[Federal Register Volume 68, Number 17 (Monday, January 27, 2003)]
[Rules and Regulations]
[Pages 3970-4002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1546]



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Part III





Federal Election Commission





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11 CFR Parts 100, et al.



Increased Contribution and Coordinated Party Expenditure Limits for 
Candidates Opposing Self-Financed Candidates; Interim Final Rule

  Federal Register / Vol. 68, No. 17 / Monday, January 27, 2003 / Rules 
and Regulations  

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FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 101, 104, 110, 116, 400, and 9035

[Notice 2003--3]


Increased Contribution and Coordinated Party Expenditure Limits 
for Candidates Opposing Self-Financed Candidates

AGENCY: Federal Election Commission.

ACTION: Interim final rules.

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SUMMARY: The Federal Election Commission (``FEC'' or ``Commission'') is 
adopting, as interim final rules, new regulations relating to increased 
contribution limits for individuals when contributing to candidates who 
are facing self-financed candidates under the Federal Election Campaign 
Act of 1971 (``FECA'' or the ``Act''), as amended by the Bipartisan 
Campaign Reform Act of 2002 (``BCRA''). The so-called ``Millionaires' 
Amendment'' in BCRA raises the individual contribution limits for 
candidates for the Senate and House of Representatives depending on the 
amount that opposing candidates expend from personal funds in 
connection with an election. BCRA also removes the limitations on 
national and State party committee expenditures on behalf of a 
candidate if the opposing candidate's expenditures from personal funds 
exceed a threshold amount. These interim final rules implement the 
various provisions of the Millionaires' Amendment including thresholds, 
computation formulas, increased contribution limits with overall caps, 
repayment of personal loans, and reporting requirements.
    The Commission is promulgating these rules on an interim final 
basis. The Commission is soliciting comments on all aspects of the 
interim final rules and may amend the interim rules as appropriate in 
response to comments received. Further information is contained in the 
Supplementary Information that follows.

DATES: The interim final rules are effective on February 26, 2003. 
Comments must be received on or before March 28, 2003. If the 
Commission receives sufficient requests to testify, it may hold a 
hearing on these interim final rules. If the Commission decides to hold 
a hearing, it will announce the date after the end of the comment 
period. Persons wishing to testify at a hearing should so indicate in 
their written or electronic comments.

ADDRESSES: All comments should be addressed to Ms. Mai T. Dinh, Acting 
Assistant General Counsel, and must be submitted in either electronic 
or written form. Electronic mail comments should be sent to 
[email protected] and must include the full name, electronic mail 
address, and postal service address of the commenter. Electronic mail 
comments that do not contain the full name, electronic mail address, 
and postal service address of the commenter will not be considered. If 
the electronic mail comments include an attachment, the attachment must 
be in the Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. Faxed 
comments should be sent to (202) 219-3923, with printed copy follow-up 
to ensure legibility. Written comments and printed copies of faxed 
comments should be sent to the Federal Election Commission, 999 E 
Street, NW., Washington, DC 20463. Commenters are strongly encouraged 
to submit comments electronically to ensure timely receipt and 
consideration.

FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Acting Assistant 
General Counsel, Mr. J. Duane Pugh, Jr., Acting Special Assistant 
General Counsel, or Mr. Robert M. Knop, Attorney, 999 E Street, NW., 
Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: In the Bipartisan Campaign Reform Act of 
2002 (``BCRA''), Public Law 107-155, 116 Stat. 81 (March 27, 2002), 
Congress made 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 one of a series of rulemaking notices the 
Commission has published over the past several months in order to meet 
the rulemaking deadlines set out in BCRA. The Commission adopted these 
interim final rules on December 19, 2002.
    These interim final rules address the so-called ``Millionaires' 
Amendment'' to BCRA. Section 304 of BCRA adds a new paragraph (i) to 2 
U.S.C. 441a, which addresses Senate elections. Section 319 of BCRA adds 
a new section 441a-1 to the FECA, which addresses elections for the 
House of Representatives. The Senate provisions also add new 
notification or reporting requirements in 2 U.S.C. 434. Collectively, 
these provisions address elections in which a candidate for the Senate 
or the House of Representatives faces an opponent who is spending 
significant amounts of his or her personal funds on the race. It is 
important to note that the increased contribution and coordinated party 
expenditure limitations available to candidates opposing self-financed 
candidates under the Millionaires' Amendment apply only to candidates 
running for the Senate or the House of Representatives and do not apply 
to candidates running for President or Vice-President. These interim 
final rules also address a provision of BCRA limiting how a candidate 
may repay a loan he or she has made to his or her campaign. 2 U.S.C. 
441a(j).
    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 
interim final rules on Increased Contribution Limits for Candidates 
Opposing Self-financed Candidates were transmitted to Congress on 
January 17, 2003.

Explanation and Justification

    As of January 1, 2003, the Act, as amended by BCRA, limits the 
amount that a person, other than a multicandidate political committee, 
may contribute to a candidate to $2,000 per election, which is indexed 
for inflation. 2 U.S.C. 441a(a)(1)(A). Under the Act, an individual may 
not contribute, in the aggregate, more than $37,500 to candidates and 
their authorized committees during a 2-year period. 2 U.S.C. 
441a(a)(3)(A). The Act also limits the amounts of coordinated 
expenditures by national and State political party committees 
(including subordinate committees) made in connection with the general 
election campaign of a candidate. 2 U.S.C. 441a(d)(3).
    The Millionaires' Amendment raises contribution limits on 
contributions received by a candidate for the Senate or the House of 
Representatives who is facing a ``self-financed'' opponent, that is, an 
opponent who spends significant amounts of his or her personal funds on 
the race. As the opponent's spending from personal funds reaches 
certain prescribed levels, the candidate is granted limited relief from 
certain contribution limits and party spending limits.\1\ First, when 
the spending of personal wealth by the opponent reaches certain 
thresholds (and other conditions are met), the candidate may accept 
contributions from individuals under increased contribution limits. 
Second, national and State political party committees may make 
unlimited coordinated party expenditures on behalf of the candidate 
under 2 U.S.C.

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441a(d)(3). These increased contribution and coordinated expenditure 
limits are in effect only when certain specific conditions are met, and 
are rescinded if other contingencies occur.
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    \1\ ``Candidate'' is used in this document to mean that 
candidate who is facing an ``opponent,'' or ``opposing candidate,'' 
whose expenditures from personal funds are sizeable.
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    The Millionaires' Amendment establishes a ``threshold amount'' for 
each election. For House of Representatives races, the threshold amount 
is a set amount, $350,000. 2 U.S.C. 441a-1(a)(1). For Senate races, the 
threshold amount varies, according to a formula driven by the ``voting 
age population'' of the State. 2 U.S.C. 441a(i)(1)(B).
    The Millionaires' Amendment measures the opponent's expenditure of 
personal funds relative to the candidate's expenditures from personal 
funds. BCRA defines two new terms, ``personal funds'' and ``opposition 
personal funds amount.'' 2 U.S.C. 431(26); 2 U.S.C. 441a(i)(1)(D) 
(Senate); 2 U.S.C. 441a-1(a)(2) (House of Representatives). For both 
Senate elections and House of Representatives elections, the opposition 
personal funds amount is the difference between the opponent's 
expenditures from personal funds and the candidate's expenditures from 
personal funds. 2 U.S.C. 441a(i)(1)(D) (Senate); 2 U.S.C. 441a-1(a)(2) 
(House of Representatives). This provision precludes the acceptance of 
contributions under increased limits, as well as the lifting of the 
coordinated spending limits, in a situation where a candidate's own 
expenditures from personal funds offset the opponent's expenditures 
from personal funds.
    The calculation of the opposition personal funds amount also takes 
into account any fundraising advantage the candidate may have which 
negates the advantage the opponent gains from his or her expenditures 
from personal funds. This ``gross receipts advantage'' is another check 
on the operation of the Millionaires'' Amendment, accounting for the 
situation where a candidate's advantage in ``ordinary'' fundraising may 
offset the expenditures from personal funds by the opponent. 2 U.S.C. 
441a(i)(1)(E) (Senate); 2 U.S.C. 441a-1(a)(2)(B) (House of 
Representatives).
    In Senate elections, when the opposition personal funds amount 
reaches certain multiples of the threshold amount, the candidate may 
accept increased contributions according to a tiered schedule. The 
first such multiple is twice the threshold amount. When the opposition 
personal funds amount reaches twice the threshold amount, the 
contribution limit for individuals is tripled. 2 U.S.C. 
441a(i)(1)(C)(i)(I). A contribution accepted under this increased 
contribution limit does not count against the individual's aggregate 
contribution limit under 2 U.S.C. 441a(a)(3). 2 U.S.C. 
441a(i)(1)(C)(i)(II). The contribution limits also increase at 
multiples of four times and ten times the threshold amount. When the 
opposition personal funds amount reaches four times the threshold 
amount, the contribution limit for individuals is raised six-fold. When 
the opposition personal funds amount reaches ten times the threshold 
amount, the contribution limit for individuals is raised six-fold and 
the Act's limits on coordinated political party expenditures on behalf 
of the candidate are lifted. 2 U.S.C. 441a(i)(1)(C)(iii)(III).
    In House of Representatives elections, if the opposition personal 
funds amount reaches the threshold amount, the individual contribution 
limits are tripled, such increased contributions do not count against 
the section 441a(a)(3) individual aggregate contribution limits, and 
the coordinated political party expenditures limits in section 
441a(d)(3) are lifted. 2 U.S.C. 441a-1(a)(1)(A) through (C). Note that 
for House of Representatives candidates, unlike Senate candidates, the 
limits are raised or lifted all at once, and not in increments.
    For both Senate and House of Representatives candidates, the 
operation of the increased contribution limits and the suspension of 
the limit on coordinated political party expenditures are subject to an 
on-going check in the form of the so-called ``proportionality 
provision.'' See 147 CR S2538 (daily ed. March 20, 2001) (Sen. DeWine). 
If the sum of the contributions accepted under the increased limits 
plus the coordinated party expenditures made by political party 
committees under the increased limits exceeds 110% of the opposition 
personal funds amount in a Senate election or 100% of the opposition 
personal funds amount in a House of Representatives election, then the 
contribution limits revert to the original amount, and the political 
party expenditure limits also revert to their original amount. 2 U.S.C. 
441a(i)(2)(A)(ii) (Senate); 2 U.S.C. 441a-1(a)(3)(A)(ii) (House of 
Representatives). Thus, the Millionaires' Amendment does not permit 
those candidates facing wealthy self-financed opponents to raise 
individual contributions significantly in excess of the amount of 
personal funds wealthy opponents actually spend on their own elections.
    The increased contribution limits are also terminated if the self-
financed opponent withdraws from the race. 2 U.S.C. 441a(i)(2)(B) 
(Senate); 2 U.S.C. 441a-1(a)(3)(B) (House of Representatives). 
Additionally, both the Senate and House of Representatives versions of 
the Millionaires' Amendment prescribe rules for disposing of ``excess 
contributions'' received under the increased contribution limits. 2 
U.S.C. 441a(i)(3) (Senate); 2 U.S.C. 441a-1(b) (House of 
Representatives).

Part 100--Definitions

1. 11 CFR 100.19 File, Filed, or Filing (2 U.S.C. 434(a))

    The Commission's regulations at 11 CFR 100.19 define ``file, filed, 
and filing.'' The rule in current paragraph (b) states that a document 
is considered timely filed if it is: (1) Delivered to the appropriate 
filing office (either the Commission or the Secretary of the Senate), 
or (2) sent by registered or certified mail and postmarked by 11:59 
p.m. Eastern Standard/Daylight Time of the prescribed filing date--
except for pre-election reports. The final rule adds paragraph (g), 
discussed below, to the list of reports not subject to the rule in 
paragraph (b). Thus, paragraph (b) notes that this rule does not apply 
to reports described in 11 CFR 100.19(c) through (g) which are 
electronic filings, 48-hour and 24-hour reports of independent 
expenditures, 48-hour notices of last-minute contributions, 
electioneering communication statements, and notifications of 
expenditures from personal funds, respectively.
    New paragraph (g) states that notifications of self-financed 
candidates' expenditures from personal funds, required under 11 CFR 
part 400, are considered timely filed by Senate candidates' principal 
campaign committees only if they are faxed or e-mailed to the 
Commission and faxed or e-mailed to each opposing candidate within 24 
hours of the time the thresholds set forth in 11 CFR 400.21 and 400.22 
are exceeded, thereby triggering the reporting requirement. As 
discussed in greater detail below (see Explanation and Justification 
for new 11 CFR 400.21, 400.22, and 400.24), Senate candidates' 
principal campaign committees are required to file their original 
notifications with the Secretary of the Senate and copies of their 
notifications with the Commission and each opposing candidate. 
Notifications by House of Representatives candidates' principal 
campaign committees are considered timely filed only when they are both 
electronically filed (if required under 11 CFR 104.18, 400.20, and 
400.23) with the Commission and when they are faxed or e-mailed to each 
opposing candidate within 24 hours of the time the thresholds defined 
in 11

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CFR 400.21 and 400.22 are exceeded, thereby triggering the reporting 
requirement.

2. 11 CFR 100.33 Definition of ``Personal Funds'' (2 U.S.C. 431(26))

    The definition of ``personal funds'' in new section 100.33 largely 
tracks the definition provided in BCRA (2 U.S.C. 431(26)), which, in 
turn, appears to be based primarily on the definition of ``personal 
funds'' in former 11 CFR 110.10(b). Because BCRA placed the new 
statutory definition of ``personal funds'' in 2 U.S.C. 431, giving it 
general applicability in FECA, the Commission has decided to place the 
corresponding regulatory definition in 11 CFR part 100 to give general 
applicability to the definition in all of the Commission's regulations 
relating to Title 2 of the United States Code. Therefore, the version 
of the definition in 11 CFR 110.10(b) is deleted. The Commission notes 
that the regulations relating to Title 26 of the United States Code 
also contain a definition of ``personal funds'' at 11 CFR 9003.2(c)(3). 
The definition of ``personal funds'' in 11 CFR 9003.2(c)(3) is not 
being changed. Only the definition of ``personal funds'' in former 11 
CFR 110.10(b) is being altered in conformance with the definition of 
``personal funds'' in BCRA.
    Although the new statutory definition of ``personal funds'' seems 
to be based largely on the previous definition contained in former 11 
CFR 110.10(b), it differs from that prior rule in a number of respects. 
First, although both definitions include salary and income from bona 
fide employment, BCRA considers only salary and earned income received 
during the current election cycle (as defined in new 11 CFR 400.2, 
discussed below) to be the candidate's personal funds. Second, while 
both definitions include income from trusts established before and 
after certain points in time, the relevant date in BCRA is the 
beginning of the election cycle (again, as defined in new 11 CFR 400.2) 
whereas in former 11 CFR 110.10(b) the relevant date is the point at 
which an individual becomes a candidate for Federal office.
    A third difference between the definition of ``personal funds'' in 
BCRA and former Sec.  110.10(b) involves the receipt of gifts by the 
candidate. While both definitions include gifts of a personal nature 
that had been customarily received by the candidate before a certain 
point in time, BCRA counts only those that had been customarily 
received prior to the beginning of the election cycle (see Explanation 
and Justification for new 11 CFR 400.2, below) whereas former 11 CFR 
110.10(b) counted those that had been customarily received prior to 
candidacy.

Part 101--Candidate Status and Designations

11 CFR 101.1 Candidate Designations (2 U.S.C. 432(e)(1))

    Currently, Sec.  101.1(a) requires Statements of Candidacy (FEC 
Form 2) to be filed with the Commission or with the Secretary of the 
Senate, as appropriate under 11 CFR part 105, within 15 days of the 
time an individual becomes a candidate. Since this is the same time in 
which a candidate will be required to file a Declaration of Intent 
under new section 11 CFR 400.20 (see Explanation and Justification for 
new 11 CFR 400.20, below), the Commission has decided to add the 
information required in the Declaration of Intent to FEC Form 2.
    We note that current sections of 11 CFR 101.1(a) and 105.2 require 
Senate candidates to file their Statements of Candidacy with the 
Secretary of the Senate. This requirement will not change under the 
Commission's interim final rules. However, in the interest of rapid 
notification to the Commission and to each opposing candidate, new 11 
CFR 400.20(b)(1) will require Senate candidates to fax or 
electronically mail a copy of their Statement of Candidacy to the 
Commission. Further, both Senate and House of Representatives 
candidates will be required to send a fax or an electronic mail message 
to each opposing candidate that either attaches their FEC Form 2 or 
contains the information required by 11 CFR 400.23 (see Explanation and 
Justification for new 11 CFR 400.23, below).

Part 102--Registration, Organization, and Recordkeeping by Political 
Committees (2 U.S.C. 433)

11 CFR 102.2 Statement of Organization: Forms and Committee 
Identification Number (2 U.S.C. 433(b), (c))

    New 11 CFR 102.2(a)(1)(viii) requires the principal campaign 
committee of each Senate and House of Representatives candidate to 
provide either an electronic mail address or a facsimile number, for 
the purpose of receiving Declarations of Intent and Notifications of 
Expenditures from Personal Funds from other candidates in the same 
election as required by subpart B of part 400. This requirement is 
intended to facilitate the notification of expenditures from personal 
funds under part 400. Use of facsimile machines or electronic mail will 
provide candidates' principal campaign committees nearly instantaneous 
notification. The Commission recognizes that not all principal campaign 
committees may have a facsimile machine, an electronic mail address, or 
even a computer system. However, the Commission notes that most public 
libraries have computers available for free public use and several Web 
sites provide free access to electronic mail. Thus, the Commission 
concludes that this requirement will at most create only a minimal 
burden on some candidates, and to whatever extent it might do so is 
outweighed by the overall benefits.

Part 104--Reports by Political Committees (2 U.S.C. 434)

11 CFR 104.19 Special Reporting Requirements for Principal Campaign 
Committees of Candidates for Election to the United States Senate or 
United States House of Representatives

    The definition of ``opposition personal funds amount'' in new 11 
CFR 400.10 includes the computation for ``gross receipts advantage,'' 
as defined in 2 U.S.C. 441a(i)(1)(E) (Senate) and 441a-1(a)(2)(B) 
(House of Representatives). See below for discussion and explanation 
and justification of these definitions. To compute the ``gross receipt 
advantage,'' candidates must know of the gross receipts of each of 
their opposing candidates during any election cycle that may be 
expended in connection with the election where they are running against 
a self-financed candidate. The ``gross receipts advantage'' also takes 
into account amounts that candidates contribute to their own campaign 
by subtracting that amount from the gross receipts their authorized 
committees received.
    Because the former regulations and the reporting forms did not 
require candidates' authorized committees to report the information 
necessary to compute ``gross receipts advantage'' in a concise and 
comprehensive manner, the Commission is adding a new section, 11 CFR 
104.19, to require supplemental reporting by the principal campaign 
committees of candidates who are seeking election to the U.S. Senate or 
U.S. House of Representatives. This ensures that the candidates in the 
same election have sufficient and timely information to do the 
necessary computations under 11 CFR part 400.
    Paragraph (a) limits the scope of this new section to only these 
candidates. It also provides that the reports required under this 
section must be filed with the Commission. Paragraph (b) describes when 
these reports must be filed and the content required. Paragraph (b)(1)

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requires principal campaign committees to file by July 15 of the year 
before the general election of the office sought that discloses the 
gross receipts available to the candidates and their authorized 
committees to expend in connection with the primary election and the 
general election as determined on June 30 of that year. The gross 
receipts amounts must include the contributions that have been 
designated, deemed to be designated, or redesignated for both the 
primary election and the general election. Principal campaign 
committees must report the amount of contributions from personal funds 
of their candidates received by any of the candidates' authorized 
committees by June 30 that have been designated for the primary 
election and the general election. They must then subtract the 
contributions from personal funds that have been designated for the 
primary election from the gross receipts that may be expended in 
connection with the primary election and disclose that amount. 
Likewise, they must also compute and disclose the amount for the 
general election.
    Paragraph (b)(2) requires that principal campaign committees file 
another report on January 31 of the year of the general election of the 
office sought. This paragraph is similar to paragraph (b)(1) except 
that the pertinent date is December 31 of the year preceding the 
relevant general election. Principal campaign committees must disclose 
the same information under paragraph (b)(2) as in paragraph (b)(1) but 
instead of reporting the amount determined as of June 30, this amount 
is determined as of December 31.
    While BCRA mandates that the opposition personal funds amount use 
the amounts determined for June 30 and December 31, the interim final 
rules set the deadlines for the reports at July 15 and January 31, 
respectively, to coincide with the filing deadlines of the second 
quarterly reports and the year-end reports that all authorized 
committees are required to file. The Commission seeks comment whether 
these are appropriate deadlines.

Part 110--Contribution and Expenditure Limitations and Prohibitions

1. 11 CFR 110.1 Conforming Amendment to 11 CFR 110.1(b)(3) Regarding 
Net Debts Outstanding (2 U.S.C. 441a(j))

    Current 11 CFR 110.1(b)(3) restricts the ability of candidates and 
their authorized committees to accept contributions after the election. 
It states that they can accept contributions up to the amount of their 
``net debts outstanding.'' ``Net debts outstanding'' is defined in 
current 11 CFR 110.1(b)(3)(ii). In order to conform with the 
fundraising restrictions in new 11 CFR 116.11 (see Explanation and 
Justification for new 11 CFR 116.11, below), new paragraph 
(b)(3)(ii)(C) would be added to current 11 CFR 110.1 to exclude the 
amount of personal loans that exceed $250,000 from the definition of 
``net debts outstanding.''

2. 11 CFR 110.10 Deletion of Former 11 CFR 110.10(b) Definition of 
``Personal Funds''

    As explained in greater detail above (see Explanation and 
Justification for new 11 CFR 100.33), the Commission is implementing 
BCRA's new definition of ``personal funds.'' The Commission has decided 
to locate this new definition in new 11 CFR 100.33. Accordingly, the 
Commission is deleting the former definition of ``personal funds'' in 
former 11 CFR 110.10(b).

Part 116--Debts Owed by Candidates and Political Committees

    BCRA added a new subsection (j) to 2 U.S.C. 441a, which restricts 
the ability of candidates and their authorized committees to raise 
funds after the election to repay loans that the candidates made to 
their authorized committees. These loans are referred to as ``personal 
loans.'' Section 441a(j) of FECA states that:

    Any candidate who incurs personal loans after the effective date 
of the Bipartisan Campaign Reform Act of 2002 in connection with the 
candidate's campaign for election shall not repay (directly or 
indirectly), to the extent such loans exceed $250,000, such loans 
from any contributions made to such candidate or any authorized 
committee of such candidate after the date of such election.

    Although 2 U.S.C. 441a(j) is part of the Millionaires' Amendment, 
the provision has wider application than the other provisions of the 
Millionaires' Amendment because it is placed as a separate subsection 
within 2 U.S.C. 441a. This statutory provision thus applies to all 
personal loans from candidates to their authorized committees 
regardless of whether the increased contribution and party spending 
limits in 2 U.S.C. 441a(i) or 441a-1 apply. BCRA's amendment to 2 
U.S.C. 441a regarding candidate loans also applies to presidential 
candidates, who may be self-financed, or who may be permitted under the 
public funding regime to make limited expenditures from personal funds 
for their campaigns. Therefore, the interim final rules add new section 
11 CFR 116.11--Debts Owed by Candidates or Political Committees rather 
than include new rules implementing 2 U.S.C. 441a(j) in 11 CFR part 400 
with the other Millionaires' Amendment regulations. The interim final 
rules also include a conforming amendment to 11 CFR 110.1(b)(3) 
regarding net debts outstanding, see above.

