Federal 

Election 

Commission 

Annual Report 2002 

Federal Election Commission 

Washington, DC 20463 
Federal 

Election 

Commission 

Annual Report 2002 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

Ellen L. Weintraub, Chair 

Bradley A. Smith, Vice Chairman 

David M. Mason, Commissioner 

Danny L. McDonald, Commissioner 

Scott E. Thomas, Commissioner 

Michael E. Toner, Commissioner 

Statutory Officers 

James A. Pehrkon, Staff Director 

Lawrence H. Norton, General Counsel 

Lynne A. McFarland, Inspector General 

The Annual Report is prepared by: 

Gregory J. Scott, Assistant Staff Director, 

Information Division 

George J. Smaragdis, Senior Public Affairs Specialist, 

Information Division 

Amy L. Kort, Ph.D., Senior Technical Writer, 

Information Division 

Paul Clark, Ph.D., Statistician, 

Data Division 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 1, 2003 

The President of the United States 

Members of The United States Senate 

Members of The United States House of Representatives 

Dear Mr. President, Senators and Representatives: 

We are pleased to submit for your information the 28th Annual Report of the Federal 

Election Commission, pursuant to 2 U.S.C. §438(a)(9). The Annual Report 2002 

describes the activities performed by the Commission in the last calendar year. 

Last year was marked by the successful implementation of the Bipartisan Campaign 

Reform Act (BCRA): the Commission completed nine BCRA-related rulemakings 

within the 270-day time period specified by the BCRA. In addition, the Commission 

made permanent its Alternative Dispute Resolution program to ensure the expeditious 

processing of enforcement matters and approved revisions to the National Mail Voter 

Registration form and the Voting System Standards. 

This report also includes the seven legislative recommendations the Commission recently 

adopted and transmitted to the President and the Congress for consideration. The 

Commission has substantially reduced the number of recommendations for legislative 

action, including only high priority recommendations with broad Commission support. 

We hope that Congress will consider adopting these proposals, which we believe would 

bring about some necessary changes in campaign finance law. 

We hope that you will find this annual report to be a useful summary of the 

Commission s efforts to implement the Federal Election Campaign Act. 

Respectfully, 

Ellen L. Weintraub 

Chair 
Table of Contents 

Executive Summary 1 

Chapter One 

Keeping the Public Informed 

Public Disclosure 3 

Educational Outreach 5 

Office of Election Administration 7 

Chapter Two 

Interpreting and Enforcing the Law 

Regulations 9 

Advisory Opinions 10 

Enforcement 11 

Administrative Fine Program 12 

Alternative Dispute Resolution Program 14 

Chapter Three 

Legal Issues 

BCRA Challenges 17 

Soft Money 17 

Electioneering Communications 19 

Coordinated and Independent Expenditures 20 

Contribution Limitations and Prohibitions 22 

Disclaimers 22 

Corporate Contributions 24 

Personal Use of Campaign Funds 27 

Foreign Nationals 29 

Preemption 30 

Administrative Fines 32 

Chapter Four 

Presidential Public Funding 

Shortfall 35 

Entitlement to Pre-General Election

 Presidential Funding 35 

Repayment of Public Funds—2000 Election 36 

Chapter Five 

The Commission 

Commissioners 39 

Inspector General 39 

Equal Employment Opportunity 39 

Ethics 39 

Personnel and Labor/Management Relations 40 

The FEC’s Budget 40 

Chapter Six 

Legislative Recommendations 43 

Chapter Seven 

Campaign Finance Statistics 49

Appendices 

1. Biographies of Commissioners 

and Officers 59 

2. Chronology of Events 63 

3. FEC Organization Chart 65

4. FEC Offices 67

5. Statistics on Commission Operations 71

6. 2002 Federal Register Notices 75

7. Summaries of Selected BCRA-Related

Rulemakings 77 
Table of Charts 

Chapter One 

Keeping the Public Informed 

Chart 1-1: 

Size of Detailed Database by Election Cycle 4 

Chapter Two 

Interpreting and Enforcing the Law 

Chart 2-1: 

