
Federal funds to be required for the Federal portions of costs of the 
specified activities for which allocation between Federal and Levin 
funds is permissible. One goal of the allocation rules is to assure 
that activities deemed allocable are not paid for with a 
disproportionate amount of 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, in lieu of the State-by-State ballot composition 
ratios for generic campaign activity and in lieu of the time or space 
method applied to exempt State party activities in the pre-BCRA 
regulations, the 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.
    In the NPRM, the Commission set out allocation percentages for the 
Federal shares of the allocable Federal election activities described 
in paragraph (a). The final rules at 11 CFR 300.33(b)(1) through (4) 
use the same minimum Federal percentages. Thus, State, district, and 
local party committees and organizations must allocate no less than the 
following amounts to their Federal accounts:
    (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.
    As with the percentages used in 11 CFR 106.7 for the allocation of 
activities that are not Federal election activities, the percentages 
for those allocable Federal election activities that may be paid for in 
part with Levin funds were 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) ten 
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% to 33.33%, with an 
average of 28%, while the Federal percentages for the two parties in 
the ten States that held both Presidential and Senate campaigns 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 ranged from 20% to 25%, with an average of 21%, while the 
Federal percentages for the two parties in six States with no Senate 
campaign ranged from 11.11% to

[[Page 49099]]

16.67%, with an average of 15%. The rules apply the average percentages 
in each of the four groupings of States to all 50 States.
    As discussed in the Explanation and Justification for 11 CFR 106.7, 
one comment on the NPRM from a public interest organization addressed 
the Commission's proposed fixed percentages by providing two 
alternatives to the Commission's figures. The first alternative would 
have set a flat 33% requirement for Federal shares of what the response 
termed ``Levin expenditures'' and for allocable costs other than 
administrative costs in odd-numbered years or in non-Presidential 
election years, and a flat 40% requirement for Federal shares of these 
same categories of activities in Presidential election years. The 
commenter based these percentages on what was termed ``the current 
assumption'' as to what State party committees spend in certain years.
    The second alternative posed by the same commenter adopted the 
Commission's calculations, but called for the use of the higher 
percentages in the sample States for what the response termed ``Levin 
spending'' and for voter registration outside the 120 day period before 
an election, plus the average percentages for certain non-Levin 
expenses. The commenter also urged the Commission to apply the 
allocation percentages to a two-year election cycle, not just to the 
year of a Federal election.
    The comment submitted on behalf of the principal Congressional 
sponsors of BCRA with regard to fixed allocation percentages was very 
similar to that of the public interest organization's response cited 
above in that, as one alternative approach, it called for at least a 
33% Federal allocation of what it termed ``Levin activities'' and of 
voter registration activities outside the 120 day period before an 
election. It also called for 40% Federal allocations of Levin 
activities and of voter registration activities that are not Federal 
election activities in Presidential election years. This alternative 
urged the application of the percentages to two-year Federal election 
cycles. As a second alternative, this commenter also agreed to use of 
the Commission's percentages for administrative costs in a two year 
cycle, but urged the application over that cycle of the highest, not 
the average, Federal percentages for what it termed ``Levin 
activities'' and voter registration activities that are not `Federal 
election activity'. * * *'' Another comment from a public interest 
organization also called for use of the highest percentages in the 
identified States, not the average percentages.
    Comments on the NPRM received from party committees with regard to 
fixed percentages for Federal allocations ranged from support for the 
Commission's position to giving party committees a choice at the 
beginning of each cycle between the proposed formula and ballot 
composition ratios.
    The final rules at paragraph 300.33(b) retain the fixed percentage 
approach to allocation proposed in the NRPM and adopt the percentages 
proposed in the NPRM to disbursements for Federal election activities. 
As discussed above, disbursements for salaries and wages, and 
allocations of administrative costs, are addressed at 11 CFR 106.7. The 
final rules at 11 CFR 300.33(b) also contain additional language to 
clarify that the allocation percentages must be used for activities 
that occur within the time periods described in 11 CFR 100.24, time 
periods that establish when specific activities are to be treated as 
``Federal election activity'' under BCRA. The time periods differ 
between voter registration on the one hand and voter identification, 
GOTV, and generic campaign activities on the other. See 11 CFR 
100.24(a) and (b). As explained in the Explanation and Justification 
for 11 CFR 100.24, the complete two-year cycle approach urged by some 
commenters has not been adopted for Federal election activities.
    With regard to the amounts of the fixed minimum Federal 
allocations, the Commission has retained the percentages contained in 
the NPRM because they represent averages of actual allocation ratios 
used in specific States at specific times, not assumptions of State, 
district, and local party behavior. The Explanation and Justification 
for 11 CFR 106.7 explains the basis for this approach in greater 
detail.
    Paragraphs (c)(1) and (2) of section 300.33 set out the categories 
of Federal election activity costs that must not be allocated between 
Federal funds and Levin funds. These categories include: (1) The costs 
of public communications as defined at 11 CFR 100.26, which must be 
paid with all Federal funds, and (2) the costs of salaries and wages 
for employees who spend more than 25% of their compensated time in a 
month on activities in connection with a Federal election, which must 
also be paid entirely with Federal funds. The costs of salaries and 
wages for employees that spend 25% or less of their compensated time in 
a month on activities in connection with a Federal election must be 
paid entirely with non-Federal funds that comply with State law. See 11 
CFR 106.7(c)(1). This approach to salaries and wages is explained more 
fully in the Explanation and Justification for 11 CFR 106.7.
    Section 300.33(c)(3) requires that the direct costs of raising 
funds for Federal election activities be paid solely from the party 
committee's Federal funds, pursuant to 2 U.S.C. 441i(e), or with Levin 
funds. The Explanation and Justification for 11 CFR 106.7 and 300.32 
explain the reasons for this approach. The proposed rules had indicated 
that non-Federal funds could be used in certain limited fundraising 
situations involving non-Federal activity. This language has been 
deleted from the final rules for the reasons explained in the 
accompanying Explanation and Justification for 11 CFR 106.7.
    Paragraph 300.33(d) addresses transfers of Levin funds from a 
State, district, or local party committee's Levin account or from its 
non-Federal account to its Federal account or to an allocation account 
to meet the Levin fund portion of the costs of allocable expenditures 
made pursuant to 2 U.S.C. 441i(b)(2). The final rule largely tracks 
pre-BCRA 11 CFR 106.5(g) by requiring that reimbursements from a Levin 
account or from a non-Federal account to a Federal account or to an 
allocation account take place within a specified number of days. New 
paragraph (d), like former 11 CFR 106.5(g)(2)(B)(iii), states that any 
payment outside this time frame, absent the need for an advance payment 
of a reasonably estimated amount, could result, depending upon the 
circumstances, in a loan to the Federal account and a violation of the 
Act. No commenters addressed this provision.

11 CFR 300.34  Transfers

    As explained above, the Levin Amendment permits spending on certain 
Federal election activities subject to 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). A State, district, or 
local committee must raise by itself all money spent under the Levin 
Amendment. 2 U.S.C. 441i(b)(2)(B)(iv). Congress expressly stated that a 
State, district, or local committee must not use as Levin funds ``any 
funds provided to such committee'' by certain enumerated entities. 
These entities are: any other State, district, or local committee; any 
national political party committee; any agent of a political party 
committee; and any entity directly or indirectly established, financed, 
maintained, or controlled by a political party committee. 2 U.S.C. 
441i(b)(2)(B)(iv)(I) through (IV). By the plain language of these 
provisions, these restrictions

[[Page 49100]]

extend to the Federal funds component of the 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 pre-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).\6\ Paragraph (a) of section 300.34 makes 
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. A State party committee and an association 
of State party officials commented that this provision about 
transferred Federal funds should apply only to transferred Federal 
funds ``earmarked'' for spending under the Levin Amendment by the 
transferring committee. The Commission has not adopted this suggestion 
in the final rules. Congress, at 2 U.S.C. 441i(b)(2)(B)(iv), 
specifically bars a State, district, or local committee spending 
Federal funds (and Levin funds) for Federal election activity from 
using transferred funds. How a transferring committee may or may not 
characterize the transfer is irrelevant to this prohibition.
---------------------------------------------------------------------------

    \6\ 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.
---------------------------------------------------------------------------

    In response to the NPRM, a public interest group noted that a 
State, district, or local political party committee's Federal account 
may commingle Federal funds raised by the committee itself, which are 
eligible for spending for Federal election activities, and transferred 
Federal funds, which are not so eligible. This commenter suggested that 
the Commission should require party committees to use ``a reasonable 
and industry-accepted accounting method'' to ensure that they have 
sufficient self-raised, non-transferred Federal funds to cover 
expenditures for Federal election activities as the expenditures are 
made. The Commission has responded to this suggestion in the final 
rules. Paragraph (a) of section 300.34 is organized into two 
paragraphs. Paragraph (a)(1) contains the language published in the 
NPRM, without change. Paragraph (a)(2) provides that a State, district, 
or local political party committee must demonstrate through a 
reasonable accounting method approved by the Commission (including any 
method embedded in software provided or approved by the Commission) 
that its Federal account has sufficient Federal funds raised by the 
committee itself to make a given disbursement of Federal funds for 
Federal election activity. Paragraph (a)(2) alternatively permits, but 
does not require, a State, district, or local political party committee 
to establish a separate Federal account to use for spending on Federal 
election activities, and into which it deposits only Federal funds it 
has raised by itself.
    The principal Congressional sponsors of BCRA commented that 11 CFR 
300.34 should not be interpreted to forbid a State, district, or local 
political party committee from using Federal funds raised lawfully on 
its behalf by a Federal or State candidate or officeholder as long as 
the funds are contributed directly to the party committee. The 
Commission agrees with the sponsors' interpretation, and emphasizes 
that 11 CFR 300.34 applies to transfers of funds from the persons 
described in paragraphs (b)(1) and (b)(2).
    The final sentence of paragraph (a)(1) states 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).
    The Levin Amendment specifically forbids particular 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). 11 CFR 300.34(b)(1) and 
(b)(2) implement these transfer prohibitions by expressly identifying 
these persons to, and from, which transfers must not be made.
    Paragraph (c) of section 300.34 cross-refers to 11 CFR 300.30, 
which sets forth the permissible account structures for Levin funds, 
and 11 CFR 300.33, in which are the rules for allocation transfers 
between the accounts of a given State, district, or local political 
party committee.

11 CFR 300.35  Office Buildings

    BCRA repealed 2 U.S.C. 431(8)(B)(viii), which had exempted from the 
definition of contribution any donation of money or anything of value, 
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 subsequent technical amendments, however, Congress enacted 
2 U.S.C. 453(b), which 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).
    New section 300.35 addresses three areas in implementing 2 U.S.C. 
453(b). Paragraphs (a) and (b) provide for the application of State law 
to the source and use of funds, and provide that Federal law will not 
preempt the application of State law with respect to the use of non-
Federal funds and Levin funds, but that Federal law will preempt State 
law if Federal funds are used. Paragraph (c) specifically allows a 
party committee to lease space in its office building to others with 
conditions on the deposit of funds into a Federal or non-Federal 
account. Finally, paragraph (d) addresses the transitional requirements 
for the current State party office building funds established under the 
repealed statutory section.
A. Application of State Law
    A principal sponsor of the technical amendments 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). A principal 
sponsor of BCRA 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 used by State or local 
parties for such purposes, 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).
    The final rule at paragraph (a) of new section 300.35 provides that 
a State or local party committee may spend either Federal funds or non-
Federal funds that are not subject to the limitations, prohibitions, or 
disclosure provisions of the Act, so long as such funds are not 
contributed or donated by a foreign national. If non-Federal funds are 
used, they are subject to State law. If Federal funds are used, they 
are subject to

[[Page 49101]]

Federal law. The paragraph also incorporates language from the repealed 
statute and deleted regulations to the effect that the exemptions from 
Federal limits and prohibitions are based on the building not being 
purchased or constructed for the purpose of any particular Federal 
candidacy, but, rather, for the functioning of the party, which entails 
the support of most or all of the party's candidates over a number of 
years. The purchase or construction of the building to assist the 
campaign of a particular Federal candidate would entail the use of 
impermissible funds in a manner contrary to the basic purpose of the 
Federal law.
    Paragraph (b) explains the coverage of State law with respect to 
non-Federal funds or Levin funds received by a State or local party 
that are spent for the purchase or construction of its office building. 
Other than with respect to donations by foreign nationals, Federal law 
would not preempt State law as to the source of non-Federal funds, 
State restrictions on the use of those funds (i.e., the State can 
prohibit or limit the use of funds with respect to the purchase or 
construction), or the reporting of the receipt and disbursement of 
those funds. In addition, Levin funds (which also exclude foreign 
national funds) may be used for purchase or construction, subject to 
State law.
    The application of State law to the use of non-Federal funds is 
derived directly from the wording of 2 U.S.C. 453(b) and from 
Congressional statements. 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: (1) 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; (2) Congress took the affirmative step of deleting 
the receipt and disbursement of funds for such activity from the 
proscriptions of the Act; and (3) there is no indication that Congress 
intended to limit the preemptive effect to some allocable portion of 
the purchase costs. New section 300.35 supersedes these Commission 
advisory opinions to the extent that they might pertain to Federal 
preemption with respect to use of funds from a State (and now local) 
party committee's non-Federal account for the purchase or construction 
of its office building. For example, corporate donations and donations 
that are excessive under Federal law, and that are in a non-Federal 
account, may be used for the purchase or construction of a State party 
office building where State law permits, and if State law forbids 
corporate donations and donations in excess of a particular amount, 
Federal law would not preempt the application of State law prohibiting 
the use of funds from a party committee's non-Federal account.
    Although receipts and disbursements from the non-Federal accounts 
must comply with State law, section 300.35 does not contemplate that 
the Commission would take enforcement action against a party committee 
for violating State law with respect to the purchase or construction of 
its office building. Such an action is the State's responsibility. 
Moreover, although section 300.35 does not require the establishment of 
a separate bank account or book account for the receipt and 
disbursement of non-Federal funds for purchase or construction of the 
office building, Federal law does not preempt a State law requirement 
to establish such an account.
    Paragraphs (a) and (b) of the proposed rules in the NPRM differed 
from the final rules. They were revised, in part, in response to public 
comments. Proposed paragraph (a) did not refer to the prohibition on 
contributions or donations from foreign nationals. In addition, 
paragraphs (a) and (b) provided that if the party committee used funds 
from the Federal account, Federal law would not preempt State law as to 
the permissibility of the disbursements and as to the source of funds 
where State law establishes additional limits or prohibitions.
    Several commenters remarked on the provisions in proposed 
paragraphs (a) and (b) relating to the application of State law. Two 
commenters representing party committees expressed the concern that, 
with respect to the use of Federal account funds, Federal law would not 
supersede a State law that would further limit or prohibit 
contributions. They stated that this could conceivably prevent a party 
committee from using 100 percent Federal funds to pay for a building. 
They asserted that there is no support in the BCRA legislative history 
for this proposition, and that BCRA's intent was simply to allow State 
and local parties to pay for their buildings entirely with non-Federal 
funds and would not require them to use non-Federal funds.
    Three comments, including one from the four principal sponsors of 
BCRA, stated that the provisions regarding application of State law 
should not be read to allow for the use of contributions or donations 
by foreign nationals to pay for the purchase or construction of the 
party office buildings. They indicated that BCRA was not intended to 
allow for such funds to be used. Two of those commenters recommended 
that these rules should make this prohibition clear.
    As indicated above, the final rules reflect commenter input on both 
of these issues. The Commission notes that the exemption from Federal 
preemption at section 453(b) refers to the use of ``exclusively funds 
that are not subject to the prohibitions, limitations, and reporting 
requirements of the Act,'' subject to State law. It did not extend non-
preemption to Federal funds. The Commission concurs with those 
commenters who interpret BCRA as allowing use of funds from the 
committee's non-Federal account, so long as they complied with State 
law, but as not subjecting funds from the committee's Federal account 
to State law. Hence, funds in the Federal account (that are lawful 
under Federal law) may be used, even if they are not in compliance with 
the limitations and prohibitions of State law.
    The final rules in paragraphs (a) and (b) also reflect the comments 
on the explicit inclusion of a ban on the use of funds contributed or 
donated by foreign nationals, and incorporate such a ban. The 
prohibition at 2 U.S.C. 441e is so sweeping and explicit (including an 
explicit prohibition of donations ``to a committee of a political 
party'') that it would be difficult to read the intent of BCRA as 
allowing for the use of such funds by a party committee for those 
activities. One of BCRA's principal sponsors stated that BCRA 
``prohibits foreign nationals from making any contribution to a 
committee of a political party or any contribution in connection with 
federal, state or local elections * * * This clarifies that the ban on 
contributions [by] foreign nationals applies to soft money donations.'' 
148 Cong. Rec. S1994 (daily ed. March 18, 2002) (statement of Senator 
Feingold). See also United States v. Kanchanalak, 192 F.3d 1037 (D.C. 
Cir. 1999). This ban also applies to any in-kind contribution or 
donation by a foreign national such as a direct payment to a seller, 
builder, or other vendor for purchase or construction.
    Paragraphs (a) and (b) of the final rules include technical changes 
to state more clearly than the proposed rule that

