II 

109TH CONGRESS 

1ST SESSION S. 271 

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. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 2, 2005 

Mr. MCCAIN (for himself, Mr. FEINGOLD, Mr. LOTT, Mr. LIEBERMAN, Mr. 

SCHUMER, Ms. SNOWE, Ms. COLLINS, and Mr. SALAZAR) introduced the 

following bill; which was read twice and referred to the Committee on 

Rules and Administration 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘527 Reform Act of 

5 2005’’. 
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1 SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS. 

2 (a) DEFINITION OF POLITICAL COMMITTEE.—Sec3 tion 301(4) of the Federal Election Campaign Act of 1971 

4 (2 U.S.C. 431(4)) is amended by striking the period at 

5 the end of subparagraph (C) and inserting ‘‘; or’’ and by 

6 adding at the end the following: 

7 ‘‘(D) any applicable 527 organization.’’. 

8 (b) DEFINITION OF APPLICABLE 527 ORGANIZA9 TION.—Section 301 of the Federal Election Campaign Act 

10 of 1971 (2 U.S.C. 431) is amended by adding at the end 

11 the following new paragraph: 

12 ‘‘(27) APPLICABLE 527 ORGANIZATION.—For 

13 purposes of paragraph (4)(D)— 

14 ‘‘(A) IN GENERAL.—The term ‘applicable 

15 527 organization’ means a committee, club, as16 sociation, or group of persons that— 

17 ‘‘(i) is an organization described in 

18 section 527 of the Internal Revenue Code 

19 of 1986, and 

20 ‘‘(ii) is not described in subparagraph 

21 (B). 

22 ‘‘(B) EXCEPTED ORGANIZATIONS.—Sub23 ject to subparagraph (D), a committee, club, 

24 association, or other group of persons described 

25 in this subparagraph is— 
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1 ‘‘(i) an organization described in sec2 tion 527(i)(5) of the Internal Revenue 

3 Code of 1986, 

4 ‘‘(ii) an organization which is a com5 mittee, club, association or other group of 

6 persons that is organized, operated, and 

7 makes disbursements exclusively for paying 

8 expenses described in the last sentence of 

9 section 527(e)(2) of the Internal Revenue 

10 Code of 1986 or expenses of a newsletter 

11 fund described in section 527(g) of such 

12 Code, or 

13 ‘‘(iii) an organization which is a com14 mittee, club, association, or other group of 

15 persons whose election or nomination ac16 tivities relate exclusively to— 

17 ‘‘(I) elections where no candidate 

18 for Federal office appears on the bal19 lot, or 

20 ‘‘(II) one or more of the purposes 

21 described in subparagraph (C). 

22 ‘‘(C) ALLOWABLE PURPOSES.—The pur23 poses described in this subparagraph are the 

24 following: 
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1 ‘‘(i) Influencing the selection, nomina2 tion, election, or appointment of one or 

3 more candidates to non-Federal offices. 

4 ‘‘(ii) Influencing one or more State or 

5 local ballot initiatives, State or local 

6 referenda, State or local constitutional 

7 amendments, State or local bond issues, or 

8 other State or local ballot issues. 

9 ‘‘(iii) Influencing the selection, ap10 pointment, nomination, or confirmation of 

11 one or more individuals to non-elected of12 fices. 

13 ‘‘(D) SECTION 527 ORGANIZATIONS MAKING

14 CERTAIN DISBURSEMENTS.—A committee, club, 

15 association, or other group of persons described 

16 in subparagraph (B)(ii) or (B)(iii) shall not be 

17 considered to be described in such paragraph 

18 for purposes of subparagraph (A)(ii) if it makes 

19 disbursements aggregating more than $1000 

20 during any calendar year for any of the fol21 lowing: 

22 ‘‘(i) A public communication that pro23 motes, supports, attacks, or opposes a 

24 clearly identified candidate for Federal of25 fice during the 1-year period ending on the 
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1 date of the general election for the office 

2 sought by the clearly identified candidate 

3 occurs. 

4 ‘‘(ii) Any voter drive activity (as de5 fined in section 325(d)(1)).’’. 

6 SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN 

7 FEDERAL AND NON-FEDERAL ACTIVITIES. 

8 (a) IN GENERAL.—Title III of the Federal Election 

9 Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended 

10 by adding at the end the following: 

11 ‘‘SEC. 325. ALLOCATION AND FUNDING RULES FOR CER12 TAIN EXPENSES RELATING TO FEDERAL AND 

13 NON-FEDERAL ACTIVITIES. 

14 ‘‘(a) IN GENERAL.—In the case of any disbursements 

15 by any political committee that is a separate segregated 

16 fund or nonconnected committee for which allocation rules 

17 are provided under subsection (b)— 

18 ‘‘(1) the disbursements shall be allocated be19 tween Federal and non-Federal accounts in accord20 ance with this section and regulations prescribed by 