Conciliation Agreements by Calendar Year 12 

Chart 2-2: 

Median Civil Penalty by Calendar Year 12 

Chart 2-3: 

Ratio of Active to Inactive Cases by Calendar Year 13 

Chart 2-4: 

Cases Dismissed under EPS 13 

Chart 2-5: 

Average Number of Respondents and 

 Enforcement Cases by Calendar Year 13 

Chapter Five 

The Commission 

Chart 5-1: 

Functional Allocation of Budget 40 

Chart 5-2: 

Divisional Allocation 41 

Chapter Seven 

Campaign Finance Statistics 

Chart 7-1: 

Number of PACs, 1974-2002 49 

Chart 7-2: 

House Candidates’ Sources of Receipts:

 Election Cycle 50 

Chart 7-3: 

Senate Candidates’ Sources of Receipts:

 Election Cycle 51 

Chart 7-4: 

PAC Contributions to Candidates by 

 Party and Type of PAC 52 

Chart 7-5: 

PAC Contributions to House and Senate 

Candidates by Party and Candidate Status 53 

Chart 7-6: 

PAC Contributions to House and Senate 

 Candidates by Type of PAC and

 Candidate Status 54 

Chart 7-7: 

Major Party Federal Account Receipts: 2002 55 

Chart 7-8: 

Party Federal and Nonfederal Receipts 56 

Chart 7-9: 

Sources of Party Receipts 57 
1 Executive Summary 

The Federal Election Commission faced unprecedented challenges during 2002. On March 27 President Bush signed into law the Bipartisan Campaign 

Reform Act of 2002 (BCRA), which required the Commission to promulgate implementing regulations 

within 270 days, and within 90 days for the soft 

money provisions. The Commission met the statutory 

deadlines, completing nine BCRA-related rulemakings 

by December 22, 2002. 

At the same time that the agency worked to implement the new law, it also devoted its efforts to defending the constitutionality of the BCRA. A number of 

lawsuits, consolidated around McConnell v. FEC, that 

challenge provisions of the new law were expected to 

reach the Supreme Court by mid-2003. The Commission is also defending its new regulations in the U.S. 

Court for the District of Columbia, in response to a 

complaint filed by Representatives Christopher Shays 

and Martin Meehan charging that the new rules contravene the language of the BCRA. 

In addition to completing its duties in implementing 

the BCRA, the Commission also monitored the 2002 

election. Although committees generally have less 

financial activity in non-Presidential election cycles 

than during Presidential elections, 2002 proved to be 

an especially active year in many respects. For example, the national party committees raised $1.1 billion for the 2002 cycle, an amount comparable to that 

raised for the 2000 elections and 72 percent greater 

than that raised in the last non-Presidential election. 

The Commission also completed all but one of the 

audits required for the publicly funded Presidential 

primary and general and convention committees for 

the 2000 elections. 

In the area of enforcement, the Commission entered into conciliation agreements requiring the payment of more than $1.3 million in total civil penalties, 

representing a 42 percent increase over 2001 and the 

highest total amount in the last six years. Moreover, 

the median civil penalty for 2002 was the largest median civil penalty in the last 16 years. Additionally, the 

Alternative Dispute Resolution program, which began 

as a Pilot program in 2000, continues to help expedite 

the agency’s processing of compliance matters. In 

September 2002, the Commission voted to establish 

a permanent Alternative Dispute Resolution Office 

and approved a report chronicling the Pilot program’s 

success over the past two years. 

The Commission also made great strides during 

the year to improve its ability to provide campaign 

finance disclosure information to the public. The 

agency has created a new retrieval system that allows 

anyone with access to the FEC’s web site to examine 

all of the FEC’s campaign finance records. The new 

system allows users to perform complex search functions online and save their results. The Commission 

believes that the enhanced abilities of the new data 

retrieval system are a seminal achievement in its mission to make campaign finance information available 

to public. 