[[Page 49102]]

the pertinent funds include funds that are in the accounts but were not 
received specifically for the purchase or construction, as well as 
funds specifically received for that purpose. In addition, the sentence 
in paragraph (a) discussing the application of State law is changed to 
conform to other parts of the regulation emphasizing that this 
exemption is meant to apply only to a State or local committee paying 
for its own building.
B. Proposals Excluded From the Final Rule
    The proposed rule included two paragraphs, (c) and (d), which are 
not included in the final rule. Proposed paragraph (c) would have 
defined ``purchase or construction of an office building'' by defining 
the individual terms, ``office building,'' ``purchase,'' and 
``construction.'' The terms were defined to explicitly include and 
exclude certain items or actions. The proposed definition of ``office 
building,'' particularly as it pertained to the explicit exclusion of 
certain items, would have treated the use of the term ``building'' in 2 
U.S.C. 453(b), instead of the term ``facility'' in the repealed 
exemption, as signifying a Congressional intent to narrow the scope of 
the covered costs. Recent advisory opinions stated that expenses that 
were ``capital expenditures'' under the Internal Revenue Code would be 
payable by the building fund (as opposed to business expenses). These 
opinions have been interpreted to allow building fund payments to 
purchase office equipment, furniture, and similar items. See Advisory 
Opinions 2002-12, 2001-01, and 1998-7; see also 26 CFR 1.263(a)-(1) and 
1.263(a)-(2).
    Proposed exclusions explicitly listed in the draft definitions of 
``purchase'' and ``construction'' were drawn from exclusions specified 
in previous Commission advisory opinions (in those aspects of the 
opinions that did not pertain to Federal preemption). The NPRM 
narrative for these definitions also included examples of what would 
and would not constitute ``construction.'' Proposed paragraph (d) would 
have stated that an expense that did not fit within the definition of 
``purchase or construction of an office building'' would be an 
allocable administrative cost unless it fell within another category, 
such as a support of a Federal candidate.
    The Commission sought 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 sought 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.
    Three commenters representing party committees asserted that BCRA 
did not intend the change in terminology from ``facility'' to 
``building'' to represent a change in the expenses covered by the 
exemption. One commenter noted that the McCain-Feingold bill as passed 
by the Senate in 2001 eliminated the building fund exemption for 
national and State parties and also provided that ``Federal election 
activity'' would specifically not include ``the cost of constructing or 
purchasing an office facility or equipment for a State, district, or 
local committee.'' An amendment adopted by the House eliminated a 
transition provision allowing national party committees to spend 
building fund donations raised prior to the effective date of the new 
law, and that amendment also eliminated the language as to the purchase 
of an office facility or equipment. The commenter characterized the 
technical amendment now in effect as merely a restoration of the 
deleted provision on the State and local office facility or equipment, 
noting that one of BCRA's principal sponsors characterized this as a 
non-substantive amendment.
    One of the party committee commenters urged the Commission to 
continue to use principles from the Internal Revenue Code ``such that 
capital expenditures would be allowed from the building fund (subject 
to state law) and ongoing expenses would not.'' Two of the party 
committee commenters maintained that the question of narrowing the 
definition is a moot point because they believe that if certain costs 
were not deemed to be within the definition, they would be classified 
as administrative costs and should be payable with 100% non-Federal 
funds.
    In contrast, three comments, including one from the principal 
sponsors, maintained that the change from ``facility'' to ``building'' 
indicated a Congressional intent to narrow the scope of the exemption 
and that items such as office equipment, machinery, or furniture should 
not be included within the exemption. They agreed with the proposed 
definition of ``office building.'' The sponsors also stated that it was 
their intent that administrative expenses related to office buildings 
should be allocable between Federal and non-Federal accounts or Federal 
and Levin accounts.
    The Commission also sought comment on whether more examples should 
be included in the sub-definitions of ``purchase'' or ``construction,'' 
or whether the advisory opinion process would best suit that purpose. 
Specifically, it asked whether payments for a long-term lease with an 
option to purchase the rented building should be included within the 
definition of purchase. One commenter stated that, to avoid abuses, the 
Commission should establish a bright line rule that treats purchases as 
falling within the exemption and leases as administrative expenses.
    The final rule does not include the proposed definitions of 
``office building,'' ``purchase,'' or ``construction,'' or the proposed 
allocation provision. The Commission does not view section 453(b) as 
evidence of any Congressional intent to narrow or otherwise change the 
scope of the activities (from that of the repealed exemption) for which 
building fund monies may be donated or spent. Specifically, the 
Commission concludes that BCRA does not supercede or in any way 
displace the Commission's various advisory opinions regarding building 
fund activities as applied to State, district or local political party 
committees. Accordingly, those advisory opinions remain in force and 
effect. The Commission believes that State and local party committees 
needing information as to the scope of the costs covered can receive 
guidance from the Commission's previous advisory opinions.
C. Leasing a Portion of the Office Building to Others
    Paragraph (c) of the final rule allows a State or local party 
committee to lease a portion of its office building to others at the 
usual and normal rental charge. The sources of funds will determine the 
account in which the rent revenues can be deposited.
    This provision did not appear in the NPRM. The Commission requested 
comments, however, on whether a party that owned an entire office 
building would also be able to lease space in the building to others at 
fair market rates in order to generate income. The Commission also 
sought comments 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.
    One commenter, speaking on behalf of party committees, stated that 
party committees should be permitted to rent space in their office 
buildings to State and local candidates regardless of the source of 
funds used to purchase the buildings. The comment from the principal 
sponsors of BCRA stated that

[[Page 49103]]

BCRA permits a party committee to generate income by leasing parts of 
its building and describes how to determine whether the funds may be 
deposited in a Federal or non-Federal account. Specifically, a purchase 
in whole or in part with non-Federal funds would require the deposit of 
rental income into the non-Federal account to be used only for non-
Federal purposes. Rental income generated from a building purchased 
solely with Federal funds may be deposited in the committee's Federal 
account only if all the revenues collected comply with the limitations, 
prohibitions, and reporting requirements of the Act.
    The Commission has concluded that the source of funds used to 
construct or purchase the building must determine where the rental 
revenues may be deposited. If only Federal funds were used, the 
revenues may be deposited in the Federal account. If any non-Federal 
funds were used, the revenues must be deposited in a non-Federal 
account, provided that State law permits. These requirements ensure 
that the committee's Federal account is not indirectly funded (through 
rental payments) by donations that do not meet the requirements of the 
Act, such as corporate donations.
    Consistent with the jurisdiction of State law over non-Federal 
accounts, the rule provides that the revenue received by the non-
Federal account must comply with State law. The rental amounts 
deposited in the Federal account would have to be disclosed as an 
``other receipt,'' pursuant to 11 CFR 104.3(a)(4)(vi). The Commission 
notes that the purchase or rental of a committee asset is considered a 
contribution, unless excepted through the advisory opinion process with 
respect to specific types of assets or particular circumstances (e.g., 
isolated sales of specific committee assets developed or purchased for 
the committee's own use, rather than for fundraising, and campaign 
equipment and leftover supplies of an authorized committee wishing to 
terminate). See, e.g., Advisory Opinions 1992-24, 1991-34, 1990-26, 
1989-4, and 1986-14; see also 11 CFR 100.7(a)(2). Commission advisory 
opinions have also interpreted the regulations to allow a committee to 
invest its funds and to treat the interest, dividends, or other returns 
on the investment (under particular circumstances) as ``other 
receipts.'' See Advisory Opinions 1999-8, 1989-6, and 1986-18. The 
Commission views the leasing of portions of the building as the 
equivalent of obtaining income through the investment of committee 
assets or funds. Under particular circumstances, such leasing out may 
also be viewed as an isolated sale of a unique committee asset 
purchased for the committee's own use. Hence, the payment of rent for 
office building space to the party committee at the usual and normal 
charge is not a contribution. If the tenant pays rent in excess of the 
usual and normal charge and the rent is deposited in the Federal 
account, then the amount in excess would be a contribution and 
reportable as such. An excess payment from a corporate tenant would be 
in violation of 2 U.S.C. 441b. See Advisory Opinions 1992-24 and 1990-
26.
D. Transitional Provisions for State Party Building or Facility Account
    The final rule at 11 CFR 300.35(d) addresses office building 
accounts set up by State party committees under repealed 2 U.S.C. 
431(8)(B)(viii). The regulation states that up to and including 
November 5, 2002, such accounts may accept funds that are ``designated 
for the purchase or construction of an office building.'' The rule then 
states that, starting on November 6, 2002, the funds in the account may 
not be used for Federal account or Levin account purposes but may be 
used for any other non-Federal purposes as permitted by State law.
    The NPRM differed from the final rule in two respects. Like the 
final rule, the proposed rule provided that, up until November 5, 2002, 
a State party committee could accept funds into the account, but then 
indicated that the funds in the account could only be used for the 
construction or purchase of an office building or facility. In place of 
the language on the use of the funds in the account, the final rule 
states that it applies to funds ``designated for the purchase or 
construction of an office building.'' Both the final rule and the 
proposed rule provide that, starting on November 6, 2002, the funds are 
not useable for Federal account or Levin account purposes but may be 
used for any other non-Federal purposes, as permitted by State law. 
However, the proposed rule also would have provided that the funds 
would be subject to specific paragraphs of the proposed rule, including 
the definitional paragraph that is now deleted.
    Two commenters from the party committees criticized the NPRM 
version of the transitional provisions, stating that unlike the 
national party building and facility fund transition provisions in 
BCRA, there is no BCRA provision covering the spending of funds by the 
already existing State party office facility fund. One of those 
commenters criticized the State law limitation on the use of the funds 
from the account once BCRA goes into effect, noting that the funds had 
been lawfully raised under the exemption in the repealed statutory 
section.
    The final rule as to the use of building fund accounts prior to the 
effective date of BCRA is not meant to deviate from any current 
permissible uses of those accounts. As to the use of those accounts 
after the effective date, the regulation was written to conform the 
treatment of the funds in the accounts established under the repealed 
statutory section with BCRA and still allow their use for election 
purposes. As unlimited non-Federal funds, they could not be used for 
Federal account or Levin account purposes. As such, however, they may 
be used for non-Federal purposes, and the Commission also recognizes 
the control by State law over the permissibility of such funds.

11 CFR 300.36  Reporting Federal Election Activity; Recordkeeping

    BCRA establishes certain reporting requirements for State, 
district, and local committees that are political committees and that 
finance Federal election activities. See 2 U.S.C. 434(e)(2). This 
requirement for these political committees 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). These requirements added by BCRA are in addition 
to the existing FECA requirements to report expenditures of Federal 
funds under 2 U.S.C. 434. See also 11 CFR part 104.
    Paragraph (a) of new section 300.36 applies to two types of 
entities. The first is a State, district, or local political party 
committee that has not qualified as a political committee under 2 
U.S.C. 431(4) or 11 CFR 100.5. The second is an association or similar 
group of candidates for State or local office or of individuals holding 
State or local office (see 2 U.S.C. 441i(b)(1)) that has not qualified 
as a political committee under 11 CFR 100.5. In the NPRM, the 
Commission sought comments as to what, if any, reporting requirements 
an association or similar group of candidates for, or holders of, State 
and local office may have under 2 U.S.C. 434(e)(2) if it is not a 
political committee. The Commission received one comment, from a public 
interest group, which suggested that the result should depend on 
whether the association or similar group has attained

[[Page 49104]]

political committee status under 11 CFR 100.5. The Commission has 
concluded that such an association or similar group that has not 
qualified as a political committee has no reporting requirements under 
2 U.S.C. 434(e)(2) because that section, by its own terms, applies to 
``political committees.'' The Commission further concludes such an 
association or similar group is in a position analogous to a political 
party organization that is not a political committee under 11 CFR 100.5 
to the extent both engage in Federal election activity. Therefore, in 
the final rules, such an association or similar group that has not 
qualified as a political committee under 11 CFR 100.5 must comply with 
paragraph (a) of section 300.36.
    Paragraph (a) recognizes that neither type of organization has 
reporting requirements under BCRA because it is not a political 
committee. See 2 U.S.C. 434(e)(2). Under paragraph (a)(1), both types 
of organizations must demonstrate through a reasonable accounting 
method that they have sufficient Federal funds on hand to pay the 
required Federal portion of the costs of Federal election activity 
under 11 CFR 300.32 and 300.33. Paragraph (a)(1) also requires each 
type of organization to keep records of Federal receipts and 
disbursements and to make those records available to the Commission 
upon request. A State party committee and an association of State party 
officials commented in support of paragraph (a)(1), to the extent that 
it applies to political party committees.
    A national party committee commented in opposition to proposed 
paragraph (a)(2), which would have required a payment for Federal 
election activity to be treated as an expenditure, regardless of 
whether it qualified as an expenditure under the statutory definition. 
See 2 U.S.C. 431(9). This commenter objected to characterizing a 
payment of Federal funds for Federal election activity as an 
expenditure ``even if such activity does not reference any Federal 
candidate.'' A State party committee and an association of State party 
officials made very similar comments, citing Advisory Opinion 1999-4. 
The State party committee characterizes this advisory opinion as 
``rul[ing] that only disbursements that influence a specific Federal 
election count towards the dollar thresholds in [11 CFR 100.5(c)].'' 
The State party committee's primary concern is that ``thousands'' of 
local and district committees not currently required to register and 
file reports with the Commission will be required to do so. One of the 
commenters stated that the Commission has ``effectively acknowledged'' 
in paragraph (a)(1) of section 300.36 that ``Congress did not intend 
first-dollar disclosure of'' Federal election activity spending. 
Conversely, a public interest group commented in support of this 
paragraph.
    Paragraph (a)(2) clarifies that a payment of Federal funds or Levin 
funds for the costs of Federal election activity does not constitute an 
expenditure for purposes of determining whether or not a State, 
district, or local political party committee, or an association or 
similar group of candidates for State or local office or of individuals 
holding State or local office, becomes a political committee, under 11 
CFR 100.5, unless the payment otherwise qualifies as an expenditure 
under 2 U.S.C. 431(9). Paragraph (a)(2) also states that a payment of 
Federal funds for the costs of Federal election activity that refers to 
a clearly identified Federal candidate and that meets the definition of 
``exempt activities'' (see 11 CFR 100.8(b)(10), (16), and (18)) is to 
be treated as a payment for exempt activities for the purposes of 
determining political committee status under 2 U.S.C. 431(4)(C) and 11 
CFR 100.5(c).
    Paragraph (b) of section 300.36 applies to State, district, and 
local political party committees, and to an association or similar 
group of State and local candidates and officeholders, that disburse 
Federal funds for Federal election activities and that have qualified 
as political committees under 11 CFR 100.5. The heading of paragraph 
(b)(1) is revised from the version of the regulation published in the 
NPRM. The new heading makes clear that paragraph (b)(1) applies to 
State, district, and local political party committees that have 
qualified as political committees and that have less than $5,000 in 
total receipts and disbursements for Federal election activity (see 2 
U.S.C. 434(e)(2)(A)), and to an association or similar group of 
candidates for State or local office or of individuals holding State or 
local office at all times. Paragraph (b)(1) provides that such 
committees must report all receipts and disbursements of Federal funds 
for all or part of the costs of Federal election activity. Paragraph 
(b)(1) goes on to state that this requirement applies 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). A national 
party committee and a State party committee commented in opposition to 
the requirement of itemization of Federal receipts for Levin activity, 
because ``Federal receipts will be used fungibly for multiple 
purposes.'' The Commission points out that Federal receipts are not 
fungible, as far as spending for Federal election activity goes, to the 
extent that receipts include transfers from other party committees. A 
State, district, or local committee must not use transferred funds for 
Federal election activity spending. 2 U.S.C. 441i(b)(2)(B)(iv). 
Moreover, Congress has specifically required itemization of these 
receipts. 2 U.S.C. 434(e)(3). The final sentence of 11 CFR 300.36(b)(1) 
provides that a disbursement of Federal funds or Levin funds for 
Federal election activity will not be deemed an expenditure and 
reported as such, unless it satisfies the definition of expenditure in 
2 U.S.C. 431(9).
    In the final rules, the Commission has corrected an inadvertent 
omission that appeared in the version of paragraph (b)(1) of section 
300.36 published in the NPRM. The words ``receipts and'' have been 
inserted before the word ``disbursement'' in the second sentence. The 
preamble of 11 CFR 300.36(b)(1) correctly discussed the paragraph, 
referring to ``receipts and disbursements.'' 67 FR 35671. The 
Commission has also deleted an unnecessary and potentially confusing 
introductory clause in one of the sentences in this paragraph.
    Paragraph (b)(2) implements the broader reporting provisions of 2 
U.S.C. 434(e)(2)(A) and (B) with regard to State, district, and local 
political party committees. The heading of this paragraph has been 
revised from the version of the regulation published in the NPRM. The 
change is intended to make clear that this paragraph applies to State, 
district, and local political party committees that are political 
committees and that have $5,000 or more of total receipts and 
disbursements for Federal election activity. 2 U.S.C. 434(e)(2)(A) and 
(B). Paragraph (b)(2) does not apply to an association or similar group 
of State and local candidates and officeholders that disburses Federal 
funds for Federal election activities because such groups are not 
authorized to raise and spend Levin funds, and thus may not allocate 
disbursements for Federal election activity between Federal funds and 
Levin funds. See 2 U.S.C. 441i(b)(2), which applies only to party 
committees. These committees always report under part 104 of Title 11 
because they may have no Levin funds to report pursuant to paragraph 
(a), discussed above.
    The first sentence of paragraph (b)(2) states the basic rule that 
all receipts and disbursements for Federal election activity must be 
reported if the political committee has an aggregate of $5,000 or more 
of such receipts and

[[Page 49105]]

disbursements in a calendar year. The second sentence makes it clear 
that this basic reporting rule extends to Levin funds used for Federal 
election activity.
    Paragraphs (b)(2)(i) through (iv) have been revised, or added, 
since the version of the regulation published in the NPRM. As published 
in the NPRM, the regulation would have referred the reader to 11 CFR 
104.17(b) to identify important elements of information that must be 
reported under this section 300.36. Instead, paragraphs (b)(2)(i) 
through (iv), as adopted in the final rules, state these requirements 
expressly, for the convenience of the reader. These requirements 
generally parallel the requirements adopted in 11 CFR 104.17(b) with 
certain modifications appropriate to the context of expenses allocated 
among Federal election activities.
    Paragraph (b)(2)(i) pertains to disclosure of the methods State, 
district, or local committees use to report allocating expenses for 
Federal election activity between Federal funds and Levin funds. 
Paragraph (b)(2)(i)(A) of section 300.36 specifies that a committee 
must state the allocation percentages for Federal election activity 
disbursements that are used in its reports. This paragraph includes a 
specific cross-reference to 11 CFR 300.33(b), where these allocation 
percentages for Federal election activity are set out.
    Paragraph (b)(2)(i)(B) of section 300.36 requires the committee to 
report which allocable category of Federal election activity a given 
allocated disbursement falls into. In paragraph (b)(2)(i)(B), the 
reference to allocable category of Federal election activity means the 
type of Federal election activity as defined in 11 CFR 100.24 (e.g., 
voter registration activity as defined in section 100.24(b)(1), or 
voter identification as defined in section 100.24(b)(2)(i)). Note that 
expenses for certain categories of Federal election activity are not 
allocable between Federal funds and Levin funds (e.g., public 
communications that promote or support, or attack or oppose, a clearly 
identified Federal candidate under 11 CFR 100.24(b)(3)). See 11 CFR 
300.33(a).
    Paragraph (b)(2)(ii) pertains to reporting of allocation transfers 
between a Levin or non-Federal account and a Federal account, or among 
a Levin or non-Federal account, a Federal account, and a designated 
allocation account for allocated Federal election activity. All 
transfers related to a category of Federal election activity must 
identify that category. Paragraph (b)(2)(iii) specifies the elements of 
information that must be reported for an allocated disbursement for 
Federal election activity, including the name and address of the payee, 
the date of the payment, and the purpose of the payment. This paragraph 
also sets out itemization requirements for disbursements covering more 
than one program or activity. Paragraph (b)(2)(iv) covers itemization 
of disbursements of more than $200. 2 U.S.C. 434(e)(3).
    Paragraph (b)(3) alerts the reader to the rules for reporting 
payments allocated between Federal funds and non-Federal funds that are 
not covered in paragraph (b)(2). As explained above, paragraph (b)(2) 
applies only to payments for Federal election activity allocated 
between Federal funds and Levin funds under 11 CFR 300.33. The 
reporting regulation for payments allocated between Federal funds and 
non-Federal funds are contained in 11 CFR 104.17. For example, section 
104.17 addresses reporting of administrative expenses.
    Paragraph (c)(1) implements BCRA's new requirement for monthly 
filing by party committees that come under new section 434(e) of the 
Act. 2 U.S.C. 434(e)(4). This is accomplished by referring to the 
Commission's existing regulation specifying monthly reporting, e.g., 11 
CFR 104.5(c)(3).
    In the NPRM, the Commission sought 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. The 
Commission received two comments. An association of State party 
officials opposed applying receipts and disbursements for Federal 
election activities toward the electronic filing threshold because 
these ``will also be disclosed on the party committee's regularly filed 
reports.'' The Commission notes that this comment, while true, could be 
applied to any committee with regard to electronic filing. A public 
interest group commented that receipts and disbursements for Federal 
election activity should apply to the electronic filing threshold.
    Consistent with 2 U.S.C. 434(a)(11), paragraph (c)(2) of section 
300.36 provides that contributions and expenditures of Federal funds 
for Federal election activity apply to the $50,000 threshold for 
mandatory electronic filing. When determining whether a receipt of 
Federal funds for Federal election activities is a contribution, the 
Commission's regulation at 11 CFR 100.7, including the exclusions in 
paragraph (b) of that section, must be applied. Similarly, when 
determining whether a disbursement of Federal funds for Federal 
election activity is an expenditure, the Commission's regulation at 11 
CFR 100.8, including the exclusions in paragraph (b) of that section, 
must be applied. The Commission discerns no reason why a contribution 
or expenditure should be treated differently for this purpose simply 
because it is related to a Federal election activity. The Commission 
emphasizes that this provision does not apply to receipts and 
disbursements of Levin funds for Federal election activity, and does 
not apply to receipts and disbursements that are not ``contributions'' 
or ``expenditures'' as defined by the FECA.
    Finally, paragraph (d) of section 300.36 supports the disclosure 
provisions outlined above by adding a recordkeeping requirement. 
Paragraph (d) refers 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.