1. 11 CFR 116.11 Restriction on an Authorized Committee's Repayment of 
Personal Loans Exceeding $250,000 Made by the Candidate to the 
Authorized Committee

A. Interim Final Rule
    According to the sponsors of the Millionaires' Amendment, the 
purpose of 2 U.S.C. 441a(j) is to restrict the amount of money 
candidates and their authorized committees can raise after the election 
to repay the candidates for personal loans.\2\ Essentially, authorized 
committees may only use up to $250,000 of contributions made after the 
election to repay the candidates. New 11 CFR 116.11 sets forth these 
restrictions.
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    \2\ ``This (amendment) limits candidates who incur personal 
loans in connection with their campaign in excess of $250,000. They 
can do $250,000 and then reimburse themselves with fundraisers. But 
anything more than that, they cannot repay it by going out and 
having fundraisers once they are elected with their own money.'' 147 
CR S2451 (daily ed. Mar. 19, 2001) (statement of Sen. Domenici).
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    The interim final rules define ``personal loans'' in paragraph (a) 
of 11 CFR 116.11. The definition includes not only loans made by 
candidates to their authorized committees, but also loans made by other 
persons to the authorized committees that are endorsed or guaranteed by 
the candidate or that are secured by the personal funds of the 
candidate. This definition ensures that loans to authorized committees 
that are used in connection with the candidate's campaign for election, 
for which the candidate is personally liable, are subject to the 
provisions of 11 CFR 116.11. It is important to note that new 11 CFR 
116.11 applies to all loans made, endorsed, or guaranteed by candidates 
regardless of whether the other provisions of the Millionaires' 
Amendment are triggered, i.e., the increased contribution limits.
    The definition of ``personal loans'' in paragraph (a) specifies 
that advances made by the candidate to their authorized committees are 
personal loans subject to the repayment restrictions in 11 CFR 116.11. 
The Commission seeks comment on whether the interim final rules should 
specify within this definition of ``personal loans'' other debts and 
obligations that

[[Page 3974]]

the candidate's authorized committee owes to the candidate.
    The introductory text in paragraph (b) makes clear that if a 
candidate makes several personal loans over the course of an election, 
those loans will not be treated separately for purposes of this section 
but will, instead, be considered in the aggregate. Paragraphs (b) and 
(d) treat a primary election as a separate election from a general 
election. If a candidate makes several personal loans to the authorized 
committee, all the loans will be added together to determine whether 
they exceed $250,000 and are, therefore, subject to the provisions of 
this section.
    Under paragraph (b)(1), authorized committees may repay the entire 
amount of any personal loans from contributions that are made on the 
date of the election or before that date. Repayment of the entire loan 
amount is permitted under BCRA and FECA even if the total loan amount 
exceeds $250,000 and as long as these contributions were made on or 
before the date of the election.
    In contrast, paragraphs (b)(2) and (3) both address repayments 
using contributions made after the election. Paragraph (b)(2) allows 
authorized committees to use only $250,000 of contributions that are 
made after the election to repay the candidate's personal loans to his 
or her campaign committee. Consequently, paragraph (b)(3) prohibits 
authorized committees from using more than $250,000 of contributions 
that are made after the election to repay the candidate for personal 
loans.
    It is important to note that 11 CFR 116.11(b)(1), (b)(2), and 
(b)(3) are not mutually exclusive. Under the interim final rules, 
authorized committees may use contributions that are made before the 
election to repay candidate loans in any amount, and contributions made 
after the election to repay candidate loans up to $250,000. For 
example, Candidate A loans $600,000 to her authorized committee. The 
authorized committee receives $350,000 in contributions by election day 
and receives an additional $400,000 in contributions after the 
election. Candidate A's authorized committee may use $250,000 of the 
$400,000 received after the election and $350,000 received before the 
election to repay the entire amount of the candidate's personal loan.
    Paragraph (c) of new 11 CFR 116.11 outlines certain conditions 
regarding the repayment of candidates' personal loans after the 
election. Paragraph (c)(1) establishes a post-election time limit for 
the use of remaining cash on hand for the repayment of personal loans. 
If a candidate's authorized committee wishes to use the cash on hand as 
of the day after the election to repay any portion of the candidate's 
personal loan(s), it must repay the personal loan(s) within 20 days of 
the election, which is the close of books for the post-general election 
report. After the 20-day post-election time period has elapsed, 
paragraph (c)(2) requires a candidate's authorized committee to treat 
the remaining balance of the candidate's personal loan that exceeds 
$250,000 as a contribution from the candidate to the authorized 
committee, given that this amount could never be repaid, and given that 
the amount must be accounted for on the authorized committee's next 
report.
    Further, paragraph (c)(3) requires the candidate's authorized 
committee to report both the amount of cash on hand used to repay the 
candidate's personal loan(s) (under paragraph (c)(1)) and the treatment 
of the remaining loan amount as a contribution from the candidate 
(under paragraph (c)(2)) in the authorized committee's next scheduled 
report.

    Example: Candidate X loans $500,000 to her campaign on October 1 
for the general election. As of the day after the general election, 
Candidate X's authorized committee has cash on hand from the general 
election in the amount of $100,000. Candidate X's authorized 
committee decides to use $50,000 of the cash on hand to repay part 
of the candidate's personal loan, leaving an outstanding balance of 
$450,000. Candidate X's authorized committee must repay $50,000 of 
the personal loan and must treat $200,000 as a contribution from the 
candidate within 20 days of the general election because that is the 
amount that exceeds $250,000 of the remaining balance. Candidate X's 
authorized committee must report the repayment of $50,000 of the 
personal loan and the treatment of $200,000 of the personal loan's 
outstanding balance as a contribution on the next regularly 
scheduled report, the post-general election report.

    BCRA specifically states that 2 U.S.C. 441a(j) applies only to 
personal loans that are made after November 6, 2002. Thus, the 
limitations on repayment of personal loans from contributions made 
after the respective election do not apply to personal loans made 
before this date. Consequently, any outstanding loan balances of 
candidate loans that were made before November 6, 2002, may be repaid 
with contributions made after this date subject to the provisions 
concerning net debts outstanding in 11 CFR 110.1(b)(3).
B. Alternative Interpretation of 2 U.S.C. 441a(j)
    The definition of ``personal loans'' in new 11 CFR 116.11(a) is 
based on a broad interpretation of the opening phrase ``[a]ny candidate 
who incurs personal loans'' in 2 U.S.C. 441a(j) to mean loans made by 
candidates to their authorized committees. This interpretation is based 
on the legislative history of the Senate debates on this provision.\3\
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    \3\ ``If you incur debt from a personal loan and then you get 
elected as Senator, and then you go around and say, now I am 
Senator, I want you to get my money so I can pay back what I used of 
my own money to run for election. It is clear in this amendment that 
you cannot do that in the future.'' 147 CR S2537 (daily ed. Mar. 20, 
2001) (statement of Sen. Domenici); ``[The] language [of 2 U.S.C. 
441a(j)] makes it clear there will not be any effort after the 
election to raise money to repay those loans; * * *'' Id. at S2462 
(daily ed. Mar. 19, 2001) (statement of Sen. Durbin); see also 
footnote 2, above.
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    The Commission, however, seeks comments on its interpretation of 
``incurs'' in 2 U.S.C. 441a(j). ``Incur'' means ``[t]o become liable or 
subject to * * * and to become through one's own action liable or 
subject to.'' \4\ In the opening phrase of 2 U.S.C. 441a(j), it is the 
candidate who is ``incurring'' the personal loans. Thus, arguably, the 
use of ``incurs'' could refer to the candidate's liability and not the 
authorized committee's liability to the candidate. The interim final 
rules reject this interpretation of 2 U.S.C. 441a(j) to mean loans that 
are made to candidates rather than loans made by candidates for two 
reasons. First, the legislative history supports a different 
interpretation. Second, the practical consequence of interpreting 2 
U.S.C. 441a(j) to apply to loans made to candidates rather than loans 
made by candidates to their authorized committee would be that 
similarly situated candidates may be treated differently. Under this 
interpretation, a candidate who takes out a loan from a lending 
institution and then lends the loan proceeds to his or her authorized 
committee would be subject to the restrictions of 2 U.S.C. 441a(j) and 
11 CFR 116.11. Conversely, a candidate who liquidates an asset and 
loans the proceeds from the sale to his or her authorized committee 
would not be subject to these sections and the candidate's authorized 
committee would be able to raise funds after the election to repay him 
or her. For these two reasons, the Commission rejects this possible 
interpretation of 2 U.S.C. 441a(j) at this time.
---------------------------------------------------------------------------

    \4\ Black's Law Dictionary 108 (6th ed. 1990).

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[[Page 3975]]

2. 11 CFR 116.12 Repayment of Candidate Loans of $250,000 or Less

    In a recent BCRA-related rulemaking, the Commission deleted 11 CFR 
113.2(d) from the regulations. ``Disclaimers, Fraudulent Solicitation, 
Civil Penalties, and Personal Use of Campaign Funds: Final Rules and 
Explanation and Justification,'' 67 FR 76962 (December 13, 2002). That 
now-deleted paragraph addressed, among other things, the repayment of 
candidate loans using campaign funds. In the Explanation and 
Justification, the Commission noted that it would return to the issue 
of repayment of candidate loans in the Millionaires' Amendment 
rulemaking, if necessary. 67 FR at 76975. The Commission has decided to 
address this issue in 11 CFR 116.11 and 116.12 as part of this 
rulemaking, rather than in part 113, because part 116 specifically 
implements statutory changes directly affecting the repayment of 
candidate loans (i.e., 2 U.S.C. 441a(j)).
    Whereas 11 CFR 116.11 outlines the requirements regarding the 
repayment of candidate's personal loans that, in the aggregate, exceed 
$250,000, new 11 CFR 116.12 contains requirements regarding the 
repayment of candidate's personal loans that, in the aggregate, are 
equal to or less than $250,000. Paragraph (a) of 11 CFR 116.12, states 
that a candidate's authorized committee may repay up to $250,000 of a 
candidate's personal loans using contributions to the candidate or the 
candidate's authorized committee made any time before, on, or after the 
date of the election as long as the personal loans were used in 
connection with the candidate's campaign for election. BCRA places no 
temporal limit on the contributions that may be used to repay personal 
loans of $250,000 or less, so paragraph (a) permits candidate's 
authorized committees to use contributions received before, during, or 
after the election for this purpose.
    Paragraph (b) of 11 CFR 116.12 states that this section applies 
separately to each election. This means that, if a candidate were to 
make a personal loan or loans in connection with more than one 
election, his or her authorized committee may repay up to $250,000 of 
the aggregate loan amount for each election. For example, Candidate X 
makes a $250,000 personal loan to her campaign for the primary election 
and a $250,000 personal loan to her campaign committee for the general 
election. As of the date after the general election, Candidate X has 
$500,000 in aggregate outstanding personal loans made to her authorized 
committee for the primary and general elections. Candidate X's 
authorized committee may use contributions received before, during, or 
after the primary election to repay Candidate X's $500,000 outstanding 
personal loan balance, $250,000 for the primary election loan and 
$250,000 for the general election loan.
    Paragraph (c) states that nothing in 11 CFR 116.12 shall supercede 
11 CFR 9035.2 regarding the limitations on expenditures from personal 
funds or family funds of a presidential candidate who accepts matching 
funds. Presidential primary candidates must still comply with the limit 
on expenditures from personal funds exceeding $50,000 prescribed by 11 
CFR 9035.2 and 2 U.S.C. 9035.

Part 400--Increased Limits for Candidates Opposing Self-financed 
Candidates

Scope and Definitions

1. 11 CFR 400.1 Scope and Effective Date

    The Commission is promulgating new rules implementing the 
Millionaires' Amendment. These rules are in new part 400 of Title 11 of 
the Code of Federal Regulations.
    Paragraph (a) of new 11 CFR 400.1 introduces the scope of the part, 
which is elections to the office of United States Senator, or 
Representative in, or Delegate or Resident Commissioner to, the 
Congress, in which a candidate is permitted an increased contribution 
limit in response to certain expenditures from personal funds by an 
opposing candidate. Paragraph (a) also states expressly that part 400 
does not apply to presidential and vice-presidential elections. 
Paragraph (b) of 11 CFR 400.1 specifies the effective date of part 400, 
February 26, 2003, and makes the important clarification that part 400 
will not apply to any runoff elections, recounts, or election contests 
resulting from elections prior to that date. Pub. L. 107-155, Sec. 
402(a)(4).
    The Commission seeks comment on whether it should adopt a 
provision, in 11 CFR 400.1, whereby candidates and national and State 
committees of political parties would be permitted to affirmatively 
``opt-out'' of the Millionaires'' Amendment's benefits and obligations, 
in cases where all of the following conditions were met: (1) The 
candidate has no intention of making expenditures from personal funds 
in excess of the relevant threshold amount in 11 CFR 400.9; (2) the 
candidate and the candidate's authorized committee have no intention of 
accepting contributions under the increased limits; and (3) the 
national and State committees of the candidate's political party have 
no intention of making coordinated expenditures on behalf of the 
candidate's election. By ``opting-out,'' the candidate would be 
prohibited from accepting contributions under the increased limits and 
the national and State committees of the candidate's political party 
would be prohibited from making coordinated expenditures on behalf of 
the candidate's election in excess of the usual coordinated expenditure 
limits in 11 CFR 109.32(b). In return, the candidate and the national 
and State committees of the candidate's political party would be exempt 
from all the notification and reporting obligations under 11 CFR part 
400.
    In addition, the Commission seeks comment on whether, and under 
what circumstances, candidates and national and State committees of 
political parties who had ``opted out'' should be permitted to opt back 
in to the Millionaires'' Amendment's benefits and obligations.

2. 11 CFR 400.2 Definition of ``Election Cycle''

    BCRA provides a definition of ``election cycle,'' which is, by its 
own terms, specific to the Millionaires'' Amendment. 2 U.S.C. 431(25). 
New 11 CFR 400.2 implements this definition, tracking the specific 
language of the statute. Ordinarily, statutory definitions from 2 
U.S.C. 431 are implemented by regulations in part 100, which includes 
definitions that have application throughout Title 11. However, the 
regulatory definition of ``election cycle'' in 2 U.S.C. 431(25) is 
codified in part 400 because the scope of the definition in 2 U.S.C. 
431(25) is limited, by its own terms, to the Millionaires' Amendment.
    ``Election cycle'' is defined in the Millionaires'' Amendment in 
BCRA to be the period from election-to-election, with the primary 
election and the general election considered to be separate elections. 
2 U.S.C. 431(25). Thus, the period from the day after the last general 
election for a particular office to the day of the next primary 
election for that same office is one election cycle, and the period 
from the day after the primary election to the day of the general 
election is another separate election cycle.
    In the case of a run-off election, the Commission has decided to 
treat it as an extension of the election cycle containing the election 
that necessitated the run-off under 11 CFR 400.2(c). For example, in 
the case of a primary election where no candidate receives the 
necessary percentage of votes to be declared the winner and where, 
therefore, a run-off election must be

[[Page 3976]]

held to determine the winner, the Commission will consider the run-off 
election to be part of the primary election cycle, for purposes of the 
Millionaires' Amendment.

3. 11 CFR 400.3 Definition of ``Opposing Candidate''

    The operative provisions of the Millionaires'' Amendment are 
triggered by expenditures of personal funds by ``an opposing 
candidate.'' See 2 U.S.C. 441a(i)(1)(D) (Senate); 2 U.S.C. 441a-1(a)(2) 
(House of Representatives). New 11 CFR 400.3 defines ``opposing 
candidate.'' Paragraph (a) applies to primary elections. It establishes 
that ``opposing candidate'' means another candidate seeking the 
nomination of the same party as the candidate who may benefit from 
increased contribution limits and the lifting of the coordinated party 
expenditure limits. The final sentence of this paragraph clarifies that 
a candidate may have more than one ``opposing candidate'' in a primary.
    The Commission seeks comment as to whether ``opposing candidate'' 
should be expanded to include candidates seeking another political 
party's nomination for the same office. Under such an expanded 
definition, for example, a self-financed candidate seeking the 
nomination of political party ABC would be an ``opposing candidate'' 
where his or her personal funds are intended to influence the primary 
of political party XYZ by working to defeat whichever candidate of 
political party XYZ is judged to be the strongest opponent of the self-
financed candidate in the general election.
    Paragraph (b) of 11 CFR 400.3 applies to general elections, and 
establishes that ``opposing candidate'' means another candidate seeking 
election to the same office as the candidate who may benefit from 
increased contribution limits. Again, the final sentence states that a 
candidate may have more than one ``opposing candidate'' in the general 
election.

4. 11 CFR 400.4 Definition of ``Expenditure From Personal Funds''

    The amount of ``expenditures from personal funds'' by an opposing 
candidate is an important factor in determining whether the increased 
contribution limits and unlimited coordinated party expenditures are 
permitted under the Millionaires' Amendment. 2 U.S.C. 441a(i)(1)(D) 
(Senate); 2 U.S.C. 441a-1(a)(2) (House of Representatives). This term 
is defined in both the Senate and the House of Representatives versions 
of the Millionaires' Amendment as ``an expenditure made by a candidate 
using personal funds,'' as ``a contribution or loan made by a candidate 
using personal funds,'' and as ``a loan secured using such funds to 
candidate's authorized committee.'' 2 U.S.C. 434(a)(6)(B)(i) (Senate); 
2 U.S.C. 441a-1(b)(1)(A) (House of Representatives).
    New 11 CFR 400.4 implements this statutory definition and includes 
cross-references to 11 CFR 100.33, which defines ``personal funds.'' 
The introductory wording of 11 CFR 400.4(a) states that all of the 
items described in paragraphs (a)(1) through (a)(4) are aggregated to 
determine expenditures from personal funds.
    Paragraph (a)(1) follows the definition of ``expenditure'' in 11 
CFR part 100, subparts D and E. It includes payments made directly by 
the candidate for purposes of influencing the election in which he or 
she is a candidate. Paragraph (a)(2) includes in the definition 
contributions and loans made by the candidate to his or her authorized 
committee using personal funds. 2 U.S.C. 434(a)(6)(B)(i)(II). Paragraph 
(a)(3) includes in the definition a loan made by any person to the 
candidate's authorized committee if that loan is secured or guaranteed 
by the candidate's personal funds. BCRA requires that obligations to 
make expenditures from personal funds be included when aggregating such 
expenditures. 2 U.S.C. 434(a)(6)(B)(ii) (Senate); 2 U.S.C. 441a-
1(b)(1)(A)(ii) (House of Representatives). Thus, 11 CFR 400.4(a)(4) 
states that any obligation to make an expenditure from personal funds 
that is legally enforceable against the candidate falls within the 
definition of ``expenditure from personal funds.''
    BCRA does not define when an expenditure from personal funds is 
considered to be made. The Commission, in 11 CFR 400.4(b), defines when 
an expenditure from personal funds will be considered made for purposes 
of 11 CFR part 400. Paragraph (b) states that an expenditure is 
considered made on the date the funds are deposited into the bank 
account designated by the candidate's authorized committee as the 
campaign depository, on the date the instrument transferring the funds 
is signed, or on the date the contract obligating the personal funds is 
executed, whichever date is earlier. Accordingly, contributions or 
loans made by the candidate to his or her authorized committee or loans 
made by any person but secured or guaranteed with the candidate's 
personal funds will be considered made on the date the loaned funds are 
deposited into the authorized committee's bank account or, in the case 
of a loan from a third party secured by the candidate's personal funds, 
the date the contract obligating the candidate's personal funds was 
signed, whichever date is earlier. In the situation where a candidate 
makes direct expenditures on behalf of his or her authorized committee, 
the expenditure will be considered to have been made on the date he or 
she signed the check or other instrument conveying the funds or signed 
a contract obligating his or her personal funds in connection with the 
direct expenditure. Evidence of expenditures will be receipts, 
cancelled checks, and signed contracts and such documents must be 
maintained under the recordkeeping provisions of 11 CFR 102.9.

5. 11 CFR 400.5 Definition of ``Applicable Limit''

    The Senate provisions of the Millionaires'' Amendment use the term 
``applicable limit.'' 2 U.S.C. 441a(i)(1)(A). This means the amount 
limitation on contributions to candidates by persons other than 
multicandidate committees in 2 U.S.C. 441a(a)(1)(A) that is modified by 
the operation of the Millionaires' Amendment. Although the House of 
Representatives version does not use the term ``applicable limit,'' it 
also operates to increase the 2 U.S.C. 441a(a)(1)(A) limits for 
individuals. 2 U.S.C. 441a-1(a)(1)(A). Accordingly, new 11 CFR 400.5 
defines ``applicable limit'' by linking the term to the contribution 
limitation in 11 CFR 110.1(b)(1), which implements 2 U.S.C. 
441a(a)(1)(A). The Commission notes this applicable limit will most 
likely change every two years due to the indexing of the applicable 
limit for inflation under 2 U.S.C. 441a(c) and 11 CFR 110.1(b)(1). See 
11 CFR 110.17(b).

6. 11 CFR 400.6 Definition of ``Increased Limit''

    The Millionaires'' Amendment, under certain circumstances, allows a 
candidate certain advantages to respond to expenditures from personal 
funds by an opposing candidate. One of these advantages is an increase 
in the amount limitation on contributions to the candidate by 
individuals. The other advantage is a suspension of the usual limits on 
coordinated expenditures by national and State political party 
committees in connection with the general election campaign of the 
candidate (see 11 CFR 109.32(b)). 2 U.S.C. 441a(i)(1)(C) (Senate); 2 
U.S.C. 441a-1(a)(1) (House of Representatives). This suspension of the 
coordinated expenditure limits applies to any

[[Page 3977]]

coordinated spending authority either of these party committees may 
assign to another party committee, such as a Congressional campaign 
committee or a district or local party committee, under 11 CFR 109.33.
    New 11 CFR 400.6 defines ``increased limit'' to mean an amount 
limitation on contributions from individuals that exceed the applicable 
limit (see Explanation and Justification for new 11 CFR 400.5, above) 
in 11 CFR 110.1(b). It is important to note that under the 
Millionaires' Amendment the amount limitations for contributions from 
persons other than individuals (political committees, multicandidate 
political committees (PACs), partnerships, limited liability 
corporations, Indian tribes, etc.) to candidates do not increase.
    New 11 CFR 400.6 also includes within the definition of ``increased 
limit'' the suspension of party expenditure limits, where applicable. 
The Commission notes that nothing in the Millionaires' Amendment 
changes the restrictions on coordinated party expenditures in 11 CFR 
109.35.

7. 11 CFR 400.7 Definition of ``Contribution That Exceeds the 
Applicable Limit''

    The Millionaires' Amendment provides that, in certain 
circumstances, an individual may contribute more to a candidate than 
otherwise allowed under 2 U.S.C. 441a(a)(1)(A) and 11 CFR 110.1(b). The 
limits in 2 U.S.C. 441a(a)(1)(A) and 11 CFR 110.1(b) are defined as the 
``applicable limit'' in new 11 CFR part 400. See Explanation and 
Justification for new 11 CFR 400.5, above. New 11 CFR 400.7 defines 
``contribution that exceeds the applicable limit'' as the difference 
between the contribution amount and the applicable limit.

    Example: A contributor delivered a check for $6,000 to a Senate 
candidate who had been accepting contributions up to that amount 
under the increased limits. See 2 U.S.C. 441a(i)(1)(C)(i)(I). 
Because the current applicable limit under 11 CFR 110.1(b)(1) is 
$2,000, the ``amount of the contribution above the applicable 
limit'' is $4,000.

8. 11 CFR 400.8 Definition of ``Gross Receipts''

    Both the Senate and House of Representatives provisions of the 
Millionaires' Amendment take into account any overall fundraising 
advantage that a candidate may have over his or her opposing candidate 
before allowing the opposing candidate's expenditures from personal 
funds to trigger increased limits on contributions to the candidate and 
unlimited coordinated party expenditures on behalf of the candidate. 
The candidate's fundraising advantage, if any, is called the ``gross 
receipts advantage'' in both versions of the Millionaires' Amendment. 2 
U.S.C. 441a(i)(1)(E) (Senate); 2 U.S.C. 441a-1(2)(B) (House of 
Representatives). If the candidate's gross receipts advantage offsets 
the advantage the opposing candidate derives from the expenditure of 
his or her personal funds, then the increased contribution limits do 
not come into play. The Commission's regulations do not define the term 
``gross receipts advantage.'' Instead, the Commission has incorporated 
the calculation of ``gross receipts advantage'' into the formulas for 
determining the opposition personal funds amount in 11 CFR 400.10 (see 
Explanation and Justification for new 11 CFR 400.10, below).
    ``Gross receipts'' is not defined in BCRA. New 11 CFR 400.8 defines 
``gross receipts'' by reference to an existing reporting regulation 
already applicable to authorized committees in other contexts, 11 CFR 
104.3(a)(3). Section 104.3(a)(3) enumerates the types of receipts that 
make up the ``total amount of receipts'' and that must be reported by a 
candidate's principal campaign committee on behalf of all the 
candidate's authorized committees.\5\ This approach has the benefit of 
relying on rules and concepts already familiar to candidates and 
authorized committees to implement this part of BCRA.
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    \5\ Note that certain amounts that qualify as ``expenditures 
from personal funds'' are reported under 11 CFR 104.3(a)(3), e.g., 
contributions from candidates under 11 CFR 104.3(a)(3)(ii). However, 
expenditures from personal funds are expressly excluded from BCRA's 
definition of ``gross receipts advantage.'' 2 U.S.C. 441a(i)(8)(E) 
(Senate); 2 U.S.C. 441a-1(a)(2)(B)(ii) (House of Representatives). 
The Commission has accounted for this in the computation of 
``opposition personal funds amount'' in 11 CFR 400.10, below.
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9. 11 CFR 400.9 Definition of ``Threshold Amount''

    Both the Senate and House of Representatives provisions of the 
Millionaires' Amendment define a ``threshold amount.'' If the opposing 
candidate's expenditures from personal funds, adjusted for the 
candidate's expenditures from personal funds and the candidate' gross 
receipts advantage (see Explanation and Justification for new 11 CFR 
400.10, below), exceed this threshold amount, or specified multiples of 
this threshold amount, and other conditions are met, the candidate 
receives the advantage of increased contribution limits and the lifting 
of the coordinated party spending limits.
    In the Senate provisions, the threshold amount varies from State to 
State according to a statutory formula called ``State-by-State 
Competitive and Fair Campaign Formula.'' 2 U.S.C. 441a(i)(1)(B)(i). The 
formula is the sum of $150,000 plus the product of the ``voting age 
population'' of the State and $0.04. Id.
    The interim final rules define ``threshold amount'' in new 11 CFR 
400.9. Paragraph (a) applies to Senate elections. It defines threshold 
amount by restating the ``State-by-State Competitive and Fair Campaign 
Formula'' from 2 U.S.C. 441a(i)(1)(B)(i). Paragraph (a) also defines 
``voting age population'' by reference to new 11 CFR 110.18, which is 
entitled ``voting age population.'' See also former 11 CFR 110.9(d). 
New 11 CFR 110.18 provides that the term means ``resident population, 
18 years of age or older.'' That section also provides that the 
Commission will assure that this data is published annually in the 
Federal Register. The Commission will also post this data on its 
website.
    Paragraph (b) applies to House of Representatives elections. 
Because the threshold amount in House of Representatives elections is 
statutorily fixed at $350,000, paragraph (b) simply restates that 
amount. 2 U.S.C. 441a-1(a)(1).