Likewise, the Commission’s Office of Election Administration (OEA) completed significant work in 

2002, and the Commission approved its revisions to 

both the National Mail Voter Registration form and the 

2002 Voting Systems Standards (the Standards). 

The Standards are intended to ensure that election 

equipment certified for purchase by participating 

states is accurate, reliable and dependable. In 2002 

OEA was the only federal office directly involved in 

providing assistance to state and local officials who 

administer federal elections. On October 29, 2002, 

Congress passed the Help America Vote Act, which 

provides, among other things, for a new agency to 

assist in the administration of federal elections. All of 

the duties, liabilities, assets and personnel of the 

FEC’s OEA will be transferred to this new agency 

upon the appointment of its Commissioners. The 

FEC and OEA believe that the 2002 Standards will 

serve as a necessary policy directive until this new 

federal law is implemented. To this end, the Commission additionally approved an Implementation Plan for 

the 2002 Standards. 

The material that follows details the Commission’s 

2002 activities. Additional information on most materials can be found in the 2002 issues of the FEC newsletter, the Record. 
3 

Chapter One 

Keeping the Public Informed 

The FEC’s public disclosure and educational outreach programs work together to educate the electorate about the various aspects of the campaign finance 

law. The financial reports of all federal political committees are accessible to members of the general 

public, which provides an incentive for the regulated 

community to comply with the law. Educational outreach helps committees achieve compliance by providing the information necessary to understand the 

requirements of the law. 

As detailed below, new regulations and other 

changes went into effect during the year that will lead 

to further enhancement of the disclosure and educational outreach programs. 

Public Disclosure 

During 2002, the disclosure of the sources and 

amounts of funds spent on federal campaign activity 

continued to be the centerpiece of the Commission’s 

work. The Commission received the reports filed by 

committees, reviewed them to ensure compliance 

with the law, entered the data into the FEC’s computer database and made the reports available to the 

public within 48 hours of receipt. 

Continued advances in computer technology 

greatly enhanced the disclosure process in 2002. 

Moreover, the Commission acted during the year to 

aid filers in complying with new disclosure requirements mandated under the Bipartisan Campaign Reform Act of 2002 (BCRA). As detailed below, these 

changes benefit both the public and the regulated 

community. 

Policy Statement on Interim Reporting Procedures 

In November 2002, the Commission issued a policy 

statement to help the regulated community comply 

with the new reporting requirements of the BCRA 

while regulations and forms and instructions to implement those reporting requirements were completed. 

Congress set a 270-day period for the completion of 

most BCRA rulemakings, including those regarding 

most reporting requirements. This deadline fell on 

December 22, 2002. However, many of the BCRA’s 

statutory reporting requirements became effective on 

November 6, 2002, before the rulemakings and forms 

development could be completed. 

The Commission issued the policy statement to 

provide filers with interim reporting instructions. Using 

these instructions, filers could comply with the postBCRA reporting requirements while continuing to use 

the existing disclosure forms and software until the 

new reporting regulations and forms became available. The interim reporting instructions applied to the 

December 5th Post General Election Report, the January 31st Year End Report and, for monthly filers only, 

the February Monthly Report. New or revised reporting responsibilities introduced by the BCRA and addressed in the Policy Statement included: 

• The reporting by state, district and local party committees of federal election activities, including the 

allocation of some of those activities between federal 

funds and “Levin” funds; 

• Allocations of payments between federal and 

nonfederal funds; and 

• Disclosure by federal candidates and their committees with respect to a candidate’s funding of his or 

her own campaign under the BCRA’s “Millionaires’ 

Amendment.” 

In the Policy Statement, the Commission additionally expressed its intention to exercise its discretion 

by not pursuing the filers addressed in the statement 

for possible reporting violations so long as the filers 

fully adhered to those instructions and timely filed the 

reports. 

Electronic filing 

The Commission’s mandatory electronic filing program continued to pay disclosure dividends in 2002. 