11 CFR 300.37  Prohibitions on Fundraising for and Donating to Certain 
Tax-Exempt Organizations

    BCRA 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 soliciting any funds for, or making or directing any donations to 
certain tax exempt organizations engaged in certain election-related 
activity. 2 U.S.C. 441i(d). Except as discussed below, the ban on State 
party fundraising for tax-exempt organizations at new 11 CFR 300.37 
mirrors the provision applicable to the prohibition on national party 
committee fundraising for these organizations at new 11 CFR 300.11. See 
Explanation and Justification for 11 CFR section 300.11 above for a 
discussion of comments received in response to specific questions 
raised in the NPRM.
    Paragraph (a)(3) implements BCRA's prohibition on State party 
committee fundraising for, and donations to, a section 527 organization 
unless the organization is a ``political committee,'' a State or local 
party committee, or an authorized committee of a State or local 
candidate. The NPRM asked whether the term ``political committee'' in 
11 CFR 300.37 should mirror the definition of that term in 2 U.S.C. 
431(4), which would encompass only organizations that make 
contributions and expenditures in connection with Federal elections or 
whether it should be interpreted to also encompass State-registered 
political committees that support only State and local candidates.

[[Page 49106]]

    BCRA's cosponsors stated that it would be in keeping with the 
intent of BCRA to permit State, district, and local party committees 
``to make a non-federal donation to a section 527 organization 
registered as a State PAC as long as such a State PAC does not make 
expenditures and disbursements in connection with an election for 
Federal office, including expenditures and disbursements for Federal 
election activity.'' Several party committee commenters and at least 
one public interest group agreed with this approach. One public 
interest commenter disagreed, stating that permitting State and local 
party committees to fundraise for, or donate to, State political 
committees ``would be contrary to the letter and spirit of BCRA.''
    Accordingly, in the final rules, new paragraph (a)(3)(iv) of 
section 300.37 permits a State, District or local party committee to 
solicit funds for, or donate to, a political committee registered under 
State law that supports only State or local candidates and does not 
make expenditures or disbursements in connection with an election for 
Federal office, including expenditures and disbursements for Federal 
election activity. The Commission agrees with the sponsors and other 
commenters that this new paragraph is consistent with the major purpose 
of BCRA--to prohibit non-Federal funds from being used in connection 
with Federal elections. As long as the section 527 organization for 
which funds are being raised exclusively supports non-Federal 
candidates and does not finance activities that could benefit Federal 
candidates, such as get-out-the-vote activities in connection with an 
election in which a Federal candidate appears on the ballot, BCRA's 
intent is preserved.
    As discussed in the Explanation and Justification for 11 CFR 
300.11, a safe harbor provision has been added at 11 CFR 300.37(c). 
Because 11 CFR 300.37(a) permits State, district and local party 
committees to solicit funds for, or donate funds to, section 527 
organizations that are State-registered political committees and that 
meet certain other requirements, paragraph (c)(2) of the final rules 
contains an additional safe harbor provision applicable to those 
organizations. This safe harbor is similar to the safe harbor provision 
applicable to section 501(c) organizations in paragraph (c)(1). The 
safe harbor provides that a State, district, and local party committee 
may obtain and rely upon a certification from certain section 527 
organizations to determine whether such organizations fall outside the 
fundraising/donations prohibition.
    Paragraph (d) of 11 CFR 300.37 sets forth the criteria for the 
certification for both 501(c) organizations and certain section 527 
organizations. This paragraph for the most part tracks the criteria for 
certifications by section 501(c) organizations set forth in 11 CFR 
300.11(d). See Explanation and Justification for 11 CFR 300.11. 
Additionally, paragraph (d)(1) of 11 CFR 300.37 provides that in the 
case of a section 527 organization that is a State-registered political 
committee pursuant to paragraph (a)(3)(iv), the certification is a 
written statement signed by the committee treasurer. As the individual 
who oversees expenditures of a political committee, the treasurer has 
knowledge of the types of activities undertaken by the organization. 
The remaining certification requirements are identical to those for 
section 501(c) organizations.
    New paragraphs (e) and (f) of 11 CFR 300.37 mirror the provisions 
in 11 CFR 300.11(e) and (f) as applied to State, district, and local 
party committees and other covered persons rather than national party 
committees. See Explanation and Justification for 11 CFR 300.11.

Subpart C--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 combines 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.
    The proposed rules for 11 CFR 300.50 (national party prohibition) 
and 11 CFR 300.51 (State party prohibition) were identical to proposed 
11 CFR 300.11 (national party prohibition) and proposed 11 CFR 300.37 
(State party prohibition), respectively.
    The final rule at 11 CFR 300.50 (national party prohibition) is 
identical to the final rule at 11 CFR 300.11; the final rule at 11 CFR 
300.51 (State party prohibition) is identical to the final rule at 11 
CFR 300.37; and the final rule at 11 CFR 300.52 (regulations governing 
Federal candidate and officeholder solicitations for 501(c) 
organizations) is identical to the final rule at 11 CFR 300.65. The 
Explanation and Justification for 11 CFR 300.11, 300.37 and 300.65 
apply to 11 CFR 300.50, 300.51 and 300.52, respectively.

Subpart D--Federal Candidates and Officeholders

11 CFR 300.60  Scope

    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 placing the 
regulations that address these limitations in 11 CFR part 300, subpart 
D.
    Section 300.60 explains that these 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 
elective 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). As noted above, the 
Commission is adding a comparable definition at 11 CFR 300.2(o). 
Persons covered by the restrictions in this subpart may not ``solicit, 
receive, direct, transfer or spend'' non-Federal funds unless certain 
requirements are satisfied, and subject to certain exceptions explained 
below.
    No comments were received on this section.

11 CFR 300.61  Federal Elections

    Section 300.61 as proposed in the NPRM prohibited any Federal 
candidate or officeholder, his or her agent, or any person described in 
section 300.60, above, from soliciting, receiving, directing, 
transferring, or spending non-Federal funds in connection with an 
election for Federal office, including funds for any Federal election 
activity described in 11 CFR 100.24, discussed above. 2 U.S.C. 
441i(e)(1)(A). One commenter urged the Commission to construe this 
language to prohibit a candidate only from raising non-Federal funds 
that would eventually benefit the candidate's own campaign. Because the 
Commission does not find support in the statutory language for this 
approach, it is not incorporating this recommendation.
    The principal sponsors of BCRA asked the Commission to include 
``disburse'' in the list of specified actions, so as to clarify that a 
person described in 11 CFR 300.60 must use Federal funds when 
disbursing funds in connection with an election for Federal office. The 
Commission appreciates the desire for uniformity between sections

[[Page 49107]]

300.61 and 300.62, discussed below; and also notes that drawing a 
distinction between funds that are ``spent'' and funds that are 
``disbursed'' for certain purposes could prove problematic. 
Accordingly, it is adding ``disburse'' to the list of covered 
activities in section 300.61.

11 CFR 300.62  Non-Federal Elections

    BCRA also prohibits any Federal candidate or officeholder, his or 
her agent, or any other person described in Sec. 300.60, from raising, 
receiving, directing, transferring, or spending or disbursing funds in 
connection with any non-Federal election, unless the funds are not in 
excess of the amounts permitted with respect to contributions to 
candidates and political committees and are not from sources prohibited 
by the Act from making contributions in connection with Federal 
elections. 2 U.S.C. 441i(e)(1)(B).
    The NPRM limited this restriction to Federal funds subject to the 
limitations and prohibitions of the Act. One comment requested the 
Commission to remove the term ``Federal'' from this definition, to make 
it cover all funds that are subject to the limitations and prohibitions 
of the Act. The Commission is making this change, which is consistent 
with the statutory language; and is making additional changes to 
further parallel the statutory language.
    In discussing proposed 11 CFR 300.61 and 300.62, the NPRM stated 
that these prohibitions encompassed ``leadership PACs'' and ``candidate 
PACs'' because they are entities ``directly or indirectly established, 
financed, maintained, or controlled by'' Federal candidates and/or 
officeholders as defined in 11 CFR 300.2(c). Generally, ``leadership 
PACs'' and ``candidate PACs'' are political organizations set up by 
congressional leaders and other Federal candidates and officeholders, 
in part, as a way to support other candidates' campaigns. Although 
candidate PACs and leadership PACs are not specifically mentioned, the 
legislative history indicates that 2 U.S.C. 441i(e)(1) is intended to 
prohibit Federal officeholders and candidates from soliciting any funds 
for these committees that do not comply with FECA's source and amount 
limitations. See 148 Cong. Rec. S2140 (Daily ed. March 20, 2002) 
(statement of Sen. McCain). Consequently, the NRPM stated that Federal 
candidates and officeholders and their leadership and candidate PACs 
must not solicit, receive, direct, transfer, or spend funds for such a 
PAC's Federal or non-Federal account unless the funds complied with the 
Act's source and limitations requirements.
    The comments of the national party committees construed the NPRM 
statements, in light of statements made in the Senate debates, to mean 
that a person could contribute $5,000 to the Federal account of a 
``leadership'' PAC and could donate an additional $5,000 to the non-
Federal account of the same committee. These commenters expressed 
support for such an interpretation of the proposed rules and further 
argued that the national party ban on raising and spending non-Federal 
funds found at 2 U.S.C. 441i(a) should be construed similarly. As noted 
elsewhere, the Commission believes that the plain language of 2 U.S.C. 
441i(a) prevents such an interpretation as to the national party 
committees. No other commenters addressed this point in their written 
comments, although some commenters testified that the statutory 
language could be interpreted either to permit solicitations of $5,000 
each for a Federal and non-Federal account of a leadership PAC in light 
of the floor statements, or not to permit such PACs to have non-Federal 
accounts at all. Another commenter argued that the statutory language 
did not include the term ``non-Federal accounts,'' but instead 
permitted a Federal officeholder to solicit, receive, direct and spend 
funds ``in connection with non-Federal elections.''
    The Commission notes first that the definition of an entity 
``directly or indirectly established, financed, maintained, or 
controlled'' is being modified in the final rules from the definition 
contained in the proposed rule at section 300.2(c). The final rule 
defines this phrase by incorporating the affiliation factors set forth 
at 11 CFR 100.5(g)(4)(ii). Consequently, 11 CFR 300.62, permitting 
solicitations and spending for funds ``in connection with'' a non-
Federal election applies to a candidate PAC or leadership PAC to the 
extent that the PAC comes within the new definition of 11 CFR 300.2(c). 
Secondly, in discussing BCRA's restrictions on the solicitation and 
spending of non-Federal funds by Federal candidates and officeholders, 
the co-sponsors stated that these provisions were part of a ``system of 
prohibitions and limitations on the ability of Federal officeholders 
and candidates, to raise, spend and control soft money'' in order ``to 
stop the use of soft money as a means of buying influence and access 
with Federal officeholders and candidates.'' See 148 Cong. Rec. S2139 
(Daily ed. March 20, 2002) (statement of Sen. McCain). In light of this 
purpose, the Commission notes that new 11 CFR 300.62 permits Federal 
candidates and officeholders to solicit, receive, direct, transfer, 
spend, or disburse funds in connection with Federal and non-Federal 
elections only from sources permitted under the Act and only when the 
combined amounts solicited and received from any particular person or 
entity do not exceed the amounts permitted under the Act's contribution 
limits and are not from prohibited sources. In other words, a 
Leadership PAC that comes within the definition of 11 CFR 300.2(c) can 
raise up to a total of $5,000 from any particular person or entity, 
regardless of whether the funds are contributed to the PAC's Federal 
account, donated to its non-Federal account, or allocated between the 
two. In addition, the Commission agrees with commenters who pointed out 
that 11 CFR 300.62 does not permit Federal candidates and 
officeholders, their agents and entities established, financed, 
maintained, or controlled by them to solicit, receive, direct, 
transfer, spend, or disburse non-Federal funds for Federal elections.

11 CFR 300.63  Exception for Non-Federal Candidates

    An exception to the fundraising prohibition applies when a Federal 
candidate or Federal officeholder is a candidate for State or local 
office. 2 U.S.C. 441i(e)(2). 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. 
This exception is reflected in new 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. No comments addressed this provision.

11 CFR 300.64  Exemption for Attending, Speaking, or Appearing as a 
Featured Guest at Fundraising Events

    BCRA contains an exemption from the fundraising prohibition for 
Federal candidates and officeholders who attend, speak, or appear as a 
featured guest at a State, district, or local party committee 
fundraising event. 2 U.S.C. 441i(e)(3). The NPRM sought comment on how 
to construe and implement this exemption, particularly in light of the 
separate general prohibition on Federal candidates and officeholders 
soliciting non-Federal funds in connection with an election for 
Federal, State, or local office. The NPRM sought comment on the 
provision in light of Sen. McCain's

[[Page 49108]]

explanation in the Senate debate that 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). The Commission 
initially sought comment on a rule proposing that, while such 
individuals could attend, speak, or be a featured guest at a State or 
local party fundraising event, they could not say anything that could 
be construed as soliciting or otherwise seeking non-Federal funds. In 
the alternative, the NPRM sought comment on whether the fundraising 
event provision was a total exemption from the general solicitation 
ban, whereby Federal candidates and officeholders and their agents may 
attend and speak freely at such events. 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, and the Commission sought comments 
on whether this means that Federal candidates and officeholders may be 
referred to in invitation materials for the event, or appear as members 
of a host committee, or be honored at the event.
    The Commission received a range of comments on these issues. Some 
advocated a restrictive approach, arguing that any other construction 
would undercut the fundraising prohibition. Others noted that it could 
be almost impossible for a Federal candidate or officeholder not to 
become involved in at least indirect fundraising, such as thanking 
people in a rope line for their support, by virtue of the fact that 
they are appearing and speaking at a fundraising event, which the 
statutory exemption expressly permits. Some claimed that monitoring 
every word the speaker said could turn the Commission into ``speech 
police,'' raising First Amendment concerns. U.S. CONST. amend. I 
(``Congress shall make no law * * * abridging the freedom of speech * * 
*''). Also, the fact that a candidate or officeholder is to be honored 
at an event implies that his or her name or picture may appear 
prominently on invitations, flyers, and other material distributed in 
connection with the event.
    The Commission has decided to construe the statutory exemption 
permitting Federal candidates and officeholders to attend, speak, and 
appear as a featured guest at State, district or local party committee 
fundraising events without regulation or restriction. This conclusion 
is compelled by the plain language of the section and the structure of 
the section within BCRA. The structure of the statute requires the 
Commission to construe the provision as a total exemption to the 
solicitation prohibition, applicable to Federal candidates and 
officeholders, when attending and speaking at party fundraising events, 
because the statutory section is styled as such. To conclude otherwise 
would require the Commission to read the restrictions itemized in the 
general prohibition into a statutory exemption that clearly and 
unambiguously excludes those restrictions by it own terms. It would 
also require the Commission to regulate and potentially restrict what 
candidates and officeholders say at political events, which is contrary 
to the plain meaning of the statutory exemption and would raise serious 
constitutional concerns. Accordingly, candidates and officeholders are 
free under the rule to speak at such functions without regulation or 
restriction. In addition, as several commenters urged, State, district, 
and local party committees are free within the rule to publicize 
featured appearances of Federal candidates and officeholders at these 
events, including references to these individuals in invitations. The 
Commission concludes, however, that Federal candidates and 
officeholders are prohibited from serving on ``host committees'' for a 
party fundraising event or from personally signing a solicitation in 
connection with a State, local, or district party fundraising event, on 
the basis that these pre-event activities are outside the permissible 
activities described above flowing from a Federal candidate's or 
officeholder's appearance or attendance at the event. The rule, 
consistent with the statute, places no restriction on the speech of 
Federal candidates and individuals holding Federal office at these 
fundraising events.

