[Federal Register Volume 72, Number 191 (Wednesday, October 3, 2007)]
[Rules and Regulations]
[Pages 56245-56247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-19260]


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FEDERAL ELECTION COMMISSION

11 CFR Part 113

[Notice 2007-18]


Use of Campaign Funds for Donations to Non-Federal Candidates and 
Any Other Lawful Purpose Other Than Personal Use

AGENCY: Federal Election Commission.

ACTION: Final rule.

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SUMMARY: The Federal Election Commission is revising its rules 
regarding the use of campaign funds by candidates and other 
individuals. The revision adds to the current list of permissible uses 
of campaign funds in Commission regulations: donations to non-Federal 
candidates; and any other lawful purpose other than personal use. This 
change conforms the provision with those in the Federal Election 
Campaign Act, as amended (``the Act''). Further information is provided 
in the supplementary information that follows.

EFFECTIVE DATE: November 2, 2007.

FOR FURTHER INFORMATION CONTACT: Ms. Amy L. Rothstein, Assistant 
General Counsel, or Ms. Stacey J. Shin, Attorney, 999 E Street, NW., 
Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: Section 313 of the Federal Election Campaign 
Act of 1971, as amended (``the Act''), sets forth permissible uses of

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contributions \1\ accepted by candidates and donations \2\ received by 
individuals to support their activities as Federal officeholders. 
Section 313 is codified at 2 U.S.C. 439a and is referred to hereafter 
as ``Section 439a.'' Section 439a(a) provides that candidates may use 
contributions, and individuals holding Federal office may use 
donations, for: (1) Expenditures in connection with the candidate's or 
individual's campaign for Federal office; (2) ordinary and necessary 
expenses incurred in connection with duties of the individual as a 
Federal officeholder; (3) contributions to an organization described in 
section 170(c) of the Internal Revenue Code; (4) transfers, without 
limitation, to a national, State, or local committee of a political 
party; (5) donations to State and local candidates subject to the 
provisions of State law; and (6) any other lawful purpose, unless such 
purpose constitutes personal use of contributions or donations. See 2 
U.S.C. 439a(a).
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    \1\ A ``contribution'' is a payment, service or anything of 
value given to a person for the purpose of influencing a Federal 
election. See 11 CFR 100.52(a). ``Contributions'' are subject to the 
limits and prohibitions of the Act.
    \2\ A ``donation'' is a payment, service or anything of value 
given to a person other than a ``contribution.'' See 11 CFR 
300.2(e).
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    Section 113.2 of the Commission's regulations implements Section 
439a by tracking the permissible uses of campaign funds and funds 
donated to a Federal officeholder. The Commission initiated this 
rulemaking to add to section 113.2 the two recently enacted permissible 
uses regarding donations to non-Federal candidates, and donations for 
any other lawful purpose other than personal use. See the Consolidated 
Appropriations Act of 2005.\3\ The Commission notes that before 2002, 
the Act and Commission regulations had permitted the use of campaign 
funds for ``any other lawful purpose'' other than personal use. The 
Bipartisan Campaign Reform Act of 2002 (``BCRA''),\4\ deleted ``any 
other lawful purpose'' from Section 439a and set forth four permissible 
uses of campaign funds.
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    \3\ Pub. L. 108-447, 118 Stat. 2809 (2004). The Consolidated 
Appropriations Act of 2005 directed that section 312a(a) of the Act 
be amended, but was executed by amending section 313(a) of the Act 
``as the probable intent of Congress.'' 2 U.S.C.A. 439a (West 2004).
    \4\ Pub. L. 107-155, 116 Stat. 81 (2002).
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    As noted above, however, the ``any other lawful purpose'' provision 
was restored to Section 439a through the Consolidated Appropriations 
Act of 2005. At that time, Congress also added donations to State and 
local candidates as permissible uses of campaign funds. These changes 
to the Act prompted this rulemaking.
    The Commission published a Notice of Proposed Rulemaking (``NPRM'') 
on July 19, 2007, in which it sought comment on proposed revisions to 
11 CFR 113.2. See Notice of Proposed Rulemaking for Use of Campaign 
Funds for Donations to Non-Federal Candidates and Any Other Lawful 
Purpose Other Than Personal Use, 72 FR 39583 (July 19, 2007).\5\ The 
comment period closed on August 20, 2007. The Commission received one 
written comment from the Internal Revenue Service, which stated that 
``the proposed rules do not pose a conflict with the Internal Revenue 
Code or the regulations thereunder.''
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    \5\ Available at http://www.fec.gov/pdf/nprm/useoffunds/notice_2007-15.pdf.
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    Accordingly, the Commission has decided to revise its rules 
governing the use of campaign funds to add to the current list of 
permissible uses of campaign funds in Commission regulations: (1) 
Donations to non-Federal candidates; and (2) any other lawful purpose 
other than personal use. These changes are identical to those proposed 
in the NPRM.