Under the program, committees that receive contributions or make expenditures in excess of $50,000 in a 

calendar year, or expect to do so, must file their campaign finance reports electronically.1 Committees that 

are required to file electronically but instead file on 

paper are considered nonfilers and could be subject 

to enforcement actions. In order to file electronically, 

committee treasurers obtain passwords from the FEC 

1 The mandatory electronic filing rules do not apply to 

Senate committees. 
4 Chapter One 

and use software to fill out the reports, which they can 

send to the Commission via Internet connection, modem or floppy disk. The FEC’s validation system 

verifies that the reports meet certain criteria and informs the committees of problems that need to be 

fixed. 

State Filing Waivers 

The Commission’s State Filing Waiver Program 

continued to ease the reporting and recordkeeping 

burdens for political committees and state election 

offices. The program, which began in October 1999, 

expanded in 2002 to include Alaska, Iowa and Massachusetts. Fifty-one states/territories have now qualified for the waiver.2 Under the program, filers whose 

reports are available on the FEC web site need not 

file duplicate copies of their reports in states that provide adequate public access to the Commission’s site. 

Imaging and Processing of Data 

The Commission also continued its work in 2002 to 

make the reports it receives quickly and easily available to the public. The Commission scans all of the 

reports filed with the agency to create digital images 

of the documents, which are then accessible to the 

public in the FEC’s Public Disclosure Office or on the 

Commission’s web site. In addition to the digital imaging system, the Commission codes and enters information taken from campaign finance reports into 

the agency’s disclosure database, which contains 

2

 As of December 31, 2002, the Commission had certified that the following states and territories qualify for filing 

waivers: 

Alabama, Alaska, American Samoa, Arizona, Arkansas, 

California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, 

Louisiana, Maine, Massachusetts, Maryland, Michigan, 

Minnesota, Mississippi, Missouri, Nebraska, Nevada, New 

Hampshire, New Jersey, New Mexico, New York, North 

Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Virgin Islands, 

Washington, West Virginia, Wisconsin and Wyoming. 

Guam, Montana and Puerto Rico are not currently in the 

State Filing Waiver Program. 

data from 1977 to the present. Information is coded 

so that committees are identified consistently throughout the database. 

CHART 1-1 

Size of Detailed Database by Election Cycle 

Year Number of Detailed Entries* 

1990 767,000 

1991 444,000† 

1992 1,400,000 

1993 472,000 

1994 1,364,000 

1995 570,000 

1996 1,887,160 

1997 619,170 

1998 1,652,904 

1999 840,241 

2000 2,390,837 

2001 661,591 

2002 13,888,456‡ 

* Figures for even-numbered years reflect the cumulative 

total for each two-year election cycle. 

†

 The FEC began entering nonfederal account data in 1991. 

‡

 The FEC began entering transactions of amounts less 

than $200 in 2002. 

Public access to data 

During the year the Commission completed one of 

the most significant improvements to its disclosure 

system in the history of the agency. 

In 2002, as part of its information technology upgrade, the Commission modernized its hardware, 

software and communications infrastructure to create 

a new retrieval system that allows anyone with access 

to the FEC’s web site—www.fec.gov—to access all of 

the FEC’s campaign finance records. By allowing 

users to login with a personal account on the FEC’s 

web site, this new system, which debuted in December 2002, allows users to sort, filter, export and save 

the results of their campaign finance searches. The 
Keeping the Public Informed 5 

new system also allows users to perform complex 

search functions previously unavailable on the FEC’s 

web site or in its Office of Public Disclosure. 

The Commission’s disclosure database, which 

contains millions of transactions, enables researchers 

to select information in a flexible way. For example, 

the database can instantly produce a profile of a 

committee’s financial activity for each election cycle. 

Researchers can also customize their searches for 

information on contributions by using a variety of elements (e.g., donor’s name, recipient’s name, date, 

amount or geographic location). 

Visitors to the Office of Public Disclosure can use 

computer terminals to inspect digital images of reports 

and to access the disclosure database and more than 

25 different campaign finance indices that organize 

the data in different ways. Visitors can also access 

the FEC’s web site, which offers search and retrieval 

of more than 3 million images of report pages dating 

back to 1993 and over 2 million database entries 

since 1997. Those outside Washington, DC, can 

access the information via the Internet or the Direct 

Access Program, or order it using the Commission’s 

toll-free number. 