11 CFR 300.65  Exceptions for Certain Tax-Exempt Organizations

    In 2 U.S.C. 441i(e)(1), BCRA prohibits candidates and officeholders 
from soliciting, receiving, directing, transferring, or spending funds 
unless the funds meet the source and amount restrictions of the Act. 
See also new 11 CFR 300.61 and 11 CFR 300.62. BCRA creates two 
exceptions from that general rule in 2 U.S.C. 441i(e)(4): (1) It allows 
candidates, officeholders, and individuals who are agents acting on 
behalf of either to make general solicitations, without source or 
amount restrictions for a 501(c) organization unless the ``principal 
purpose'' of the organization is to conduct certain Federal election 
activity, specifically voter registration, voter identification, GOTV 
activities, or generic campaign activity, so long as the solicitation 
is not to obtain funds in connection with a Federal election; and (2) 
it permits Federal candidates and officeholders, and individuals who 
are agents acting on their behalf, to make a solicitation explicitly to 
obtain funds for a 501(c) organization whose principal purpose is to 
conduct Federal election activity as described above or for a 501(c) 
organization to conduct these activities provided that only individuals 
are solicited for no more than $20,000 per calendar year. The final 
rule at 11 CFR 300.65 implements these exceptions for Federal candidate 
and officeholder solicitations for 501(c) organizations. It mirrors the 
final rule at 11 CFR 300.52 contained in subpart C, discussed above.
    In response to the NPRM, BCRA's principal sponsors and a public 
interest group stated that the proposed rule at 11 CFR 300.52(a)(1) 
(mirrored in 300.65(a)(1)) could be interpreted to prohibit candidate/
officeholder solicitations that were not meant to be prohibited. The 
proposed rules stated that a Federal candidate or officeholder may make 
a general solicitation on behalf of a 501(c) organization without 
regard to source or amount restrictions ``only if the solicitation does 
not specify how the funds will or should be spent,'' if the 
solicitation is not for a 501(c) organization whose principal purpose 
is to conduct certain enumerated Federal election activity, and if the 
solicitation is not for that enumerated Federal election activity. 
These commenters expressed concern that the proposed regulation could 
be erroneously interpreted as prohibiting Federal candidates or 
officeholders from making a general or specific solicitation, without 
source or amount limitations, for an organization such as the Red 
Cross, which engages in no ``electoral activities'' whatsoever. BCRA's 
principal sponsors also argued that this provision could be interpreted 
to prohibit specific solicitations, without source or amount 
limitations, for a 501(c) organization whose principal purpose is not 
to engage in Federal election activity, but who nonetheless engages in 
some election activity, provided that the solicitation is not for 
activity in connection with an election. The sponsors argued that the 
final rules should permit such specific solicitations. The examples 
given by the sponsors to illustrate this point included a specific 
solicitation for the

[[Page 49109]]

NAACP College Fund or the NRA firearms training program, even though 
the NAACP and the NRA engage in certain election activity.
    The Commission agrees that 11 CFR 300.65 should not be 
misinterpreted to prohibit candidates, officeholders, or their agents 
from soliciting funds for a 501(c) organization that engages in no 
election activity, such as the Red Cross. Accordingly, the final rule 
at 11 CFR 300.65 addresses the commenters' concerns by more 
specifically setting forth the circumstances under which Federal 
candidates, officeholders, and their agents can make general 
solicitations on behalf of 501(c) organizations, without regard to 
source or limitation, and by setting forth in paragraph (b) the 
circumstances under which they can made specific, limited solicitations 
to individuals to obtain funds to carry out certain Federal election 
activities.
    In response to a question in the NRPM regarding the scope of the 
term ``agent'' in 2 U.S.C. 441i(e), the sponsors stated that it was 
their intent that the restrictions on candidate/officer holder 
solicitations apply to an agent ``acting on behalf of'' either. 
Accordingly, the final rule states throughout that it applies to an 
individual who is an agent ``acting on behalf of'' a Federal candidate 
or officeholder. BCRA's sponsors and the same public interest commenter 
also pointed out that proposed 11 CFR 300.52(b)(2) (mirrored in 
proposed 11 CFR 300.65(b)(2)) did not make clear that the specific 
solicitations permitted for Federal election activity or organizations 
principally engaged in such activities applies only to 501(c) 
organizations and not to other tax exempt organizations, such as 
section 527 organizations. The Commission agrees. Accordingly, the 
introductory language in the final rule specifically states that the 
requirements for solicitations in the rule apply to 501(c) 
organizations.
    Paragraph (c) of the final rule enumerates the specific types of 
Federal election activity for which a Federal candidate or officeholder 
can make specific solicitations and incorporates the definitions of 
those activities at 11 CFR 100.24(a). Because BCRA permits limited 
solicitations only for specific Federal election activities, new 
paragraph (d) of the final rule makes clear that solicitations are not 
permitted for other election activities, including Federal election 
activity such as public communications promoting or opposing clearly 
identified Federal candidates. See 11 CFR 100.24(b)(3).
    In response to questions raised in the NPRM, BCRA's principal 
sponsors, a public interest group, and a non-profit organization agreed 
that 11 CFR 300.65 should include a safe harbor provision for Federal 
candidates, officeholders, and their agents, similar to the one for 
party committees in 11 CFR 300.11 and 11 CFR 300.37. Accordingly, new 
paragraph (e) provides that a Federal candidate, officeholder, or agent 
acting on behalf of either, may obtain and rely upon a certification 
from a section 501(c) organization in determining the scope of the 
permissible solicitations they may make on behalf of the organization. 
Paragraph (e) also sets forth the requirements for such a 
certification: the certification is a written statement signed by an 
officer or other authorized representative of the organization with 
knowledge of the organization's activities; the certification states 
the organization's principal purpose is not to conduct election 
activities, including Federal election activities described in 
paragraph (c) of this section; and the certification states that the 
organization does not intend to pay debts incurred in a prior election 
cycle for expenditures and disbursements made in connection with an 
election for Federal office (including for Federal election activity).
    A non-profit organization raised several concerns about the 
restrictions on Federal officeholders soliciting for 501(c) 
organizations. First, the non-profit group maintained that the 
regulations should create a presumption that the principal purpose of 
any 501(c) organization is not to conduct election activity because 
``under federal tax law, no 501(c) organization may conduct partisan 
electoral activity as its primary purpose.'' The commenter was 
concerned that requiring a candidate or officeholder to verify whether 
or not an organization engages in election activity as its principal 
purpose will ``result in an unnecessary chilling effect on their 
assistance'' to 501(c) organizations. The commenter was also concerned 
that IRS Form 990 tax returns and other tax forms mentioned in the NPRM 
as possible ways to determine an organization's activities or principal 
purpose would not provide a candidate or officeholder with the 
necessary information. Second, the commenter urged that any definition 
of ``principal purpose'' be based on a multi-year average of an 
organization's expenditures for Federal election activity to more 
accurately capture an organization's actual level of electoral 
activity, which necessarily occurs closer to elections. Finally, the 
group urged that the regulations include a safe harbor permitting 
candidates and officeholders to appear at a Section 501(c) 
organization's fundraiser or convention as long as no solicitations are 
made for funds for election activities, or alternatively, for any 
funds.
    Determining whether a particular organization's principal purpose 
is to conduct election activities, such as voter registration or GOTV, 
is a fact-based determination that must be made as to a particular 
organization. Thus, creating a presumption that the principal purpose 
of any 501(c) organization is not to engage in election activity is 
inappropriate and could conflict with IRS determinations. As for 
including a definition of ``principal purpose'' that is based on a 
multi-year average of an organization's election expenditures, the 
Commission lacks sufficient information to establish a particular 
percentage or average at this time. Finally, the Commission notes that 
the general and specific solicitations contemplated in 11 CFR 300.65 
may take place at a fundraising event conducted by the 501(c) 
organization.
    The Commission agrees with the commenter that IRS Form 990s may not 
clearly indicate whether or not an organization engages in specific 
election activities. Therefore, the safe harbor provision in the final 
rule does not require a Federal candidate or office holder to obtain or 
rely upon such forms.
    As for the concern that Federal candidates and officeholders will 
be chilled from assisting 501(c) organizations in fundraising, the safe 
harbor provided in paragraph (e) is intended to ease concerns as to 
inadvertent violations of the Act, as amended by BCRA. On the other 
hand, new paragraph (f) of the final rules makes clear that a Federal 
candidate, Federal officeholder, or individual agents acting on behalf 
of either may not rely upon a certification obtained from an 
organization if the individual has actual knowledge that the 
certification is false. This provision is identical to the provisions 
applicable to party committees in 11 CFR 300.11 and 300.37.

Subpart E--State and Local Candidates

11 CFR 300.70  Scope

    Subpart E implements two provisions of BCRA regarding State and 
local candidates. 2 U.S.C. 441i(f)(1), (2). Section 300.70 explains 
that this subpart applies to any candidate for State or local office, 
individual holding State or local office, or an agent acting on behalf 
of any such candidate or individual. 2 U.S.C. 441i(f)(1). For example, 
the subpart applies to an

[[Page 49110]]

individual holding Federal office who is a candidate for State or local 
office. It does not, however, apply to an association or similar group 
of candidates for State or local office, or of individuals holding 
State or local office, because they are not addressed in this section 
of BCRA. The Commission received no comments on this section.

11 CFR 300.71  Federal Funds Required for Certain Communications

    BCRA prohibits State and local candidates and officeholders from 
funding certain public communications with non-Federal funds. 2 U.S.C. 
441i(f)(1). This prohibition is contained in new 11 CFR 300.71. The 
prohibition on use of non-Federal funds encompasses public 
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. 
See 2 U.S.C. 431(20)(A)(iii). The section contains a cross reference to 
section 11 CFR 100.26, which defines the new term public communication 
for purposes of the Act. State and local candidates and officeholders 
may, however, use Federal funds for these public communications.
    No commenters addressed this section.

11 CFR 300.72  Federal Funds Not Required for Certain Communications

    BCRA contains an exception to the prohibition on the use of Federal 
funds for certain public communications that permits State and local 
candidates and officeholders to use non-Federal funds for public 
communications that refer to Federal candidates but do not promote, 
support, attack, or oppose any candidate for Federal office. 2 U.S.C. 
441i(f)(2). This exception is set forth at new 11 CFR 300.72. Section 
300.72 follows the statutory language.

XI. Part 9034--Entitlements

11 CFR 9034.8  Joint Fundraising

    The ban on national party non-Federal fundraising affects the 
Commission's joint fundraising rules under the Presidential Primary 
Matching Payment Act at 11 CFR 9034.8. The Commission is, therefore, 
adding introductory language to this section, advising readers that 
``[n]othing in this section shall supersede 11 CFR part 300, which 
prohibits any person from soliciting, receiving, directing, 
transferring, or spending any non-Federal funds, or from transferring 
Federal funds for Federal election activities.''

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, Chapter I of title 11 of the 
Code of Federal Regulations is amended as follows:

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

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

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


    2. Section 100.14 is revised 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) 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 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.
    (c) Subordinate committee of a State, district, or local committee 
means any organization that 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, and 
is directly or indirectly established, financed, maintained, or 
controlled by the State, district, or local committee.

    3. Sections 100.24, 100.25, 100.26, 100.27, and 100.28 are added to 
read as follows:


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

    (a) As used in this section, and in part 300 of this chapter,
    (1) In connection with an election in which a candidate for Federal 
office appears on the ballot means:
    (i) The period of time beginning on the date of the earliest filing 
deadline for access to the primary election ballot for Federal 
candidates as determined by State law, or in those States that do not 
conduct primaries, on January 1 of each even-numbered year and ending 
on the date of the general election, up to and including the date of 
any general runoff.
    (ii) In an odd-numbered year, the period beginning on the date on 
which the date of a special election in which a candidate for Federal 
office appears on the ballot is set and ending on the date of the 
special election.
    (2) Voter registration activity means contacting individuals by 
telephone, in person, or by other individualized means to assist them 
in registering to vote. Voter registration activity

[[Page 49111]]

includes, but is not limited to, printing and distributing registration 
and voting information, providing individuals with voter registration 
forms, and assisting individuals in the completion and filing of such 
forms.
    (3) Get-out-the-vote activity means contacting registered voters by 
telephone, in person, or by other individualized means, to assist them 
in engaging in the act of voting. Get-out-the-vote activity shall not 
include any communication by an association or similar group of 
candidates for State or local office or of individuals holding State or 
local office if such communication refers only to one or more State or 
local candidates. Get-out-the-vote activity includes, but is not 
limited to:
    (i) Providing to individual voters, within 72 hours of an election, 
information such as the date of the election, the times when polling 
places are open, and the location of particular polling places; and
    (ii) Offering to transport or actually transporting voters to the 
polls.
    (4) Voter identification means creating or enhancing voter lists by 
verifying or adding information about the voters' likelihood of voting 
in an upcoming election or their likelihood of voting for specific 
candidates. This paragraph shall not apply to an association or similar 
group of candidates for State or local office or of individuals holding 
State or local office if the association or group engages in voter 
identification that refers only to one or more State or local 
candidates.
    (b) As used in part 300 of this chapter, Federal election activity 
means any of the activities described in paragraphs (b)(1) through 
(b)(4) of this section.
    (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.
    (ii) Generic campaign activity, as defined in 11 CFR 100.25.
    (iii) Get-out-the-vote activity.
    (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 or supports, or attacks or opposes any candidate for Federal 
office. This paragraph applies whether or not the communication 
expressly advocates a vote for or against a Federal candidate.
    (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.
    (c) Exceptions. Federal election activity does not include any 
amount expended or disbursed by a State, district, or local committee 
of a political party for any of the following activities:
    (1) A public communication that refers solely to one or more 
clearly identified candidates for State or local office and that does 
not promote or support, or attack or oppose a clearly identified 
candidate for Federal office; provided, however, that such a public 
communication shall be considered a Federal election activity if it 
constitutes voter registration activity, generic campaign activity, 
get-out-the-vote activity, or voter identification.
    (2) A contribution to a candidate for State or local office, 
provided the contribution is not designated to pay for voter 
registration activity, voter identification, generic campaign activity, 
get-out-the-vote activity, a public communication, or employee services 
as set forth in paragraphs (a)(1) through (4) of this section.
    (3) The costs of a State, district, or local political convention, 
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.


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

    Generic campaign activity means a public communication that 
promotes or opposes a political party and does not promote or oppose a 
clearly identified Federal candidate or a non-Federal candidate.


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. The term public communication shall not include 
communications over the Internet.


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. A mass mailing does not 
include electronic mail or Internet communications. For purposes of 
this section, substantially similar includes communications that 
include substantially the same template or language, but vary in non-
material respects such as communications customized by the recipient's 
name, occupation, or geographic location.


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. A telephone 
bank does not include electronic mail or Internet communications 
transmitted over telephone lines. For purposes of this section, 
substantially similar includes communications that include 
substantially the same template or language, but vary in non-material 
respects such as communications customized by the recipient's name, 
occupation, or geographic location.

    4. Sections 100.29 through 100.50 are added and reserved.

    5. Sections 100.1 through 100.50 are designated as subpart A--
General Definitions.

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

    6. The authority citation for part 102 continues to read as 
follows:

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


    7. Section 102.5 is 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: Accounts and Accounting.

    (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

[[Page 49112]]

political committee that must comply with the requirements of the Act 
including the registration and reporting requirements of 11 CFR parts 
102 and 104. Only funds subject to the prohibitions and limitations of 
the Act shall be deposited in such separate Federal account. See 11 CFR 
103.3. 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 and paragraph 
(a)(5) of this section. 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 300.33, 300.34, 106.6(c), and 
106.7(f). Administrative expenses for political committees other than 
party committees shall be allocated pursuant to 11 CFR 106.6 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 106.7 and 11 CFR part 300; or
    (ii) Establish a political committee that 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 any of the conditions set forth in 
paragraphs (a)(2)(i), (ii), or (iii) of this section may be deposited 
in a Federal account established under paragraph (a)(1)(i) of this 
section, see 11 CFR 103.3, or may be received by a political committee 
established under paragraph (a)(1)(ii) of this section:
    (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) State, district, and local party committees that intend to 
expend Levin funds raised pursuant to 11 CFR 300.31 for activities 
identified in 11 CFR 300.32(b)(1) must either:
    (i) Establish one or more separate Levin accounts pursuant to 11 
CFR 300.30(c)(2); or
    (ii) Demonstrate through a reasonable accounting method approved by 
the Commission (including any method embedded in software provided or 
approved by the Commission) that whenever such organization makes a 
payment that organization has received sufficient funds subject to the 
limitations and prohibitions of the Act or the requirements of 11 CFR 
300.30(c)(1) or (3) to make such payment. Such organization shall keep 
records of amounts received or expended under this paragraph and, upon 
request, shall make such records available for examination by the 
Commission.
    (4) Solicitations by Federal candidates and Federal officeholders 
for State, district, and local party committees are subject to the 
restrictions in 11 CFR 300.31(e) and 11 CFR part 300, subpart D.
    (5) State, district, and local party committees and organizations 
may establish one or more separate allocation accounts to be used for 
activities allocable pursuant to 11 CFR 106.7 and 11 CFR 300.33.
    (b) Organizations that are not political committees under the Act.
    (1) Any 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), but that does not qualify as a political 
committee under 11 CFR 100.5, must keep records of receipts and 
disbursements and, upon request, must make such records available for 
examination by the Commission. The organization must demonstrate 
through a reasonable accounting method that, whenever such an 
organization makes a contribution or expenditure, or payment, the 
organization has received sufficient funds subject to the limitations 
and prohibitions of the Act to make such contribution, expenditure, or 
payment.
    (2) Any State, district, or local party organization that makes 
payments for certain Federal election activities under 11 CFR 300.32(b) 
must either:
    (i) Establish one or more Levin accounts pursuant to 11 CFR 
300.30(b) into which only funds solicited pursuant to 11 CFR 300.31 may 
be deposited and from which payments must be made pursuant to 11 CFR 
300.32 and 300.33. See 11 CFR 300.30(c)(2)(i); or
    (ii) Demonstrate through a reasonable accounting method approved by 
the Commission (including any method embedded in software provided or 
approved by the Commission) that whenever such organization makes a 
payment that organization has received sufficient funds subject to the 
limitations and prohibitions of the Act or the requirements of 11 CFR 
300.31 to make such payment. Such organization shall keep records of 
amounts received or expended under this paragraph and, upon request, 
shall make such records available for examination by the Commission. 
See 11 CFR 300.30(c)(2)(ii).
    (3) All such party organizations shall keep records of deposits to 
and disbursements from such Federal and Levin accounts, and upon 
request, shall make such records available for examination by the 
Commission.
    (c) National party committees. Between November 6, 2002, and 
December 31, 2002, paragraphs (a) and (b) of this section apply to 
national party committees. After December 31, 2002, national party 
committees are prohibited from raising and spending non-Federal funds. 
Therefore, this section does not apply to national party committees 
after December 31, 2002.

    8. Section 102.17 is 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 supersede 11 CFR part 
300, which prohibits any person from soliciting, receiving, directing, 
transferring, or spending any non-Federal funds, or from transferring 
Federal funds for Federal election activities.
* * * * *

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

    9. The authority citation for part 104 continues to read as 
follows:

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


    10. Section 104.8 is 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,

[[Page 49113]]

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.

    11. Section 104.9 is 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 March 31, 2003, 
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 
paragraph (b) of this section. As used in this section, 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 March 31, 2003, 
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 
paragraph (b) of this section. As used in this section, 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 accounts 
of a State or local party committee.

    12. Section 104.10 is 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 part 106. 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 part 106. 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), but shall be reported pursuant 
to paragraphs (a)(1) through (a)(4) of this section, 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 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.

[[Page 49114]]

    (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, and shall report those allocations according 
to paragraphs (b) (1) through (5) of this section, 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.

