**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.

**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 \[insert a date 30
days from publication in the [Federal Register]{.underline}.\] Comments
must be received on or before \[insert a date 60 days from publication
in the [Federal Register]{.underline}\]. 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
millionaire@fec.gov 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, N.W., Washington, D.C. 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 N.W., 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]{.underline}*.* 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]{.underline} to
candidates running for the Senate or the House of Representatives and do
[not]{.underline} 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]{.underline} 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. 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.

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]{.underline} 147 Cong. Rec. 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))]{.underline}

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]{.underline} 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]{.underline} when they are faxed or e-mailed to each opposing
candidate within 24 hours of the time the thresholds defined in 11 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))]{.underline}

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]{.underline} 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 section 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]{.underline}
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))]{.underline}

Currently, section 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]{.underline}

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]{.underline} 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)
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))]{.underline}

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]{.underline} 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]{.underline} 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]{.underline}
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]{.underline} 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]{.underline}

[A. Interim final rule]{.underline}

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.

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 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]{.underline}. 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]{.underline} the
election to repay candidate loans in any amount, and contributions made
[after]{.underline} 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)]{.underline}

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]

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]{.underline} candidates rather than loans made
[by]{.underline} 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]{.underline} candidates rather than loans made [by]{.underline}
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.

[2. 11 CFR 116.12 Repayment of candidate loans of \$250,000 or
less]{.underline}

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]{.underline}

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]{.underline}.

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,
\[insert date that is 30 days from publication in [Federal
Register]{.underline}\], 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"]{.underline}

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 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"]{.underline}

The operative provisions of the Millionaires' Amendment are triggered by
expenditures of personal funds by "an opposing candidate."
[See]{.underline} 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]{.underline}
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"]{.underline}

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"]{.underline}

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]{.underline} 11 CFR 110.17(b).

[6. 11 CFR 400.6 Definition of "increased limit"]{.underline}

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]{.underline} 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]{.underline} 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]{.underline} 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"]{.underline}

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]{.underline} 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]{.underline} 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"]{.underline}

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]{.underline} 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.

[9. 11 CFR 400.9 Definition of "threshold amount"]{.underline}

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]{.underline} 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 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.]{.underline}

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]{.underline} 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]{.underline}. 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"]{.underline}

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. 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]{.underline} 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]{.underline} . . .") (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 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 section 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 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' 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]{.underline}

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]{.underline}
11 CFR 400.5) pursuant to the increased contribution limits
([see]{.underline} 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) 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]{.underline} 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]{.underline} 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]{.underline} 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]{.underline} 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]{.underline}

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%.
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%. 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%. 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 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]{.underline} 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]{.underline} 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% of
the opposition personal funds amount, not 110%, as in Senate elections.

[3. 11 CFR 400.32 Effect of the withdrawal of an opposing
candidate]{.underline}

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]{.underline}

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]{.underline}

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 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]{.underline} 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.,]{.underline} BCRA Secs. 304 and 319
(entitled "Modification of [individual]{.underline} contribution limits
in response to expenditures from personal funds" and "Modification of
[individual]{.underline} contribution limits for House candidates in
response to expenditures from personal funds," respectively) (emphasis
added)); 147 Cong. Rec. S2537 (daily ed. Mar. 20, 2001) (statement of
Sen. Domenici); 147 Cong. Rec. S2538 (daily ed. Mar. 20, 2001)
(statement of Sen. DeWine) (explaining effect of triggering threshold
amount on [individual]{.underline} 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]{.underline}

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]{.underline} 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]{.underline}

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]{.underline}

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
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]{.underline}
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 bi-annual
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
> bi-annual 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"]{.underline}

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]{.underline}

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).

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
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]{.underline}

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]{.underline} 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]{.underline} 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 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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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 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]{.underline}

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]{.underline}

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]{.underline}

Meanwhile, Frank Rogers was starting to flounder. His campaign had
already spent the \$7.5 million he had deposited on April 4^th^ 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]{.underline} required to amend that form.

## [Calculating the new opposition personal funds amount for the Miller and Hyer campaigns]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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

## [Variable (d) -- Miller campaign]{.underline}

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 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]{.underline}

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;

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(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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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 (\$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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

Hyer was optimistic that he would still be able 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]{.underline}

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.

[Reporting of gross receipts as of December 31, 2003]{.underline}

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 15^th^ 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]{.underline}

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]{.underline}

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);

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```
(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]{.underline} included.