10. 11 CFR 400.10 Definition of ``Opposition Personal Funds Amount''

    The purpose of the Millionaires' Amendment is to allow a candidate 
to respond to very large expenditures of personal funds by an opposing 
candidate. However, the operative provisions of the Millionaires' 
Amendment are not triggered directly by the opposing candidate's 
expenditures from personal funds. Instead, the opposing candidate's 
expenditure of personal funds is measured relative to the candidate's 
own expenditures from personal funds. For both Senate and House of 
Representatives elections, the ``opposition personal funds amount'' is 
the difference between the opponents' expenditures from personal funds 
and the candidate's own expenditures from personal funds. 2 U.S.C. 
441a(i)(1)(D) (Senate); 2 U.S.C. 441a-1(a)(2) (House of 
Representatives). This provision precludes the operation of the 
Amendment in a situation where a candidate's own expenditures from 
personal funds offsets the opponent's expenditures from personal funds.
    The opposition personal funds amount is subject to one other 
factor, called the ``gross receipts advantage.'' 2 U.S.C. 441a(i)(1)(E) 
(Senate); 2 U.S.C.

[[Page 3978]]

441a-1(a)(2)(B) (House of Representatives). As explained in more detail 
above, if the candidate's overall fundraising advantage, called the 
``gross receipts advantage,'' offsets an opposing candidate's 
expenditures from personal funds, the increased contribution and 
coordinated party expenditure limits will not be triggered. Given that 
gross receipts advantage must be taken into account in determining the 
opposition personal funds amount, the Commission has decided to imbed 
the factors necessary for calculating gross receipts advantage into the 
formulas in the regulations for determining the opposition personal 
funds amount, as explained below.
    Accordingly, 11 CFR 400.10 defines ``opposition personal funds 
amount'' by setting out three mutually exclusive formulas. Only one of 
the formulas will apply at a given time, depending on the date of the 
computation. The date of computation is important because Congress, in 
BCRA, specified two benchmark dates for making the determination of 
gross receipts advantage: June 30 and December 31 of the year preceding 
the year in which the general election is held. Before June 30 of the 
year preceding the year in which the general election is held, gross 
receipts advantage does not seem to be given effect by the statute. 2 
U.S.C. 441a(i)(1)(D)(ii) (Senate); 2 U.S.C. 441a-1(a)(2)(B) (House of 
Representatives). On or after June 30 of the year preceding the year in 
which the general election is held, however, gross receipts advantage 
must be taken into account in determining the opposition personal funds 
amount.
    The Commission notes that, although the statute uses the benchmark 
dates of June 30 and December 31 of the year preceding the year in 
which the general election is held for determining gross receipts 
advantage, the formulas in the Commission's rule for calculating 
opposition personal funds amount (new 11 CFR 400.10), are framed in 
terms of the later dates of July 16 of the year preceding the year in 
which the general election is held and February 1 of the year in which 
the general election is held, respectively. The reason for this 
discrepancy is that the disclosure reports containing the necessary 
information for determining gross receipts advantage as of June 30 and 
December 31 of the year preceding the year in which the general 
election is held, the Second Quarterly Report, the Year End Report, and 
the supplement reports required under new 11 CFR 104.19, are not due 
until July 15 of the year preceding the year in which the general 
election is held and January 31 of the year in which the general 
election is held, respectively. Furthermore, it will not actually be 
possible to make the necessary calculations until the day after each of 
those reports is due.
    Accordingly, the formulas for calculating the opposition personal 
funds amount revolve around two important dates: July 16 of the year 
preceding the year in which the general election is held (the day after 
the Second Quarterly Report is due) and February 1 of the year in which 
the general election is held (the day after the Year End Report is 
due).
    The formulas and their respective effective dates are set out in 
paragraph (a) of new 11 CFR 400.10 using variables that are defined in 
paragraph (b). The first term is the same in each of the formulas: The 
difference between the expenditures of personal funds by the candidate 
and the opposing candidates. This is expressed as a formula, ``a-b,'' 
where ``a'' is the amount of expenditures from personal funds by the 
opposing candidate and ``b'' is the amount of expenditures from 
personal funds by the candidate seeking to accept contributions under 
the increased limits. The difference between the three sets of formulas 
is how gross receipts advantage is computed. In the formula that 
applies prior to July 16 of the year before the general election year 
(paragraph (a)(1)), gross receipts advantage is not factored into the 
formula, as explained above. Thus, during this timeframe, the 
opposition personal funds amount is simply the difference between the 
expenditures from personal funds by the candidate and each opposing 
candidate.
    The first of the benchmark dates set by Congress for computing 
gross receipts advantage is June 30 of the year before the general 
election year. As explained above, the information necessary for 
calculating gross receipts advantage as of that date will not be 
available to the public until July 16 of the year before the general 
election year. Accordingly, July 16, rather than June 30 of the year 
before the general election year, marks the beginning date for 
applicability of the second formula (paragraph (a)(2)).
    Paragraph (a)(2) sets out two different formulas (using the 
terminology of the formula, ``a-b-((c-d)/2)'' or ``a-b''). Variable 
``c'' is the aggregate amount of the gross receipts of the candidate's 
authorized committees, minus any contributions by the candidate from 
personal funds, during any election cycle that may be expended in 
connection with the election, as determined on June 30 of the year 
preceding the year in which the general election is held. Variable 
``d'' is the aggregate amount of the gross receipts of the opposing 
candidate's authorized committee, minus any contributions by that 
opposing candidate from personal funds, during any election cycle that 
may be expended in connection with the election, as determined on June 
30 of the year preceding the year in which the general election is 
held.
    If the amount for variable ``c'' is greater than the amount for 
variable ``d,'' then the first of these formulas must be used to 
determine the opposition personal funds amount (a-b-((c-d)/2)). If the 
reverse is true, however, then the gross receipts advantage is 
considered to be equal to $0 because BCRA states that the gross 
receipts advantage is taken into consideration only if the candidate's 
authorized committee's gross receipts exceed the opposing candidate's 
authorized committee's gross receipts. 2 U.S.C. 441a(i)(1)(E)(ii) 
(Senate); 2 U.S.C. 441a-1(a)(2)(B)(ii) (House of Representatives) (``* 
* * the term `gross receipts advantage' means the excess, if any * * 
*'') (emphasis added). Thus, the opposition personal funds amount 
simply equals the difference between the greatest aggregate amount of 
expenditures from personal funds made by the opposing candidate and the 
candidate opposing the opposing candidate in the same election (using 
the terminology of the formulas, ``a-b''). The computation of gross 
receipts advantage then remains constant until the next statutory 
benchmark date occurs. It is important to note, however, that the 
opposition personal funds amount is still subject to change during this 
time period, depending on changes in the amounts of expenditures from 
personal funds of the candidates in the same election.
    The second of the benchmark dates set by Congress for computing 
gross receipts advantage is December 31 of the year before the general 
election year. As explained above, the information necessary for 
calculating gross receipts advantage as of that date will not be 
available to the public until February 1 of the general election year. 
Accordingly, February 1 of the general election year, rather than 
December 31 of the year before the general election year, marks the 
beginning date for applicability of the third set of formulas 
(paragraph (a)(3)).
    Like paragraph (a)(2), paragraph (a)(3) sets out two formulas 
(using the terminology of the formula, ``a-b-((e-f)/2)'' or ``a-b''). 
Variable ``e'' is the aggregate amount of the gross receipts of the 
candidate's authorized committees, minus any contributions by

[[Page 3979]]

the candidate from personal funds, during any election cycle that may 
be expended in connection with the election, as determined on December 
31 of the year preceding the year in which the general election is 
held. Variable ``f'' is the aggregate amount of the gross receipts of 
the opposing candidate's authorized committee, minus any contributions 
by that opposing candidate from personal funds, during any election 
cycle that may be expended in connection with the election, as 
determined on December 31 of the year preceding the year in which the 
general election is held.
    If the amount for variable ``e'' is greater than the amount for 
variable ``f,'' then the first of these formulas must be used to 
determine the opposition personal funds amount (a-b-((e-f)/2)). If the 
reverse is true, however, then the gross receipts advantage is not 
taken into consideration, for the same reason stated in the Explanation 
and Justification for paragraph (a)(2), above, and consequently is 
equal to $0. The opposition personal funds amount simply equals the 
difference between the greatest aggregate amount of expenditures from 
personal funds made by the opposing candidate and the candidate 
opposing the opposing candidate in the same election (using the 
terminology of the formulas, ``a-b''). The computation of gross 
receipts advantage then remains constant until the day of the general 
election. Once again, however, it is important to note that the 
opposition personal funds amount is still subject to change during this 
time period, depending on changes in the amounts of expenditures from 
personal funds of the candidates in the same election.

Notification and Reporting Requirements

1. 11 CFR 400.20 Declaration of Intent

    Both the Senate and the House of Representatives versions of the 
Millionaires' Amendment (2 U.S.C. 434(a)(6)(B)(ii) (Senate) and 441a-
1(b)(1)(B) (House of Representatives)) require candidates to file a 
``declaration of intent'' within 15 days of becoming a candidate. This 
declaration must state the amount by which the candidate intends to 
exceed the threshold amount (see Explanation and Justification for new 
11 CFR 400.9, above). New 11 CFR 400.20 implements these statutory 
requirements.
    Paragraph (a) sets forth the basic requirements for filing 
Declarations of Intent, including the 15 day filing deadline. See 11 
CFR 100.3 for the definition of ``candidate.'' The declaration must be 
filed with the Commission and with each ``opposing candidate'' as 
described in 11 CFR 400.3.
    Paragraph (b) sets forth the methods of filing for the Senate in 
paragraph (b)(1) and for the House of Representatives in paragraph 
(b)(2). Because Senate candidates are exempt from the FECA's electronic 
filing requirements at 2 U.S.C. 434(a)(11), under paragraph (b)(1), 
Senate candidates must send a copy of their Statement of Candidacy with 
the declaration to the Commission, in addition to their paper filing 
with the Secretary of the Senate. Candidates will be required to send 
the copy of their filing to the Commission using either a facsimile 
machine or as an attachment to an electronic mail message to ensure 
that it is received within the statutorily required time frame. 
Additionally, Senate candidates will be required to fax or 
electronically mail either their FEC Form 2 as an attachment, or the 
information required in FEC Form 2 by 11 CFR 101.1(a), including the 
amount by which the they expect to exceed the threshold amount to each 
opposing candidate.
    Under paragraph (b)(2), candidates for the House of Representatives 
will also be required to include the Declaration of Intent information 
on their Statement of Candidacy, FEC Form 2. Currently, political 
committees that exceed, or that have reason to expect to exceed, 
$50,000 in contributions or expenditures must file electronically. 
Paragraph (b)(2) requires candidates for the House of Representatives 
who state on FEC Form 2 that they intend to exceed the threshold 
amount, as defined in 11 CFR 400.9, to file electronically. This is 
because the electronic filing threshold in 11 CFR 104.18 ($50,000) is 
lower than the $350,000 threshold for part 400. By declaring his or her 
intention to exceed $350,000 in expenditures from personal funds, a 
House of Representatives candidate is stating that he or she 
anticipates spending more than seven times the $50,000 electronic 
filing threshold. Additionally, House of Representatives candidates are 
required to fax or electronically mail their FEC Form 2 as an 
attachment, or the information required therein by 11 CFR 101.1(a), 
including the amount by which they intend to exceed the threshold 
amount, to each opposing candidate.
    With these required methods of filing, the Commission seeks to 
facilitate the making and receiving of the Declaration of Intent by all 
candidates. As explained in the discussion of revised Sec.  101.1 
above, due to the availability of computers in public libraries and the 
availability of free electronic mail on several Web sites, the 
Commission does not believe that requiring the use of electronic mail 
will pose an undue burden on candidates, especially when weighed 
against the fact that electronic mail will provide the most rapid 
manner of notification possible.

2. 11 CFR 400.21 Initial Notification of Expenditures From Personal 
Funds

    BCRA (2 U.S.C. 434(a)(6)(B)(iii) (Senate) and 441a-1(b)(1)(C) 
(House of Representatives)) requires the filing of an ``initial 
notification'' of expenditures from personal funds within 24 hours of 
the time certain threshold amounts of expenditures from candidates' 
personal funds are exceeded. For Senate candidates, that amount is two 
times the threshold amount defined in 11 CFR 400.9(a). For House of 
Representatives candidates, that amount is the threshold amount as 
defined in 11 CFR 400.9(b). New 11 CFR 400.21 largely tracks the 
wording of the statute at 2 U.S.C. 434(a)(6)(B)(iii) (Senate) and 441a-
1(b)(1)(C) (House of Representatives), with two modifications. First, 
as discussed in greater detail below (see Explanation and Justification 
for new 11 CFR 400.25), while BCRA seems to require candidates 
themselves to file initial notifications of expenditures from personal 
funds, the Commission interprets this to mean that the candidates' 
principal campaign committees are primarily responsible for these 
notifications, consistent with their other reporting obligations. 
Second, as explained in more detail below (see Explanation and 
Justification for new 11 CFR 400.24), FECA requires all original 
documents filed by Senate candidates' principal campaign committees to 
be filed with the Secretary of the Senate. Accordingly, paragraph (a) 
of new 11 CFR 400.21 requires Senate candidates' principal campaign 
committees to file their original notifications with the Secretary of 
the Senate and to file copies with other required recipients, including 
the Commission.
    New 11 CFR 400.21 addresses the requirements for the principal 
campaign committees of Senate candidates in paragraph (a). Paragraph 
(a) states that Senate candidates' principal campaign committees must 
notify the Secretary of the Senate, the Commission, and each opposing 
candidate when making expenditures from personal funds in connection 
with the election exceeding two times the threshold amount, as defined 
in 11 CFR 400.9. Paragraph (a) makes clear that such notifications must 
be received by each required recipient

[[Page 3980]]

within 24 hours of when the expenditures are made.
    Paragraph (b) of 11 CFR 400.21 contains the requirements for the 
principal campaign committees of House of Representatives candidates. 
Paragraph (b) states that House of Representatives candidates' 
principal campaign committees must notify the Commission, each opposing 
candidate, and the national party of each opposing candidate when 
making expenditures from personal funds in connection with the election 
exceeding the $350,000 threshold amount, as defined in 11 CFR 400.9. 
Paragraph (b) also makes clear that such notifications must be received 
by each required recipient within 24 hours of when the expenditures are 
made. The content and method of filing of initial notification of 
expenditures from personal funds are discussed below in the Explanation 
and Justification for new 11 CFR 400.23 and 400.24.

3. 11 CFR 400.22 Additional Notification of Expenditures From Personal 
Funds

    After the initial notification discussed above, BCRA (2 U.S.C. 
434(a)(6)(B)(iv) and 441a-1(b)(1)(D)) requires the filing of additional 
notices each time expenditures from the candidate's personal funds 
exceed $10,000. Like 11 CFR 400.21, new 11 CFR 400.22 largely tracks 
the language of the statute, with two modifications. First, as 
discussed in greater detail below (see Explanation and Justification 
for new 11 CFR 400.25), while BCRA seems to require candidates 
themselves to file additional notifications of expenditures from 
personal funds, the Commission interprets this to mean that the 
candidates' principal campaign committees are primarily responsible for 
these notifications, consistent with their other reporting obligations. 
Second, as explained in more detail below (see Explanation and 
Justification for new 11 CFR 400.24), FECA requires all original 
documents filed by Senate candidates' principal campaign committees to 
be filed with the Secretary of the Senate. Accordingly, paragraph (a) 
of new 11 CFR 400.22 requires Senate candidates' principal campaign 
committees to file their original notifications with the Secretary of 
the Senate and to file copies with other required recipients.
    New 11 CFR 400.22 addresses the requirements for the principal 
campaign committees of Senate candidates in paragraph (a). Paragraph 
(a) states that Senate candidates' principal campaign committees must 
notify the Secretary of the Senate, the Commission, and each opposing 
candidate when making additional expenditures from personal funds in 
connection with the election exceeding $10,000. Paragraph (a) makes 
clear that such notifications must be received by each required 
recipient within 24 hours of when the expenditures are made.
    Paragraph (b) of 11 CFR 400.22 contains the requirements for the 
principal campaign committees of House of Representatives candidates. 
Paragraph (b) states that House of Representatives candidates' 
principal campaign committees must notify the Commission, each opposing 
candidate, and the national party of each opposing candidate when 
making additional expenditures from personal funds in connection with 
the election exceeding $10,000. Paragraph (b) also makes clear that 
such notifications must be received by each required recipient within 
24 hours of when the expenditures are made. The content and method of 
filing of additional notifications of expenditures from personal funds 
are discussed below in the Explanation and Justification for new 11 CFR 
400.23 and 400.24.

4. 11 CFR 400.23 Contents of Notifications of Expenditures From 
Personal Funds

    The Millionaires' Amendment at 2 U.S.C. 434(a)(6)(B)(v) (Senate) 
and 441a-1(b)(1)(E) (House of Representatives) specifically sets forth 
the contents of the initial and additional notifications discussed 
above. BCRA requires that the initial and each additional notification 
contain the following information: (1) The name and office sought by 
the candidate making the expenditures from personal funds, (2) the date 
and amount of each such expenditure, and (3) the total amount of 
expenditures from personal funds that the candidate has made in 
connection with the election from the beginning of the election cycle 
to the date of the expenditure that, when aggregated with all others, 
exceed the $10,000 threshold, thereby triggering the additional 
notification requirement. The interim final rule in 11 CFR 400.23 
largely tracks the notification requirements of the statute.
    While new 11 CFR 400.23(c) requires candidates and their authorized 
committees to provide information regarding the date and amount of each 
expenditure from personal funds, the Commission has included language 
in paragraph (c) to make it clear that the candidate's principal 
campaign committee is not required to supply such detailed information 
regarding each expenditure from personal funds more than once.

    Example: Candidate X, a candidate for the House of 
Representatives, spends $200,000 from personal funds in connection 
with his election campaign on April 1 and another $200,000 on April 
10. On April 11, within 24 hours of triggering the $350,000 
threshold, Candidate X's principal campaign committee files an 
initial notification of expenditures from personal funds pursuant to 
11 CFR 400.21, on which the committee provides the dates and amounts 
of all expenditures from personal funds to date, namely the 
expenditure of $200,000 on April 1 and the subsequent expenditure of 
$200,000 on April 10. On April 12, Candidate X spends an additional 
$15,000 from personal funds. On April 13, within 24 hours, Candidate 
X's principal campaign committee files an additional notification of 
expenditures from personal funds as required by 11 CFR 400.22. On 
the April 13 additional notification, Candidate X's principal 
campaign committee would provide the date and amount of the $15,000 
expenditure and would report the total aggregate amount of 
expenditures from personal funds as $415,000 ($200,000 + $200,000 + 
$15,000). Candidate X's principal campaign committee would not be 
required to report the date and amount of the two $200,000 
expenditures on the April 13 additional notification because details 
regarding those expenditures were already provided in the initial 
notification of expenditures from personal funds that the committee 
filed on April 11.

5. 11 CFR 400.24 Methods of Filing Notifications

    BCRA does not specify methods of filing the initial and additional 
Notifications of Expenditures from Personal Funds. New 11 CFR 400.24 
addresses methods of filing. Paragraph (a) contains the requirements 
for Senate candidates and paragraph (b) contains the requirements for 
House of Representatives candidates. As discussed in greater detail 
below (see Explanation and Justification for 11 CFR 400.25), while BCRA 
could be interpreted to require candidates themselves to file initial 
and additional notifications of expenditures from personal funds, the 
Commission concludes that the primary reporting obligation should 
reside with the candidates' principal campaign committees, although 
candidates must ensure that their principal campaign committees comply 
with this obligation.
    Although 2 U.S.C. 434(a)(6) does not specifically require Senate 
candidates to file their initial and additional notifications of 
expenditures from personal funds with the Secretary of the Senate, 2 
U.S.C. 432(g)(1), which was not amended by BCRA, states that all 
reports required to be filed by Senate candidates under the FECA must 
be filed with the Secretary of the Senate. Accordingly, paragraph (a) 
of 11 CFR 400.24 requires Senate candidates'

[[Page 3981]]

principal campaign committees to file their initial and additional 
notifications of expenditures from personal funds with the Secretary of 
the Senate on FEC Form 10. Paragraph (a) also requires Senate 
candidates' principal campaign committees to send a copy of FEC Form 10 
by either facsimile machine or electronic mail or to send an electronic 
mail containing the information required by 11 CFR 400.23 to the 
Commission and to each opposing candidate. Although Senate candidates 
are exempt from the FECA's electronic filing requirements, the 
Commission is requiring their principal campaign committees to send 
this time-sensitive information regarding their expenditures from 
personal funds by facsimile machine or electronic mail in order to 
provide the most rapid notification possible.
    Paragraph (b) of 11 CFR 400.24 requires certain methods of filing 
for House of Representatives candidates. As noted above, House of 
Representatives candidates are subject to the electronic filing 
requirements of 2 U.S.C. 434(a)(11). Therefore, whereas Senate 
candidates' principal campaign committees must send their notifications 
to the Commission by facsimile machine or by electronic mail, House of 
Representatives candidates' principal campaign committees must 
electronically file FEC Form 10 as they would any other report using 
the Commission's electronic filing system. This is because House of 
Representatives candidates who exceed the threshold amount in 11 CFR 
400.10(b) will be well over the $50,000 electronic filing threshold. 
Additionally, House of Representatives candidates' principal campaign 
committees will be required to send their FEC Form 10 via facsimile or 
as an attachment to an electronic mail message, or to send an 
electronic mail message containing the information required in new 11 
CFR 400.23 to each opposing candidate as well as to the national party 
committees of each opposing candidate.
    Although 11 CFR 400.21 and 400.22 require candidates to file the 
initial notification of expenditures from personal funds and additional 
notification of expenditures from personal funds with their opposing 
candidates, they may not be able to do so because they are unable to 
obtain the phone number of the facsimile machine or the electronic mail 
address of one or more of their opposing candidates' principal campaign 
committees. This may be because the opposing candidate's principal 
campaign committee failed to supply that information in its Statement 
of Organization. The Commission seeks comment on whether it should 
waive these notification to opposing candidates requirements where the 
opposing candidate's authorized committee does not report the phone 
number for its facsimile machine or its electronic mail address on FEC 
Form 1, the Statement of Organization.

6. 11 CFR 400.25 Reporting Obligations of Candidates and Candidates' 
Principal Campaign Committees

    The Commission notes that BCRA states that candidates are required 
to file various notifications under the Millionaires' Amendments. For 
example, BCRA requires candidates to file initial notifications of 
expenditures from personal funds (2 U.S.C. 434(a)(6)(B)(iii) and 441a-
1(b)(1)(C)) and additional notifications of expenditures from personal 
funds (2 U.S.C. 434(a)(6)(B)(iv) and 441a-1(b)(1)(D)). In the case of 
notifications of the disposal of excess contributions (2 U.S.C. 
441a(i)(3) and 441a-1(a)(4)), either the candidates or their authorized 
committees must file the notifications. These reporting obligations are 
similar in nature and extent to other reporting requirements in FECA. 
Accordingly, the Commission has decided to implement these new 
reporting requirements in a manner consistent with the way in which 
other reporting requirements operate under 2 U.S.C. 434 and 11 CFR part 
104.
    Under FECA, political committees, including candidates' authorized 
political committees and principal campaign committees, are required to 
file regularly scheduled reports of receipts and disbursements. See 11 
CFR 104.3. Although the obligation to file the reports rests with 
political committees, it is the committees' treasurers who are liable 
if their committees fail to file the required reports. See 11 CFR 
104.1(a). Consequently, the Commission is taking a similar approach to 
the reporting requirements under the Millionaires' Amendment. While the 
Commission's regulations implementing the new reporting provisions 
state that candidates' principal campaign committees are required to 
file the required reports and notifications (see 11 CFR 400.21, 400.22, 
400.24, and 400.54, below), candidates are responsible for ensuring 
that their principal campaign committees meet these new disclosure 
obligations under new 11 CFR 400.25. The Commission seeks comment on 
whether holding candidates personally liable for violations of the 
reporting requirements under subpart B of part 400 is consistent with 
Congressional intent.