21 the Commission, and 

22 ‘‘(2) in the case of disbursements allocated to 

23 non-Federal accounts, may be paid only from a 

24 qualified non-Federal account. 
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1 ‘‘(b) COSTS TO BE ALLOCATED AND ALLOCATION

2 RULES.—Disbursements by any separate segregated fund 

3 or nonconnected committee for any of the following cat4 egories of activity shall be allocated as follows: 

5 ‘‘(1) 100 percent of the expenses for public 

6 communications or voter drive activities that refer to 

7 one or more clearly identified Federal candidates, 

8 but do not refer to any clearly identified non-Federal 

9 candidates, shall be paid with funds from a Federal 

10 account, without regard to whether the communica11 tion refers to a political party. 

12 ‘‘(2) At least 50 percent of the expenses for 

13 public communications and voter drive activities that 

14 refer to one or more clearly identified candidates for 

15 Federal office and one or more clearly defined non16 Federal candidates shall be paid with funds from a 

17 Federal account, without regard to whether the com18 munication refers to a political party. 

19 ‘‘(3) At least 50 percent of the expenses for 

20 public communications or voter drive activities that 

21 refer to a political party, but do not refer to any 

22 clearly identified Federal or non-Federal candidate, 

23 shall be paid with funds from a Federal account, ex24 cept that this paragraph shall not apply to commu25 nications or activities that relate exclusively to elec-
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1 tions where no candidate for Federal office appears 

2 on the ballot. 

3 ‘‘(4) At least 50 percent of the expenses for 

4 public communications or voter drive activities that 

5 refer to a political party, and refer to one or more 

6 clearly identified non-Federal candidates, but do not 

7 refer to any clearly identified Federal candidates, 

8 shall be paid with funds from a Federal account, ex9 cept that this paragraph shall not apply to commu10 nications or activities that relate exclusively to elec11 tions where no candidate for Federal office appears 

12 on the ballot. 

13 ‘‘(5) At least 50 percent of any administrative 

14 expenses, including rent, utilities, office supplies, 

15 and salaries not attributable to a clearly identified 

16 candidate, shall be paid with funds from a Federal 

17 account, except that for a separate segregated fund 

18 such expenses may be paid instead by its connected 

19 organization. 

20 ‘‘(6) At least 50 percent of the direct costs of 

21 a fundraising program or event, including disburse22 ments for solicitation of funds and for planning and 

23 administration of actual fundraising events, where 

24 Federal and non-Federal funds are collected through 

25 such program or event shall be paid with funds from 
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1 a Federal account, except that for a separate seg2 regated fund such costs may be paid instead by its 

3 connected organization. 

4 ‘‘(c) QUALIFIED NON-FEDERAL ACCOUNT.—For 

5 purposes of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘qualified non7 Federal account’ means an account which consists 

8 solely of amounts— 

9 ‘‘(A) that, subject to the limitations of 

10 paragraphs (2) and (3), are raised by the sepa11 rate segregated fund or nonconnected com12 mittee only from individuals, and 

13 ‘‘(B) with respect to which all other re14 quirements of Federal, State, or local law are 

15 met. 

16 ‘‘(2) LIMITATION ON INDIVIDUAL DONA17 TIONS.— 

18 ‘‘(A) IN GENERAL.—A separate segregated 

19 fund or nonconnected committee may not ac20 cept more than $25,000 in funds for its quali21 fied non-Federal account from any one indi22 vidual in any calendar year. 

23 ‘‘(B) AFFILIATION.—For purposes of this 

24 paragraph, all qualified non-Federal accounts of 

25 separate segregated funds or nonconnected 
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1 committees which are directly or indirectly es2 tablished, financed, maintained, or controlled by 

3 the same person or persons shall be treated as 

4 one account. 

5 ‘‘(3) FUNDRAISING LIMITATION.—No donation 

6 to a qualified non-Federal account may be solicited, 

7 received, directed, transferred, or spent by or in the 

8 name of any person described in subsection (a) or 

9 (e) of section 323. 

10 ‘‘(d) DEFINITIONS.—For purposes of this section— 

11 ‘‘(1) VOTER DRIVE ACTIVITY.—The term ‘voter 

12 drive activity’ means any of the following activities 

13 conducted in connection with an election in which a 

14 candidate for Federal office appears on the ballot 

15 (regardless of whether a candidate for State or local 

16 office also appears on the ballot): 

17 ‘‘(A) Voter registration activity. 

18 ‘‘(B) Voter identification. 

19 ‘‘(C) Get-out-the-vote activity. 

20 ‘‘(D) Generic campaign activity. 

21 Such term shall not include any activity described in 

22 subparagraph (A) or (B) of section 316(b)(2). 