> Miller determined the value of each variable as follows:

(a) = \$21,000,000

(b) = \$0.00

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```
(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]{.underline}

Having determined that the opposition personal funds amount was
\$20,050,000, 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]{.underline}

\$12,000 (6 x \$2,000 (applicable limit))

[Coordinated party expenditure limit]{.underline}

Unlimited

## [Calculating the proportionality provision amount for the Miller campaign]{.underline}

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]{.underline} count against his 2-year aggregate limit of
\$37,500, it [would not]{.underline} 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]{.underline}

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);

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```
(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:

\$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]{.underline}

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]{.underline}

\$12,000 (6 x \$2,000 (applicable limit))

[Coordinated party expenditure limit -- Miller campaign]{.underline}

Unlimited

## [Calculating the new proportionality provision amount for the Miller campaign]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline} 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]{.underline}

Elections.

[11 CFR Part 101]{.underline}

Political candidates, Reporting and recordkeeping requirements.

[11 CFR Part 104]{.underline}

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

[11 CFR Part 110]{.underline}

Campaign funds, Political committees and parties.

[11 CFR Part 116]{.underline}

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

[11 CFR Part 400]{.underline}

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

[11 CFR Part 9035]{.underline}

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]{.underline} as follows:

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 section 100.19, paragraph (b) is revised, and paragraph (g) is
added to read as follows:

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

\* \* \* \* \*

\(b\) [Timely filed.]{.underline} 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.]{.underline} 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:

§ 100.33 Personal funds.

[Personal funds of a candidate]{.underline} means the sum of all of the
following:

\(a\) [Assets.]{.underline} 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.]{.underline} 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.]{.underline} 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:

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

\(a\) [Principal Campaign Committee.]{.underline} 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 section 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:

§ 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:

§ 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.]{.underline} 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.]{.underline}

(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:

    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 section 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:

§ 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 amended to read as follows:

§ 110.10 Expenditures by candidates.

Except as provided in 11 CFR parts 9001, [et seq.]{.underline} and 9031,
[et seq.]{.underline}, 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 sections 116.11 and 116.12 to
read as follows:

§ 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 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 paragraph (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.

§ 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

Sec.

20. Declaration of intent.

21. Initial notification of expenditures from personal funds.

22. Additional notification of expenditures from personal funds.

23. Contents of notifications of expenditures from personal funds.

24. Methods of filing notifications.

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

# Subpart C -- Determining When the Increased Limits Apply.

Sec.

30. Receipt of notification of opposing candidate's expenditures from

> personal funds.

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

Sec.

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

Sec.

50. Excess contributions.

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

52. Prohibition against redesignation of excess contributions.

53. Disposal of excess contributions.

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

§ 400.1 Scope and effective date.

\(a\) [Introduction.]{.underline} 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.]{.underline} Except as otherwise specifically
provided in this part, this part shall take effect on \[insert a date 30
days from the date of publication in the [Federal
Register]{.underline}\].

§ 400.2 Election cycle.

\(a\) For purposes of this part, [election cycle]{.underline} 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.

§ 400.3 Opposing candidate.

\(a\) For purposes of a primary election, [opposing
candidate]{.underline} 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]{.underline} 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.

§ 400.4 Expenditure from personal funds.

\(a\) [Expenditure from personal funds]{.underline} 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]{.underline} 11 CFR 100.33 for definition of [personal
    funds]{.underline});

(3) A loan by any person to the candidate's authorized committee that is
    secured using the candidate's personal funds. ([see]{.underline} 11
    CFR 100.33 for definition of [personal funds]{.underline}); 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 the date the contract obligating the personal
funds is executed, whichever is earlier.

**§ 400.5 Applicable limit.**

[Applicable limit]{.underline} means the contribution amount limitation
set forth in 11 CFR 110.1(b)(1).

§ 400.6 Increased limit.

[Increased limit]{.underline} 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]{.underline} 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).

**§ 400.7 Contribution that exceeds the applicable limit.**

[Amount of contribution above the applicable limit]{.underline} means
the difference between the amount of a contribution accepted under this
part and the applicable limit.

**§ 400.8 Gross receipts.**

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

**§ 400.9 Threshold amount**.

\(a\) [Senate]{.underline}. For an election to the office of United
States Senator, [threshold amount]{.underline} 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]{.underline}. For an election to the
office of Representative in, or Delegate or Resident Commission to, the
Congress, [threshold amount]{.underline} means \$350,000.

**§ 400.10 Opposition personal funds amount.**

\(a\) To compute the [opposition personal funds amount]{.underline}, 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 c d, 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 e f, opposition personal funds amount = a -- b -- ((e -- f)
> 2).

\(ii\) If e f, opposition personal funds amount = a -- b.