Determining When the Increased Limits Apply

    The Millionaires' Amendment prescribes rules for calculating the 
amounts of the increased limits to allow response to expenditures from 
personal funds by an opposing candidate, and also for determining when 
these increased limits do and do not apply. New 11 CFR part 400, 
subpart C implements the Millionaires' Amendment provisions concerning 
when a candidate may and must not accept contributions from individuals 
under the increased limits and when a national or State political party 
political party committee may and must not make coordinated party 
expenditures exceeding the limits in 2 U.S.C. 441a(d). New subpart D of 
part 400 covers the procedures for calculating the increased limits.

1. 11 CFR 400.30 Receipt of Notification of Opposing Candidate's 
Expenditures From Personal Funds

    Paragraph (a) of new 11 CFR 400.30 clarifies that the section 
applies to both Senate races and House of Representatives races.
    Paragraph (b) sets the conditions under which a candidate may 
accept contributions above the applicable limit, while paragraph (c) 
sets the conditions under which certain political party committees may 
make unlimited coordinated party expenditures on behalf of the 
candidate. There are several conditions that must be satisfied before a 
candidate may accept contributions above the applicable limit (see 11 
CFR 400.5) pursuant to the increased contribution limits (see 11 CFR 
400.6), and before a national or State political party committee may 
make unlimited coordinated party expenditures on behalf of the 
candidate in the general election. The first of these conditions is 
that the candidate must receive certain notification from the opposing 
candidate. 2 U.S.C. 441a(i)(2)(A)(i) (Senate); 2 U.S.C. 441a-
1(a)(3)(A)(i) (House of Representatives). This condition is implemented 
in new 11 CFR 400.30.
    There seems to be an inconsistency in the statute between the 
notification that the opposing candidate must give, and the 
notification that the candidate must receive. In both the Senate and 
the House of Representatives versions, the opposing candidate must give 
notifications in terms of his or her ``expenditures from personal 
funds.'' 2 U.S.C. 434(a)(6)(B)(ii) through (v) (Senate); 2 U.S.C. 441a-
1(b)(1)(B)

[[Page 3982]]

through (E) (House of Representatives). The candidate must, however, 
receive notification of the ``opposition personal funds amount.'' 2 
U.S.C. 441a(i)(2)(A)(i) (Senate); 2 U.S.C. 441a-1(a)(3)(A)(i) (House of 
Representatives). The terms ``expenditure from personal funds'' and 
``opposition personal funds amount'' mean different things in the 
Millionaires' Amendment. See 11 CFR 400.4 and 400.10, respectively.
    New 11 CFR 400.30 reconciles these provisions by interpreting the 
reference to ``opposition personal funds amount'' in 2 U.S.C. 
441a(i)(2)(A)(i) (Senate) and 2 U.S.C. 441a-1(a)(3)(A)(i) (House of 
Representatives) to mean ``expenditure from personal funds.'' Thus, 
paragraph (b) of new 11 CFR 400.30 provides that a candidate must not 
accept, pursuant to this part, any contribution above the applicable 
limits (see 11 CFR 400.5) until the candidate has received the initial 
notification of an opposing candidate's expenditures from personal 
funds, as defined in new 11 CFR 400.4.
    Although this regulatory interpretation diverges to some extent 
from the wording of 2 U.S.C. 441a(i)(2)(A)(i) (Senate) and 441a-
1(a)(3)(A)(i) (House of Representatives), this interpretation 
harmonizes the statutory scheme by reconciling the nature of the 
notification that the opposing candidate must give with the nature of 
notification that the candidate must receive. This interpretation also 
makes sense when one considers that the self-financed candidate is not 
able to calculate the opposition personal funds amount in order to give 
notification of this amount to the candidate in the initial 
notification. To calculate the opposition personal funds amount, one 
must have data from both candidates (i.e., about expenditures from 
personal funds by both candidates). See 11 CFR 400.10. The purpose of 
the notification requirements in the statute seems to be to provide the 
candidate with all the data necessary to calculate the opposition 
personal funds amount. The regulatory interpretation in paragraph (b) 
of new 11 CFR 400.30 thus accomplishes the apparent purpose of the 
statute.
    Under the Millionaires' Amendment, one of the advantages that may 
be granted to a candidate to allow response to expenditures from 
personal funds by the opposing candidate is unlimited coordinated party 
expenditures on the candidate's behalf. See 2 U.S.C. 
441a(i)(1)(C)(iii)(III) (Senate); 2 U.S.C. 441a-1(a)(1)(C) (House of 
Representatives). Paragraph (c) of new 11 CFR 400.30 applies to 
national and State committees of a political party (including 
Congressional campaign committees), and makes it clear that such party 
committees may not make unlimited coordinated party expenditures on 
behalf of a candidate until that candidate has received the initial 
notification.
    The Commission is aware that, under some circumstances, candidates, 
authorized committees, and party committees may not actually receive 
initial and additional notifications sent by opposing candidates in a 
timely manner due to technological difficulties, faulty equipment, or 
other reasons. To enable candidates and authorized committees to accept 
contributions and party committees to make coordinated expenditures 
under the increased limits as soon as possible once expenditures from 
personal funds above the threshold amount have been made, the 
Commission is adding the concept of ``constructive notification'' to 
paragraphs (b) and (c) of 11 CFR 400.30. Under paragraph (d), a 
candidate, authorized committee, or party committee is considered to 
have received constructive notice of the filing of an opposing 
candidate's initial or addition notification of expenditures from 
personal funds when they obtain a copy of such notification that is 
received by the Commission.

2. 11 CFR 400.31 Preventing Disproportionate Advantage Resulting From 
Increased Contribution and Coordinated Party Expenditure Limits

    Congress placed several checks on the operation of the 
Millionaires' Amendment. Among these checks is the so-called 
``proportionality provision.'' 147 Cong. Rec. S2538 (daily ed. March 
20, 2001) (Sen. DeWine). The proportionality provision ensures that the 
advantages of the increased contribution and coordinated party spending 
limits allowed to the candidate facing a self-financed opponent do not 
tip the scales disproportionately in favor of the candidate enjoying 
the increased limits. 2 U.S.C. 441a(i)(2)(A)(ii) (Senate); 2 U.S.C. 
441a-1(a)(3)(A)(ii) (House of Representatives). New 11 CFR 400.31 
implements the statutory proportionality provision.
    The proportionality provision requires a candidate and his or her 
authorized committee that accepts contributions under the increased 
limits, and a political party committee that makes coordinated party 
expenditures on behalf of the candidate under the increased limits, to 
monitor a certain proportion. The numerator of the proportion is the 
running total of contributions previously accepted and coordinated 
party expenditures previously made under the increased limits. The 
denominator of the proportion is the opposition personal funds amount. 
2 U.S.C. 441a(i)(2)(A)(ii) (Senate); 2 U.S.C. 441a-1(a)(3)(A)(ii) 
(House of Representatives).
    In the Senate version of the proportionality provision, a candidate 
and his or her authorized committee must not accept a contribution ``to 
the extent'' the contribution causes the proportion to exceed 110 
percent. Similarly, a national or State political party committee must 
not make a coordinated party expenditure on behalf of the candidate 
``to the extent'' that the expenditure causes the proportion to exceed 
110 percent. 2 U.S.C. 441a(i)(2)(A)(ii). The House of Representatives 
version operates in an almost identical manner. The only difference in 
the House of Representatives version is that the proportion must not 
exceed 100 percent. 2 U.S.C. 441a-1(a)(3)(A)(ii).
    Thus, the effect of the proportionality provision on the increased 
individual contribution limits is to cause the contribution limits to 
revert to the applicable limit in 11 CFR 110.1(b)(1) from the increased 
limits specified by the Millionaires' Amendment once the advantages of 
the increased limits reach a specified level that is disproportionate 
to the opposing candidate's expenditures from personal funds. 
Similarly, the effect of the proportionality provision on the 
suspension of coordinated party expenditure limits is to reintroduce 
the limit on national and State coordinated party expenditures in 11 
CFR 109.32(b) when the advantages of the increased coordinated spending 
limits also become disproportionate.
    Paragraph (a) of new 11 CFR 400.31 clarifies that the 
proportionality provision applies to both Senate and House of 
Representatives elections. Paragraph (b) identifies those who have 
responsibilities under the proportionality provision: Any candidate and 
his or her authorized committee that accepts contributions under the 
increased limits, and any party committee that makes coordinated party 
expenditures on behalf of such a candidate under the increased limits. 
The Commission seeks comment on whether holding candidates personally 
liable for violations of 11 CFR 400.31 is consistent with Congressional 
intent.
    Paragraph (c) sets out the information that must be monitored by 
the candidates and authorized committees that accept contributions from 
individuals under the increased coordinated spending limits, and the 
party committees that make coordinated

[[Page 3983]]

party expenditures on behalf of candidates under the increased limits. 
This information consists of the three elements necessary to compute 
the proportion required by the statute: (1) The aggregate amount of 
contributions previously accepted by the candidate under the increased 
limits (paragraph (c)(1)); (2) the aggregate amount of coordinated 
party expenditures in connection with the general election campaign of 
the candidate previously made by any political party committee under 
the increased limits (paragraph (c)(2)); and (3) the opposition 
personal funds amount (paragraph (c)(3)).
    Paragraph (d) of 11 CFR 400.31 applies to Senate elections. 
Paragraph (d)(1)(i) provides that a candidate must not accept that part 
of a contribution that exceeds the applicable limit (see 11 CFR 400.7) 
if the contribution would cause the proportion to exceed 110%. Note 
that, under this circumstance, the candidate would be able to accept 
that part of the contribution up to the applicable limit. This would be 
so because, even if the increased limits do not apply because of the 
proportionality provision, contributions up to the applicable limit are 
still permitted under 11 CFR 110.1(b).

    Example: A contributor who had made no prior contributions 
delivered a check for $6,000 to a Senate candidate who had been 
accepting contributions up to that amount under the increased 
limits. See 2 U.S.C. 441a(i)(1)(C)(i)(I). The candidate determines 
that accepting the entire amount of the contribution would cause the 
proportion of the sum of the contributions previously accepted under 
the increased individual limits, plus coordinated party expenditures 
previously made under the increased limits, to the opposition 
personal funds amount to exceed 110%. Therefore, the candidate may 
accept the first $2,000 of the contribution, but not the amount 
above that.

    Paragraph (d)(1)(ii) states that the candidate or the candidate's 
authorized committee has an affirmative duty to notify the national and 
State committees of their political party and the Commission, by 
facsimile machine or electronic mail, within 24 hours of when the 
aggregate amounts described in 11 CFR 400.31(c)(1) plus the aggregate 
amounts described in 11 CFR 400.31(c)(2) equals 110 percent of the 
opposition personal funds amount. The purpose of this requirement is to 
ensure that national and State committees of the candidate's political 
party and the Commission are put on notice that the committees may no 
longer make coordinated party expenditures in connection with the 
candidate's general election campaign that exceed the ordinary 
expenditure limitations in 11 CFR 109.32(b).
    Paragraph (d)(2) prohibits national and State committees of 
political parties from making coordinated party expenditures in excess 
of the expenditure limits in 11 CFR 109.32(b) in connection with a 
candidate's general election campaign when the sum of the aggregate 
amounts described in 11 CFR 400.31(c)(1) and the aggregate amounts 
described in 11 CFR 400.31(c)(2) reach the proportionality provision 
threshold. Again, as provided in the statute, the obligation is on the 
party committee not to make any coordinated party expenditures pursuant 
to the increased limits if the amount of that expenditure would cause 
the proportion of the sum of the contributions previously accepted 
under the increased limits, plus coordinated party expenditures 
previously made under the increased limits, to the opposition personal 
funds amount to exceed 110%.
    Paragraphs (e)(1) and (e)(2) operate analogously to paragraphs 
(d)(1) and (d)(2), respectively, in the context of House of 
Representatives elections. It is important to note that, like their 
Senate counterparts, candidates for the House of Representatives or 
their authorized committees have an affirmative duty, under 11 CFR 
400.31(e)(2)(B), to notify the national and State committees of their 
political party and the Commission, by facsimile machine or electronic 
mail, within 24 hours of when the aggregate amounts described in 11 CFR 
400.31(c)(1) plus the aggregate amounts described in 11 CFR 
400.31(c)(2) reach the proportionality provision threshold. In House of 
Representatives elections, however, the proportionality provision 
threshold is 100 percent of the opposition personal funds amount, not 
110 percent, as in Senate elections.

3. 11 CFR 400.32 Effect of the Withdrawal of an Opposing Candidate

    One of the checks placed on the operation of the Millionaires' 
Amendment by Congress comes into play when a candidate, whose 
expenditures of personal funds has triggered increased limits for 
another candidate, ceases to be a candidate. 2 U.S.C. 441a(i)(2)(B) 
(Senate); 2 U.S.C. 441a-1(a)(3)(B) (House of Representatives). 11 CFR 
400.32 implements these provisions of the Millionaires' Amendment.
    Paragraph (a)(1) clarifies that this new rule applies to both 
Senate and House of Representatives elections. Paragraph (a)(2) sets 
out the conditions under which the section operates. It is critical to 
determine when a candidate ``ceases to be a candidate'' within the 
meaning of the statute. To this end, paragraph (a)(2) of new 11 CFR 
400.32 follows the approach of existing 11 CFR 110.3(c)(4)(iv), which 
defines when a candidate ceases to be a candidate for purposes of 
certain other contribution limits in the Act. This may occur, for 
example, when a candidate publicly withdraws from the race, or fails to 
file by the filing date specified in State law, or fails to qualify for 
a run-off election under State law.
    Paragraph (b) of 11 CFR 400.32 applies to candidates and their 
authorized committees. It provides that candidates must not accept 
contributions under the increased individual contribution limits after 
the opposing candidate, whose expenditures from personal funds 
triggered the increased limits, ceases to be a candidate. Paragraph (c) 
applies to national and State political party committees. It provides 
that such committees must not make any coordinated party expenditures 
under the increased spending limits after the opposing candidate, whose 
expenditures from personal funds triggered the increased limits, ceases 
to be a candidate. Given that the events triggering the end of both the 
increased contribution limits and unrestricted coordinated party 
expenditures are matters of public knowledge, the opposing candidate 
need not provide notification of these events to any candidate or 
political party committee, as all candidates and party committees will 
be deemed to have constructive knowledge of these events.

4. Additional Reporting Issue

    The Commission seeks comment on whether candidates and authorized 
committees that are entitled to accept contributions under the 
increased limits pursuant to 11 CFR part 400 should be required, at 
regular intervals (such as daily or weekly), to notify the Commission, 
of the opposition personal funds amount, the aggregate amount of 
contributions received to date under the increased limits, and the 
aggregate coordinated party expenditures made to date in connection 
with their campaign for election.

5. Additional Issue Regarding Repayment of Outstanding Debts to Vendors

    The Commission seeks comments on the following issue. An authorized 
committee of a candidate that is opposing a self-financed candidate 
incurs debts to vendors in anticipation of being able to raise 
contributions above the applicable limit under 11 CFR

[[Page 3984]]

part 400 because the self-financed candidate's expenditures from 
personal funds allow the authorized committee to accept contributions 
under the increased limit. After the self-financed candidate ceases to 
be a candidate, either because the candidate has withdrawn from the 
campaign or the election has taken place, should the authorized 
committee be able to continue to raise funds under the increased limits 
to pay off the outstanding debts?

Calculating the Increased Limits

    The rules in new subpart C of part 400 address the determination as 
to when, if ever, a candidate for the House of Representatives or 
Senate may accept contributions under the increased limits, and when, 
if ever, a political party committee may make coordinated party 
expenditures on behalf of the candidate under the increased limits. The 
regulations in subpart D go to determining the amounts of the increased 
limits.
    Under 2 U.S.C. 441a(i) (Senate) and 2 U.S.C. 441a-1 (House of 
Representatives), when the relevant thresholds are triggered the 
contribution limit in 2 U.S.C. 441a(a)(1)(A) is increased. The 
Commission notes that 2 U.S.C. 441a(a)(1)(A) applies to all persons and 
is not limited to individuals. The Commission has decided to limit the 
increased contribution limit to individuals, however, based on the 
titles given to the Millionaires' Amendment provisions in BCRA and on 
the legislative history of the Millionaires' Amendment. See, e.g., BCRA 
Secs. 304 and 319 (entitled ``Modification of individual contribution 
limits in response to expenditures from personal funds'' and 
``Modification of individual contribution limits for House candidates 
in response to expenditures from personal funds,'' respectively) 
(emphasis added)); 147 CR S2537 (daily ed. Mar. 20, 2001) (statement of 
Sen. Domenici); 147 CR S2538 (daily ed. Mar. 20, 2001) (statement of 
Sen. DeWine) (explaining effect of triggering threshold amount on 
individual contribution limits). The Commission seeks public comment, 
however, on whether, despite provisions' titles in BCRA and the 
legislative history of the Millionaires' Amendment, the Commission 
should expand the availability of the increased contribution limit to 
include all persons and not only individuals.

1. 11 CFR 400.40 Calculating the Increased Limits for Senate Elections

    Although the Senate and House of Representatives versions of the 
Millionaires' Amendment are similar in many respects, they differ in 
the amounts of the increased limits once those increased limits are 
triggered. 11 CFR 400.40 implements the increased limits for Senate 
elections. (11 CFR 400.41, below, implements the increased limits for 
House of Representatives elections.) Paragraph (a) of 11 CFR 400.40 
states that the section applies to Senate elections.
    Paragraph (b) states conditions on the operation of the increased 
limits as calculated under this section. Paragraph (b)(1) cross-
references the conditions and restrictions in new subpart C. Paragraph 
(b)(2) clarifies that the amount limitations on contributions by 
persons other than multicandidate political committees under the 
increased limits are indexed for inflation, just as are the underlying 
applicable limits in 2 U.S.C. 441a(a)(1)(A) on which they are based. 
See 2 U.S.C. 441a(c).
    Paragraph (c) outlines the procedure for calculating the increased 
contribution and coordinated party expenditure limits. Paragraph (c)(1) 
cross-references 11 CFR 400.10 and instructs the calculator to 
determine the opposition personal funds amount. Paragraph (c)(2) cross-
references 11 CFR 110.18 and directs the calculator to determine the 
voting age population (``VAP'') of the candidate's State. Once those 
numbers have been determined, paragraph (c)(3) directs the calculator 
to a table containing formulas for computing the applicable increased 
contribution and coordinated party expenditure limits.
    While the formulas in the table in paragraph (c)(3) may appear to 
differ from those provided in the statute, the resulting calculations 
are the same. If the Commission were to simply incorporate the language 
of the statutory formulas into the table, those seeking to calculate 
the increased limits would first have to perform a separate calculation 
to determine the relevant threshold amount before they would be able to 
make use of the formulas in the table. The Commission has determined 
that it is preferable to provide a table that synthesizes all of the 
calculations of the relevant thresholds needed to determine the 
increased contribution limits in one place.

2. 11 CFR 400.41 Calculating the Increased Limits for House of 
Representatives Elections

    Unlike the increased limits in Senate elections, which vary 
according to increasing level of expenditures from personal funds by 
the opposing candidate, the increased limits in House of 
Representatives elections are fixed. If the opposing candidate's 
expenditures from personal funds cause the opposition personal funds 
amount to exceed the threshold amount, $350,000, a single set of 
increased limits is triggered. 2 U.S.C. 441a-1(a)(1)(A)-(C). 11 CFR 
400.41 implements these increased limits.
    Paragraph (a) clarifies that the section applies to House of 
Representatives elections. Paragraph (b) states the increased limits. 
Paragraph (b)(1) sets the increased contribution limit for individuals 
at $6,000, i.e., three times the applicable limit in 2 U.S.C. 
441a(a)(1)(A). 2 U.S.C. 441a-1(a)(1)(A). Paragraph (b)(2) states that 
the limit on coordinated party expenditures in 11 CFR 109.32(b) does 
not apply. 2 U.S.C. 441a-1(a)(1)(B).

3. 11 CFR 400.42 Effect of Increased Limits on the Aggregate 
Contribution Limits for Individuals

    Under the Act, an individual may not contribute, in the aggregate, 
more than $37,500 to candidates and their authorized committees during 
the period which runs from January 1 of an odd-numbered year and ends 
on December 31 of the next even-numbered year. 2 U.S.C. 441a(a)(3)(A). 
Both the Senate and House of Representatives versions of the 
Millionaires' Amendment provide, however, that contributions made under 
the increased limits do not count against the aggregate contribution 
limit in section 441a(a)(3)(A). 2 U.S.C. 441a(i)(1)(C)(i)(II), 2 U.S.C. 
441a(i)(1)(C)(ii)(II) (Senate); 2 U.S.C. 441a-1(a)(1)(B). New 11 CFR 
400.42 implements these statutory provisions.
    Paragraph (a) clarifies that this section applies to all elections 
covered by the part, that is, both Senate and House of Representatives 
elections.
    Both the Senate and the House of Representatives provisions of the 
Millionaires' Amendment provide that the 2 U.S.C. 441a(a)(3) aggregate 
contribution limit ``shall not apply with respect to any contribution 
made with respect to a candidate'' if such contribution is lawfully 
made under the increased limits. 2 U.S.C. 441a(i)(1)(C)(i)(II), 2 
U.S.C. 441a(i)(1)(C)(ii)(II) (Senate); 2 U.S.C. 441a-1(a)(1)(B) (House 
of

[[Page 3985]]

Representatives). The Commission is interpreting these provisions to 
mean that the amount of the contribution that exceeds the individual 
contribution limit in 11 CFR 110.1 does not count when aggregating 
contributions for purposes of 11 CFR 110.5, taking into account 
previous contributions made during the election cycle. New 11 CFR 400.5 
allows an individual to include only the first $2,000 he or she 
contributes, regardless of whether it was a prior contribution or part 
of a contribution accepted under the increased limit, in the biannual 
aggregate contribution limit.

    Example: In 2004, the contribution limit under 11 CFR 110.1 is 
$2,000. Contributor X contributes $1,500 to Candidate Y in April for 
the general election. Because Candidate Y is opposing a self-
financed candidate, she can accept up to $6,000 under the increased 
limit. After learning this, Contributor X contributes an additional 
$3,000 to Candidate Y's campaign in May for the general election. 
Under 11 CFR 400.5, Contributor X should count the initial $1,500 
contribution and $500 of the subsequent contribution towards the 
biannual aggregate limit. The remaining $2,500 of the $3,000 
contribution accepted in May should not count towards that limit.

    The Commission, however, seeks comment on whether 2 U.S.C. 
441a(i)(1)(C) (i)(II) and (ii)(II) (Senate) and 2 U.S.C. 441a-
1(a)(1)(B) (House of Representatives) should be interpreted in an 
alternative manner. Does the plain language of these statutory sections 
indicate that no part of a contribution accepted under the increased 
limits counts against the aggregate contribution limit in section 
441a(a)(3), regardless of whether the contributor has made prior 
contributions to the candidate for that election? Under this 
alternative interpretation, Contributor X in the above example would 
not include any of the $3,000 contribution accepted in May in the 
biannual aggregate limit.
    Paragraph (c) addresses situations where an individual contributor 
has contributed the maximum permitted under the aggregate biannual 
contribution limitation for individuals in 11 CFR 110.5, but has not 
contributed the maximum under the increased limits of 11 CFR part 400. 
Under this circumstance, a contributor may make contributions that, in 
the aggregate, do not exceed the applicable increased limit under 11 
CFR 400.40(b) or 400.41(b) minus the applicable limit as defined in 11 
CFR 400.5.

    Example: Between January 1, 2003 and June 30, 2004, Contributor 
X has already contributed $37,500 to various candidates including 
$1,000 to Candidate Y. On July 10, 2004, Candidate Y determined that 
she could accept up to $6,000 under 11 CFR 400.40(b)(3) and 
solicited Contributor X for a $6,000 contribution. The applicable 
limit in 2004 is $2,000. Because Contributor X has already reached 
his aggregate biannual contribution limit, he may contribute up to 
$4,000 to Candidate Y ($6,000-$2,000).

