A bill to amend the Federal Election Campaign Act of 1971 to clarify when organizations described in section 527 of the Internal Revenue Code of 1986 must register as political committees, and for other purposes.

Summary: 527 Reform Act of 2006 - Amends the Federal Election Campaign Act of 1971 to subject to its requirements as a political committee any applicable 527 organization.

Excludes from the meaning of 527 organization for these purposes any committee, club, association, or other group of persons organized to influence: (1) the selection, nomination, election, appointment, or confirmation of one or more candidates to non-federal or non-elected office; or (2) any state or local ballot measure.

Denies exception from treatment as an applicable 527 organization to any such a committee, club, association, or other groups of persons which makes disbursements aggregating more than $1,000 for: (1) a public communication that promotes, supports, attacks, or opposes a clearly identified candidate for federal office during the one year period ending on the date of the general election for the office sought by the clearly identified candidate; or (2) certain voter drive activity.

Sets forth rules for allocation and funding by a political committee for certain expenses relating to federal and non-federal activities.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``527 Reform Act of 2005''.

SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.

    (a) Definition of Political Committee.--Section 301(4) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 431(4)) is amended by 
striking the period at the end of subparagraph (C) and inserting ``; 
or'' and by adding at the end the following:
                    ``(D) any applicable 527 organization.''.
    (b) Definition of Applicable 527 Organization.--Section 301 of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 431) is amended by 
adding at the end the following new paragraph:
            ``(27) Applicable 527 organization.--For purposes of 
        paragraph (4)(D)--
                    ``(A) In general.--The term `applicable 527 
                organization' means a committee, club, association, or 
                group of persons that--
                            ``(i) is an organization described in 
                        section 527 of the Internal Revenue Code of 
                        1986, and
                            ``(ii) is not described in subparagraph 
                        (B).
                    ``(B) Excepted organizations.--Subject to 
                subparagraph (D), a committee, club, association, or 
                other group of persons described in this subparagraph 
                is--
                            ``(i) an organization described in section 
                        527(i)(5) of the Internal Revenue Code of 1986,
                            ``(ii) an organization which is a 
                        committee, club, association or other group of 
                        persons that is organized, operated, and makes 
                        disbursements exclusively for paying expenses 
                        described in the last sentence of section 
                        527(e)(2) of the Internal Revenue Code of 1986 
                        or expenses of a newsletter fund described in 
                        section 527(g) of such Code, or
                            ``(iii) an organization which is a 
                        committee, club, association, or other group of 
                        persons whose election or nomination activities 
                        relate exclusively to--
                                    ``(I) elections where no candidate 
                                for Federal office appears on the 
                                ballot, or
                                    ``(II) one or more of the purposes 
                                described in subparagraph (C).
                    ``(C) Allowable purposes.--The purposes described 
                in this subparagraph are the following:
                            ``(i) Influencing the selection, 
                        nomination, election, or appointment of one or 
                        more candidates to non-Federal offices.
                            ``(ii) Influencing one or more State or 
                        local ballot initiatives, State or local 
                        referenda, State or local constitutional 
                        amendments, State or local bond issues, or 
                        other State or local ballot issues.
                            ``(iii) Influencing the selection, 
                        appointment, nomination, or confirmation of one 
                        or more individuals to non-elected offices.
                    ``(D) Section 527 organizations making certain 
                disbursements.--A committee, club, association, or 
                other group of persons described in subparagraph 
                (B)(ii) or (B)(iii) shall not be considered to be 
                described in such paragraph for purposes of 
                subparagraph (A)(ii) if it makes disbursements 
                aggregating more than $1000 during any calendar year 
                for any of the following:
                            ``(i) A public communication that promotes, 
                        supports, attacks, or opposes a clearly 
                        identified candidate for Federal office during 
                        the 1-year period ending on the date of the 
                        general election for the office sought by the 
                        clearly identified candidate occurs.
                            ``(ii) Any voter drive activity (as defined 
                        in section 325(d)(1)).''.

SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-
              FEDERAL ACTIVITIES.

    (a) In General.--Title III of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the 
following:

``SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING 
              TO FEDERAL AND NON-FEDERAL ACTIVITIES.