    13. Part 104 is amended by adding Sec. 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. 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. These payments shall be allocated among candidates 
pursuant to 11 CFR part 106, but only Federal funds may be used for 
such payments. 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 candidates. A State, district, or local party committee 
making expenditures and disbursements on behalf of one or more clearly 
identified Federal and one or more clearly identified non-Federal 
candidates where the activity is not a Federal election activity may 
allocate the payments between its Federal and non-Federal account and 
must report the allocation among all named candidates. For allocated 
expenditures, the committee must report the amount of each in-kind 
contribution, independent expenditure, or coordinated expenditure 
attributed to each candidate. If a payment also includes amounts 
attributable to one or more non-Federal candidates, and is made by a 
State, district, or local party committee with separate Federal and 
non-Federal accounts, and is not for a Federal election activity, then 
the payment shall be made according to the procedures set forth in 11 
CFR 106.7(f), but shall be reported pursuant to paragraphs (a)(1) 
through (a)(4) of this section, 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 must assign a unique identifying title or 
code to each program or activity conducted on behalf of such 
candidates, state the allocation ratio calculated for the program or 
activity, and explain the manner in which the ratio applied to each 
candidate was derived. The committee must also summarize the total 
amounts attributed to each candidate, to date, for each program or 
activity.
    (2) Reporting of transfers between accounts for the purpose of 
paying expenses attributable to specific Federal and non-Federal 
candidates. A State, district, or local party committee that pays 
allocable expenses in accordance with 11 CFR 106.7(f) 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 State, district, or local party 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

[[Page 49115]]

program or activity, the State, district, or local party committee must 
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 State, district, or local 
committee that pays allocable expenses in accordance with 11 CFR 
106.7(f) 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 State, district, or local party 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 State, district, or local party committee must 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 State, district, or local party committee must report the total 
amount expended by the committee that year, to date, for each joint 
program or activity.
    (4) Recordkeeping. The treasurer of a State, district, or local 
party committee 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) Allocation of activities that are not Federal election 
activities. A State, district, or local committee of a political party 
that has established separate Federal and non-Federal accounts, 
including related allocation accounts, under 11 CFR 102.5 must report 
all payments that are allocable between these accounts pursuant to the 
allocation rules in 11 CFR 106.7. Disbursements for activities that are 
allocable between Federal and Levin accounts, including related 
allocation accounts, must be reported pursuant to 11 CFR 300.36.
    (1) Reporting of allocations of expenses for activities that are 
not Federal election activities.
    (i) In the first report in a calendar year disclosing a 
disbursement allocable pursuant to 11 CFR 106.7, a State, district, or 
local committee shall state and explain the allocation percentages to 
be applied to each category of allocable activity (e.g., 36% Federal/
64% non-Federal in Presidential and Senate election years) pursuant to 
11 CFR 106.7(d).
    (ii) In each subsequent report in the calendar year itemizing an 
allocated disbursement, the State, district, or local party committee 
shall state the category of activity for which each allocated 
disbursement was made, and shall summarize the total amounts expended 
from Federal and non-Federal accounts, or from allocation accounts, 
that year to date for each such category.
    (iii) In each report disclosing disbursements for allocable 
activities as described in 11 CFR 106.7, the State, district, or local 
party committee shall assign a unique identifying title or code to each 
such program or activity, and shall state the applicable Federal/non-
Federal percentage for any direct costs of fundraising. Unique 
identifying titles or codes are not required for salaries and wages 
pursuant to 11 CFR 106.7(c)(1), or for other administrative costs 
allocated pursuant to 11 CFR 106.7(c)(2).
    (2) Reporting of transfers between the accounts of State, district, 
and local party committees and into allocation accounts for allocable 
expenses. A State, district, or local committee of a political party 
that pays allocable expenses in accordance with 11 CFR 106.7 shall 
report each transfer of funds from its non-Federal account to its 
Federal account, or each transfer from its Federal account and its non-
Federal account into an allocation account, for the purpose of payment 
of such expenses. In the report covering the period in which each 
transfer occurred, the State, district, or local party 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 
State, district, or local party committee must itemize the transfer, 
showing the amounts designated for each category of expense as 
described in 11 CFR 106.7.
    (3) Reporting of allocated disbursements for certain allocable 
activity that is not Federal election activity.
    (i) A State, district, or local committee of a political party that 
pays allocable expenses in accordance with 11 CFR 106.7 shall report 
each disbursement from its Federal account for allocable expenses, or 
each payment from an allocation account for such activity. In the 
report covering the period in which the disbursement occurred, the 
State, district, or local committee shall 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 to Federal and non-Federal portions of the allocable 
activity. If the disbursement includes payment for the allocable costs 
of more than one activity, the State, district, or local party 
committee must itemize the disbursement, showing the amounts designated 
for payments of particular categories of activity as described in 11 
CFR 106.7. The State, district, or local party committee must also 
report the total amount paid that calendar year to date for each 
category of allocable activity.
    (ii) A State, district, or local committee of a political party 
that pays allocable expenses from a Federal account and a Levin account 
in accordance with 11 CFR 300.33 shall report disbursements from those 
accounts according to the requirements of 11 CFR 300.36.
    (4) Recordkeeping. The treasurer of a State, district, or local 
party committee 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

    14. The authority citation for part 106 continues to read as 
follows:

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


    15. Section 106.1 is 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

[[Page 49116]]

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. In the case of a phone bank, the 
attribution shall be determined by the number of questions or 
statements devoted to each candidate as compared to the total number of 
questions or statements devoted to 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.
    (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 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) or 106.7(f), but shall be reported pursuant to 11 CFR 
104.10(a) or 104.17(a). If a State, district, or local party 
committee's payment on behalf of both a Federal candidate and a non-
Federal candidate is for a Federal election activity, only Federal 
funds may be used for the entire payment. For Federal election 
activities, the provisions of 11 CFR 300.33 and 104.17(a) will apply to 
payments attributable to candidates.
* * * * *
    (e) State, district, and local party committees, separate 
segregated funds, and nonconnected committees that make mixed Federal/
non-Federal payments for activities other than an activity entailing an 
expenditure for a Federal candidate and disbursement for a non-Federal 
candidate, or that make mixed Federal/Levin fund payments, shall 
allocate those expenses in accordance with 11 CFR 106.6, 106.7, or 
300.33, as appropriate.

    16. Section 106.5 is revised to read as follows:


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

    (a) General rules.
    (1) Disbursements from Federal and non-Federal accounts. National 
party committees that make disbursements in connection with Federal and 
non-Federal elections shall make those disbursements entirely from 
funds subject to the prohibitions and limitations of the Act, or from 
accounts established pursuant to 11 CFR 102.5. Political committees 
that have established separate Federal and non-Federal accounts under 
11 CFR 102.5(a)(1)(i) shall allocate expenses between those accounts 
according to this section. Organizations that are not political 
committees but have established separate Federal and non-Federal 
accounts under 11 CFR 102.5(b)(1)(i), or that make Federal and non-
Federal disbursements from a single account under 11 CFR 
102.5(b)(1)(ii), shall also allocate their Federal and non-Federal 
expenses according to this section. This section covers:
    (i) General rules regarding allocation of Federal and non-Federal 
expenses by party committees;
    (ii) Percentages to be allocated for administrative expenses and 
costs of generic voter drives by national party committees;
    (iii) Methods for allocation of administrative expenses, costs of 
generic voter drives, and of fundraising costs by national party 
committees; and
    (iv) Procedures for payment of allocable expenses. Requirements for 
reporting of allocated disbursements are set forth in 11 CFR 104.10.
    (2) Costs to be allocated. National party committees that make 
disbursements in connection with Federal and non-Federal elections 
shall allocate expenses according to this section for the following 
categories of activity:
    (i) Administrative expenses including rent, utilities, office 
supplies, and salaries, except for such expenses directly attributable 
to a clearly identified candidate;
    (ii) The direct costs of a fundraising program or event including 
disbursements for solicitation of funds and for planning and 
administration of actual fundraising events, where Federal and non-
Federal funds are collected by one committee through such program or 
event; and
    (iii) [Removed and reserved]
    (iv) Generic voter drives including voter identification, voter 
registration, and get-out-the-vote drives, or any other activities that 
urge the general public to register, vote or support candidates of a 
particular party or associated with a particular issue, without 
mentioning a specific candidate.
    (b) National party committees other than Senate or House campaign 
committees; fixed percentages for allocating administrative expenses 
and costs of generic voter drives.
    (1) General rule. Each national party committee other than a Senate 
or House campaign committee shall allocate a fixed percentage of its 
administrative expenses and costs of generic voter drives, as described 
in paragraph (a)(2) of this section, to its Federal and non-Federal 
account(s) each year. These percentages shall differ according to 
whether or not the allocable expenses were incurred in a presidential 
election year. Such committees shall allocate the costs of each 
combined Federal and non-Federal fundraising program or event according 
to paragraph (f) of this section, with no fixed percentages required.
    (2) Fixed percentages according to type of election year. National 
party committees other than the Senate or House campaign committees 
shall allocate their administrative expenses and costs of generic voter 
drives according to paragraphs (b)(2) (i) and (ii) as follows:
    (i) Presidential election years. In presidential election years, 
national party committees other than the Senate or House campaign 
committees shall allocate to their Federal accounts at least 65% each 
of their administrative expenses and costs of generic voter drives.
    (ii) Non-presidential election years. In all years other than 
presidential election years, national party committees other than the 
Senate or House campaign committees shall allocate to their Federal 
accounts at least 60% each of their administrative expenses and costs 
of generic voter drives.
    (c) Senate and House campaign committees of a national party; 
method and minimum Federal percentage for allocating administrative 
expenses and costs of generic voter drives.
    (1) Method for allocating administrative expenses and costs of 
generic voter drives. Subject to the minimum percentage set forth in 
paragraph (c)(2) of this section, each Senate or House campaign 
committee of a national party shall allocate its administrative 
expenses and costs of generic voter drives, as described in paragraph 
(a)(2) of this section, according to the funds expended method, 
described in paragraphs (c)(1)(i) and (ii) as follows:
    (i) Under this method, expenses shall be allocated based on the 
ratio of Federal expenditures to total Federal and non-Federal 
disbursements made by the committee during the two-year

[[Page 49117]]

Federal election cycle. This ratio shall be estimated and reported at 
the beginning of each Federal election cycle, based upon the 
committee's Federal and non-Federal disbursements in a prior comparable 
Federal election cycle or upon the committee's reasonable prediction of 
its disbursements for the coming two years. In calculating its Federal 
expenditures, the committee shall include only amounts contributed to 
or otherwise spent on behalf of specific federal candidates. 
Calculation of total Federal and non-Federal disbursements shall also 
be limited to disbursements for specific candidates, and shall not 
include overhead or other generic costs.
    (ii) On each of its periodic reports, the committee shall adjust 
its allocation ratio to reconcile it with the ratio of actual Federal 
and non-Federal disbursements made, to date. If the non-Federal account 
has paid more than its allocable share, the committee shall transfer 
funds from its Federal to its non-Federal account, as necessary, to 
reflect the adjusted allocation ratio. The committee shall make note of 
any such adjustments and transfers on its periodic reports, submitted 
pursuant to 11 CFR 104.5.
    (2) Minimum Federal percentage for administrative expenses and 
costs of generic voter drives. Regardless of the allocation ratio 
calculated under paragraph (c)(1) of this section, each Senate or House 
campaign committee of a national party shall allocate to its Federal 
account at least 65% each of its administrative expenses and costs of 
generic voter drives each year. If the committee's own allocation 
calculation under paragraph (c)(1) of this section yields a Federal 
share greater than 65%, then the higher percentage shall be applied. If 
such calculation yields a Federal share lower than 65%, then the 
committee shall report its calculated ratio according to 11 CFR 
104.10(b), and shall apply the required minimum Federal percentage.
    (3) Allocation of fundraising costs. Senate and House campaign 
committees shall allocate the costs of each combined Federal and non-
Federal fundraising program or event according to paragraph (f) of this 
section, with no minimum percentages required.
    (d) [Reserved].
    (e) [Reserved].
    (f) National party committees; method for allocating direct costs 
of fundraising.
    (1) If Federal and non-Federal funds are collected by one committee 
through a joint activity, that committee shall allocate its direct 
costs of fundraising, as described in paragraph (a)(2) of this section, 
according to the funds received method. Under this method, the 
committee shall allocate its fundraising costs based on the ratio of 
funds received into its Federal account to its total receipts from each 
fundraising program or event. This ratio shall be estimated prior to 
each such program or event based upon the committee's reasonable 
prediction of its Federal and non-Federal revenue from that program or 
event, and shall be noted in the committee's report for the period in 
which the first disbursement for such program or event occurred, 
submitted pursuant 11 CFR 104.5. Any disbursements for fundraising 
costs made prior to the actual program or event shall be allocated 
according to this estimated ratio.
    (2) No later than the date 60 days after each fundraising program 
or event from which both Federal and non-Federal funds are collected, 
the committee shall adjust the allocation ratio for that program or 
event to reflect the actual ratio of funds received. If the non-Federal 
account has paid more than its allocable share, the committee shall 
transfer funds from its Federal to its non-Federal account, as 
necessary, to reflect the adjusted allocation ratio. If the Federal 
account has paid more than its allocable share, the committee shall 
make any transfers of funds from its non-federal to its federal account 
to reflect the adjusted allocation ratio within the 60-day time period 
established by this paragraph. The committee shall make note of any 
such adjustments and transfers in its report for any period in which a 
transfer was made, and shall also report the date of the fundraising 
program or event that serves as the basis for the transfer. In the case 
of a telemarketing or direct mail campaign, the date for purposes of 
this paragraph is the last day of the telemarketing campaign, or the 
day on which the final direct mail solicitations are mailed.
    (g) Payment of allocable expenses by committees with separate 
Federal and non-Federal accounts.
    (1) Payment options. Committees that have established separate 
Federal and non-Federal accounts under 11 CFR 102.5(a)(1)(i) or 
(b)(1)(i) shall pay the expenses of joint Federal and non-Federal 
activities described in paragraph (a)(2) of this section according to 
either paragraph (g)(1)(i) or (ii), as follows:
    (i) Payment by Federal account; transfers from non-Federal account 
to Federal account. The committee shall pay the entire amount of an 
allocable expense from its Federal account and shall transfer funds 
from its non-Federal account to its Federal account solely to cover the 
non-Federal share of that allocable expense.
    (ii) Payment by separate allocation account; transfers from Federal 
and non-Federal accounts to allocation account.
    (A) The committee shall establish a separate allocation account 
into which funds from its Federal and non-Federal accounts shall be 
deposited solely for the purpose of paying the allocable expenses of 
joint Federal and non-Federal activities. Once a committee has 
established a separate allocation account for this purpose, all 
allocable expenses shall be paid from that account for as long as the 
account is maintained.
    (B) The committee shall transfer funds from its Federal and non-
Federal accounts to its allocation account in amounts proportionate to 
the Federal or non-Federal share of each allocable expense.
    (C) No funds contained in the allocation account may be transferred 
to any other account maintained by the committee.
    (2) Timing of transfers between accounts.
    (i) Under either payment option described in paragraphs (g)(1)(i) 
or (ii) of this section, the committee shall transfer funds from its 
non-Federal account to its Federal account or from its Federal and non-
Federal accounts to its separate allocation account following 
determination of the final cost of each joint Federal and non-Federal 
activity, or in advance of such determination if advance payment is 
required by the vendor and if such payment is based on a reasonable 
estimate of the activity's final cost as determined by the committee 
and the vendor(s) involved.
    (ii) Funds transferred from a committee's non-Federal account to 
its Federal account or its allocation account are subject to the 
following requirements:
    (A) For each such transfer, the committee must itemize in its 
reports the allocable activities for which the transferred funds are 
intended to pay, as required by 11 CFR 104.10(b)(3); and
    (B) Except as provided in paragraph (f)(2) of this section, such 
funds may not be transferred more than 10 days before or more than 60 
days after the payments for which they are designated are made.
    (iii) Any portion of a transfer from a committee's non-Federal 
account to its Federal account or its allocation account that does not 
meet the requirements of paragraph (g)(2)(ii) of this section shall be 
presumed to be a loan or contribution from the non-Federal account to a 
Federal account, in violation of the Act.

[[Page 49118]]

    (3) Reporting transfers of funds and allocated disbursements. A 
political committee that transfers funds between accounts and pays 
allocable expenses according to this section shall report each such 
transfer and disbursement pursuant to 11 CFR 104.10(b).
    (h) Sunset provision. This section applies from November 6, 2002, 
to December 31, 2002. After December 31, 2002, see 11 CFR 106.7(a).

    17. Section 106.7 is added to part 106 to read as follows:


Sec. 106.7  Allocation of expenses between Federal and non-Federal 
accounts by party committees, other than for Federal election 
activities.