Disposal of Excess Contributions

    BCRA added two identical provisions to FECA, one for the Senate and 
one for the House of Representatives, requiring candidates and their 
authorized committees to refund excess contributions that are not spent 
in connection with their elections. 2 U.S.C. 441a(i)(3) and 441a-
1(a)(4). Subpart E of 11 CFR part 400, implements the requirements of 
these BCRA provisions.

1. 11 CFR 400.50 Definition of ``Excess Contributions''

    The first section in subpart E defines the term ``excess 
contributions.'' BCRA describes the term ``excess contributions'' as 
``the aggregate amount of contributions accepted by a candidate or a 
candidate's authorized committee under the increased limit * * * and 
not otherwise expended in connection with the election with respect to 
which such contributions relate * * *.'' 2 U.S.C. 441a(i)(3) (Senate); 
2 U.S.C. 441a-1(a)(4) (House of Representatives). By referencing back 
to the definition of ``increased limit'' in 11 CFR 400.6, the 
regulatory definition of ``excess contribution'' allows candidates and 
their authorized committees to exclude the amount of a contribution, 
when added to previous contributions made by a person, that is less 
than or equal to the regular contribution limitations of 11 CFR 110.1 
from the computation of excess contributions. This allows the 
candidates and their authorized committees the benefit of contributions 
that they would have received regardless of whether the increased limit 
provisions of the Millionaires' Amendment were triggered.

2. 11 CFR 400.51 Relation of Excess Contributions to the Election in 
Which They Are Made

    The purpose of new 11 CFR 400.51 is to make clear that 
contributions accepted under the increased limit, that are accepted 
during an election cycle, whether a primary election cycle or a general 
election cycle, can only be spent for that election. A primary election 
is treated as an election separate from the general election. Thus, 
paragraph (a) requires that any excess contributions made during the 
primary election cycle must be refunded to the original contributor 
within 50 days of the primary election. Paragraph (b) contains a 
similar provision for the general election.
    Paragraph (c) creates an exception from paragraphs (a) and (b) for 
run-off elections. Run-off elections will be considered as extensions 
of the elections that resulted in the run-off elections. Thus, 
candidates and their authorized committees are able to use 
contributions made under the increased limit during the applicable 
election cycle for the run-off election. Refunds of all excess 
contributions must be made within 50 days of the run-off election.
    The Commission seeks comments on whether treating run-off elections 
as extensions of the elections that resulted in the run-off elections 
is an appropriate approach. Should the Commission, instead, treat run-
off elections as separate elections and require that excess 
contributions be refunded within 50 days of the applicable primary or 
general election? Conversely, should the Commission treat the primary, 
general, and any run-off elections as one election with the refund 
period being within 50 days of the general election? Under this 
approach, however, candidates who do not participate in the general 
election would be required to refund excess contributions within 50 
days of the primary election.

3. 11 CFR 400.52 Prohibition Against Redesignation of Excess 
Contributions

    New 11 CFR 400.52 prohibits candidates and their authorized 
committees from seeking redesignation of contributions made under the 
increased limits to another election. It also prohibits contributors 
from redesignating a contribution made under the increased limits once 
the contribution has been made. The focus of the Millionaires' 
Amendment is on the fundraising ability of the candidate facing an 
opposing candidate who is a self-financed. The Commission concludes 
that nothing in BCRA suggests that once the election is over, the 
candidate should be able to carry over the benefit of the increased 
contribution limits into the next election where he or she would be 
opposing an entirely different candidate. In addition, BCRA (2 U.S.C. 
441a(i)(3) and 441a-1(a)(4)) provides for only one method of disposing 
of excess contributions and that is the refund of the excess 
contributions to the original contributors, which is incorporated into 
the interim final rules. Nevertheless, the Commission seeks comments on 
whether to amend the interim final rules by adding a similar 
prohibition against reattribution to a joint contributor of a 
contribution made under the increased limits in accordance with 11 CFR 
110.1(k).

[[Page 3986]]

4. 11 CFR 400.53 Disposal of Excess Contributions

    As stated above, BCRA (2 U.S.C. 441a(i)(3) and 441a-1(a)(4)) 
requires candidates and their authorized committees to refund excess 
contributions to the original contributors within 50 days of the 
election. New 11 CFR 400.53 implements this requirement.
    Paragraph (a) states that the candidate's authorized committee must 
refund the excess contributions to individuals who made contributions 
to the candidate or the candidate's authorized committee under 11 CFR 
part 400. This ensures that only those contributors who actually made 
contributions to the candidate under the increased individual 
contribution limit provided for by the Millionaires' Amendment may 
receive refunds. Paragraph (a) also states that the refund to each 
individual must not exceed that individual's aggregate contributions to 
the candidate or the candidate's authorized committee for the relevant 
election cycle. This restriction prohibits authorized committees from 
refunding more money to an individual than that individual actually 
contributed.
    Paragraph (b) of 11 CFR 400.53 addresses the situation where 
contributors do not cash, deposit, or otherwise negotiate the refunds 
checks sent to them under 11 CFR 400.53(a). Authorized committees will 
be required to disgorge to the United States Treasury an amount equal 
to the aggregate amount of any refund checks not cashed, deposited, or 
otherwise negotiated within six months of the date of the refund 
checks. Authorized committees will be required to disgorge this amount 
within nine months of the election. This would allow for 50 days after 
the election to make the refunds and for six months for contributors to 
cash, deposit, or otherwise negotiate the refund checks with an 
additional 40 days to determine the disgorgement amount and send the 
check to the United States Treasury.

5. 11 CFR 400.54 Notification of Disposal of Excess Contributions

    BCRA requires that candidates dispose of excess contributions 
within 50 days of the election. 2 U.S.C. 441a(i)(3) and 441a-1(a)(4) 
(See Explanation and Justification for new 11 CFR 400.50, above.) BCRA 
also requires that, in the first regular report after the election, the 
candidate or the authorized committee report the source and amount of 
each excess contribution and the manner in which the candidate or the 
authorized committee used such funds. 2 U.S.C. 441a(i)(3) and 441a-
1(a)(4). New 11 CFR 400.54 largely tracks the wording of the statute 
with two modifications. First, rather than requiring that the 
``source'' of excess contributions be reported, the new rule requires 
the ``identification,'' as defined in 11 CFR 100.12, of the contributor 
of each excess contribution.
    The second modification addresses an inconsistency in the statute. 
While 2 U.S.C. 441a(i)(3) (Senate) and 2 U.S.C. 441a-1(a)(4) (House of 
Representatives) require that excess contributions be disposed of 
within 50 days of the election, 2 U.S.C. 434(a)(6)(C) (Senate) and 2 
U.S.C. 441a-1(b)(2) (House of Representatives) require that candidates 
or their authorized committees report the source of each excess 
contribution and the manner in which it was used. Note that the first 
regular report after a primary election would be the quarterly report 
for the quarter in which the primary was held, and the first regular 
report after the general election would be the post-general election 
report. In the case of a primary election, the next quarterly report 
may be due before the expiration of the 50 day post-election time 
period for the election in which the candidate who must dispose of 
excess contributions has run, depending on the date the primary 
election is held. In the case of a general election, the next regular 
report after the election, the post-general election report, would most 
definitely be due before the expiration of the 50 day post-election 
time period for the election in which the candidate who must dispose of 
excess contributions has run.
    To reconcile these two provisions of BCRA, 11 CFR 400.54 requires 
principal campaign committees to report the identification of the 
contributors of excess contributions and the manner in which such funds 
were refunded in the first regular report due after the 50 day time for 
disposing of such funds has expired. For example, in the case of a 
primary election, the principal campaign committee would have to report 
the excess contributions and the manner in which they were refunded in 
the first report that quarterly filers are required to file after the 
50-day post-primary time period has elapsed. For example, for a primary 
on May 31, the principal campaign committee would report the excess 
funds and the manner in which they were refunded in its third quarterly 
report rather than its second quarterly report because the 50-day post-
primary time period would elapse on July 20, five days after the second 
quarterly report was due. Thus, the principal campaign committee would 
report this information with its third quarterly report, due on October 
15. Similarly, for the general election, the principal campaign 
committee would report the excess funds and the manner in which they 
were refunded not in the post-general report, but rather in the year-
end report.
    The Commission requests comments on this inconsistency and the 
Commission's reconciliation, as well as an alternative interpretation. 
To avoid reading an inconsistency in BCRA, the requirement that 
authorized committees report the source and amount of excess campaign 
funds and the manner in which they were ``used'', 2 U.S.C. 434(a)(6)(C) 
(Senate) and 2 U.S.C. 441a-1(b)(2) (House of Representatives), could be 
read as requiring the reporting of whether and, if so, to what extent 
funds raised under the increased contribution limits were spent. 
Consequently, the Commission seeks comment on a reading of the 
foregoing statutory provisions that would require an authorized 
committee taking advantage of the increased contribution limits to 
identify in the first report following each election the identity of 
each contributor of a contribution in excess of the normal limits, the 
aggregate amount raised and how much of that was spent in connection 
with the election. It is plausible that Congress intended to capture in 
a single report the identity of all ``excess'' contributors and the 
extent to which campaign spending was affected by the increased 
contribution limits. This reading would resolve the conflict between 
the requirement to dispose of excess contributions within 50 days under 
2 U.S.C. 441a(i)(3) (Senate) and 2 U.S.C. 441a-1(a)(4) (House of 
Representatives) and the reporting of excess contributions, prior to 
that deadline.

Part 9035--Expenditure Limitations

11 CFR 9035.2 Limitation on Expenditures From Personal or Family Funds

    The Commission is changing a cross-reference in 11 CFR 9035.2(c) to 
the definition of ``personal funds.'' As explained in greater detail 
above, the Commission is changing the definition of ``personal funds'' 
in former 11 CFR 110.10 and moving it to 11 CFR 100.33 (see Explanation 
and Justification for former 11 CFR 110.10, above). The new definition 
of ``personal funds'' in 11 CFR 100.33 applies only to the Commission's 
rules implementing Title 2 of the U.S. Code, however, and not to the 
Commission's rules implementing Title 26 of the U.S. Code.
    Current 11 CFR 9003.2 includes a definition of ``personal funds'' 
that is

[[Page 3987]]

nearly identical to the definition in former 11 CFR 110.10. Because 
that definition remains appropriate in the context of the Title 26 
regulations, the Commission is adopting the definition of ``personal 
funds'' in 11 CFR 9003.2 for purposes of 11 CFR 9035.2. Accordingly, 
rather than changing the cross-reference in 11 CFR 9035.2(c) from 
former 11 CFR 110.10 to new 11 CFR 100.33, the Commission is changing 
the cross-reference to the existing Title 26 definition of ``personal 
funds'' in 11 CFR 9003.2.

Millionaires' Amendment Hypothetical

    In an effort to provide a better understanding of the manner in 
which the various provisions of the Millionaires' Amendment would 
operate in the context of a primary and general election, the 
Commission presents the following hypothetical example. All candidates 
in the following example are fictional and any similarities to past or 
present candidates or elections for Federal office are purely 
coincidental. The contribution and coordinated party expenditure limits 
in the example will probably be different in subsequent years due to 
indexing for inflation.

Statement of Candidacy

    For months, local newspapers had been speculating about the 
possibility that Frank Rogers, an independently wealthy investment 
banker from New Franklin was planning to enter the race for the 
Democratic Party's nomination for the U.S. Senate. Some of Rogers's 
most ardent supporters had already formed a committee, called the 
``Draft Frank Rogers Committee'' and had been soliciting contributions 
on behalf of his potential candidacy. By February 1, 2003, the Draft 
Frank Rogers Committee (``Committee'') had received contributions 
aggregating in excess of $5,000. On February 15, 2003, Rogers received 
a letter from the Federal Election Commission (``FEC'' or 
``Commission'') notifying him of the Committee's efforts on his behalf 
and informing Rogers that, unless he disavowed the Committee's 
activities within 30 days of receiving the Commission's notification, 
the Commission would consider Frank Rogers to be a candidate, under 11 
CFR 100.3(a).
    On March 3, 2003, Frank Rogers filed a Statement of Candidacy on 
FEC Form 2 and designated a principal campaign committee by filing a 
Statement of Organization on FEC Form 1, pursuant to 11 CFR 102.12 and 
102.2, respectively. Because Rogers was running for the Senate, he was 
required to file the original FEC Form 2 and FEC Form 1 with the 
Secretary of the United States Senate, under 11 CFR 105.2. Rogers 
noticed that he was also required to send a copy of FEC Form 2 (but not 
FEC Form 1) to the Commission and to each opposing candidate in the 
same election, under 11 CFR 400.20.
    When he began to fill out the forms, Rogers noticed that they had 
changed since the last time he had seen them, a year earlier, when he 
considered but decided against a race for Federal office. In addition 
to the information Form 2 used to require (name, address, party 
affiliation, office sought, etc.), he was now also required to state a 
dollar figure representing the amount of his personal funds that he 
intended to spend on behalf of his campaign in excess of a certain 
``threshold amount,'' as defined in 11 CFR 400.9. In addition, the new 
Form 1 required Rogers' principal campaign committee to provide either 
its electronic mail address or its facsimile number. Rogers completed 
Form 1 first and then turned his attention to FEC Form 2.
    Rogers retrieved his copy of the Code of Federal Regulations and 
determined that, for Senate candidates like him, the threshold amount 
was equal to the sum of $150,000 plus the product of the voting age 
population of his State (as certified under 11 CFR 110.18) multiplied 
by $0.04. After looking at 11 CFR 110.18, Rogers realized that, in 
order to determine the voting age population of New Franklin, he needed 
to search the Federal Register for the most recent voting age 
population estimate published annually by the Department of Commerce. 
Considering that the voting age population of New Franklin was listed 
as 24,800,000, he calculated the threshold amount, as follows:

$150,000 + (24,800,000 x $0.04) = $1,142,000.

    Rogers's personal fortune was estimated to be at least $500 
million. Frank Rogers had determined that his campaign would need an 
initial infusion of $7.5 million of his personal funds. Rogers 
sincerely hoped he would not have to spend any more of his personal 
funds, but he was willing to spend more if necessary. Thus, on FEC Form 
2, Rogers stated his intention to exceed the threshold amount by 
$6,358,000 ($7,500,000 - $1,142,000 threshold amount). In addition to 
filing the original FEC Form 2 and FEC Form 1 with the Secretary of the 
Senate, Rogers faxed a copy of FEC Form 2 to the Commission as required 
by 11 CFR 400.20. Considering that Rogers was the only candidate in the 
race at that point, he was not required to fax or e-mail a copy of FEC 
Form 2 to any opposing candidates.
    On March 31, 2003, Arlene Miller announced her intention to oppose 
Frank Rogers for the Democratic Party's nomination for the U.S. Senate. 
Although Miller was not nearly as wealthy as Frank Rogers, she stated 
on her FEC Form 2 that she intended to exceed the threshold amount 
($1,142,000) by $1,858,000. This meant that Miller intended to make 
expenditures from personal funds totaling $3,000,000 ($1,858,000 + 
$1,142,000 threshold amount). Miller also designated a principal 
campaign committee on FEC Form 1. Miller filed her original FEC Form 2 
and FEC Form 1 with the Secretary of the Senate, faxed a copy of FEC 
Form 2 to the Commission, and sent an electronic copy of FEC Form 2 to 
opposing candidate Frank Rogers as an attachment to an e-mail message.
    On April 3, 2003, Jim Hyer entered the Democratic primary race. 
Given his position as Chairman of the New Franklin Democratic Party, 
Hyer had high name recognition among party activists but almost no 
money. He was counting on his popularity with the state's Democratic 
Party activists to carry him to victory in the June 1, 2004, primary 
election. Within 15 days of becoming a candidate, Hyer filed his 
original FEC Form 2 and FEC Form 1 with the Secretary of the Senate, 
and faxed copies of FEC Form 2 to the Commission and to the Rogers and 
Miller campaigns. On FEC Form 2, Hyer indicated that he did not intend 
to spend any of his personal funds on the race.
    On April 15, 2003, James Rockford, a venture capitalist, announced 
his intention to seek the Republican Party's nomination for the U.S. 
Senate. Rockford had made a fortune in the technology boom of the late 
1990s (he was worth an estimated $20 billion) and was extremely well 
known throughout the state for his support of a popular statewide 
referendum, Proposition 895. At the time that Rockford announced his 
candidacy, he was the only candidate seeking the Republican Party's 
nomination. Within 15 days of becoming a candidate, Rockford filed his 
original FEC Form 2 and FEC Form 1 with the Secretary of the Senate. On 
FEC Form 2, Rockford stated that he intended to exceed the threshold 
amount ($1,142,000) by $148,858,000. This meant that Rockford intended 
to spend $150 million of his personal funds on the race ($148,858,000 = 
$150,000,000 - $1,142,000 threshold amount). The same day, Rockford

[[Page 3988]]

deposited $50 million in his authorized committee's account and filed 
an initial notification of expenditures from personal funds on FEC Form 
10 with the Secretary of the Senate. Given that there were no opposing 
candidates vying for the Republican nomination, Rockford satisfied his 
remaining reporting obligations by faxing copies of his FEC Form 2 and 
FEC Form 10 to the Commission.

Initial Notification of Expenditure From Personal Funds

    On April 4, 2003, the day after Hyer entered the race, Rogers 
immediately pumped $7.5 million of his personal funds into his 
authorized committee's account. Because $7.5 million was more than two 
times the threshold amount of $1,142,000, within 24 hours of depositing 
the funds, Rogers filed an initial notification of expenditures from 
personal funds on FEC Form 10 with the Secretary of the Senate and 
faxed a copy of the form to the FEC and to the Miller and Hyer 
campaigns, as required by 11 CFR 400.21, 400.23, and 400.24.
    Miller's campaign received Rogers's notification on April 5, 2003. 
Miller responded by contributing to her authorized committee 
$3,000,000. Because a contribution from a candidate to the candidate's 
authorized committee was considered an expenditure of personal funds 
under 11 CFR 400.4 and because the total contribution amount 
($3,000,000) exceeded two times the threshold amount (2 x $1,142,000 = 
$2,284,000), within 24 hours of making the loan, Miller was required to 
file a notification of expenditures from personal funds on FEC Form 10. 
On April 6, 2003, Miller filed her original FEC Form 10 with the 
Secretary of the Senate and faxed copies of the form to the Commission 
and to the Rogers and Hyer campaigns.
    Miller was aware that once she received Rogers's initial 
notification, it was possible for her authorized committee to begin 
receiving contributions from individuals in excess of the usual $2,000 
limit. She scrambled to do the necessary calculations to determine the 
increased limit. According to the procedure outlined in 11 CFR 400.40, 
Miller first needed to determine the ``opposition personal funds 
amount,'' the computation of which is explained at 11 CFR 400.10.

Calculating the Opposition Personal Funds Amount for the Miller 
Campaign

    Miller quickly noticed that there were three different formulas for 
calculating the opposition personal funds amount and that the 
appropriate formula depended on the date of calculation. Because the 
date was April 7, 2003, she determined that the first formula was the 
correct one to use because April 7, 2003, was prior to July 16 of the 
year preceding the year in which the general election was to be held. 
(The general election was scheduled to be held on November 8, 2004.) 
According to the formula, the opposition personal funds amount on April 
6, 2003 was equal to the greatest aggregate amount of expenditures from 
personal funds made by her opposing candidate (Rogers) minus the 
greatest aggregate amount of expenditures from personal funds made by 
her. Thus, as of April 7, 2003, the opposition personal funds amount 
was $7,500,000 minus $3,000,000, or $4,500,000. Miller notified her 
national and State party committees and the Commission of this 
calculation, as required by 11 CFR 400.30(b).

Calculating the Increased Contribution and Coordinated Party 
Expenditure Limits for the Miller Campaign

    Miller returned to the table in 11 CFR 400.10 to continue 
calculating the increased limit. According to the table, if the 
opposition personal funds amount ($4,500,000) was greater than the sum 
of the product of $0.08 times the voting age population of New Franklin 
(24,800,000) plus $300,000 but less than or equal to the sum of the 
product of $0.16 times the voting age population of New Franklin 
(24,800,000) plus $600,000, then her authorized committee may accept 
three times the ordinary contribution limit of $2,000, or $6,000.
    Miller made the following calculations:

($0.08 x 24,800,000) + $300,000 = $2,284,000
($0.16 x 24,800,000) + $600,000 = $4,568,000.
    Because the opposition personal funds amount ($4,500,000) was 
between $2,284,000 and $4,568,000, the increased limit for individual 
contributions to Miller's authorized committee was $6,000 (three times 
the ordinary limit). According to the table, Miller's national party 
committee was also able to make coordinated expenditures on behalf of 
her campaign in connection with the general election. Miller located a 
copy of the March 2002 FEC Record, which contained a table showing the 
coordinated party expenditure limits for 2002 Senate nominees. Miller 
found the amount for New Franklin, $1,781,136, which represented $0.02 
times the voting age population of New Franklin (24,800,000), indexed 
for inflation. Given that her national and State party committees have 
a policy of not making coordinated expenditures before the primary 
election when there are multiple candidates vying for the Democratic 
Party's nomination, Miller knew that she could not count on any 
assistance from either committee until the general election.

Calculating the Proportionality Provision Amount for the Miller 
Campaign

    Miller was all set to call her closest supporters to begin 
soliciting $6,000 checks when she suddenly realized that she and her 
authorized committee were required, under 11 CFR 400.31 to constantly 
monitor a certain proportion to make sure that the aggregate amount of 
contributions made under the increased limit never exceeded 110 percent 
of the opposition personal funds amount ($4,500,000). Miller made the 
calculation as follows: 1.10 x $4,500,000 = $4,950,000. She immediately 
started making calls, realizing that she could accept contributions 
under the increased limits only until the aggregate amount of such 
contributions to her campaign equaled $4,950,000.

Calculating the Opposition Personal Funds Amount for the Hyer Campaign

    Having received Rogers's initial notification of expenditure from 
personal funds on April 5, 2003, and Miller's initial notification on 
April 6, 2003, Hyer set out to determine the increased contribution and 
coordinated party expenditure limits applicable to his campaign. In 
order to perform the necessary calculations, Hyer first needed to 
determine the opposition personal funds amount as of April 5, 2003.
    Under 11 CFR 400.10, the opposition personal funds amount prior to 
June 30 of the year preceding the year in which the general election is 
held is the difference between the greatest aggregate amount of 
expenditures from personal funds made by the opposing candidate and the 
candidate himself in the same election. Hyer considered for a minute 
which of the three announced Senate candidates, Rogers, Miller, or 
Rockford, was his ``opposing candidate,'' for purposes of the formula. 
He quickly ruled out Rockford because he realized that in the primary 
election cycle, he and Rockford were not seeking the nomination of the 
same political party.
    Of the two remaining candidates, Hyer concluded that the 
contribution and coordinated expenditure limits would be much higher if 
Rogers were the opposing candidate. As of April 6, 2003, the aggregate 
amount of Rogers's

[[Page 3989]]

expenditures from personal funds was $7.5 million while the aggregate 
amount of Miller's expenditures from personal funds was $3 million. 
Unlike Arlene Miller, Hyer had not yet made any expenditures from 
personal funds, so the aggregate amount of his expenditures was $0.00. 
Plugging these numbers into the formula, Hyer calculated the possible 
opposition personal funds amounts as follows:

Opposing candidate Rogers: $7,500,000 - $0.00 = $7,500,000
Opposing candidate Miller: $3,000,000 - $0.00 = $3,000,000

Thus, Hyer concluded that it would be to his advantage to consider 
Rogers to be his ``opposing candidate'' for purposes of determining the 
opposition personal funds amount. According to his calculations, the 
applicable opposition personal funds amount as of April 6, 2003, was 
$7.5 million. Hyer notified his national and State party committees and 
the Commission of this calculation, as required by 11 CFR 400.30(b).

Calculating the Increased Contribution and Coordinated Party 
Expenditure Limits for the Hyer Campaign

    Hyer proceeded to calculate the increased contribution and 
coordinated party expenditure limits pursuant to the formulas in 11 CFR 
400.40. Doing the necessary calculations according to the formulas in 
the table (illustrated below), Hyer determined that because the 
opposition personal funds amount ($7,500,000) was between $4,568,000 
and $11,420,000, the increased limit for individual contributions to 
his campaign was $12,000 (six times the applicable limit ($2,000)).

($0.16 x 24,800,000 (VAP of New Franklin)) + $600,000 = $4,568,000
($0.40 x 24,800,000 (VAP of New Franklin)) + $1,500,000 = $11,420,000
    Hyer also determined that the increased coordinated party 
expenditure limit applicable to his campaign was $1,781,136 (the 
greater of $20,000 or $0.02 times the voting age population of the 
State of New Franklin (24,800,000), as adjusted for inflation). Like 
Miller, Hyer was well aware of his party committees' policy of not 
making coordinated expenditures prior to the date of nomination when 
there was a contested primary.