    ``(a) In General.--In the case of any disbursements by any 
political committee that is a separate segregated fund or nonconnected 
committee for which allocation rules are provided under subsection 
(b)--
            ``(1) the disbursements shall be allocated between Federal 
        and non-Federal accounts in accordance with this section and 
        regulations prescribed by the Commission, and
            ``(2) in the case of disbursements allocated to non-Federal 
        accounts, may be paid only from a qualified non-Federal 
        account.
    ``(b) Costs To Be Allocated and Allocation Rules.--Disbursements by 
any separate segregated fund or nonconnected committee for any of the 
following categories of activity shall be allocated as follows:
            ``(1) 100 percent of the expenses for public communications 
        or voter drive activities that refer to one or more clearly 
        identified Federal candidates, but do not refer to any clearly 
        identified non-Federal candidates, shall be paid with funds 
        from a Federal account, without regard to whether the 
        communication refers to a political party.
            ``(2) At least 50 percent of the expenses for public 
        communications and voter drive activities that refer to one or 
        more clearly identified candidates for Federal office and one 
        or more clearly defined non-Federal candidates shall be paid 
        with funds from a Federal account, without regard to whether 
        the communication refers to a political party.
            ``(3) At least 50 percent of the expenses for public 
        communications or voter drive activities that refer to a 
        political party, but do not refer to any clearly identified 
        Federal or non-Federal candidate, shall be paid with funds from 
        a Federal account, except that this paragraph shall not apply 
        to communications or activities that relate exclusively to 
        elections where no candidate for Federal office appears on the 
        ballot.
            ``(4) At least 50 percent of the expenses for public 
        communications or voter drive activities that refer to a 
        political party, and refer to one or more clearly identified 
        non-Federal candidates, but do not refer to any clearly 
        identified Federal candidates, shall be paid with funds from a 
        Federal account, except that this paragraph shall not apply to 
        communications or activities that relate exclusively to 
        elections where no candidate for Federal office appears on the 
        ballot.
            ``(5) At least 50 percent of any administrative expenses, 
        including rent, utilities, office supplies, and salaries not 
        attributable to a clearly identified candidate, shall be paid 
        with funds from a Federal account, except that for a separate 
        segregated fund such expenses may be paid instead by its 
        connected organization.
            ``(6) At least 50 percent of the direct costs of a 
        fundraising program or event, including disbursements for 
        solicitation of funds and for planning and administration of 
        actual fundraising events, where Federal and non-Federal funds 
        are collected through such program or event shall be paid with 
        funds from a Federal account, except that for a separate 
        segregated fund such costs may be paid instead by its connected 
        organization.
    ``(c) Qualified Non-Federal Account.--For purposes of this 
section--
            ``(1) In general.--The term `qualified non-Federal account' 
        means an account which consists solely of amounts--
                    ``(A) that, subject to the limitations of 
                paragraphs (2) and (3), are raised by the separate 
                segregated fund or nonconnected committee only from 
                individuals, and
                    ``(B) with respect to which all other requirements 
                of Federal, State, or local law are met.
            ``(2) Limitation on individual donations.--
                    ``(A) In general.--A separate segregated fund or 
                nonconnected committee may not accept more than $25,000 
                in funds for its qualified non-Federal account from any 
                one individual in any calendar year.
                    ``(B) Affiliation.--For purposes of this paragraph, 
                all qualified non-Federal accounts of separate 
                segregated funds or nonconnected committees which are 
                directly or indirectly established, financed, 
                maintained, or controlled by the same person or persons 
                shall be treated as one account.
            ``(3) Fundraising limitation.--No donation to a qualified 
        non-Federal account may be solicited, received, directed, 
        transferred, or spent by or in the name of any person described 
        in subsection (a) or (e) of section 323.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Voter drive activity.--The term `voter drive 
        activity' means any of the following activities conducted in 
        connection with an election in which a candidate for Federal 
        office appears on the ballot (regardless of whether a candidate 
        for State or local office also appears on the ballot):
                    ``(A) Voter registration activity.
                    ``(B) Voter identification.
                    ``(C) Get-out-the-vote activity.
                    ``(D) Generic campaign activity.
        Such term shall not include any activity described in 
        subparagraph (A) or (B) of section 316(b)(2).
            ``(2) Federal account.--The term `Federal account' means an 
        account which consists solely of contributions subject to the 
        limitations, prohibitions, and reporting requirements of this 
        Act. Nothing in this section or in section 323(b)(2)(B)(iii) 
        shall be construed to infer that a limit other than the limit 
        under section 315(a)(1)(C) applies to contributions to the 
        account.
            ``(3) Nonconnected committee.--The term `nonconnected 
        committee' shall not include a political committee of a 
        political party.''.
    (b) Reporting Requirements.--Section 304(e) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 434(e)) is amended by redesignating 
paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and by 
inserting after paragraph (2) the following new paragraph:
            ``(3) Receipts and disbursements from qualified non-federal 
        accounts.--In addition to any other reporting requirement 
        applicable under this Act, a political committee to which 
        section 325(a) applies shall report all receipts and 
        disbursements from a qualified non-Federal account (as defined 
        in section 325(c)).''