    (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. All disbursements by a national party committee must be made 
from a Federal account.
    (b) State, district, and local party committees that make 
expenditures and disbursements in connection with both Federal and non-
Federal elections for activities that are not Federal election 
activities pursuant to 11 CFR 100.24 may use only funds subject to the 
prohibitions and limitations of the Act, or they may allocate such 
expenditures and disbursements between their Federal and their non-
Federal accounts. State, district, and local party committees that are 
political committees that have established separate Federal and non-
Federal accounts under 11 CFR 102.5(a)(1)(i) shall allocate expenses 
between those accounts according to paragraphs (c) and (d) of this 
section. Party organizations that are not political committees but have 
established separate Federal and non-Federal accounts, or that make 
Federal and non-Federal disbursements from a single account, shall also 
allocate their Federal and non-Federal expenses according to paragraphs 
(c) and (d) of this section. In lieu of establishing separate accounts, 
party organizations that are not political committees may choose to use 
a reasonable accounting method approved by the Commission (including 
any method embedded in software provided or approved by the Commission) 
pursuant to 11 CFR 102.5 and 300.30.
    (c) Costs allocable by State, district, and local party committees 
between Federal and non-Federal accounts.
    (1) Salaries and wages. State, district, and local party committees 
must pay salaries and wages from funds that comply with State law for 
employees who spend 25% or less of their time in any given month on 
Federal election activity or activity in connection with a Federal 
election. See 11 CFR 300.33(c)(2).
    (2) Administrative costs. State, district, and local party 
committees may either pay administrative costs, including rent, 
utilities, office equipment, office supplies, postage for other than 
mass mailings, and routine building maintenance, upkeep and repair, 
from their Federal account, or allocate such expenses 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) Exempt party activities that are not Federal election 
activities. State, district, and local party committees may pay 
expenses for party activities that are exempt from the definitions of 
contribution and expenditure under 11 CFR 100.7(b)(9), (15), or (17), 
and 100.8(b)(10), (16), or (18), that are conducted in conjunction with 
non-Federal activity, and that are not Federal election activities 
pursuant to 11 CFR 100.24, from their Federal accounts, or may allocate 
these expenses between their Federal and non-Federal accounts.
    (4) Certain fundraising costs. State, district, and local party 
committees may allocate the direct costs of certain fundraising 
programs or events between their Federal and non-Federal accounts 
provided that none of the proceeds from the activities or events will 
ever be used for Federal election activities. The proceeds of 
fundraising allocated pursuant to this paragraph must be segregated in 
bank accounts that are never used for Federal election activity. Direct 
costs of fundraising include disbursements for the planning and 
administration of specific fundraising events or programs.
    (5) Voter-drive activities that do not qualify as Federal election 
activities and that are not party exempt activities. Other than for 
salaries and wages as described in paragraph (c)(1) of this section, 
expenses for voter identification, voter registration, and get-out-the-
vote drives, and any other activities that urge the general public to 
register or vote, or that promote or oppose a political party, without 
promoting or opposing a candidate or non-Federal candidate, that do not 
qualify as Federal election activities and that are not exempt party 
activities, must be paid with Federal funds or may be allocated between 
the committee's Federal and non-Federal accounts.
    (d) Allocation percentages, ratios, and record-keeping.
    (1) Salaries and wages. Committees must keep a monthly log of the 
percentage of time each employee spends in connection with a Federal 
election. Allocations of salaries and wages shall be undertaken as 
follows:
    (i) Salaries and wages paid for employees who spend 25% or less of 
their compensated time in a given month on Federal election activities 
or on activities in connection with a Federal election shall be paid 
from funds that comply with State law.
    (ii) Salaries and wages paid for employees who spend more than 25% 
of their compensated time in a given month on Federal election 
activities or on activities in connection with a Federal election must 
be paid only from a Federal account. See 11 CFR 300.33(c)(2), and 
paragraph (e)(2) of this section.
    (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 even year in which a 
Presidential candidate, but no Senate candidate appears on the ballot, 
and in the preceding year, 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 even year in 
which a Presidential candidate and a Senate candidate appear on the 
ballot, and in the preceding year, State, district, and local party 
committees must allocate at least 36% of administrative expenses to 
their Federal accounts.
    (iii) Senate election year. In any even year in which a Senate 
candidate, but no Presidential candidate, appears on the ballot, and in 
the preceding year, 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 even year in 
which neither a Presidential nor a Senate candidate appears on the 
ballot, and in the preceding year, State, district, and local party 
committees must allocate at least 15% of administrative expenses to 
their Federal account.
    (3) Exempt party activities and voter drive activities that are not 
Federal election activities. State, district, and local party 
committees that choose to allocate expenses for exempt activities 
conducted in conjunction with non-Federal activities and voter drive 
activities, that are not Federal election activities, must do so 
subject to the following requirements:

[[Page 49119]]

    (i) Presidential election years. In any even year in which a 
Presidential candidate, but no Senate candidate appears on the ballot, 
and in the preceding year, State, district, and local party committees 
must allocate at least 28% of these expenses to their Federal accounts.
    (ii) Presidential and Senate election year. In any even year in 
which a Presidential candidate and a Senate candidate appear on the 
ballot, and in the preceding year, State, district, and local party 
committees must allocate at least 36% of these expenses to their 
Federal accounts.
    (iii) Senate election year. In any even year in which a Senate 
candidate, but no Presidential candidate, appears on the ballot, and in 
the preceding year, State, district, and local party committees must 
allocate at least 21% of these expenses to their Federal account.
    (iv) Non-Presidential and non-Senate year. In any even year in 
which neither a Presidential nor a Senate candidate appears on the 
ballot, and in the preceding year, State, district, and local party 
committee must allocate at least 15% of these expenses to their Federal 
account.
    (4) Fundraising for Federal and non-Federal accounts. If Federal 
and non-Federal funds are collected by a State, district, or local 
party committee through a joint fundraising activity, that committee 
must allocate its direct fundraising costs using the funds received 
method and according to the following procedures:
    (i) The committee must allocate its fundraising costs based on the 
ratio of funds received into its Federal account to its total receipts 
from each fundraising program or event. This ratio shall be estimated 
prior to each such program or event based upon the committee's 
reasonable prediction of its Federal and non-Federal revenue from that 
program or event, and must be noted in the committee's report for the 
period in which the first disbursement for such program or event 
occurred, submitted pursuant to 11 CFR 104.5. Any disbursements for 
fundraising costs made prior to the actual program or event must be 
allocated according to this estimated ratio.
    (ii) No later than the date 60 days after each fundraising program 
or event from which both Federal and non-Federal funds are collected, 
the committee shall adjust the allocation ratio for that program or 
event to reflect the actual ratio of funds received. If the non-Federal 
account has paid more than its allocable share, the committee shall 
transfer funds from its Federal to its non-Federal account, as 
necessary, to reflect the adjusted allocation ratio. If the Federal 
account has paid more than its allocable share, the committee shall 
make any transfers of funds from its non-Federal to its Federal account 
to reflect the adjusted allocation ratio within the 60-day time period 
established by this paragraph. The committee shall make note of any 
such adjustments and transfers in its report for any period in which a 
transfer was made, and shall also report the date of the fundraising 
program or event that serves as the basis for the transfer. In the case 
of a telemarketing or direct mail campaign, the date for purposes of 
this paragraph is the last day of the telemarketing campaign, or the 
day on which the final direct mail solicitations are mailed.
    (e) Costs not allocable by State, district, and local party 
committees between Federal and non-Federal accounts. The following 
costs incurred by State, district, and local party committees shall be 
paid only with Federal funds:
    (1) Disbursements for State, district, and local party committees 
for activities that refer only to one or more candidates for Federal 
office must not be allocated. All such disbursements must be made from 
a Federal account.
    (2) Salaries and wages. Salaries and wages for employees who spend 
more than 25% of their compensated time in a given month on activities 
in connection with a Federal election must not be allocated. All such 
disbursements must be made from a Federal account. See 11 CFR 
300.33(c)(2).
    (3) Federal election activities. Activities that are Federal 
election activities pursuant to 11 CFR 100.24 must not be allocated 
between Federal and non-Federal accounts. Only Federal funds, or a 
mixture of Federal funds and Levin funds, as provided in 11 CFR 300.33, 
may be used.
    (4) Fundraising Costs. Expenses incurred by State, district, and 
local party committees directly related to programs or events 
undertaken to raise funds to be used, in whole or in part, for 
activities in connection with Federal and non-Federal elections that 
are Federal election activities pursuant to 11 CFR 100.24 must not be 
allocated between Federal and non-Federal accounts. Except as provided 
in 11 CFR 300.32(a)(4), all such disbursements must be made from a 
Federal account.
    (f) Transfers between accounts to cover allocable expenses. State, 
district, and local party committees may transfer funds from their non-
Federal to their Federal accounts or to an allocation account solely to 
meet allocable expenses under this section and only pursuant to the 
following requirements:
    (1) Payments from Federal accounts or from allocation accounts.
    (i) State, district, and local party committees must pay the entire 
amount of an allocable expense from their Federal accounts and transfer 
funds from their non-Federal account to the Federal account solely to 
cover the non-Federal share of that allocable expense; or
    (ii) State, district, or local party committees may establish a 
separate allocation account into which funds from its Federal and non-
Federal accounts may be deposited solely for the purpose of paying the 
allocable expenses of joint Federal and non-Federal activities.
    (2) Timing.
    (i) If a Federal or allocation account is used to make allocable 
expenditures and disbursements, State, district, and local party 
committees must transfer funds from their non-Federal to their Federal 
or allocation account 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 or allocation account, except that 
transfers may be made more than 10 days before a payment is made from 
the Federal or allocation 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 or allocation account that does not meet the 
requirement of paragraph (f)(2)(i) of this section shall be presumed to 
be a loan or contribution from the non-Federal account to the Federal 
or allocation account, in violation of the Act.

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

    18. The authority citation for part 108 continues to read as 
follows:

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


    19. Section 108.7 is 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;

[[Page 49120]]

    (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

    20. The authority citation for part 110 continues 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.


    21. Section 110.1 is 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

    22. The authority citation for part 114 continues 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.


    23. Section 114.1 is 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
* * * * *

    24. Subchapter C consisting of part 300 is added to Chapter I to 
read as follows:

SUBCHAPTER C--BIPARTISAN CAMPAIGN REFORM ACT OF 2002--(BCRA) 
REGULATIONS

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; (a) and (c)).
300.11   Prohibition on fundraising for and donating to certain tax-
exempt organizations (2 U.S.C. 441; (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 of costs of Federal election activity.
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, speaking, or appearing as a 
featured guest at fundraising events (2 U.S.C. 441i (e)(3)).
300.65   Exceptions for certain tax-exempt organizations (2 U.S.C. 
441i (e)(1) and (4)).
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 and 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 to 455 of Title 2, 
United States Code, or regulations prescribed thereunder (11 CFR parts 
100 to 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.
    (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 ``Levin Amendment'' to BCRA; office buildings; and 
fundraising and donation prohibitions with regard to certain tax-exempt 
organizations.
    (3) Subpart C of this part addresses non-Federal funds 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 pertaining to 
soliciting non-Federal funds from the perspective of Federal candidates 
and officeholders in Federal and non-Federal elections; including 
exceptions for those who are also State candidates and exemptions for 
those attending, speaking, and appearing as featured guests at 
fundraising events, or who solicit for certain tax-exempt 
organizations.
    (5) Subpart E of this part focuses on State and local candidates, 
including regulations about using Federal funds for certain public 
communications, and

[[Page 49121]]

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) 501(c) organization that makes expenditures or disbursements in 
connection with a Federal election. A 501(c) organization that makes 
expenditures or disbursements in connection with a Federal election as 
that term is used in 11 CFR 300.11, 300.37, 300.50, and 300.51 includes 
an organization that, within the current election cycle, plans to:
    (1) Make expenditures or disbursements in connection with an 
election for Federal office including for Federal election activity; or
    (2) Pay a debt incurred from the making of expenditures or 
disbursements in connection with an election for Federal office 
(including for Federal election activity) in a prior election cycle.
    (b) Agent. For the purposes of part 300 of chapter I, agent means 
any person who has actual authority, either express or implied, to 
engage in any of the following activities on behalf of the specified 
persons:
    (1) In the case of a national committee of a political party:
    (i) To solicit, direct, or receive any contribution, donation, or 
transfer of funds; or,
    (ii) To solicit any funds for, or make or direct any donations to, 
an organization that is described in 26 U.S.C 501(c) and exempt from 
taxation under 26 U.S.C. 501(a) (or has submitted an application for 
determination of tax exempt status under 26 U.S.C. 501(a)), or an 
organization described in 26 U.S.C. 527 (other than a political 
committee, a State, district, or local committee of a political party, 
or the authorized campaign committee of a candidate for State or local 
office).
    (2) In the case of a State, district, or local committee of a 
political party:
    (i) To expend or disburse any funds for Federal election activity; 
or
    (ii) To transfer, or accept a transfer of, funds to make 
expenditures or disbursements for Federal election activity; or
    (iii) To engage in joint fundraising activities with any person if 
any part of the funds raised are used, in whole or in part, to pay for 
Federal election activity; or
    (iv) To solicit any funds for, or make or direct any donations to, 
an organization that is described in 26 U.S.C. 501(c) and exempt from 
taxation under 26 U.S.C. 501(a) (or has submitted an application for 
determination of tax exempt status under 26 U.S.C. 501(a)), or an 
organization described in 26 U.S.C. 527 (other than a political 
committee, a State, district, or local committee of a political party, 
or the authorized campaign committee of a candidate for State or local 
office).
    (3) In the case of an individual who is a Federal candidate or an 
individual holding Federal office, to solicit, receive, direct, 
transfer, or spend funds in connection with any election.
    (4) In the case of an individual who is a candidate for State or 
local office, to spend funds for a public communication (see 11 CFR 
100.26).
    (c) Directly or indirectly establish, maintain, finance, or 
control.
    (1) This paragraph (c) applies to national, State, district, and 
local committees of a political party, candidates, and holders of 
Federal office, including an officer, employee, or agent of any of the 
foregoing persons, which shall be referred to as ``sponsors'' in this 
section.
    (2) To determine whether a sponsor directly or indirectly 
established, finances, maintains, or controls an entity, the factors 
described in paragraphs (c)(2)(i) through (x) of this section must be 
examined in the context of the overall relationship between sponsor and 
the entity to determine whether the presence of any factor or factors 
is evidence that the sponsor directly or indirectly established, 
finances, maintains, or controls the entity. Such factors include, but 
are not limited to:
    (i) Whether a sponsor, directly or through its agent, owns 
controlling interest in the voting stock or securities of the entity;
    (ii) Whether a sponsor, directly or through its agent, has the 
authority or ability to direct or participate in the governance of the 
entity through provisions of constitutions, bylaws, contracts, or other 
rules, or through formal or informal practices or procedures;
    (iii) Whether a sponsor, directly or through its agent, has the 
authority or ability to hire, appoint, demote, or otherwise control the 
officers, or other decision-making employees or members of the entity;
    (iv) Whether a sponsor has a common or overlapping membership with 
the entity that indicates a formal or ongoing relationship between the 
sponsor and the entity;
    (v) Whether a sponsor has common or overlapping officers or 
employees with the entity that indicates a formal or ongoing 
relationship between the sponsor and the entity;
    (vi) Whether a sponsor has any members, officers, or employees who 
were members, officers or employees of the entity that indicates a 
formal or ongoing relationship between the sponsor and the entity, or 
that indicates the creation of a successor entity;
    (vii) Whether a sponsor, directly or through its agent, provides 
funds or goods in a significant amount or on an ongoing basis to the 
entity, such as through direct or indirect payments for administrative, 
fundraising, or other costs, but not including the transfer to a 
committee of its allocated share of proceeds jointly raised pursuant to 
11 CFR 102.17, and otherwise lawfully;
    (viii) Whether a sponsor, directly or through its agent, causes or 
arranges for funds in a significant amount or on an ongoing basis to be 
provided to the entity, but not including the transfer to a committee 
of its allocated share of proceeds jointly raised pursuant to 11 CFR 
102.17, and otherwise lawfully;
    (ix) Whether a sponsor, directly or through its agent, had an 
active or significant role in the formation of the entity; and
    (x) Whether the sponsor and the entity have similar patterns of 
receipts or disbursements that indicate a formal or ongoing 
relationship between the sponsor and the entity.
    (3) Safe harbor. On or after November 6, 2002, an entity shall not 
be deemed to be directly or indirectly established, maintained, or 
controlled by another entity unless, based on the entities' actions and 
activities solely after November 6, 2002, they satisfy the requirements 
of this section. If an entity receives funds from another entity prior 
to November 6, 2002, and the recipient entity disposes of the funds 
prior to November 6, 2002, the receipt of such funds prior to November 
6, 2002 shall have no bearing on determining whether the recipient 
entity is financed by the sponsoring entity within the meaning of this 
section.
    (4) 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 and must demonstrate that the 
entity is not directly or indirectly financed, maintained, or 
controlled by the sponsor.
    (ii) Notwithstanding the fact that a sponsor may have established 
an entity within the meaning of paragraph (c)(2) of this section, the 
sponsor or the entity

[[Page 49122]]

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 demonstrate that all material connections 
between the sponsor and the entity have been severed for two years.
    (iii) Nothing in this section shall require entities that are 
separate organizations on November 6, 2002 to obtain an advisory 
opinion to operate separately from each other.
    (d) Disbursement. Disbursement means any purchase or payment made 
by:
    (1) A political committee; or
    (2) Any other person, including an organization that is not a 
political committee, that is subject to the Act.
    (e) Donation. For purposes of part 300, donation means a payment, 
gift, subscription, loan, advance, deposit, or anything of value given 
to a person, but does not include contributions.
    (f) Federal account. Federal account means an account at a campaign 
depository that contains funds to be used in connection with a Federal 
election.
    (g) Federal Funds. Federal funds mean funds that comply with the 
limitations, prohibitions, and reporting requirements of the Act.
    (h) Levin account. Levin account means an account at a campaign 
depository 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.
    (i) Levin funds mean funds that are raised pursuant to 11 CFR 
300.31 and are or will be disbursed pursuant to 11 CFR 300.32.
    (j) Non-Federal account means an account that contains funds to be 
used in connection with a State or local election or allocable expenses 
under 11 CFR 106.7, 300.30, or 300.33.
    (k) Non-Federal funds mean funds that are not subject to the 
limitations and prohibitions of the Act.
    (l) [Reserved].
    (m) To solicit. For the purposes of part 300, to solicit means to 
ask that another person make a contribution, donation, transfer of 
funds, or otherwise provide anything of value, whether the 
contribution, donation, transfer of funds, or thing of value, is to be 
made or provided directly, or through a conduit or intermediary. A 
solicitation does not include merely providing information or guidance 
as to the requirement of particular law.
    (n) To direct. For the purposes of part 300, to direct means to ask 
a person who has expressed an intent to make a contribution, donation, 
or transfer of funds, or to provide anything of value, to make that 
contribution, donation, or transfer of funds, or to provide that thing 
of value, including through a conduit or intermediary. Direction does 
not include merely providing information or guidance as to the 
requirement of particular law.
    (o) Individual holding Federal office. Individual holding Federal 
office means an individual elected to or serving in the office of 
President or Vice President of the United States; or a Senator or a 
Representative in, or Delegate or Resident Commissioner to, the 
Congress of the United States.

Subpart A--National Party Committees


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

    (a) Prohibitions. A national committee of a political party, 
including a national 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 is not 
subject to the prohibitions, limitations and reporting requirements of 
the Act;
    (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 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 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 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 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, unless the 
organization is:
    (i) A political committee under 11 CFR 100.5;
    (ii) A State, district, or local committee of a political party; or
    (iii) 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 congressional campaign committee;
    (2) An entity that is directly or indirectly established, financed, 
maintained, or controlled by a national party committee, including a 
national congressional campaign 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, State, district, 
or local committee of a political party, including a national 
congressional campaign committee.
    (c) Determining whether a section 501(c) organization makes 
expenditures or disbursements in connection with Federal elections. In 
determining whether a section 501(c) organization is one that makes 
expenditures or disbursements in connection with a Federal election, 
including expenditures or disbursements for Federal election activity, 
pursuant to paragraphs (a)(1) and (2) of this section, a national 
committee of a political party, including a national congressional 
campaign committee, or any other person described in paragraph (b) of 
this section, may obtain and rely upon a certification from the 
organization that satisfies the criteria described in paragraph (d) of 
this section.
    (d) Certification. A national committee of a political party, 
including

[[Page 49123]]

a national congressional campaign committee, or any person described in 
paragraph (b) of this section, may rely upon a certification that meets 
all of the following criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities;
    (2) The certification states that within the current election 
cycle, the organization has not made, and does not intend to make, 
expenditures or disbursements in connection with an election for 
Federal office (including for Federal election activity); and
    (3) The certification states that the organization does not intend 
to pay debts incurred from the making of expenditures or disbursements 
in connection with an election for Federal office (including for 
Federal election activity) in a prior election cycle.
    (e) If a national committee of a political party or any person 
described in paragraph (b) of this section has actual knowledge that 
the certification is false, the certification may not be relied upon.
    (f) It is not prohibited for a national party or its agent to 
respond to a request for information about a tax-exempt group that 
shares the party's political or philosophical goals.