Calculating the Proportionality Provision Amount for the Hyer Campaign

    Before soliciting $12,000 checks, however, Hyer decided it would be 
wise to figure out the aggregate amount of contributions his committee 
could accept under the increased limit before it would become 
necessary, under 11 CFR 400.31, to refuse that portion of contributions 
made under the increased limit that exceeded the ordinary limit of 
$2,000. Given that the opposition personal funds amount as of April 6, 
2003, was $7,500,000, Hyer made the following calculation: 1.10 x 
$7,500,000 = $8,250,000. Hyer began fundraising at once, knowing that 
he could accept contributions under the increased limits only until the 
aggregate amount all such contributions received by his campaign 
equaled $8,250,000.

Additional Notification of Expenditure from Personal Funds

    Meanwhile, Frank Rogers was starting to flounder. His campaign had 
already spent the $7.5 million he had deposited on April 4th plus an 
additional $1,000,000 in contributions his authorized committee had 
received to date. He decided that, in order to remain competitive with 
Miller and Hyer, he had no choice but to commit more of his personal 
funds to the race. So, on June 30, 2003, Rogers deposited an additional 
$2,500,000 into his authorized committee's account. Because this 
expenditure from personal funds exceeded $10,000, within 24 hours of 
depositing the funds, Rogers was required to file an additional 
notification of expenditure from personal funds on FEC Form 10, under 
11 CFR 400.22. As he did with the initial notification, Rogers filed 
the original form with the Secretary of the Senate, and faxed copies of 
the form to the FEC and the Miller and Hyer campaigns. Although this 
amount was in excess of the amount stated on Roger's FEC Form 2, he was 
not required to amend that form.

Calculating the New Opposition Personal Funds Amount for the Miller and 
Hyer Campaigns

    The Miller and Hyer campaigns received Rogers's additional 
notification of expenditures from personal funds on July 1, 2003. The 
Miller and Hyer campaigns endeavored to determine how Rogers's increase 
in spending from personal funds might affect their increased 
contribution limits. Before figuring out their new limits, however, 
each campaign first had to recalculate the opposition personal funds 
amount.
    Turning to the formulas in 11 CFR 400.10, each candidate realized 
that as soon as July 16 the applicable formula would no longer be the 
one that applied prior to July 16, 2003. With vacations taking many 
staffers and potential contributors away, both committees elected to 
wait until the new formulas were in effect before accepting any 
contributions. Once it was July 16, 2003, which was between July 16 of 
the year preceding the year in which the general election would be held 
and February 1 of the year in which the general election would be held, 
the formula required that the gross receipts advantage be taken into 
account.

Opposition Personal Funds Amount--Miller Campaign

    To calculate the opposition personal funds amounts for the Miller 
campaign as of July 16, 2003, the following formula had to be used: a-
b-((c-d) / 2), where:
    (a) Represented the greatest amount of expenditures from personal 
funds made by the opposing candidate (Rogers) in the same election;
    (b) Represented the greatest amount of expenditures from personal 
funds made by Miller in the same election;
    (c) Represented the aggregate amount of the gross receipts of 
Miller's authorized committee, minus any contributions by Miller from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30 of the 
year (2003) preceding the year in which the general election was to be 
held (2004); and
    (d) Represented the aggregate amount of the gross receipts of 
Rogers's authorized committee, minus any contributions by Rogers from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30, 2003.

Variable (a)--Miller Campaign

    Considering each variable in turn, as of June 30, 2003, Rogers had 
made aggregate expenditures from personal funds in the amount of $10 
million. So, as of that date, variable (a) in the formula for the 
Miller campaign equaled $10,000,000.

Variable (b)--Miller Campaign

    As of June 30, 2003, Miller had made aggregate expenditures from 
personal funds in the amount of $3,000,000. Thus, as of that date, 
variable (b) in the formula for Miller's campaign equaled $3,000,000.

Variable (c)--Miller Campaign

    As of June 30, 2003, Miller's authorized committee had received 
contributions in connection with the primary election totaling 
$4,000,000 and Miller's aggregate contributions from personal funds 
totaled $3,000,000. Accordingly, as of June 30, 2003, variable (c) in 
the formula for the Miller

[[Page 3990]]

campaign equaled $4,000,000-$3,000,000, or $1,000,000.

Variable (d)--Miller Campaign

    As of June 30, 2003, Rogers's authorized committee had received 
contributions in connection with the primary election totaling 
$11,000,000 and Rogers's aggregate contributions from personal funds 
totaled $10,000,000. Accordingly, as of June 30, 2003, variable (d) in 
the formula for the Miller campaign equaled $11,000,000-$10,000,000, or 
$1,000,000.
    Plugging the above numbers into the applicable formula (a-b-((c-d) 
/ 2)), the opposition personal funds amount for the Miller campaign as 
of June 30, 2003, was $7,000,000, calculated as follows:

$10,000,000-$3,000,000 - (($1,000,000-$1,000,000)/2) = $7,000,000.

Opposition Personal Funds Amount--Hyer Campaign

    To calculate the opposition personal funds amounts for the Hyer 
campaign as of July 16, 2003, the following formula had to be used: a - 
b - ((c-d) / 2), where:
    (a) Represented the greatest amount of expenditures from personal 
funds made by the opposing candidate (Rogers) in the same election;
    (b) Represented the greatest amount of expenditures from personal 
funds made by Hyer in the same election;
    (c) Represented the aggregate amount of the gross receipts of 
Hyer's authorized committee, minus any contributions by Hyer from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30 of the 
year (2003) preceding the year in which the general election was to be 
held (2004); and
    (d) Represented the aggregate amount of the gross receipts of 
Rogers's authorized committee, minus any contributions by Rogers from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30, 2003.

Variable (a)--Hyer Campaign

    Considering each variable in turn, as of June 30, 2003, Rogers had 
made aggregate expenditures from personal funds in the amount of $10 
million. So, as of that date, variable (a) in the formula for the Hyer 
campaign equaled $10,000,000.

Variable (b)--Hyer Campaign

    As of June 30, 2003, Hyer had not made any expenditures from 
personal funds. Accordingly, as of that date, variable (b) in the 
formula for Hyer's campaign equaled $0.

Variable (c)--Hyer Campaign

    As of June 30, 2003, Hyer's authorized committee had received 
contributions in connection with the primary election totaling 
$1,000,000 and Hyer's aggregate contributions from personal funds 
totaled $0. Accordingly, as of June 30, 2003, variable (c) in the 
formula for the Hyer campaign equaled $1,000,000 - $0, or $1,000,000.

Variable (d)--Hyer Campaign

    As of June 30, 2003, Rogers's authorized committee had received 
contributions in connection with the primary election totaling 
$11,000,000 and Rogers's aggregate contributions from personal funds 
totaled $10,000,000. Accordingly, as of June 30, 2002, variable (d) in 
the formula for the Hyer campaign equaled $11,000,000 - $10,000,000, or 
$1,000,000.
    Plugging the above numbers into the applicable formula (a - b - ((c 
- d) / 2)), the opposition personal funds amount for the Hyer campaign 
as of June 30, 2003, was $10,000,000, calculated as follows:

$10,000,000 - $0 - (($1,000,000 - $1,000,000 / 2) = $10,000,000.
    Both Miller and Hyer notified their national and state party 
committees and the Commission of their calculations, as required by 11 
CFR 400.30(b).

Calculating the New Contribution Limits for the Miller and Hyer 
Campaigns

    After calculating the new opposition personal funds amount, the 
Miller and Hyer campaigns recalculated the new individual contribution 
limits as follows:

Contribution Limit--Miller Campaign

    Because the opposition personal funds amount of $7,000,000 was 
greater than:

$4,568,000 = ($0.16 x 24,800,000 (VAP of New Franklin)) + $600,000

    But less than or equal to:

$11,420,000 = ($0.40 x 24,800,000 (VAP of New Franklin)) + $1,500,000

Miller determined that the new increased contribution limit for the 
Miller campaign was:

$12,000 = 6 x $2,000 (the applicable limit).

Contribution Limit--Hyer Campaign

    Because the opposition personal funds amount of $10,000,000 was 
greater than:

$4,568,000 = ($0.16 x 24,800,000 (VAP of New Franklin)) + $600,000

    But less than or equal to:

$11,420,000 = ($0.40 x 24,800,000 (VAP of New Franklin)) + $1,500,000

Hyer determined that the new increased contribution limit for the Hyer 
campaign was the same as the old increased contribution limit:

$12,000 = 6 x $2,000 (the applicable limit).

Calculating the New Proportionality Provision Amount for the Miller and 
Hyer Campaigns

    Before calling to solicit contributions under the new increased 
limits, however, both the Miller and Hyer campaigns sought to determine 
the maximum amount they could accept before being in danger of 
exceeding 110 percent of the new opposition personal funds amount in 
violation of the proportionality provision (11 CFR 400.31).

Proportionality Provision Amount--Miller Campaign

    Taking into account the new opposition personal funds amount 
($7,000,000), the Miller campaign determined that the new 
proportionality provision amount was $7,700,000, calculated as follows:

1.10 x $7,000,000 = $7,700,000

    As of July 16, 2003, the Miller campaign had received $4,500,000 in 
contributions, $1,500,000 from contributors plus the $3,000,000 
contribution from Miller's personal funds. Of the $1,500,000, the 
Miller Committee received $500,000 under the increased limits. Only 
this $500,000 of her committee's gross receipts counted towards the 
proportionality provision limit. Accordingly, the Miller campaign 
determined that it could receive another $7,200,000 ($7,700,000 limit - 
$500,000 already received) in contributions under the increased limit 
without violating the proportionality provision.

Proportionality Provision Amount--Hyer Campaign

    As of July 16, 2003, the Hyer campaign had received $1,000,000 in 
contributions, $400,000 of which was received under the increased 
limits, well short of the old $5,500,000 maximum proportionality 
provision amount. Taking into account the new opposition personal funds 
amount

[[Page 3991]]

($10,000,000), the Hyer campaign determined that the new 
proportionality provision amount was $11,000,000, calculated as 
follows:

1.10 x $10,000,000 = $11,000,000

Accordingly, the Hyer campaign determined that it could receive another 
$10,600,000 ($11,000,000 limit -$400,000 already received) in 
contributions under the increased limit without violating the 
proportionality provision.

Withdrawal of Opposing Candidate

    As summer turned into fall and fall faded into winter, the polls 
consistently showed Miller with a double-digit lead over Rogers. The 
Hyer campaign polled in the single digits.
    Rogers had already spent $10 million of his personal funds and, 
although willing to spend more, he did not want to do so unless there 
was a real chance that he might make some headway against Miller. 
Rogers figured that he could not gain ground against Miller. So, on 
December 20, 2003, Rogers held a press conference and announced his 
decision to quit the race.
    Once the initial shock of Rogers's withdrawal from the race wore 
off, both Miller and Hyer realized that his departure might have a 
significant impact on their ability to raise funds for the last seven 
months of the primary campaign. Under 11 CFR 400.32, Rogers ceased to 
be a candidate on December 20, 2003, the date he publicly announced his 
withdrawal from the race. From that day forward, Miller was prohibited 
from accepting that portion of contributions made under the increased 
limits that exceeded the applicable limit ($2,000 per person) because 
it was Rogers's expenditures from personal funds that had allowed her 
to receive contributions above the applicable limit in the first place. 
While her campaign was permitted to continue accepting contributions up 
to the applicable limit ($2,000 per individual), it would have to 
refuse any portion of any contribution above the applicable limit. Any 
amount above the applicable limit would have to be refunded to the 
contributor.

Calculating the New Opposition Personal Funds Amount for the Hyer 
Campaign

    Rogers's withdrawal from the race affected the Hyer campaign 
differently than the Miller campaign. With Rogers out of the race, Hyer 
must now consider Miller to be his ``opposing candidate'' for purposes 
of calculating the opposition personal funds amount and the increased 
contribution limits. To determine the new opposition personal funds 
amount as of December 20, 2003, Hyer used the same formula he had used 
on July 16, 2003 (a -b - ((c - d) / 2)), substituting Miller for 
Rogers, where:
    (a) Represented the greatest amount of expenditures from personal 
funds made by the opposing candidate (Miller) in the same election;
    (b) Represented the greatest amount of expenditures from personal 
funds made by Hyer in the same election;
    (c) Represented the aggregate amount of the gross receipts of 
Hyer's authorized committee, minus any contributions by Hyer from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30 of the 
year (2003) preceding the year in which the general election was to be 
held (2004); and
    (d) Represented the aggregate amount of the gross receipts of 
Miller's authorized committee, minus any contributions by Miller from 
personal funds, during any election cycle that may be expended in 
connection with the primary election, as determined on June 30, 2003.

Variable (a)--Hyer Campaign

    Considering each variable in turn, as of June 30, 2003, Miller had 
made aggregate expenditures from personal funds in the amount of 
$3,000,000. So, as of that date, variable (a) in the formula for the 
Hyer campaign equaled $3,000,000.

Variable (b)--Hyer Campaign

    As of June 30, 2003, Hyer had not made any expenditures from 
personal funds. Accordingly, as of that date, variable (b) in the 
formula for Hyer's campaign equaled $0.

Variable (c)--Hyer Campaign

    As of June 30, 2003, Hyer's authorized committee had received 
contributions in connection with the primary election totaling 
$1,000,000 and Hyer's aggregate contributions from personal funds 
totaled $0. Accordingly, as of June 30, 2003, variable (c) in the 
formula for the Hyer campaign equaled $1,000,000 - $0, or $1,000,000.

Variable (d)--Hyer Campaign

    As of June 30, 2003, Miller's authorized committee had received 
contributions in connection with the primary election totaling 
$4,000,000 and Miller's aggregate contributions from personal funds 
totaled $3,000,000. Accordingly, as of June 30, 2003, variable (d) in 
the formula for the Hyer campaign equaled $4,000,000-$3,000,000, or 
$1,000,000.
    Inserting the above numbers into the applicable formula (a-b-((c-d) 
/ 2)), the opposition personal funds amount for the Hyer campaign as of 
December 20, 2003, was $3,000,000, calculated as follows:

$3,000,000 - $0 - (($1,000,000 - $1,000,000) / 2) = $3,000,000

Hyer notified his national and State party committees and the 
Commission of this calculation, as required by 11 CFR 400.30(b).

Calculating the New Increased Contribution Limit for the Hyer Campaign

    Hyer was optimistic that he would still be able to receive 
contributions above the applicable limit. Hyer performed the following 
calculations and determined that with the new opposition personal funds 
amount of $3,000,000, the new contribution limit applicable to his 
campaign was three times the applicable limit, or $6,000:
    Opposition personal funds amount of $3,000,000 was more than * * *

$2,284,000 = ($0.08 x 24,800,000 (VAP of New Franklin)) + $300,000

    But less than or equal to * * *

$4,568,000 = ($0.16 x 24,800,000 (VAP of New Franklin)) + $600,000

Calculating the New Proportionality Provision Amount for the Hyer 
Campaign

    Before calling to solicit contributions under the new increased 
limit, however, the Hyer campaign sought to determine the maximum 
amount he could accept before being in danger of exceeding 110 percent 
of the new opposition personal funds amount in violation of the 
proportionality provision (11 CFR 400.31).
    As of December 20, 2003, the Hyer campaign had received $1,200,000 
in contributions, $750,000 of which was received under the increased 
limits. Taking into account the new opposition personal funds amount 
($3,000,000), the Hyer campaign determined that the new proportionality 
provision amount was $3,300,000, calculated as follows:

1.10 x $3,000,000 = $3,300,000

Accordingly, the Hyer campaign determined that it could receive 
$2,550,000 ($3,300,000 limit - $750,000 already received) in 
contributions under the increased limit without violating the 
proportionality provision.

[[Page 3992]]

Reporting of Gross Receipts as of December 31, 2003

    On January 31, 2004, the principal campaign committees of Arlene 
Miller, Jim Hyer, and James Rockford filed the reports required under 
11 CFR 104.19(b)(2) disclosing gross receipts as of December 31, 2003. 
Frank Rogers's principal campaign committee did not have to file a 
report because he had withdrawn from the election.
    Arlene Miller's principal campaign committee reported that it had 
received $6 million in gross receipts in connection with the primary. 
That $6 million included her $3 million contribution from personal 
funds. The committee also reported that it had $2 million in gross 
receipts that could be spent on the general election. This amount came 
from contributions it had received under the applicable limit that had 
been designated for the general election. Miller did not make any 
contribution from personal funds for the general election.
    Jim Hyer's principal campaign committee disclosed that it had $1.2 
million in gross receipts that could be spent for the primary. He did 
not make any contribution from personal funds. Additionally, the 
committee reported that it had no gross receipts for the general 
election.
    James Rockford was a candidate for the Republican nomination for 
the Senate. His principal campaign committee was also required to file 
this report. It disclosed that it had received $50.3 million in gross 
receipts in connection with the primary including a $50 million 
contribution from Rockford's personal funds. The committee also 
reported that, as of December 31, 2003, it had $1.1 million in gross 
receipts for the general election, $1 million of which was a 
contribution from Rockford's personal funds made on December 15, 2003. 
The remaining $100,000 of the committee's gross receipts represented 
contributions from contributors other than Rockford.
    The remaining months of the primary campaign were brutal. As the 
primary election day neared, polls showed Miller and Hyer in a 
statistical dead heat. On June 1, 2004, Miller received 47% of the 
vote, Hyer received 43% of the vote, and, despite the fact that he 
withdrew from the race more than five months before the primary 
election, 10% of New Franklin's Democratic primary voters wrote in 
Frank Rogers name. Because neither Miller nor Hyer received 50% or more 
of the vote, New Franklin law required that a run-off election be held.
    The run-off election was scheduled for July 1, 2004. Neither 
campaign had much money left at this point because both had spent 
nearly every available dollar on a last-minute advertising blitz. The 
Miller campaign, however, was in a better position than the Hyer 
campaign. Whereas Hyer's authorized committee had only $25,000 cash on 
hand, Miller's authorized committee had $2,075,000 total cash on hand, 
but only $75,000 was available for the primary run-off. Both candidates 
wondered whether they were permitted to use any of these funds for the 
run-off election, though, considering that they were raised in the 
primary election cycle under the increased contribution limits. They 
turned to the definition of ``election cycle'' at 11 CFR 400.2, 
however, and determined that a run-off election was considered to be an 
extension of the election cycle containing the election that 
necessitated the run-off election. Thus, the Miller and Hyer campaigns 
were permitted to use the funds remaining from the primary election for 
the July 1, 2004, run-off election because the July 1, 2004, run-off 
was considered to be part of the June 1, 2004, primary election cycle.
    On July 1, 2004, Arlene Miller won the run-off election and 
prepared to face off against James Rockford in the general election. 
Rockford ran unopposed in the Republican primary and managed to secure 
the Republican Party's nomination without spending more than $1 million 
of his personal funds. After winning the Republican endorsement, 
Rockford's authorized committee refunded the remaining $49 million to 
the candidate. (His contribution on December 15th of $1 million was for 
the general election.) Miller's authorized committee was completely out 
of primary cash by the time the run-off election ended.

General Election Campaign

    The general election cycle got off to a raucous start. On July 2, 
2004, Rockford used his own funds to purchase $20 million in air time, 
locking up key commercial slots in every major media market in the 
state through Labor Day. As required by 11 CFR 400.21, within 24 hours 
of executing the air time contract, Rockford filed an initial 
notification of expenditures from personal funds on FEC Form 10. He 
filed the original form with the Secretary of the Senate and faxed 
copies to the Commission and the Miller campaign.
    When Miller received Rockford's initial notification on July 3, 
2004, she scrambled to determine the opposition personal funds amount, 
under 11 CFR 400.10, and the increased contribution and party 
expenditure limits under 11 CFR 400.40.

Calculating the Opposition Personal Funds Amount for the Miller 
Campaign

    Given that the date of computation was on or after December 31 of 
the year preceding the year in which the general election was to be 
held, the applicable formula was the one outlined in 11 CFR 
400.10(a)(3) (a - b- ((e - f) / ( 2)), where:
    (a) Represented the greatest aggregate amount of expenditures from 
personal funds made by Rockford in the general election ($21 million);
    (b) Represented the greatest amount of expenditures from personal 
funds made by Miller in the general election ($0);
    (e) Represented the aggregate amount of gross receipts of Miller's 
authorized committee ($2 million), minus any contributions by Miller 
from personal funds (Note: This amount is $0, because the $3 million 
Miller contributed to her authorized committee on April 5, 2003 was 
made in connection with the primary and entirely spent), during any 
election cycle that may be expended in connection with the general 
election, as determined on December 31, 2003; and
    (f) Represented the aggregate amount of gross receipts of 
Rockford's authorized committee ($1.1 million), minus any contributions 
by Rockford from personal funds ($1 million), during any election cycle 
that may be expended in connection with the general election, as 
determined on December 31, 2003, so the July 2, 2004, $20 million 
expenditure is not included.
    Miller determined the value of each variable as follows:

(a) = $21,000,000
(b) = $0.00
(e) = $2,000,000 ($2,000,000 - $0)
(f) = $100,000 ($1,100,000 - $100,000)

    Inserting these above values into the applicable formula (a - b- 
((e - f) / ( 2)), Miller determined that the opposition personal funds 
amount was $20,050,000, calculated as follows:

$21,000,000 - $0 - (($2,000,000 - $100,000) / ( 2) = $20,050,000

Miller notified her national and State party committees and the 
Commission of this calculation, as required by 11 CFR 400.30(b).

Calculating the Increased Contribution and Coordinated Party 
Expenditure Limits for the Miller campaign

    Having determined that the opposition personal funds amount was 
$20,050,000, Miller determined that, because the opposition personal 
funds

[[Page 3993]]

amount was more than $11,420,000 ($0.40 x 24,800,000 (VAP of New 
Franklin) + $1,500,000), the following increased contribution and 
coordinated party expenditure limits applied to her campaign, under 11 
CFR 400.40:

Increased contribution limit
    $12,000 (6 x $2,000 (applicable limit))
Coordinated party expenditure limit
    Unlimited

Calculating the Proportionality Provision Amount for the Miller 
Campaign

    Miller next calculated the aggregate amount of contributions her 
authorized committee would be able to receive before being in danger of 
exceeding 110 percent of the opposition personal funds amount 
($20,050,000), under 11 CFR 400.31:

1.10 x $20,050,000 = $22,055,000

    Miller started raising money in earnest. By the end of July, her 
campaign had managed to raise $4,500,000, $2,300,000 of which was 
received under the increased limits. In addition, sometime in the 
middle of the month, someone from the DSCC called to say they had not 
made any independent expenditures on her behalf, and wanted to make 
coordinated party expenditures to help her out. The DSCC official 
wanted to know what sort of help Miller needed most. Miller told the 
DSCC official that her campaign desperately needed air time in all of 
New Franklin's major media markets in order to compete with Rockford. 
The DSCC immediately purchased as much air time as was available 
between July 15, 2004, and Labor Day. The DSCC notified Miller that the 
total cost of the air time that the DSCC purchased on Miller's behalf 
was $19,753,000 above the coordinated party expenditure limit. Although 
the New Franklin State Democratic Committee could also spend above the 
ordinarily-applicable $1,781,136 coordinated party spending limit, 
Miller was told they planned to make no coordinated party expenditures 
on her behalf.
    On August 1, 2004, Arlene Miller received a telephone call from Rex 
Duncan, an old college friend. Duncan said that he knew Miller was 
running against a self-financed candidate and he wanted to send her a 
contribution but he wasn't sure how much he was allowed to give. Duncan 
explained that, since Election Day 2002, he had made a number of 
contributions to other Federal candidates. As of August 1, 2004, the 
aggregate amount of Duncan's contributions was $35,500, just $2,000 shy 
of the aggregate 2-year limit of $37,500 for individual contributions 
to Federal candidate committees under 2 U.S.C. 441a(a)(3)(A). He asked 
Miller how much he would be allowed to contribute to her campaign. 
Miller informed Duncan that only the first $2,000 of his contribution 
to any one Federal candidate counted against his 2-year aggregate 
limit, pursuant to 11 CFR 400.42. Any amount above the applicable limit 
given to candidates running against self-financing candidates was 
excluded from the calculation.
    Nevertheless, Miller suspected that Duncan could not send her 
$12,000, however, because she knew that her campaign was getting close 
to a crucial limit of its own under the proportionality provision. 
Miller told Duncan that she would have to call him back after she 
figured out how much of his money her campaign could legally accept. 
Miller calculated the aggregate amount of contributions already 
received and coordinated party expenditures already made under the 
increased limits, as follows: $2,300,000 (contributions) + $19,753,000 
(coordinated expenditures) = $22,053,000.
    After performing these calculations, Miller realized that she could 
only accept $2,000 from Duncan above the applicable limit of $2,000. 
This meant that her campaign could accept a check from Duncan in the 
amount of $4,000 because, although the first $2,000 of his contribution 
would count against his 2-year aggregate limit of $37,500, it would not 
count against the Miller campaign's proportionality provision limit of 
$22,055,000. Miller called Duncan back and asked him to send her a 
check for $4,000.
    Realizing that, under 11 CFR 400.31(d)(1)(ii), Miller or her 
authorized committee was required to notify the national and State 
committees of her political party and the Commission within 24 hours of 
the time her campaign reached the proportionality provision limit, 
Miller immediately sent electronic mail messages to the DSCC, the New 
Franklin Democratic Federal Campaign Committee, and the Commission. 
Both committees were now on notice that they could no longer make 
coordinated expenditures on behalf of Miller's general election 
campaign in excess of the coordinated expenditure limitation in 11 CFR 
109.32(b).
    Miller realized that, unless Rockford spent more of his personal 
funds on behalf of his campaign, from that point forward, her campaign 
could only accept contributions up to the applicable limit ($2,000 per 
individual). In addition, the national party committee would be 
prohibited from making any more coordinated expenditures on behalf of 
the Miller campaign, although it could still contribute up to $35,000 
directly to her principal campaign committee.
    On August 3, 2004, Rockford reluctantly used his personal funds to 
purchase $30 million worth of air time between Labor Day and Election 
Day. Disappointed that he was again using personal funds, Rockford 
deemed $20 million a contribution and $10 million a personal loan. As 
required, Rockford filed his original FEC Form 10 with the Secretary of 
the Senate and faxed copies of the form to the Commission and the 
Miller campaign. Miller scrambled to recalculate the new opposition 
personal funds amount and increased contribution and coordinated party 
expenditure limits.