Transmission of Final Rules to Congress

    Under the Administrative Procedure Act, 5 U.S.C. 553(d), and the 
Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), 
agencies must submit final rules to the Speaker of the House of 
Representatives and the President of the Senate and publish them in the 
Federal Register at least 30 calendar days before they take effect. The 
final rules that follow were transmitted to Congress on September 25, 
2007.

Explanation and Justification

1. 11 CFR 113.2(d)--Donations to State and local candidates

    Section 439a(a)(5) of the Act expressly permits Federal candidates 
and officeholders to donate their campaign funds to State and local 
candidates. The Commission is amending 11 CFR 113.2 accordingly, by 
adding a new paragraph (d), which permits Federal candidates and 
officeholders to donate campaign funds from their authorized committees 
to ``State and local candidates subject to the provisions of State 
law.''

2. 11 CFR 113.2(e)--Any other lawful purpose

    The Commission is amending 11 CFR 113.2 by inserting a new 
paragraph (e), which states that campaign funds ``may be used for any 
other lawful purpose, unless such use is personal use under 11 CFR 
113.1(g).'' New paragraph (e) follows section 439a(a)(6) of the Act, 
which permits the use of campaign funds ``for any other lawful 
purpose,'' unless the funds are converted by any person to personal 
use. The Commission notes that this change to the Act had the effect of 
superseding the analysis in Advisory Opinion 2003-26 (Voinovich), in 
which the Commission concluded that after BCRA deleted the ``any other 
lawful purpose'' provision from Section 439a, campaign funds could be 
used only for those non-campaign purposes that were specifically 
enumerated in Section 439a. The change also had the effect of 
superseding, in part, Advisory Opinion 2004-03 (Dooley), to the extent 
that Advisory Opinion 2004-03 placed certain limits on an authorized 
committee that had converted into a multicandidate committee and its 
use, for any lawful purpose, of funds that had been received when the 
committee was an authorized committee.

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

    The Commission certifies that the attached final rule does not have 
a significant economic impact on a substantial number of small 
entities. The basis for this certification is that any individuals and 
not-for-profit entities affected by this rule are not ``small 
entities'' under 5 U.S.C. 601. The definition of ``small entity'' does 
not include individuals, but classifies a not-for-profit enterprise as 
a ``small organization'' if it is independently owned and operated and 
not dominant in its field. 5 U.S.C. 601(4). The final rule affects 
authorized committees, which are not independently owned and operated 
because they are not financed and controlled by a small identifiable 
group of individuals. Authorized committees are financed by 
contributions from a large number of persons and controlled by the 
candidate and the candidate's campaign employees and volunteers. To the 
extent that any authorized committees might be considered ``small 
organizations,'' the number that are affected by this final rule is not 
substantial.
    The final rule also does not impose any additional restrictions or 
increase the costs of compliance for authorized committees. Instead, 
the final rule provides authorized committees with additional options 
for using campaign funds, which track the recent changes to 2 U.S.C. 
439a(a). The final rule does not impose an undue burden upon authorized 
committees because they are already required to report the use of

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campaign funds to the Commission. Therefore, the attached final rule 
does not have a significant economic impact on a substantial number of 
small entities.

List of Subjects in 11 CFR Part 113

    Campaign funds.

PART 113--USE OF CAMPAIGN ACCOUNTS FOR NON-CAMPAIGN PURPOSES

0
For the reasons set out in the preamble, the Federal Election 
Commission is amending Subchapter A of Chapter I of Title 11 of the 
Code of Federal Regulations as follows:
0
1. The authority citation for Part 113 continues to read as follows:


    Authority: 2 U.S.C. 432(h), 438(a)(8), 439a, 441a.

0
2. Section 113.2 is amended by:
0
a. Adding paragraph (d);
0
b. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g);
0
c. Adding new paragraph (e) ;
0
d. Amending newly redesignated paragraph (f)(1) introductory text by 
removing the reference ``paragraph (e)(5)'' and inserting in its place, 
the reference ``paragraph (f)(5)'';
0
e. Amending newly redesignated paragraph (f)(1) introductory text by 
removing the reference ``paragraph (e)(1)(i)'' and inserting in its 
place, the reference ``paragraph (f)(1)(i)''; and
0
f. Amending newly redesignated paragraph (f)(1)(ii)(A) by removing the 
reference ``paragraph (e)(1)(i)'' and inserting in its place, the 
reference ``paragraph (f)(1)(i)''.


Sec.  113.2  Permissible non-campaign use of funds (2 U.S.C. 439a).

* * * * *
    (d) May be donated to State and local candidates subject to the 
provisions of State law; or
    (e) May be used for any other lawful purpose, unless such use is 
personal use under 11 CFR 113.1(g).
* * * * *

    Dated: September 24, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.
 [FR Doc. E7-19260 Filed 10-2-07; 8:45 am]
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