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 congressional campaign committee, 
and in its possession on that date, must be used before January 1, 
2003. Subject to the restrictions in paragraph (b) of this section, 
such funds may be used solely 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 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) Any non-Federal funds remaining after payment of debts and 
obligations permitted in paragraph (a) of this section must be either 
disgorged to the United States Treasury, or returned by check to the 
donors, no later than December 31, 2002. Any refund checks not cashed 
by February 28, 2003 must be disgorged to the United States Treasury by 
March 31, 2003.
    (d) National party committee office building or facility accounts. 
Before November 6, 2002, a national committee of a political party, 
including a national congressional campaign committee, may accept funds 
into its party office building or facility account, established 
pursuant to repealed 2 U.S.C. 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 party committees may 
no longer accept funds into such an account and must not use such funds 
for the purchase or construction of any 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 returned by check to the donors no later than December 31, 
2002. Any refund checks not cashed by February 28, 2003 must be 
disgorged to the United States Treasury by March 31, 2003.
    (e) Application. This section also applies to:
    (1) An officer or agent acting on behalf of a national party 
committee or a national 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.
    (f) 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),(b), (c), (f) and (g).


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

    (a) In general. The national committee of a political party, any 
national congressional campaign committee of a political party, and any 
subordinate committee of either, shall report all receipts and 
disbursements during the reporting period.
    (b) Termination report for non-Federal accounts. Unless a committee 
described in paragraph (a) of this section issues refund checks to 
donors as permitted by 11 CFR 300.12(c), each committee described in 
paragraph (a) of this section must file a termination report disclosing 
the disposition of funds in all non-Federal accounts and building fund 
accounts by January 31, 2003. Each committee that issues refund checks 
to donors must file a termination report covering the period ending 
March 31, 2003 disclosing the disposition of any refund checks not 
cashed by February 28, 2003, as required by 11 CFR 300.12(c) and (d).
    (c) Transitional reporting rules.
    (1) The reporting requirements covering receipts in 11 CFR 104.8(e) 
and (f) and disbursements in 11 CFR 104.9(e) for national party 
committee non-Federal accounts and building fund accounts shall remain 
in effect for the reports covering activity between November 6 and 
December 31, 2002.
    (2) The reporting requirements covering disbursements in 11 CFR 
104.9 (c) and (d) for national party committee non-Federal accounts and 
building fund accounts shall remain in effect for the reports covering 
activity between November 6, 2002 and March 31, 2003.

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


Sec. 300.30  Accounts

    (a) Scope and introduction. This section applies to State, 
district, or local committees or organizations of a political party, 
whether or not the committee is a political committee under 11 CFR 
100.5, that have receipts or make disbursements for Federal election 
activity. Paragraph (b) of this section describes and explains the 
types of accounts available to a political party committee or 
organization covered by this section. Paragraph (c) of this section 
sets out the account structure that must be maintained by a political 
party committee or organization covered by this section.
    (b) Types of accounts. Each State, district, and local party 
organization or committee that has receipts or makes disbursements for 
Federal election activity must establish one or more of the following 
types of accounts, pursuant to paragraph (c) of this section.
    (1) Non-Federal accounts. The funds deposited into this account are 
governed by State law. Disbursements, contributions, and expenditures 
made wholly or in part in connection with

[[Page 49124]]

Federal elections must not be made from any non-Federal account, except 
as permitted by paragraph (c)(3)(ii) of this section, 11 CFR 
102.5(a)(4), 11 CFR 106.7(d)(1)(i), 11 CFR 300.33 and 11 CFR 300.34.
    (2) Levin account. The funds deposited into this account must 
comply with 11 CFR 300.31. Such funds may be used for the categories of 
activities described at 11 CFR 300.32(b).
    (3) Federal account. Federal accounts may be used for the deposit 
of contributions and the making of expenditures pursuant to the 
following conditions:
    (i) Only contributions that are permissible pursuant to the 
limitations and prohibitions of the Act may be deposited into any 
Federal account, regardless of whether such contributions are for use 
in connection with Federal or non-Federal elections. See 11 CFR 103.3 
regarding impermissible funds.
    (ii) Only contributions solicited and received pursuant to the 
following conditions may be deposited in a Federal account:
    (A) Contributions must be designated by the contributors for the 
Federal account;
    (B) The solicitation must expressly state that contributions may be 
used wholly or in part in connection with a Federal election; or
    (C) The contributor must be informed that all contributions are 
subject to the limitations and prohibitions of the Act.
    (iii) All disbursements, contributions, and expenditures made 
wholly or in part by any State, district, or local party organization 
or committee in connection with a Federal election must be made from 
either:
    (A) A Federal account, except as permitted by 11 CFR 300.32; or
    (B) A separate allocation account (see paragraph (b)(4) of this 
section).
    (iv) If all payments in connection with a Federal election, 
including payments for Federal election activities, are to be made from 
a Federal account, expenditures and disbursements for costs that are 
allocable pursuant to 11 CFR 106.7 or 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 transferred to the Federal account 
pursuant to 11 CFR 106.7 and 11 CFR 300.33.
    (v) No transfers may be made to a Federal account from any other 
account(s) maintained by a State, district, or local party committee or 
organization from any other party organization or committee at any 
level for the purpose of financing activity in connection with Federal 
elections, except as provided by paragraph (b)(3)(iv) of this section 
or 11 CFR 300.33 and 300.34.
    (4) Allocation accounts. At the discretion of the party committee 
or organization, separate allocation accounts may be established for 
purposes of making allocable expenditures and disbursements.
    (i) Only funds from the party organization's or committee's Federal 
and non-Federal accounts may be deposited into an allocation account 
used to make allocable expenditures and disbursements for activities in 
connection with Federal and non-Federal elections.
    (ii) Only funds from the party organization's or committee's 
Federal account and Levin funds from its non-Federal or Levin 
account(s) may be deposited into an allocation account used to make 
allocable expenditures and disbursements for activities undertaken 
pursuant to 11 CFR 300.32(b).
    (iii) Once a party organization or committee has established a 
separate allocation account for activities in connection with Federal 
and non-Federal elections and a separate account for activities 
undertaken pursuant to 11 CFR 300.32(b), all allocable expenses must be 
paid from the appropriate allocation account for as long as that 
account is maintained.
    (iv) The party organization or committee must transfer to the 
appropriate allocation account funds from its Federal and non-Federal 
or Levin accounts in amounts proportionate to the Federal, non-Federal 
and Levin shares of each allocable expense pursuant to 11 CFR 106.7 and 
11 CFR 300.33. The transfers must be made pursuant to 11 CFR 300.33 and 
300.34.
    (v) No funds contained in an allocation account may be transferred 
to any other account maintained by the party committee or organization.
    (vi) For reporting purposes, all allocation accounts must be 
treated as Federal accounts.
    (c) Required account or accounts. Each State, district, and local 
party organization or committee that has receipts or makes 
disbursements for Federal election activity must establish its accounts 
in accordance with paragraphs (c)(1), or (c)(2), or (c)(3) of this 
section.
    (1) One or more Federal accounts in a campaign depository, in 
accordance with 11 CFR part 103, which must 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. State, district, and local party organizations 
or committees may choose to make non-Federal disbursements, subject to 
State law, and disbursements for Federal election activity from a 
Federal account provided that such disbursements are reported pursuant 
to 11 CFR 104.17 and 11 CFR 300.36, 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.
    (2) Establish at least three separate accounts in depositories as 
follows--
    (i) One or more Federal accounts;
    (ii) One or more Levin accounts; and
    (iii) One or more Non-Federal accounts.
    (3) Establish two separate accounts in depositories as follows:
    (i) One or more Federal accounts, and;
    (ii) An account that must function as both a Non-Federal account 
and a Levin account. If such an account is used, the State, district, 
and local party must demonstrate through a reasonable accounting method 
approved by the Commission (including any method embedded in software 
provided or approved by the Commission) that whenever such organization 
makes a disbursement for activities undertaken pursuant to 11 CFR 
300.32(b), that organization had received sufficient contributions or 
Levin funds to make such disbursement.
    (d) Recordkeeping. All party organizations or committees must keep 
records of deposits into and disbursements from such accounts, and, 
upon request, must make such records available for examination by the 
Commission.


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, other 
than 2 U.S.C. 441e, the committee may solicit and accept donations of 
Levin funds from that source, subject to paragraph (d) of this section.

[[Page 49125]]

    (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 entity established, financed, maintained, or controlled by such 
person) one or more donations of Levin funds aggregating 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. Subject to the 
amount limitations specified in paragraphs (d)(1) and (d)(2) of this 
section, a person (including any entity directly or indirectly 
established, financed, maintained, or controlled by such person) may 
donate without additional limitation to each and every State, district, 
and local committee of a 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 such 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), any officer or 
agent acting on behalf of such a national party committee, or any 
entity that is directly or indirectly established, financed, 
maintained, or controlled by such a national party committee. 
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, any officer 
or agent acting on behalf of such a national party committee, or any 
entity that is directly or indirectly established, financed, 
maintained, or controlled by such a national party committee. Nothing 
in this section shall be construed to prohibit a State, district, or 
local committee of a political party from jointly raising, under 11 CFR 
102.17, Federal funds not to be used for Federal election activity with 
a national committee of a political party, or its agent, or any entity 
directly or indirectly established, financed, maintained, or controlled 
by such a national party committee.
    (2) A Federal candidate, or an individual holding Federal office, 
or an agent of a Federal candidate or officeholder, or an entity 
directly or indirectly established, financed, maintained, or controlled 
by, or acting on behalf of, one or more Federal 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, an 
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 any joint fundraising activity with 
any other State, district, or local committee of any political party, 
the agent of such a committee, or an entity directly or indirectly 
established, financed, maintained, or controlled by such a committee. 
This prohibition includes State, district, and local committees of a 
political party organized in another State. Nothing in this section 
shall be construed to prohibit two or more State, district, or local 
committees of a political party from jointly raising, under 11 CFR 
102.17, Federal funds not to be used for Federal election activity.
    (g) Safe Harbor. The use of a common vendor for fundraising by more 
than one State, district, or local committee or a political party, or 
the agent of such a committee does not constitute joint fundraising 
within the meaning of this section.


Sec. 300.32  Expenditures and disbursements.

    (a) Federal funds.
    (1) 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 purposes, 
subject to the provisions of this chapter.
    (3) State, district, and local party committees that raise Federal 
funds to be used, in whole or in part, for Federal election activities 
must pay the direct costs of such fundraising only with Federal funds. 
The direct costs of a fundraising program or event include expenses for 
the solicitation of funds and for the planning and administration of 
actual fundraising programs and events.
    (4) State, district, and local party committees that raise Levin 
funds to be used, in whole or in part, for Federal election activity 
must pay the direct costs of such fundraising with either Federal or 
Levin funds. The direct costs of a fundraising program or event include 
expenses for the solicitation of funds and for the planning and 
administration of actual fundraising programs and events.
    (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, only 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
    (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 or 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, other than the Federal election activities 
defined in 11 CFR 100.24(b)(3) and (4). A disbursement of Levin funds 
under this paragraph need not comply with paragraphs (c)(1) and (c)(2) 
of this section, except as required by State law.
    (c) Conditions and restrictions on spending Levin funds.
    (1) The Federal election activity for which the disbursement is 
made must

[[Page 49126]]

not refer to a clearly identified candidate for Federal office.
    (2) The 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 disbursement must be made from funds raised in accordance 
with 11 CFR 300.31.
    (4) The disbursements for allocable Federal election activity that 
exceed in the aggregate $5,000 in a calendar year may be paid for 
entirely with Federal funds or may be allocated between Federal funds 
and Levin funds according to 11 CFR 300.33. Disbursements for Federal 
election activity that may be allocated and that aggregate $5,000 or 
less in a calendar year may be paid for entirely with Federal funds, 
entirely with Levin funds, or may be allocated between Federal funds 
and Levin funds according to 11 CFR 300.33.
    (d) Non-Federal activities. A State, district, or local committee 
of a political party that makes disbursements for non-Federal activity 
may make those disbursements from its Federal, Levin, 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.


Sec. 300.33  Allocation of costs of Federal election activity.

    (a) Costs of Federal election activity allocable by State, 
district, and local party committees and organizations.
    (1) Costs of voter registration. Subject to the conditions of 11 
CFR 300.32(c), State, district, and local party committees and 
organizations may allocate disbursements or expenditures, except 
salaries and wages for employees, between Federal funds and Levin funds 
for voter registration activity, as defined in 11 CFR 100.24(a)(2), 
that takes place 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 
refer to a clearly identified Federal candidate.
    (2) Costs of voter identification, get-out-the-vote activity, or 
generic campaign activities within certain time periods. Subject to the 
conditions of 11 CFR 300.32(c), State, district, and local party 
committees and organizations may allocate disbursements or 
expenditures, except salaries and wages for employees, between Federal 
funds and Levin funds for voter identification, get-out-the-vote 
activity, or generic campaign activities, as defined in 11 CFR 
100.24(a)(3) and (4) and 11 CFR 100.25, that are conducted in 
connection with an election in which a candidate for Federal office is 
on the ballot and within the time periods set forth in 11 CFR 
100.24(a)(1), provided that the activity does not refer to a clearly 
identified Federal candidate.
    (b) Allocation percentages. State, district, and local party 
committees and organizations that choose to allocate between Federal 
funds and Levin funds their expenditures and disbursements, except for 
salaries and wages, in connection with activities described in 
paragraph (a) of this section that take place within the time periods 
set forth in 11 CFR 100.24(a)(1) or paragraph (a) of this section must 
allocate the following minimum percentages to their Federal funds:
    (1) Presidential election years. If a Presidential candidate, but 
no Senate candidate appears on the ballot, State, district, and local 
party committees and organizations must allocate at least 28% of 
expenses for activities described in paragraph (a) of this section to 
their Federal funds.
    (2) Presidential and Senate election year. If a Presidential 
candidate and a Senate candidate appear on the ballot, State, district, 
and local party committees and organizations must allocate at least 36% 
of expenses for activities described in paragraph (a) of this section 
to their Federal funds.
    (3) Senate election year. If a Senate candidate, but no 
Presidential candidate, appears on the ballot, State, district, and 
local party committees and organizations must allocate at least 21% of 
expenses for activities described in paragraph (a) of this section to 
their Federal funds.
    (4) Non-Presidential and non-Senate year. If neither a Presidential 
nor a Senate candidate appears on the ballot, State, district, and 
local party committees and organizations must allocate at least 15% of 
expenses for activities described in paragraph (a) of this section to 
their Federal funds.
    (c) Costs of Federal election activity not allocable by State, 
district, and local party committees. The following costs incurred by 
State, district, and local party committees and organizations must be 
paid only with Federal funds:
    (1) Public communications. Expenditures for public communications 
as defined in 11 CFR 100.26 by State, district, and local party 
committees and organizations that refer to a clearly identified 
candidate for Federal office and that promote, support, attack, or 
oppose any such candidate for Federal office must not be allocated 
between or among Federal, non-Federal, and Levin accounts. Only Federal 
funds may be used.
    (2) Salaries and wages. Salaries and wages for employees who spend 
more than 25% of their compensated time in a given month on Federal 
election activity or activities in connection with a Federal election 
must not be allocated between or among Federal, non-Federal, and Levin 
accounts. Only Federal funds may be used. Salaries and wages for 
employees who spend 25% or less of their compensated time in a given 
month on Federal election activity or activities in connection with a 
Federal election shall be paid from funds that comply with State law.
    (3) Fundraising costs. Disbursements for direct fundraising costs 
incurred by State, district, and local party committees and 
organizations for funds to be used, in whole or in part, for Federal 
election activity, including the activities described in paragraph (a) 
of this section, must not be allocated between or among Federal, non-
Federal and Levin funds. Only Federal or Levin funds may be used.
    (d) Transfers between accounts to cover allocable expenses. State, 
district, and local party committees and organizations may transfer 
Levin funds from their Levin or non-Federal accounts to their Federal 
accounts or to allocation accounts solely to meet expenses allocable 
pursuant to paragraphs (a)(1) and (2) of this section and only pursuant 
to the following methods:
    (1) Payments from Federal accounts or from allocation accounts.
    (i) If Federal accounts are used to make payments for allocable 
activities, State, district, and local party committees and 
organizations must pay the entire amount of allocable expenses from 
their Federal accounts and transfer Levin funds from their Levin or 
non-Federal accounts to their Federal accounts solely to cover the 
portions of the expenses for which Levin funds may be used; or
    (ii) State, district, and local party committees and organizations 
may establish separate allocation accounts into which Federal funds and 
Levin funds may be deposited solely for the purpose of paying allocable 
expenses.
    (2) Timing.
    (i) If Federal or allocation accounts are used to make allocable 
expenditures and disbursements, State, district, and local party 
committees and organizations must transfer Levin funds

[[Page 49127]]

to their Federal or allocation 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 or allocation 
account, except that transfers may be made more than 10 days before a 
payment is made from the Federal or allocation 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 of Levin funds to a party committee 
or organization's Federal or allocation 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 Levin or non-Federal account to the 
Federal or allocation account, in violation of the Act.


Sec. 300.34  Transfers.

    (a) Federal funds.
    (1) 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 or disbursement 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 or disbursement allocated between Federal funds and 
Levin funds under 11 CFR 300.32 and 300.33.
    (2) A State, district, or local committee of a political party that 
makes an expenditure or disbursement of Federal funds for Federal 
election activities must demonstrate through a reasonable accounting 
method approved by the Commission (including any method embedded in 
software provided or approved by the Commission) that the Federal funds 
used to make the expenditure or disbursement do not include Federal 
funds transferred to the committee in violation of this section. 
Alternatively, a State, district, or local committee of a political 
party may establish a separate Federal account into which the committee 
deposits only Federal funds raised by the committee itself, and from 
which all expenditures or disbursement of Federal funds for Federal 
election activities are made.
    (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 300.30 and 11 CFR 
300.33.


Sec. 300.35  Office buildings.