SEC. 4. CONSTRUCTION.

    No provision of this Act, or amendment made by this Act, shall be 
construed--
            (1) as approving, ratifying, or endorsing a regulation 
        promulgated by the Federal Election Commission,
            (2) as establishing, modifying, or otherwise affecting the 
        definition of political organization for purposes of the 
        Internal Revenue Code of 1986, or
            (3) as affecting the determination of whether a group 
        organized under section 501(c) of the Internal Revenue Code of 
        1986 is a political committee under section 301(4) of the 
        Federal Election Campaign Act of 1971.

SEC. 5. JUDICIAL REVIEW.

    (a) Special Rules for Actions Brought on Constitutional Grounds.--
If any action is brought for declaratory or injunctive relief to 
challenge the constitutionality of any provision of this Act or any 
amendment made by this Act, the following rules shall apply:
            (1) The action shall be filed in the United States District 
        Court for the District of Columbia and shall be heard by a 3-
        judge court convened pursuant to section 2284 of title 28, 
        United States Code.
            (2) A copy of the complaint shall be delivered promptly to 
        the Clerk of the House of Representatives and the Secretary of 
        the Senate.
            (3) A final decision in the action shall be reviewable only 
        by appeal directly to the Supreme Court of the United States. 
        Such appeal shall be taken by the filing of a notice of appeal 
        within 10 days, and the filing of a jurisdictional statement 
        within 30 days, of the entry of the final decision.
            (4) It shall be the duty of the United States District 
        Court for the District of Columbia and the Supreme Court of the 
        United States to advance on the docket and to expedite to the 
        greatest possible extent the disposition of the action and 
        appeal.
    (b) Intervention by Members of Congress.--In any action in which 
the constitutionality of any provision of this Act or any amendment 
made by this Act is raised (including but not limited to an action 
described in subsection (a)), any Member of the House of 
Representatives (including a Delegate or Resident Commissioner to 
Congress) or Senate shall have the right to intervene either in support 
of or opposition to the position of a party to the case regarding the 
constitutionality of the provision or amendment. To avoid duplication 
of efforts and reduce the burdens placed on the parties to the action, 
the court in any such action may make such orders as it considers 
necessary, including orders to require intervenors taking similar 
positions to file joint papers or to be represented by a single 
attorney at oral argument.
    (c) Challenge by Members of Congress.--Any Member of Congress may 
bring an action, subject to the special rules described in subsection 
(a), for declaratory or injunctive relief to challenge the 
constitutionality of any provision of this Act or any amendment made by 
this Act.
    (d) Applicability.--
            (1) Initial claims.--With respect to any action initially 
        filed on or before December 31, 2006, the provisions of 
        subsection (a) shall apply with respect to each action 
        described in such subsection.
            (2) Subsequent actions.--With respect to any action 
        initially filed after December 31, 2006, the provisions of 
        subsection (a) shall not apply to any action described in such 
        subsection unless the person filing such action elects such 
        provisions to apply to the action.

SEC. 6. EFFECTIVE DATE.

    The amendments made by this Act shall take effect on the date which 
is 60 days after the date of the enactment of this Act.