23 ‘‘(2) FEDERAL ACCOUNT.—The term ‘Federal 

24 account’ means an account which consists solely of 

25 contributions subject to the limitations, prohibitions, 
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1 and reporting requirements of this Act. Nothing in 

2 this section or in section 323(b)(2)(B)(iii) shall be 

3 construed to infer that a limit other than the limit 

4 under section 315(a)(1)(C) applies to contributions 

5 to the account. 

6 ‘‘(3) NONCONNECTED COMMITTEE.—The term 

7 ‘nonconnected committee’ shall not include a polit8 ical committee of a political party.’’. 

9 (b) REPORTING REQUIREMENTS.—Section 304(e) of 

10 the Federal Election Campaign Act of 1971 (2 U.S.C. 

11 434(e)) is amended by redesignating paragraphs (3) and 

12 (4) as paragraphs (4) and (5), respectively, and by insert13 ing after paragraph (2) the following new paragraph: 

14 ‘‘(3) RECEIPTS AND DISBURSEMENTS FROM

15 QUALIFIED NON-FEDERAL ACCOUNTS.—In addition 

16 to any other reporting requirement applicable under 

17 this Act, a political committee to which section 

18 325(a) applies shall report all receipts and disburse19 ments from a qualified non-Federal account (as de20 fined in section 325(c)).’’ 

21 SEC. 4. CONSTRUCTION. 

22 No provision of this Act, or amendment made by this 

23 Act, shall be construed— 
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1 (1) as approving, ratifying, or endorsing a regu2 lation promulgated by the Federal Election Commis3 sion, 

4 (2) as establishing, modifying, or otherwise af5 fecting the definition of political organization for 

6 purposes of the Internal Revenue Code of 1986, or 

7 (3) as affecting the determination of whether a 

8 group organized under section 501(c) of the Internal 

9 Revenue Code of 1986 is a political committee under 

10 section 301(4) of the Federal Election Campaign 

11 Act of 1971. 

12 SEC. 5. JUDICIAL REVIEW. 

13 (a) SPECIAL RULES FOR ACTIONS BROUGHT ON

14 CONSTITUTIONAL GROUNDS.—If any action is brought for 

15 declaratory or injunctive relief to challenge the constitu16 tionality of any provision of this Act or any amendment 

17 made by this Act, the following rules shall apply: 

18 (1) The action shall be filed in the United 

19 States District Court for the District of Columbia 

20 and shall be heard by a 3-judge court convened pur21 suant to section 2284 of title 28, United States 

22 Code. 

23 (2) A copy of the complaint shall be delivered 

24 promptly to the Clerk of the House of Representa25 tives and the Secretary of the Senate. 
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1 (3) A final decision in the action shall be re2 viewable only by appeal directly to the Supreme 

3 Court of the United States. Such appeal shall be 

4 taken by the filing of a notice of appeal within 10 

5 days, and the filing of a jurisdictional statement 

6 within 30 days, of the entry of the final decision. 

7 (4) It shall be the duty of the United States 

8 District Court for the District of Columbia and the 

9 Supreme Court of the United States to advance on 

10 the docket and to expedite to the greatest possible 

11 extent the disposition of the action and appeal. 

12 (b) INTERVENTION BY MEMBERS OF CONGRESS.—In 

13 any action in which the constitutionality of any provision 

14 of this Act or any amendment made by this Act is raised 

15 (including but not limited to an action described in sub16 section (a)), any Member of the House of Representatives 

17 (including a Delegate or Resident Commissioner to Con18 gress) or Senate shall have the right to intervene either 

19 in support of or opposition to the position of a party to 

20 the case regarding the constitutionality of the provision 

21 or amendment. To avoid duplication of efforts and reduce 

22 the burdens placed on the parties to the action, the court 

23 in any such action may make such orders as it considers 

24 necessary, including orders to require intervenors taking 
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1 similar positions to file joint papers or to be represented 

2 by a single attorney at oral argument. 

3 (c) CHALLENGE BY MEMBERS OF CONGRESS.—Any 

4 Member of Congress may bring an action, subject to the 

5 special rules described in subsection (a), for declaratory 

6 or injunctive relief to challenge the constitutionality of any 

7 provision of this Act or any amendment made by this Act. 

8 (d) APPLICABILITY.— 

9 (1) INITIAL CLAIMS.—With respect to any ac10 tion initially filed on or before December 31, 2006, 

11 the provisions of subsection (a) shall apply with re12 spect to each action described in such subsection. 

13 (2) SUBSEQUENT ACTIONS.—With respect to 

14 any action initially filed after December 31, 2006, 

15 the provisions of subsection (a) shall not apply to 

16 any action described in such subsection unless the 

17 person filing such action elects such provisions to 

18 apply to the action. 

19 SEC. 6. EFFECTIVE DATE. 

20 The amendments made by this Act shall take effect 

21 on the date which is 60 days after the date of the enact22 ment of this Act. 

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