\(b\) [Variables]{.underline}. 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

§ 400.20 Declaration of intent.

\(a\) [Senate and House of Representatives.]{.underline}

\(1\) [When and where filed.]{.underline} 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.]{.underline} 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.]{.underline}

\(1\) [Senate.]{.underline} Declarations of Intent must be noted on the
candidate's Statement of Candidacy, FEC Form 2. ([See]{.underline} 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.

\(2\) [House of Representatives.]{.underline} Declarations of Intent
must be noted on the candidate's Statement of Candidacy, FEC Form 2.
([See]{.underline} 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.

**§ 400.21 Initial notification of expenditures from personal funds.**

\(a\) [Senate.]{.underline} 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.]{.underline} 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]{.underline} 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.

**§ 400.22 Additional notification of expenditures from personal
funds.**

(a) [Senate.]{.underline} 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.]{.underline} 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.

**§ 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.

**§ 400.24 Methods of filing notifications.**

\(a\) [Senate.]{.underline} 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.]{.underline} 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.

**§ 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. 

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

\(a\) [Applicable to Senate and to House of Representatives
elections.]{.underline} 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]{.underline}.

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]{.underline}.

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 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.

\(d\) For purposes of this section, [constructive
notification]{.underline} 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.

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

\(a\) [Applicability.]{.underline} 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]{.underline}. 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.]{.underline} 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]{.underline}.

\(1\) [Responsibilities of candidates and their authorized
committees.]{.underline}

\(i\) 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.]{.underline} 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.]{.underline}

\(1\) [Responsibilities of candidates and their authorized
committees.]{.underline}

\(i\) 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.]{.underline} 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.

§ 400.32 Effect of the withdrawal of an opposing candidate.

\(a\) [Applicability]{.underline}.

\(1\) 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.]{.underline} 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]{.underline}. 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.

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

§ 400.40 Calculating the increased limits for Senate elections.

\(a\) [Applicability.]{.underline} This section applies to candidates
for election to the office of United States Senator.

\(b\) [Procedure]{.underline}. 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:

  ----------------- ----------------- ----------------- -----------------
  If the opposition \--But less than  The increased     The amount
  personal funds    or equal to:      limit for         limitation on
  amount is more                      contributions by  coordinated party
  than\--                             individuals is:   committee
                                                        expenditures is:

  (\$0.08 x VAP) +  (\$0.16 x VAP) +  3 x applicable    The limitation
  \$300,000         \$600,000         limit             set forth in 11
                                                        CFR 109.32(b)

  (\$0.16 x VAP) +  (\$0.40 x VAP) +  6 x applicable    The limitation
  \$600,000         \$1,500,000       limit             set forth in 11
                                                        CFR 109.32(b)

  (\$0.40 x VAP) +  \-\-\-\--         6 x applicable    The limitation
  \$1,500,000                         limit             set forth in 11
                                                        CFR 109.32 (b)
                                                        does not apply
                                                        subject to the
                                                        provisions of 11
                                                        CFR 400.31(d).
  ----------------- ----------------- ----------------- -----------------

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

\(a\) [Applicability]{.underline}. This section applies to candidates
for election to the office of Representative in, or Delegate or Resident
Commissioner to, the Congress.

\(b\) [Increased limits]{.underline}. 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).

§ 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]{.underline} the
    applicable limit.

# Subpart E---Disposal of Excess Contributions

§ 400.50 Definition of excess contributions.

For purposes of this subpart, [excess contributions]{.underline} 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.

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

\(a\) [Primary elections]{.underline}. 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]{.underline}. 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]{.underline}. 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.

§ 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.

§ 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.

**§ 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]{.underline} 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:

§ 9035.2 Limitation on expenditures from personal or family funds.

\* \* \* \* \*

\(c\) For purposes of this section, [personal funds]{.underline} has the
same meaning as specified in 11 CFR 9003.2.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Ellen L. Weintraub

Chair

Federal Election Commission

DATED: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

BILLING CODE: 6715‑01‑U

[^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.

[^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
    [Cong. Rec.]{.underline} S2451 (daily ed. Mar. 19, 2001) (statement
    of Sen. Domenici).

[^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 [Cong. Rec.]{.underline} 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.]{.underline} at S2462 (daily ed. Mar. 19, 2001) (statement of
    Sen. Durbin); [see also]{.underline} footnote 2, above.

[^4]: [Black's Law Dictionary]{.underline} 108 (6th ed. 1990).

[^5]: Note that certain amounts that qualify as "expenditures from
    personal funds" are reported under 11 CFR 104.3(a)(3),
    [e.g.,]{.underline} 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.