    (a) General provision. For the purchase or construction of its 
office building, a State or local party committee may spend Federal 
funds or non-Federal funds that are not subject to the limitations, 
prohibitions, and disclosure provisions of the Act, so long as such 
funds are not contributed or donated by a foreign national. See 2 
U.S.C. 441e. If non-Federal funds are used, they 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. Non-Federal funds received by a State 
or local party committee that are spent for the purchase or 
construction of its office building are subject to State law as set 
forth in paragraphs (b)(1) and (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 (a) of this section.
    (2) 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) Leasing a portion of the party office building. A State or 
local party committee may lease a portion of its office building to 
others to generate income at the usual and normal charge. If the 
building is purchased or constructed in whole or in part with non-
Federal funds, all rental income shall be deposited in the committee's 
non-Federal account and used only for non-Federal purposes. Such rental 
income and its use must also comply with State law. If the building is 
purchased or constructed solely with Federal funds, the rental income 
may be deposited in the Federal account. The receipt of such funds 
shall be reported in compliance with 11 CFR 104.3(a)(4)(vi).
    (d) 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), designated for the purchase or construction of an 
office building. Starting on November 6, 2002, the funds in the account 
may not be used for Federal account or Levin account purposes, but 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, or an association or similar group of candidates for 
State or local office or of individuals holding State or local office, 
that is not a political committee.
    (1) A State, district, or local committee of a political party, or 
an association or similar group of candidates for State or local office 
or of individuals holding State or local office, 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 or Levin funds (if it is permitted to spend Levin 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) Notwithstanding the foregoing, a payment of Federal funds or 
Levin funds for Federal election activity shall not constitute an 
expenditure for purposes of determining whether a State, district, or 
local committee of a political party, or an association or similar 
group of candidates for State or local office or of individuals holding 
State or local office, qualifies as a

[[Page 49128]]

political committee under 11 CFR 100.5, unless the payment otherwise 
qualifies as an expenditure under 2 U.S.C. 431(9). A payment of Federal 
funds for Federal election activity that refers to a clearly identified 
Federal candidate and that meets the criteria of 11 CFR 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, or an association or similar group of candidates for 
State or local office or of individuals holding State or local office, 
that is a political committee.
    (1) Requirements for a State, district, or local committee of a 
political party that has less than $5,000 of aggregate receipts and 
disbursements for Federal election activity in a calendar year, and for 
an association or similar group of candidates for State or local office 
or of individuals holding State or local office at all times. This 
paragraph applies to a State, district, or local committee of a 
political party that is a political committee, and that has less than 
$5,000 of aggregate receipts and disbursements for Federal election 
activity in a calendar year; and, at all times, to an association or 
similar group of candidates for State or local office or of individuals 
holding State or local office that is a political committee (see 11 CFR 
100.5). Such a party committee or association of candidates or 
officeholders must report all receipts and disbursements of Federal 
funds for Federal election activity, including the Federally allocated 
portion of a payment for Federal election activity. A disbursement of 
Federal funds or Levin funds for Federal election activity (see 11 CFR 
300.32 and 300.33) by either such a party committee or association of 
candidates or officeholders shall not be deemed an expenditure and 
reported as such pursuant to 11 CFR part 104, unless the disbursement 
otherwise qualifies as an expenditure under 2 U.S.C. 431(9).
    (2) Requirements for a State, district, or local committee of a 
political party that has $5,000 or more of aggregate receipts and 
disbursements for Federal election activity in a calendar year. A 
State, district, or local committee of a political party that is a 
political committee (see 11 CFR 100.5) 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.
    (i) Reporting of allocation of expenses between Federal funds and 
Levin funds. A State, district, or local committee of a political party 
that makes a disbursement for Federal election activity that is 
allocated between Federal funds and Levin funds (see 11 CFR 300.33) 
must report for each such disbursement:
    (A) In the first report of a calendar year disclosing an allocated 
disbursement for Federal election activity, the committee must state 
the allocation percentages to be applied for allocable Federal election 
activity pursuant to 11 CFR 300.33(b).
    (B) In each subsequent report in the calendar year itemizing an 
allocated disbursement for Federal election activity, the committee 
must state the category of Federal election activity (see 11 CFR 
100.24(b)) for which each allocated disbursement was made, and must 
disclose the total amounts disbursed from Federal funds and Levin funds 
for that year to date for each such category.
    (ii) Reporting of allocation transfers. A committee that makes 
allocated disbursements for Federal election activities in accordance 
with 11 CFR 300.33(d) shall report each transfer of Levin funds from 
its Levin or non-Federal account, to its Federal account, and each 
transfer from its Federal account and its Levin or non-Federal account 
into an allocation account, for the purpose of making such 
disbursements. In the report covering the period in which each transfer 
occurred, the committee must explain in a memo entry the allocated 
disbursement 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 category of Federal election activity, the 
committee must itemize the transfer, showing the amounts designated for 
each category.
    (iii) Reporting of allocated disbursements. For each disbursement 
allocated between Federal funds and Levin funds, the committee must 
report the full name and address of each person to whom the 
disbursement was made, the date of the disbursement, amount, and 
purpose of the disbursement. If the disbursement is for the allocable 
costs of more than one category of Federal election activity, the 
committee must itemize the disbursement, showing the amounts designated 
for each category. The committee must also disclose the total amount 
disbursed from Federal funds and Levin funds for Federal election 
activity that calendar year, to date, for each category of Federal 
election activity.
    (iv) 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.
    (3) Reporting of disbursements allocated between Federal funds and 
non-Federal funds, other than Levin funds. A State, district, or local 
committee of a political party that makes a disbursement 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.
    (1) Schedule. A State, district, or local committee of a political 
party, or an association or similar group of candidates for State or 
local office or of individuals holding State or local office, that must 
file reports under paragraph (b) of this section must comply with the 
monthly filing schedule in 11 CFR 104.5(c)(3).
    (2) Electronic filing. Receipts of Federal funds for Federal 
election activity that constitute contributions under 11 CFR 100.7, and 
disbursements of Federal funds for Federal election activity that 
constitute expenditures under 11 CFR 100.8, apply when determining 
whether a political committee must file reports in an electronic format 
under 11 CFR 104.18.
    (d) Recordkeeping. A State, district, or local committee of a 
political party, or an association or similar group of candidates for 
State or local office or of individuals holding State or local office, 
that must file reports under paragraph (b) of 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 
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;

[[Page 49129]]

    (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, unless the 
organization is:
    (i) A political committee under 11 CFR 100.5;
    (ii) A State, district, or local committee of a political party;
    (iii) The authorized campaign committee of a State or local 
candidate; or
    (iv) A political committee under State law, that supports only 
State or local candidates and that does not make expenditures or 
disbursements in connection with an election for Federal office, 
including expenditures or disbursements for Federal election activity.
    (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 or a 
political party 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 State, district, or local 
committee of a political party.
    (c) Determining whether an organization makes expenditures or 
disbursements in connection with a Federal election.
    (1) In determining whether a section 501(c) organization is one 
that makes expenditures or disbursements in connection with a Federal 
election, including expenditures or disbursements for Federal election 
activity, pursuant to paragraphs (a)(1) and (2) of this section, a 
State, district, or local committee of a political party or any other 
person described in paragraph (b) of this section, may obtain and rely 
upon a certification from the organization that satisfies the criteria 
described in paragraph (d) of this section.
    (2) In determining whether a section 527 organization is a State-
registered political committee that supports only State or local 
candidates and does not make expenditures or disbursements in 
connection with an Federal election, including expenditures or 
disbursements for Federal election activity, pursuant to paragraph 
(a)(3)(iv) of this section, a State, district, or local committee of a 
political party or any other person described in paragraph (b) of this 
section, may obtain and rely upon a certification from the organization 
that satisfies the criteria described in paragraph (d) of this section.
    (d) Certification. A State, district, or local committee of a 
political party or any person described in paragraph (b) of this 
section may rely upon a certification that meets all of the following 
criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities or by the treasurer of the State-
registered political committee described in paragraph (a)(3)(iv) of 
this section;
    (2) The certification states that within the current election 
cycle, the organization or political committee has not made, and does 
not intend to make, expenditures or disbursements in connection with an 
election for Federal office (including for Federal election activity); 
and
    (3) The certification states that the organization or political 
committee does not intend to pay debts incurred from the making of 
expenditures or disbursements in connection with an election for 
Federal office (including for Federal election activity) in a prior 
election cycle.
    (e) If a State, district, or local committee of a political party 
or any person described in paragraph (b) of this section has actual 
knowledge that the certification is false, the certification may not be 
relied upon.
    (f) It is not prohibited for a State, district, or local committee 
of a political party or its agents to respond to a request for 
information about a tax-exempt group that shares the party's political 
or philosophical goals.

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 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 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, unless the 
organization is:
    (i) A political committee under 11 CFR 100.5;
    (ii) A State, district, or local committee of a political party; or
    (iii) 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 congressional campaign committee;
    (2) An entity that is directly or indirectly established, financed, 
maintained, or controlled by a national party committee, including a 
national congressional campaign 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, State, district, 
or local committee of a political party, including a national 
congressional campaign committee.
    (c) Determining whether a section 501(c) organization makes 
expenditures or disbursements in connection with Federal elections. In 
determining whether a section 501(c) organization is one that makes 
expenditures or disbursements in connection with a Federal election, 
including expenditures or disbursements for Federal election activity, 
pursuant to paragraphs (a)(1) and (2) of this section, a national 
committee of a political party, including a national congressional 
campaign committee, or any other person described in paragraph (b) of 
this section, may obtain and rely upon a certification from the 
organization that satisfies the criteria described in paragraph (d) of 
this section.
    (d) Certification. A national committee of a political party, 
including a national congressional campaign committee, or any person 
described in paragraph (b) of this section, may rely upon a 
certification that meets all of the following criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities;

[[Page 49130]]

    (2) The certification states that within the current election 
cycle, the organization has not made, and does not intend to make, 
expenditures or disbursements in connection with an election for 
Federal office (including for Federal election activity); and
    (3) The certification states that the organization or political 
committee does not intend to pay debts incurred from the making of 
expenditures or disbursements in connection with an election for 
Federal office (including for Federal election activity) in a prior 
election cycle.
    (e) Reliance on false certification. If a national committee of a 
political party or any person described in paragraph (b) of this 
section has actual knowledge that the certification is false, the 
certification may not be relied upon.
    (f) Requests for information. It is not prohibited for a national 
party or its agent to respond to a request for information about a tax-
exempt group that shares the party's political or philosophical goals.


Sec. 300.51  Prohibited fundraising by State, district, or 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 
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, unless the 
organization is:
    (i) A political committee under 11 CFR 100.5;
    (ii) A State, district, or local committee of a political party;
    (iii) The authorized campaign committee of a State or local 
candidate; or
    (iv) A political committee under State law, that supports only 
State or local candidates and that does not make expenditures or 
disbursements in connection with an election for Federal office, 
including expenditures or disbursements for Federal election activity.
    (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 or a 
political party 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 State, district, or local 
committee of a political party.
    (c) Determining whether an organization makes expenditures or 
disbursements in connection with a Federal election.
    (1) In determining whether a section 501(c) organization is one 
that makes expenditures or disbursements in connection with a Federal 
election, including expenditures or disbursements for Federal election 
activity, pursuant to paragraphs (a)(1) and (2) of this section, a 
State, district, or local committee of a political party or any other 
person described in paragraph (b) of this section, may obtain and rely 
upon a certification from the organization that satisfies the criteria 
described in paragraph (d) of this section.
    (2) In determining whether a section 527 organization is a State-
registered political committee that supports only State or local 
candidates and does not make expenditures or disbursements in 
connection with a Federal election, including expenditures or 
disbursements for Federal election activity, pursuant to paragraph 
(a)(3)(iv) of this section, a State, district, or local committee of a 
political party or any other person described in paragraph (b) of this 
section, may obtain and rely upon a certification from the organization 
that satisfies the criteria described in paragraph (d) of this section.
    (d) Certification. A State, district, or local committee of a 
political party or any person described in paragraph (b) of this 
section may rely upon a certification that meets all of the following 
criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities or by the treasurer of the State-
registered political committee described in paragraph (a)(3)(iv) of 
this section;
    (2) The certification states that within the current election 
cycle, the organization or political committee has not made, and does 
not intend to make, expenditures or disbursements in connection with an 
election for Federal office (including for Federal election activity); 
and
    (3) The certification states that the organization does not intend 
to pay debts incurred from the making of expenditures or disbursements 
in connection with an election for Federal office (including for 
Federal election activity) in a prior election cycle.
    (e) If a State, district, or local committee of a political party 
or any person described in paragraph (b) of this section has actual 
knowledge that the certification is false, the certification may not be 
relied upon.
    (f) It is not prohibited for a State, district, or local committee 
of a political party or its agents to respond to a request for 
information about a tax-exempt group that shares the party's political 
or philosophical goals.


Sec. 300.52  Fundraising by Federal candidates and Federal 
officeholders (2 U.S.C. 441i(e)(1)&(4)).

    A Federal candidate, an individual holding Federal office, and an 
individual agent acting on behalf of either may make the following 
solicitations 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):
    (a) General solicitations. A Federal candidate, an individual 
holding Federal office, or an individual agent acting on behalf of 
either, may make a general solicitation of funds, without regard to 
source or amount limitation, if:
    (1) The organization does not engage in activities in connection 
with an election, including any activity described in paragraph (c) of 
this section; or
    (2)(i) The organization conducts activities in connection with an 
election, but the organization's principal purpose is not to conduct 
election activities or any activity described in paragraph (c) of this 
section; and
    (ii) The solicitation is not to obtain funds for activities in 
connection with an election or any activity described in paragraph (c) 
of this section.
    (b) Specific solicitations. A Federal candidate, an individual 
holding Federal office, or an individual agent acting on behalf of 
either, may make a solicitation explicitly to obtain funds for any 
activity described in paragraph (c) of this section or for an 
organization whose principal purpose is to conduct that activity, if:
    (1) The solicitation is made only to individuals; and

[[Page 49131]]

    (2) The amount solicited from any individual does not exceed 
$20,000 during any calendar year.
    (c) Voter registration, voter identification, get-out-the-vote 
activity and generic campaign activity. This section applies to only 
the following types of Federal election activity:
    (1) Voter registration activity, as described in 11 CFR 
100.24(a)(2), 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
    (2) The following activities conducted in connection with an 
election in which one or more Federal candidates appear on the ballot 
(see 11 CFR 100.24(a)(1)), regardless of whether one or more State 
candidates also appears on the ballot:
    (i) Voter identification as described in 11 CFR 100.24(a)(4);
    (ii) Get-out-the-vote activity as described in 11 CFR 100.24(a)(3); 
or
    (iii) Generic campaign activity as defined in 11 CFR 100.25.
    (d) Prohibited solicitations. A Federal candidate, an individual 
holding Federal office, and an individual who is an agent acting on 
behalf of either, must not make any solicitation 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) for any election activity other than a Federal election activity 
as described in paragraph (c) of this section.
    (e) Safe Harbor. In determining whether a 501(c) organization is 
one whose principal purpose is to conduct election activities, 
including activity described in paragraph (c) of this section, a 
Federal candidate, an individual holding Federal office, or an 
individual agent acting on behalf of either, may obtain and rely upon a 
certification from the organization that satisfies the following 
criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities;
    (2) The certification states that the organization's principal 
purpose is not to conduct election activities, including election 
activity described in paragraph (c) of this section; and
    (3) The certification states that the organization does not intend 
to pay debts incurred from the making of expenditures or disbursements 
in connection with an election for Federal office (including for 
Federal election activity) in a prior election cycle.
    (f) If a Federal candidate, an individual holding Federal office, 
or an individual agent acting on behalf of either has actual knowledge 
that the certification is false, the certification may not be relied 
upon.

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 (see 11 CFR 300.2(o));
    (c) Agents acting on behalf 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, spend, or disburse 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)).

    A person described in 11 CFR 300.60 may solicit, receive, direct, 
transfer, spend, or disburse funds in connection with any 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.


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, speaking, or appearing as a 
featured guest 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 but not 
limited to a fundraising event at which Levin funds are raised, or at 
which non-Federal funds are raised. In light of the foregoing:
    (a) State, district, or local committees of a political party may 
advertise, announce or otherwise publicize that a Federal candidate or 
individual holding Federal office will attend, speak, or be a featured 
guest at a fundraising event, including, but not limited to, 
publicizing such appearance in pre-event invitation materials and in 
other party committee communications; and
    (b) Candidates and individuals holding Federal office may speak at 
such events without restriction or regulation.


Sec. 300.65  Exceptions for certain tax-exempt organizations (2 U.S.C. 
441i(e)(1) and (4)).

    A Federal candidate, an individual holding Federal office, and an 
individual agent acting on behalf of either may make the following 
solicitations 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):
    (a) General solicitations. A Federal candidate, an individual 
holding Federal office or an individual agent acting on behalf of 
either, may make a general solicitation of funds, without regard to 
source or amount limitation, if:
    (1) The organization does not engage in activities in connection 
with an election, including any activity described in paragraph (c) of 
this section; or
    (2)(i) The organization conducts activities in connection with an 
election, but the organization's principal purpose is not to conduct 
election activities or any activity described in paragraph (c) of this 
section; and
    (ii) The solicitation is not to obtain funds for activities in 
connection with an election or any activity described in paragraph (c) 
of this section.
    (b) Specific solicitations. A Federal candidate, an individual 
holding Federal office, or an individual agent acting on behalf of 
either, may make a solicitation explicitly to obtain funds for any 
activity described in paragraph (c)

[[Page 49132]]

of this section or for an organization whose principal purpose is to 
conduct that activity, if:
    (1) The solicitation is made only to individuals; and
    (2) The amount solicited from any individual does not exceed 
$20,000 during any calendar year.
    (c) Voter registration, voter identification, get-out-the-vote 
activity and generic campaign activity. This section applies to only 
the following types of Federal election activity:
    (1) Voter registration activity, as described in 11 CFR 
100.24(a)(2), 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
    (2) The following activities conducted in connection with an 
election in which one or more Federal candidates appear on the ballot 
(see 11 CFR 100.24(a)(1)), regardless of whether one or more State 
candidates also appears on the ballot:
    (i) Voter identification as described in 11 CFR 100.24(a)(4);
    (ii) Get-out-the-vote activity as described in 11 CFR 100.24(a)(3); 
or
    (iii) Generic campaign activity as defined in 11 CFR 100.25.
    (d) Prohibited solicitations. A Federal candidate, an individual 
holding Federal office, and an individual who is an agent acting on 
behalf of either, must not make any solicitation 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) for any election activity other than a Federal election activity 
as described in paragraph (c) of this section.
    (e) Safe Harbor. In determining whether a 501(c) organization is 
one whose principal purpose is to conduct election activities, 
including activity described in paragraph (c) of this section, a 
Federal candidate, an individual holding Federal office, or an 
individual agent acting on behalf of either may obtain and rely upon a 
certification from the organization that satisfies the following 
criteria:
    (1) The certification is a signed written statement by an officer 
or other authorized representative of the organization with knowledge 
of the organization's activities;
    (2) The certification states that the organization's principal 
purpose is not to conduct election activities, including election 
activities described in paragraphs (c) of this section.
    (3) The certification states that the organization does not intend 
to pay debts incurred from the making of expenditures or disbursements 
in connection with an election for Federal office (including for 
Federal election activity) in a prior election cycle.
    (f) If a Federal candidate, an individual holding Federal office, 
or an individual agent acting on behalf of either has actual knowledge 
that the certification is false, the certification may not be relied 
upon.

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 acting on behalf 
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 funds 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 funds 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 
public communication 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.

PART 9034--ENTITLEMENTS

    25. The authority citation for Part 9034 continues to read as 
follows:

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


    26. Section 9034.8 is amended by adding introductory language to 
paragraph (a) to read as follows:


Sec. 9034.8  Joint fundraising.

    (a) General. Nothing in this section shall supersede 11 CFR part 
300, which prohibits any person from soliciting, receiving, directing, 
transferring, or spending any non-Federal funds, or from transferring 
Federal funds for Federal election activities.
* * * * *

    Dated: July 16, 2002.
Karl J. Sandstrom,
Vice-Chairman, Federal Election Commission.
[FR Doc. 02-18311 Filed 7-26-02; 8:45 am]
BILLING CODE 6715-01-P