Calculating the New Opposition Personal Funds Amount for the Miller 
Campaign

    Given that the date of computation (August 4, 2004) was on or after 
February 1 of the year in which the general election was to be held, 
the applicable formula was the one outlined in 11 CFR 400.10(a)(3) (a-
b-((e-f) / 2)), where:
    (a) Represented the greatest aggregate amount of expenditures from 
personal funds made by Rockford in the general election ($51 million);
    (b) Represented the greatest amount of expenditures from personal 
funds made by Miller in the general election ($0);
    (e) Represented the aggregate amount of gross receipts of Miller's 
authorized committee ($2 million), minus any contributions by Miller 
from personal funds ($0), during any election cycle that may be 
expended in connection with the general election, as determined on 
December 31, 2003; and
    (f) Represented the aggregate amount of gross receipts of 
Rockford's authorized committee ($1.1 million), minus any contributions 
by Rockford from personal funds ($1 million), during any election cycle 
that may be expended in connection with the general election, as 
determined on December 31, 2003.
    Miller determined the value of each variable as follows:

(a) = $51,000,000
(b) = $0
(e) = $2,000,000 ($2,000,000-$0)
(f) = $100,000 ($1,100,000-$1,000,000)

    Plugging these values into the applicable formula, Miller 
determined that the opposition personal funds amount was $45,750,000, 
calculated as follows:


[[Page 3994]]


    $51,000,000-$0- (($2,000,000-$100,000) / 2) = $50,050,000

Miller notified her national and State party committees and the 
Commission of this calculation, as required by 11 CFR 400.30(b).

Calculating the New Increased Contribution and Coordinated Party 
Expenditure Limits for the Miller Campaign

    Having determined that the opposition personal funds amount was 
$50,050,000, Miller determined that, because the opposition personal 
funds amount was more than $11,420,000 ($0.40 x 24,800,000 (VAP of New 
Franklin) + $1,500,000), the following increased contribution and 
coordinated party expenditure limits applied to her campaign, under 11 
CFR 400.40:
Increased contribution limit--Miller campaign
    $12,000 (6 x $2,000 (applicable limit))
Coordinated party expenditure limit--Miller campaign
    Unlimited

Calculating the New Proportionality Provision Amount for the Miller 
Campaign

    Miller next calculated the aggregate amount of contributions her 
authorized committee would be able to receive before being in danger of 
exceeding 110 percent of the opposition personal funds amount 
($45,750,000), under 11 CFR 400.31:

1.10 x $50,050,000 = $55,055,000

    As of August 4, 2004, the aggregate amount of contributions 
received under the increased limits (including Duncan's $2,000) and 
coordinated party expenditures made under the increased limits equaled 
$22,055,000. Accordingly, Miller's campaign could now receive an 
additional $33,000,000 ($55,055,000-$22,055,000) in contributions and/
or coordinated party expenditures. Miller immediately called her old 
friend Rex Duncan and told him that he could now send her campaign an 
additional $8,000 if he still wished to support her. Miller then 
received a call from a multicandidate political committee (PAC) wanting 
to know how much it could contribute to her campaign. She told the 
PAC's treasurer that she could accept up to $5,000, as the PAC's 
contribution limits had not been raised.

Prohibition on Redesignation of Contributions Received Above the 
Applicable Limit to Another Election Cycle

    When the election was over, Miller's authorized committee had 
$50,000 in contributions accepted under the increased limit left in its 
campaign account. Looking ahead to the 2010 primary and general 
elections, Miller wondered whether it would be possible to redesignate 
the $50,000 to a future race, in the manner prescribed under 11 CFR 
110.1(b)(5). Miller quickly determined, however, that redesignation of 
contributions received under the increased limits was strictly 
prohibited, under 11 CFR 400.52.

Disposal of Excess Contributions Received Above the Applicable Limit

    Miller was puzzled about what her authorized committee was supposed 
to do with the extra $50,000 in contributions her committee had 
received during the general election cycle. Under 11 CFR 400.51, 
Miller's authorized committee was required to refund the excess 
contributions within 50 days of the general election. Miller's 
committee refunded the $50,000 in excess contributions to those 
individuals who had made increased contributions during the general 
election cycle, being careful to make sure that no individual 
contributor received a refund that exceeded the aggregate amount of 
their contributions to the Miller campaign, pursuant to 11 CFR 400.53.
    Miller's committee was required to notify the Commission about the 
disposition of these excess contributions under 11 CFR 400.54. 
Information about the source and amount of these excess contributions 
and the manner in which the committee used the funds had to be included 
in the first report that was due more than 50 days after the general 
election. According to the regulation, the report had to be submitted 
with Miller's FEC Form 3. Miller noted that the first report due more 
than 50 days after the November 8, 2004, general election was not the 
post-general report, which was due on December 8, 2004, but the year-
end report, due on January 31, 2005.

Repayment of Rockford's Personal Loan

    Rockford's authorized committee spent every available dollar on the 
general election campaign and, after the election was over, had no 
funds remaining to repay Rockford's $10 million personal loan. Rockford 
wondered whether his authorized committee could use funds raised after 
the date of the election to repay the loan. He quickly realized, 
however, that BCRA set a limit on the amount of personal loans that may 
be repaid with funds raised after the end of an election cycle. The 
Commission's regulation at 11 CFR 116.11, implementing the new 
statutory limit, prohibited Rockford from using more than $250,000 in 
contributions received after the date of the election to pay off his 
$10 million personal loan. See 2 U.S.C. 441a(j). This meant, of course, 
that Rockford would never be able to recover the remaining $9,750,000 
($10,000,000 personal loan -$250,000 limit) he lent his authorized 
committee during the general election cycle.

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

    The attached interim final rules will not have a significant 
economic impact on a substantial number of small entities. Although the 
interim final rules add new substantive provisions to the current 
regulations, those provisions, which are mandated by BCRA, generally 
represent a relaxation of current limitations on contributions to 
candidates for Federal office in certain, specified circumstances. 
Therefore, the attached interim final rules will not have a significant 
economic impact on a substantial number of small entities.

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 101

    Political candidates, Reporting and recordkeeping requirements.

11 CFR Part 104

    Campaign funds, Political committees and parties, Reporting and 
recordkeeping requirements.

11 CFR Part 110

    Campaign funds, Political committees and parties.

11 CFR Part 116

    Administrative practice and procedure, Business and industry, 
Credit, Elections, Political candidates, Political committees and 
parties.

11 CFR Part 400

    Campaign funds, Elections, Political candidates, Political 
committees and parties, Reporting and recordkeeping requirements.

11 CFR Part 9035

    Campaign funds, Reporting and recordkeeping requirements.


    For the reasons set out in the Explanation and Justification, the 
Commission amends Subchapters A, C, and E of Chapter I of Title 11 of 
the Code of Federal Regulations as follows:

[[Page 3995]]

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

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

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

    2. In Sec.  100.19, paragraph (b) is revised, and paragraph (g) is 
added to read as follows:


Sec.  100.19  File, filed, or filing (2 U.S.C. 434(a)).

* * * * *
    (b) Timely filed. A document, other than those addressed in 
paragraphs (c) through (g) of this section, is timely filed upon 
deposit as registered or certified mail in an established U.S. Post 
Office and postmarked no later than 11:59 p.m. Eastern Standard/
Daylight Time on the filing date, except that pre-election reports so 
mailed must be postmarked no later than 11:59 p.m. Eastern Standard/
Daylight Time on the fifteenth day before the date of the election. 
Documents sent by first class mail must be received by the close of 
business on the prescribed filing date to be timely filed.
* * * * *
    (g) Candidate notifications of expenditures from personal funds. A 
candidate's notification of expenditures from personal funds under 11 
CFR 400.21 or 400.22 is timely filed if it is received by facsimile 
machine or electronic mail by each of appropriate parties as set forth 
in 11 CFR 400.21 and 400.22 within 24 hours of the time the threshold 
amount as defined in 11 CFR 400.9 is exceeded and within 24 hours of 
the time expenditures from personal funds are made under 11 CFR 400.21 
and 400.22.

    3. Section 100.33 is added to read as follows:


Sec.  100.33  Personal funds.

    Personal funds of a candidate means the sum of all of the 
following:
    (a) Assets. Amounts derived from any asset that, under applicable 
State law, at the time the individual became a candidate, the candidate 
had legal right of access to or control over, and with respect to which 
the candidate had--
    (1) Legal and rightful title; or
    (2) An equitable interest;
    (b) Income. Income received during the current election cycle, as 
defined in 11 CFR 400.2, of the candidate, including:
    (1) A salary and other earned income that the candidate earns from 
bona fide employment;
    (2) Income from the candidate's stocks or other investments 
including interest, dividends, or proceeds from the sale or liquidation 
of such stocks or investments;
    (3) Bequests to the candidate;
    (4) Income from trusts established before the beginning of the 
election cycle as defined in 11 CFR 400.2;
    (5) Income from trusts established by bequest after the beginning 
of the election cycle of which the candidate is the beneficiary;
    (6) Gifts of a personal nature that had been customarily received 
by the candidate prior to the beginning of the election cycle, as 
defined in 11 CFR 400.2; and
    (7) Proceeds from lotteries and similar legal games of chance; and
    (c) Jointly owned assets. Amounts derived from a portion of assets 
that are owned jointly by the candidate and the candidate's spouse as 
follows:
    (1) The portion of assets that is equal to the candidate's share of 
the asset under the instrument of conveyance or ownership; provided, 
however,
    (2) If no specific share is indicated by an instrument of 
conveyance or ownership, the value of one-half of the property.

PART 101--CANDIDATE STATUS AND DESIGNATIONS (2 U.S.C. 432(e))

    4. The authority for part 101 continues to read as follows:

    Authority: 2 U.S.C. 432(e), 434(a)(11), 438(a)(f).


    5. Section 101.1(a) is revised to read as follows:


Sec.  101.1  Candidate designations (2 U.S.C. 432(e)(1)).

    (a) Principal Campaign Committee. Within 15 days after becoming a 
candidate under 11 CFR 100.3, each candidate, other than a nominee for 
the office of Vice President, shall designate in writing, a principal 
campaign committee in accordance with 11 CFR 102.12. A candidate shall 
designate his or her principal campaign committee by filing a Statement 
of Candidacy on FEC Form 2, or, if the candidate is not required to 
file electronically under 11 CFR 104.18, by filing a letter containing 
the same information (that is, the individual's name and address, party 
affiliation, and office sought, the District and State in which Federal 
office is sought, and the name and address of his or her principal 
campaign committee at the place of filing specified at 11 CFR part 
105). Candidates for the Senate and the House of Representatives must 
also state, on their Statements of Candidacy on FEC Form 2 (or, if the 
candidate is not required to file electronically under 11 CFR 104.18, 
on his or her letter containing the same information), the amount by 
which the candidate intends to exceed the threshold amount as defined 
in 11 CFR 400.9. Each principal campaign committee shall register, 
designate a depository, and report in accordance with 11 CFR parts 102, 
103, and 104.
* * * * *

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. In Sec.  102.2, paragraph (a)(1) is amended by:
    a. Removing the ``and'' at the end of paragraph (a)(1)(vi);
    b. Removing the ``.'' at the end of paragraph (a)(1)(vii) and 
replacing it with ``; and''; and
    c. Adding new paragraph (a)(1)(viii) to read as follows:


Sec.  102.2  Statement of organization: Forms and committee 
identification number (2 U.S.C. 433 (b), (c)).

* * * * *
    (a) * * * (1) * * *
    (viii) If the committee is a principal campaign committee of a 
candidate for the Senate or the House of Representatives, the principal 
campaign committee's facsimile number, if available, and electronic 
mail address.
* * * * *

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

    8. The authority citation for part 104 is revised to read as 
follows:

    Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434, 
438(a)(8) and (b), 439a, and 441a.

    9. Section 104.19 is revised to read as follows:


Sec.  104.19  Special reporting requirements for principal campaign 
committees of candidates for election to the United States Senate or 
United States House of Representatives.

    (a) Scope. The principal campaign committees of candidates for 
elections to the office of United States Senator, or Representative in, 
or Delegate or Resident Commissioner to, the Congress must file reports 
required under this section with the Commission.
    (b) Timing and contents of reports.
    (1) By July 15 of the year preceding the year in which the general 
election for the office sought is held, each principal campaign 
committee shall file a report that includes the following information:

[[Page 3996]]

    (i) The gross receipts, as defined in 11 CFR 400.8, of all of the 
candidate's authorized committees that may be expended in connection 
with the primary election as determined as of June 30 of that year 
including contributions to the candidate or any of the candidate's 
authorized committees received by June 30 of that year that have been 
made or designated for the primary election under 11 CFR 110.1(b)(2) or 
redesignated for the primary election under 11 CFR 110.1(b)(5);
    (ii) The gross receipts, as defined in 11 CFR 400.8, of all of the 
candidate's authorized committees that may be expended in connection 
with the general election that have been received by June 30 of that 
year including contributions to the candidate or any of the candidate's 
authorized committees received by June 30 of that year that have been 
designated under 11 CFR 110.1(b)(2) for the general election or 
redesignated for the general election under 11 CFR 110.1(b)(5);
    (iii) The aggregate amount of contributions from the personal funds 
of the candidate to any of the candidate's authorized committees 
received by June 30 of that year that have been made or designated for 
the primary election under 11 CFR 110.1(b)(2) or redesignated for the 
primary election under 11 CFR 110.1(b)(5);
    (iv) The aggregate amount of contributions from the personal funds 
of the candidate to any of the candidate's authorized committees 
received by June 30 of that year that have been designated under 11 CFR 
110.1(b)(2) for the general election or redesignated for the general 
election under 11 CFR 110.1(b)(5);
    (v) The aggregate amount described in paragraph (b)(1)(i) of this 
section minus the aggregate amount described in paragraph (b)(1)(iii) 
of this section; and
    (vi) The aggregate amount described in paragraph (b)(1)(ii) of this 
section minus the aggregate amount described in paragraph (b)(1)(iv) of 
this section.
    (2) By January 31 of the year in which the general election for the 
office sought is held, each principal campaign committee shall file a 
report that includes the following information:
    (i) The gross receipts, as defined in 11 CFR 400.8, of all of the 
candidate's authorized committees that may be expended in connection 
with the primary election as determined as of December 31 of the year 
preceding the year in which that general election is held including 
contributions to the candidate or any of the candidate's authorized 
committees received by December 31 of the year preceding the year in 
which that general election is held that have been made or designated 
for the primary election under 11 CFR 110.1(b)(2) or redesignated for 
the primary election under 11 CFR 110.1(b)(5);
    (ii) The gross receipts, as defined in 11 CFR 400.8, of all of the 
candidate's authorized committees that may be expended in connection 
with the general election as determined as of December 31 of the year 
preceding the year in which that general election is held including 
contributions to the candidate or any of the candidate's authorized 
committees received by December 31 of the year preceding the year in 
which that general election is held that have been designated under 11 
CFR 110.1(b)(2) for the general election or redesignated for the 
general election under 11 CFR 110.1(b)(5);
    (iii) The aggregate amount of contributions from the personal funds 
of the candidate to any of the candidate's authorized committees 
received by December 31 of the year preceding the year in which that 
general election is held that have been made or designated for the 
primary election under 11 CFR 110.1(b)(2) or redesignated for the 
primary election under 11 CFR 110.1(b)(5);
    (iv) The aggregate amount of contributions from the personal funds 
of the candidate to any of the candidate's authorized committees 
received by December 31 of the year preceding the year in which that 
general election is held that have been designated under 11 CFR 
110.1(b)(2) for the general election or redesignated for the general 
election under 11 CFR 110.1(b)(5);
    (v) The aggregate amount described in paragraph (b)(2)(i) of this 
section minus the aggregate amount described in paragraph (b)(2)(iii) 
of this section; and
    (vi) The aggregate amount described in paragraph (b)(2)(ii) of this 
section minus the aggregate amount described in paragraph (b)(2)(iv) of 
this section.

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    10. The authority citation for part 110 continues to 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, and 441k.

    11. In Sec.  110.1, paragraph (b)(3)(ii) is amended by:
    a. Removing the ``and'' at the end of paragraph (b)(3)(ii)(A);
    b. Removing the ``.'' at the end of paragraph (b)(3)(ii)(B) and 
replacing it with ``; and''; and
    c. Adding new paragraph (b)(3)(ii)(C) to read as follows:


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

* * * * *
    (b) * * *
    (3) * * *
    (ii) * * *
    (C) The amount of personal loans, as defined in 11 CFR 116.11(b), 
that in the aggregate exceed $250,000 per election.
* * * * *

    12. Section 110.10 is revised to read as follows:


Sec.  110.10  Expenditures by candidates.

    Except as provided in 11 CFR parts 9001, et seq. and 9031, et seq., 
candidates for Federal office may make unlimited expenditures from 
personal funds as defined in 11 CFR 100.33.

PART 116--DEBTS OWED BY CANDIDATES AND POLITICAL COMMITTEES

    13. The authority citation for part 116 continues to read as 
follows:

    Authority: 2 U.S.C. 433(d), 434(b)(8), 438(a)(8), 441a, 441b, 
and 451.

    14. Part 116 is amended by adding new Sec. Sec.  116.11 and 116.12 
to read as follows:


Sec.  116.11  Restriction on an authorized committee's repayment of 
personal loans exceeding $250,000 made by the candidate to the 
authorized committee.

    (a) For purposes of this part, personal loans mean a loan or loans, 
including advances, made by a candidate, using personal funds, as 
defined in 11 CFR 100.33, to his or her authorized committee where the 
proceeds of the loan were used in connection with the candidate's 
campaign for election. Personal loans also include loans made to a 
candidate's authorized committee that are endorsed or guaranteed by the 
candidate or that are secured by the candidate's personal funds.
    (b) For personal loans that, in the aggregate, exceed $250,000 in 
connection with an election, the authorized committee:
    (1) May repay the entire amount of the personal loans using 
contributions to the candidate or the candidate's authorized committee 
provided that those contributions were made on the day of the election 
or before;
    (2) May repay up to $250,000 of the personal loans from 
contributions made to the candidate or the candidate's authorized 
committee after the date of the election; and
    (3) Must not repay, directly or indirectly, the aggregate amount of 
the

[[Page 3997]]

personal loans that exceeds $250,000, from contributions to the 
candidate or the candidate's authorized committee if those 
contributions were made after the date of the election.
    (c) If the aggregate outstanding balance of the personal loans 
exceeds $250,000 after the election, the authorized political committee 
must comply with the following conditions:
    (1) If the authorized committee uses the amount of cash on hand as 
of the day after the election to repay all or part of the personal 
loans, it must do so within 20 days of the election.
    (2) Within 20 days of the election date, the authorized committee 
must treat the portion of the aggregate outstanding balance of the 
personal loans that exceeds $250,000 minus the amount of cash on hand 
as of the day after the election used to repay the loan as a 
contribution by the candidate.
    (3) The candidate's principal campaign committee must report the 
transactions in paragraphs (c)(1) and (c)(2) of this section in the 
first report scheduled to be filed after the election pursuant to 11 
CFR 104.5(a) or (b).
    (d) This section applies separately to each election.


Sec.  116.12  Repayment of candidate loans of $250,000 or less.

    (a) A candidate's authorized committee may repay to the candidate a 
personal loan, as defined in 11 CFR 116.11(a), of up to $250,000 where 
the proceeds of the loan were used in connection with the candidate's 
campaign for election. The repayment may be made from contributions to 
the candidate or the candidate's authorized committee at any time 
before, on, or after the date of the election.
    (b) This section applies separately to each election.
    (c) Nothing in this section shall supersede 11 CFR 9035.2 regarding 
the limitations on expenditures from personal funds or family funds of 
a presidential candidate who accepts matching funds.

    15. Subchapter C is amended by adding part 400 to read as follows:

PART 400--INCREASED LIMITS FOR CANDIDATES OPPOSING SELF-FINANCED 
CANDIDATES

Subpart A--Scope and Definitions
Sec.
400.1 Scope and effective date.
400.2 Election cycle.
400.3 Opposing candidate.
400.4 Expenditure from personal funds.
400.5 Applicable limit.
400.6 Increased limit.
400.7 Contribution that exceeds the applicable limit.
400.8 Gross receipts.
400.9 Threshold amount.
400.10 Opposition personal funds amount.
Subpart B--Notification and Reporting Requirements
400.20 Declaration of intent.
400.21 Initial notification of expenditures from personal funds.
400.22 Additional notification of expenditures from personal funds.
400.23 Contents of notifications of expenditures from personal 
funds.
400.24 Methods of filing notifications.
400.25 Reporting obligations of candidates and candidates' principal 
campaign committees.
Subpart C--Determining When the Increased Limits Apply
400.30 Receipt of notification of opposing candidate's expenditures 
from personal funds.
400.31 Preventing disproportionate advantage resulting from 
increased contribution and coordinated party expenditure limits.
400.32 Effect of the withdrawal of an opposing candidate.
Subpart D--Calculation of Increased Limits for Senate and House of 
Representatives Candidates
400.40 Calculating the increased limits for Senate elections.
400.41 Calculating the increased limits for House of Representatives 
elections.
400.42 Effect of increased limits on the aggregate contribution 
limitations for individuals.
Subpart E--Disposal of Excess Contributions
400.50 Definition of Excess contributions.
400.51 Relation of excess contributions to the election in which 
they are made.
400.52 Prohibition against redesignation of excess contributions.
400.53 Disposal of excess contributions.
400.54 Notification of disposal of excess contributions.

    Authority: 2 U.S.C. 431, 434(a)(6), 438(a)(8), 441a(i), 441a(j), 
441a-1.

Subpart A--Scope and Definitions


Sec.  400.1  Scope and effective date.

    (a) Introduction. This part applies to elections to the office of 
United States Senator, or Representative in, or Delegate or Resident 
Commissioner to, the Congress, in which a candidate is permitted 
increased limits to allow response to certain expenditures from 
personal funds by an opposing candidate. This part does not apply to 
elections to the Office of President or Vice President of United 
States.
    (b) Effective dates. Except as otherwise specifically provided in 
this part, this part shall take effect on February 26, 2003.


Sec.  400.2  Election cycle.

    (a) For purposes of this part, election cycle means the period 
beginning on the day after the date of the most recent election for the 
specific office or seat that a candidate is seeking and ending on the 
date of the next election for that office or seat.
    (b) For purposes of paragraph (a) of this section, a primary 
election and a general election are considered to be separate election 
cycles.
    (c) For purposes of this part, a run-off election is considered to 
be part of the election cycle of the election necessitating the run-off 
election.


Sec.  400.3  Opposing candidate.

    (a) For purposes of a primary election, opposing candidate means 
another candidate seeking the nomination of the same political party 
for election to the office of Senator, or Representative in, or 
Delegate or Resident Commissioner to, the Congress, that the candidate 
is seeking. A candidate in a primary election may have more than one 
opposing candidate.
    (b) For purposes of a general election, opposing candidate means 
another candidate seeking election to the same office of Senator, or 
Representative in, or Delegate or Resident Commissioner to, the 
Congress, that the candidate is seeking. A candidate in a general 
election may have more than one opposing candidate.


Sec.  400.4  Expenditure from personal funds.

    (a) Expenditure from personal funds means the aggregation of all 
the following:
    (1) An expenditure made by a candidate, using the candidate's 
personal funds, for the purpose of influencing the election in which he 
or she is a candidate;
    (2) A contribution or loan made by a candidate to the candidate's 
authorized committee, using the candidate's personal funds (see 11 CFR 
100.33 for definition of personal funds);
    (3) A loan by any person to the candidate's authorized committee 
that is secured using the candidate's personal funds. (see 11 CFR 
100.33 for definition of personal funds); and
    (4) Any obligation to make an expenditure from personal funds that 
is legally enforceable against the candidate.
    (b) An expenditure from personal funds shall be considered to be 
made on the date the funds are deposited into the account designated by 
the candidate's authorized committee as the campaign depository, under 
11 CFR 103.1 and 11 CFR 103.2, on the date the instrument transferring 
the funds is signed, or on

[[Page 3998]]

the date the contract obligating the personal funds is executed, 
whichever is earlier.


Sec.  400.5  Applicable limit.

    Applicable limit means the contribution amount limitation set forth 
in 11 CFR 110.1(b)(1).


Sec.  400.6  Increased limit.

    Increased limit means a contribution amount limitation that applies 
to a person other than a multicandidate political committee that, 
pursuant to this part, exceeds the applicable limit specified in 11 CFR 
110.1 in order to allow response to expenditures from an opposing 
candidate's personal funds. Increased limit also means, where 
applicable, a suspension, pursuant to this part, of the limitations on 
expenditures by a national or State political party committee in 
connection with the general election campaign of a candidate for the 
Senate or the House of Representatives under 11 CFR 109.32(b).


Sec.  400.7  Contribution that exceeds the applicable limit.

    Amount of contribution above the applicable limit means the 
difference between the amount of a contribution accepted under this 
part and the applicable limit.


Sec.  400.8  Gross receipts.

    Gross receipts means the sum of all receipts of the candidate's 
authorized committee described in 11 CFR 104.3(a)(3) (i) through (x).


Sec.  400.9  Threshold amount.

    (a) Senate. For an election to the office of United States Senator, 
threshold amount means the sum of $150,000 plus an amount equal to the 
voting age population of the State multiplied by $0.04. As used in this 
paragraph, voting age population means the voting age population of the 
State of the candidate as certified under 11 CFR 110.18.
    (b) House of Representatives. For an election to the office of 
Representative in, or Delegate or Resident Commission to, the Congress, 
threshold amount means $350,000.


Sec.  400.10  Opposition personal funds amount.

    (a) To compute the opposition personal funds amount, one of the 
following formulas must be used, depending on the date of the 
computation. The variables used in the formulas are defined in 
paragraph (b) of this section.
    (1) To compute the opposition personal funds amount prior to July 
16 of the year preceding the year in which the general election is 
held, the following formula must be used:

 opposition personal funds amount = a-b.

    (2) To compute the opposition personal funds amount from July 16 of 
the year preceding the year in which the general election is held to 
January 31 of the year in which the general election is held, one of 
the following formulas must be used:
    (i) If cd, opposition personal funds amount = a-b-((c-d) 
/ 2).
    (ii) If c<=d, opposition personal funds amount = a-b.
    (3) To compute the opposition personal funds amount from February 1 
of the year in which the general election is held to the day of the 
general election, one of the following formulas must be used:
    (i) If ef, opposition personal funds amount = a-b-((e-f) 
/ 2).
    (ii) If e<=f, opposition personal funds amount = a-b.
    (b) Variables. The variables used in the formulas set out in 
paragraph (a) of this section are defined as follows:

a = Greatest aggregate amount of expenditures from personal funds made 
by the opposing candidate in the same election.
b = Greatest aggregate amount of expenditures from personal funds made 
by the candidate in the same election.
c = Aggregate amount of the gross receipts of the candidate's 
authorized committee minus any contributions by the candidate from 
personal funds as reported under 11 CFR 104.19(b)(1)(v) or (vi), during 
any election cycle that may be expended in connection with the election 
for the nomination for election, or election, to Federal office sought, 
as determined on June 30 of the year preceding the year in which the 
general election is held.
d = Aggregate amount of the gross receipts of the opposing candidate's 
authorized committee minus any contributions by that opposing candidate 
from personal funds as reported under 11 CFR 104.19(b)(1)(v) or (vi), 
during any election cycle that may be expended in connection with the 
election for the nomination for election, or election, to Federal 
office sought, as determined on June 30 of the year preceding the year 
in which the general election is held.
e = Aggregate amount of the gross receipts of the candidate's 
authorized committee minus any contributions by the candidate from 
personal funds as reported under 11 CFR 104.19(b)(2)(v) or (vi), during 
any election cycle that may be expended in connection with the election 
for the nomination for election, or election, to Federal office sought, 
as determined on December 31 of the year preceding the year in which 
the general election is held.
f = Aggregate amount of the gross receipts of the opposing candidate's 
authorized committee minus any contributions by that opposing candidate 
from personal funds as reported under 11 CFR 104.19(b)(2)(v) or (vi), 
during any election cycle that may be expended in connection with the 
election for the nomination for election, or election, to Federal 
office sought, as determined on December 31 of the year preceding the 
year in which the general election is held.

Subpart B--Notification and Reporting Requirements


Sec.  400.20   Declaration of intent.

    (a) Senate and House of Representatives.
    (1) When and where filed. Within 15 days of becoming candidate, the 
candidate must file a Declaration of Intent with the Commission and 
with each opposing candidate.
    (2) Contents of declaration. The Declaration of Intent must state 
the total amount of expenditures from personal funds that the candidate 
intends to make with respect to the election that will exceed the 
threshold amount as defined in 11 CFR 400.9. A candidate who does not 
intend to make expenditures from personal funds that will exceed the 
threshold amount as defined in 11 CFR 400.9 may state the amount as $0.
    (b) Methods of filing.
    (1) Senate. Declarations of Intent must be noted on the candidate's 
Statement of Candidacy, FEC Form 2. (See 11 CFR 101.1.) The candidate 
must send a copy of his or her Statement of Candidacy to the Commission 
using a facsimile machine or electronic mail in addition to filing his 
or her official copy of the Statement of Candidacy on paper with the 
Secretary of the Senate. The candidate must send by facsimile machine 
or electronically mail his or her FEC Form 2 or the information 
required therein by 11 CFR 101.1, including the amount by which the 
candidate intends to exceed the threshold amount, to each opposing 
candidate.

[[Page 3999]]

    (2) House of Representatives. Declarations of Intent must be noted 
on the candidate's Statement of Candidacy, FEC Form 2. (See 11 CFR 
101.1.) FEC Form 2 must be filed electronically in accordance with 11 
CFR 104.18 if the candidate intends to exceed the threshold amount 
defined in 11 CFR 400.9(b). Candidates must send by facsimile machine 
or electronically mail his or her FEC Form 2 or the information 
required therein by 11 CFR 101.1, including the amount by which he or 
she intends to exceed the threshold amount, to each opposing candidate.


Sec.  400.21  Initial notification of expenditures from personal funds.

    (a) Senate. A candidate's principal campaign committee must notify 
the Secretary of the Senate, the Commission, and each opposing 
candidate when the candidate makes an expenditure from personal funds 
with respect to the election that causes the candidate's aggregate 
expenditures from personal funds to exceed two times the threshold 
amount as defined in 11 CFR 400.9. Such notification must be received 
by the Secretary of the Senate, the Commission, and each opposing 
candidate within 24 hours of the time such expenditure is made.
    (b) House of Representatives. A candidate's principal campaign 
committee must notify the Commission, each opposing candidate, and the 
national party of each opposing candidate when the candidate makes an 
expenditure from personal funds with respect to the election that 
causes the candidate's aggregate expenditures from personal funds to 
exceed the $350,000 threshold amount (see 11 CFR 400.9). Such 
notification must be received by the Commission, each opposing 
candidate, and the national party of each opposing candidate within 24 
hours of the time such expenditure is made.


Sec.  400.22   Additional notification of expenditures from personal 
funds.

    (a) Senate. After filing the initial notification of expenditures 
from personal funds under 11 CFR 400.21, a candidate's principal 
campaign committee must notify the Secretary of the Senate, the 
Commission, and each opposing candidate when the candidate makes 
expenditures from personal funds in connection with the election 
exceeding $10,000. Such notification must be received by the Secretary 
of the Senate, the Commission, and each opposing candidate within 24 
hours of the time such expenditures are made.
    (b) House of Representatives. After filing the initial notification 
of expenditures from personal funds under 11 CFR 400.21, a candidate's 
principal campaign committee must notify the Commission, each opposing 
candidate, and the national party of each opposing candidate when the 
candidate makes expenditures from personal funds in connection with the 
election exceeding $10,000. Such notification must be received by the 
Commission, each opposing candidate, and the national party of each 
opposing candidate within 24 hours of the time such expenditures are 
made.


Sec.  400.23   Contents of notifications of expenditures from personal 
funds.

    Each notification filed under 11 CFR 400.21 and 400.22 must contain 
the following information:
    (a) The name of the candidate making the expenditures from personal 
funds.
    (b) The office sought by the candidate making the expenditures from 
personal funds, including the State and, for candidates for the House 
of Representatives, the District.
    (c) The date and amount of each expenditure from personal funds 
made since the last notification filed pursuant to 11 CFR 400.21 or 
400.22.
    (d) The total amount of expenditures from personal funds the 
candidate has made (as defined in 11 CFR 400.4(e)) in connection with 
the election from the beginning of the election cycle to the date of 
the expenditure that is the reason for the notification.


Sec.  400.24   Methods of filing notifications.

    (a) Senate. Each notification required to be filed by the 
candidate's principal campaign committee under 11 CFR 400.21(a) and 
400.22 must be filed with the Secretary of the Senate on FEC Form 10. 
The candidate's principal campaign committee must send a copy of its 
FEC Form 10 by facsimile machine, as an attachment to an electronic 
mail, or as an electronic mail containing the information required in 
11 CFR 400.23 to the Commission and to each opposing candidate.
    (b) House of Representatives. Each notification required to be 
filed by the candidate's principal campaign committee under 11 CFR 
400.21(b) and 400.22 must be filed with the Commission electronically 
on FEC Form 10. The candidate's principal campaign committee must send 
a copy of its FEC Form 10 to each opposing candidate and to the 
national party committee of each opposing candidate by facsimile 
machine, as an attachment to an electronic mail, or as an electronic 
mail containing the information required by 11 CFR 400.23.


Sec.  400.25   Reporting obligations of candidates and candidates' 
principal campaign committees.

    Candidates must ensure that their principal campaign committees 
file all reports required under this part in a timely manner.

Subpart C--Determining When the Increased Limits Apply


Sec.  400.30  Receipt of notification of opposing candidate's 
expenditures from personal funds.

    (a) Applicable to Senate and to House of Representatives elections. 
This section applies to elections to the office of United States 
Senator, and to the office of Representative in, or Delegate or 
Resident Commission to, the Congress.
    (b) Candidates and authorized committees.
    (1) The candidate and the candidate's authorized committee must not 
accept, pursuant to this part, any contribution that exceeds the 
applicable limit, as defined in 11 CFR 400.7, until the candidate has 
received actual or constructive notification of an opposing candidate's 
expenditures from personal funds under subpart B of this part. The 
candidate and the candidate's authorized committee must calculate the 
opposition personal funds amount each time they receive an opposing 
candidate's notification of expenditures from personal funds under 11 
CFR 400.21 or 400.22.
    (2) Upon calculating the opposition personal funds amount, if the 
candidate or the candidate's authorized committee determines that such 
amount exceeds the appropriate threshold under 11 CFR 400.40 or 400.41 
that permits national and State committees of political parties to make 
coordinated party expenditures that exceed the limitations set forth in 
11 CFR 109.32, the candidate or the candidate's authorized committee 
must inform the Commission and the national and State committee of 
their political party of such opposition personal funds amount by 
facsimile machine or electronic mail within 24 hours of receipt of an 
opposing candidate's initial or additional notification of expenditure 
from personal funds.
    (c) Political party committees. (1) A national or State committee 
of a political party (including a national Congressional campaign 
committee) must not make, pursuant to this part, coordinated party 
expenditures in connection with the general election campaign of a 
candidate in excess of the limits set forth in 11 CFR 109.32(b) until

[[Page 4000]]

the political party committee has received actual or constructive 
notification under subpart B of this part and the opposition personal 
funds amount under paragraph (b) of this section indicating that the 
opposing candidate's expenditures from personal funds exceeds the 
applicable threshold amount set forth in 11 CFR 400.40 or 400.41.
    (2) If the national or State committee of a political party makes 
coordinated party expenditures in excess of the limitations set forth 
in 11 CFR 109.32 pursuant to this part, the national or State committee 
of a political party must inform the Commission and the candidate on 
whose behalf such expenditure is made, or the candidate's authorized 
committee, of the amount of such expenditures by facsimile machine or 
electronic mail within 24 hours of making such expenditures.
    (d) Constructive notification. For purposes of this section, 
constructive notification means that the candidate, the candidate's 
authorized committee, or the national or State committee of the 
political party obtains a copy of the FEC Form 10 received by the 
Commission.


Sec.  400.31  Preventing disproportionate advantage resulting from 
increased contribution and coordinated party expenditure limits.

    (a) Applicability. This section applies to elections to the office 
of United States Senator, and to the office of Representative in, or 
Delegate or Resident Commission to, the Congress.
    (b) Persons with responsibilities under this section. A candidate 
and the candidate's authorized committee that accepts contributions 
under the increased limits pursuant to this part, and any national or 
State political party committee (including a national Congressional 
campaign committee) that makes coordinated party expenditures on behalf 
of the candidate under the increased expenditure limits pursuant to 
this part, must comply with this section.
    (c) Information to be monitored. Any person described in paragraph 
(b) of this section must monitor all of the following amounts while 
accepting contributions, or making coordinated party expenditures, 
respectively, under the increased limits:
    (1) The aggregate amount of contributions previously accepted by 
the candidate and the candidate's authorized committee under the 
increased limits.
    (2) The aggregate amount of coordinated party expenditures in 
connection with the general election campaign of the candidate 
previously made by any political party committee under the increased 
limits.
    (3) The opposition personal funds amount related to each opposing 
candidate.
    (d) Senate elections-- (1) Responsibilities of candidates and their 
authorized committees. (i) A candidate and the candidate's authorized 
committee must not accept that amount of any contribution above the 
applicable limit if the sum of that amount of the contribution above 
the applicable limit plus the aggregate amounts described in paragraphs 
(c)(1) of this section and the aggregate amounts described in paragraph 
(c)(2) of this section is greater than 110% of the opposition personal 
funds amount.
    (ii) When the aggregate amounts described in paragraph (c)(1) of 
this section plus the aggregate amounts described in paragraph (c)(2) 
of this section exceed 110% of the opposition personal funds amount, 
the candidate or the candidate's authorized committee must inform the 
national and State committees of their political party and the 
Commission, by facsimile or electronic mail, of this information within 
24 hours of reaching 110% of the opposition personal funds amount.
    (2) Responsibilities of the national and State committees of the 
political party. A national or State political party committee must not 
make, pursuant to this part, a coordinated party expenditure in 
connection with a candidate's general election campaign in excess of 
the expenditure limitations under 11 CFR 109.32(b) if the sum of the 
amount of that expenditure plus the aggregate amounts described in 
paragraph (c)(1) of this section and the aggregate amounts described in 
paragraph (c)(2) of this section with regard to that candidate is 
greater than 110% of the opposition personal funds amount.
    (e) House of Representatives elections--(1) Responsibilities of 
candidates and their authorized committees. (i) A candidate and the 
candidate's authorized committee must not accept that amount of any 
contribution above the applicable limit if the sum of that amount of 
the contribution above the applicable limit plus the aggregate amounts 
described in paragraphs (c)(1) of this section and the aggregate 
amounts described in paragraph (c)(2) of this section is greater than 
100% of the opposition personal funds amount.
    (ii) When the aggregate amounts described in paragraph (c)(1) of 
this section plus the aggregate amounts described in paragraph (c)(2) 
of this section exceed 100% of the opposition personal funds amount, 
the candidate or the candidate's authorized committee must inform the 
national and State committees of their political party and the 
Commission, by facsimile machine or electronic mail, of this 
information within 24 hours of reaching 100% of the opposition personal 
funds amount.
    (2) Responsibilities of the national and State committees of the 
political party. A national or State political party committee must not 
make, pursuant to this part, a coordinated party expenditure in 
connection with a candidate's general election campaign in excess of 
the expenditure limitations under 11 CFR 109.32(b) if the sum of the 
amount of that expenditure plus the aggregate amounts described in 
paragraph (c)(1) of this section and the aggregate amounts described in 
paragraph (c)(2) of this section with regard to that candidate is 
greater than 100% of the opposition personal funds amount.


Sec.  400.32  Effect of the withdrawal of an opposing candidate.

    (a) Applicability. (1) This section applies to all elections 
covered by this part.
    (2) This section applies when an opposing candidate, whose 
expenditures from personal funds allowed another candidate the benefit 
of increased limits pursuant to this part, ceases to be a candidate. 
For purposes of this section, an opposing candidate ceases to be a 
candidate as of the earlier of the following dates:
    (i) The date on which the opposing candidate publicly announces 
that he or she will no longer be a candidate in that election for that 
office and ceases to conduct campaign activities with respect to that 
election; or,
    (ii) The date on which the opposing candidate is, or becomes, 
ineligible for nomination or election to that office by operation of 
law.
    (b) Candidates. A candidate and a candidate's authorized committee 
must not accept any contribution under the increased limits, pursuant 
to this part, to the extent that such increased limit is attributable 
to the opposing candidate who has ceased to be a candidate.
    (c) Party committees. The national and State political party 
committees must not make any coordinated party expenditure in excess of 
the limits in 11 CFR 109.32(b), pursuant to this part, to the extent 
that such increased limit is attributable to an opposing candidate who 
has ceased to be a candidate.

[[Page 4001]]

Subpart D--Calculation of Increased Limits for Senate and House of 
Representatives Candidates


Sec.  400.40  Calculating the increased limits for Senate elections.

    (a) Applicability. This section applies to candidates for election 
to the office of United States Senator.
    (b) Procedure. To calculate the increased limits:
    (1) Determine the opposition personal funds amount, as defined in 
11 CFR 400.10.
    (2) Determine the voting age population (VAP) of the State of the 
candidate, as defined in 11 CFR 110.18.
    (3) Based on the opposition personal funds amount and the VAP, use 
the following table to determine the increased limits:

----------------------------------------------------------------------------------------------------------------
                                                                                          The amount limitation
   If the opposition personal funds     But less than or equal  The increased limit for    on coordinated party
        amount is more than--                    to--               contributions by      committee expenditures
                                                                    individuals is--               is--
----------------------------------------------------------------------------------------------------------------
(i)($0.08 x VAP) + $300,000..........  ($0.16 x VAP) +          3 x applicable limit...  The limitation set
                                        $600,000.                                         forth in 11 CFR
                                                                                          109.32(b).
(ii)($0.16 x VAP) + $600,000.........  ($0.40 x VAP) +          6 x applicable limit...  The limitation set
                                        $1,500,000.                                       forth in 11 CFR
                                                                                          109.32(b).
(iii)($0.40 x VAP) + $1,500,000......  .......................  6 x applicable limit...  The limitation set
                                                                                          forth in 11 CFR 109.32
                                                                                          (b) does not apply
                                                                                          subject to the
                                                                                          provisions of 11 CFR
                                                                                          400.31(d).
----------------------------------------------------------------------------------------------------------------

Sec.  400.41  Calculating the increased limits for House of 
Representatives elections.

    (a) Applicability. This section applies to candidates for election 
to the office of Representative in, or Delegate or Resident 
Commissioner to, the Congress.
    (b) Increased limits. Subject to subpart C of this part, if the 
opposition personal funds amount exceeds the threshold amount, 
$350,000, the following will apply:
    (1) The increased limit for contributions by individuals is three 
times the applicable limit.
    (2) The national and State party committee expenditure limitation 
under 11 CFR 109.32(b) on behalf of the candidate will not apply 
subject to the provisions of 11 CFR 400.31(e).


Sec.  400.42  Effect of increased limits on the aggregate contribution 
limitations for individuals.

    (a) This section shall apply to all elections covered by this part.
    (b) The portions of contributions made under the increased limits 
pursuant to this part that, when aggregated with previous contributions 
made by the same individual to the candidate or the candidate's 
authorized committee in the same election cycle, exceed the 
contribution limits in 11 CFR 110.1 shall not be aggregated with other 
contributions made by that same individual for purposes of applying the 
aggregate contribution limitations for individuals under 11 CFR 110.5. 
This paragraph (b) applies only to such contributions that are accepted 
during the period in which the candidate may accept contributions under 
the increased limits.
    (c) Individual contributors who have reached their aggregate bi-
annual contribution limitations to candidates and authorized committees 
of candidates under 11 CFR 110.5(b)(1)(i) may make contributions under 
this part if:
    (1) The candidate who accepts the contribution may accept 
contributions that exceed the applicable limit under this part; and
    (2) The amount of the contribution, when aggregated with other 
contributions made under this paragraph (c), does not exceed the amount 
that the candidate described in paragraph (c)(1) of this section may 
accept under this part minus the applicable limit.

Subpart E--Disposal of Excess Contributions


Sec.  400.50  Definition of excess contributions.

    For purposes of this subpart, excess contributions mean 
contributions that are made under the increased limit, as defined in 11 
CFR 400.6 in subpart B of this part, but not expended in connection 
with the election to which they relate.


Sec.  400.51  Relation of excess contributions to the election in which 
they are made.

    (a) Primary elections. If the excess contributions were received 
during the primary election cycle, the candidate's authorized committee 
must refund the excess contributions within 50 days of the primary 
election in accordance with 11 CFR 400.53.
    (b) General elections. If the excess contributions were received 
during the general election cycle, the candidate's authorized committee 
must refund the excess contributions within 50 days of the general 
election in accordance with 11 CFR 400.53.
    (c) Run-off elections. For purposes of this section only, when a 
primary or general election results in a run-off election, the run-off 
election is considered part of the respective primary or general 
election. Notwithstanding paragraphs (a) and (b) of this section, the 
candidate's authorized committee must refund the excess contributions 
within 50 days of the run-off election in accordance with 11 CFR 
400.53.


Sec.  400.52  Prohibition against redesignation of excess 
contributions.

    (a) The candidate's authorized committee shall not redesignate or 
seek redesignation of excess contributions under 11 CFR 110.1(b)(5).
    (b) Once an individual has made a contribution under the increased 
limits, the individual must not redesignate the contribution for 
another election.


Sec.  400.53  Disposal of excess contributions.

    (a) The candidate's authorized committee must refund the excess 
contributions to individuals who made contributions to the candidate or 
the candidate's authorized committee under this part. The refund to 
each individual must not exceed that individual's aggregate 
contributions to the candidate or the candidate's authorized committee 
for the relevant election cycle.
    (b) The amount of any refund checks, made under paragraph (a) of 
this section that are not cashed, deposited, or otherwise negotiated 
within 6 months of the date of the refund check must be disgorged to 
the United States Treasury. The candidate's authorized committee must 
disgorge this amount to the United States Treasury within nine months 
of the election.

[[Page 4002]]

Sec.  400.54  Notification of disposal of excess contributions.

    The candidate's principal campaign committee shall submit to the 
Commission information indicating the source and amount of any excess 
contributions (see 11 CFR 400.50) and the manner in which the 
candidate, the candidate's principal campaign committee, or the 
candidate's authorized committee refunded such funds. This information 
shall be included in the first report that the principal campaign 
committee is required to file, under 11 CFR 104.5, the date of which 
falls more than 50 days after the election for which a candidate seeks 
nomination for election to, or election to, Federal office. Such report 
must be submitted with the candidate's FEC Form 3.

PART 9035--EXPENDITURE LIMITATIONS

    16. The authority citation for part 9035 continues to read as 
follows:

    Authority: 26 U.S.C. 9035 and 9039(b).

    17. In section 9035.2, paragraph (c) is revised to read as follows:


Sec.  9035.2  Limitation on expenditures from personal or family funds.

* * * * *
    (c) For purposes of this section, personal funds has the same 
meaning as specified in 11 CFR 9003.2.

    Dated: January 17, 2003.
Ellen L. Weintraub,
Chair, Federal Election Commission.
[FR Doc. 03-1546 Filed 1-24-03; 8:45 am]
BILLING CODE 6715-01-P