The Office of Public Disclosure continued to make 

available microfilmed copies of all campaign finance 

reports, paper copies of reports from Congressional 

candidates and Commission documents, such as 

press releases, audit reports, closed enforcement 

cases (MURs) and agenda documents.3 

Review of reports 

The Commission’s Reports Analysis Division 

(RAD) reviews all reports to track compliance with the 

law and to ensure that the public record provides a full 

and accurate portrayal of campaign finance activity. 

When Campaign Finance Analysts, formerly known 

as Reports Analysts, find that a report contains errors 

or suggests violations of the law, they send the reporting committee a Request for Additional Information 

(RFAI). The committee treasurer can then make additions or corrections to the report, which are then 

added to the public record. Apparent violations, however, may be referred to the Audit Division or to the 

Office of General Counsel for possible enforcement 

action. 

Recently, RAD has introduced a number of innovations to help its Campaign Finance Analysts address 

an increasing number of campaign finance transactions. In May 2002, RAD contracted with ICF Consulting to assess efficiencies in its operations and to suggest changes that would heighten efficiency. Additionally, RAD’s mentoring program, in which new 

Campaign Finance Analysts are mentored by more 

senior personnel, has proved very effective in allowing RAD to fulfill its functions with greater success. 

Finally, RAD continues to work closely with the Office 

of Administrative Review to streamline the compliance 

process for administrative fines. 

Educational Outreach 

Throughout the year, the Commission continued to 

promote voluntary compliance with the law by educating committees about the law’s requirements. 

Home Page (www.fec.gov) 

In its sixth year of operation, the Commission’s web 

site offers visitors a variety of resources. Visitors can 

search for advisory opinions (AOs) on the web by 

using words or phrases or by entering the year and 

AO number, and can access a variety of rulemaking 

documents, including Notices of Proposed 

Rulemaking and final rules. Visitors can also access 

brochures on a variety of topics, read agency news 

releases, review national election results and voter 

registration and turnout statistics, look up reporting 

dates and download the national mail voter registration form, FEC registration and reporting forms, copies of the Record newsletter, the Campaign Guides 

for PACs, parties and candidates and other agency 

publications. In September 2002, the Commission 

added a new section to the web site devoted to the 

BCRA. The new section provided links to the Federal 

3 In AFL-CIO v. FEC, the U.S. District Court for the District of Columbia found that the FEC’s practice at the end of 

an investigation of disclosing documents obtained during an 

investigation violated the confidentiality provisions of the 

Act. The Commission filed an appeal on February 15, 2002. 
6 Chapter One 

Election Campaign Act as amended by the BCRA, 

summaries of major BCRA-related lawsuits and continuously updated information on new Commission 

regulations, including final rules and the 

Commission’s rulemakings calendar. The web site 

averaged nearly 4.7 million hits per month and logged 

a high of over 7.5 million hits in October 2002. The 

average daily hits also peaked in October, at over 

243,000. 

Telephone Assistance 

A committee’s first contact with the Commission is 

often a telephone call to the agency’s toll-free information hotline. In answering questions about the law, 

staff research relevant advisory opinions and litigation, as needed. Callers receive, at no charge, FEC 

documents, publications and forms. In 2002, the Information Division responded to 19,858 callers with 

compliance questions. The monthly average was 

1,665 calls, with a peak of 2,448 in October. 

Faxline 

The Commission’s automated Faxline allows the 

public to obtain publications or other documents 

quickly and easily. During the year, 553 callers 

sought information from the 24-hour Faxline and received 776 documents. 

Reporting Assistance 

During 2002, Campaign Finance Analysts, assigned to review committee reports, were also available to answer complex reporting and compliancerelated questions from committees calling on the tollfree line. 

The Commission continued to encourage timely 

compliance with the law by mailing committees reminders of upcoming reporting deadlines three weeks 

before the due dates. The Record, the Commission’s 

newsletter, and the FEC’s web site also listed reporting schedules and requirements. 

Roundtables 

As part of its education outreach activities, the FEC 

holds roundtable sessions for the regulated community. In 2002 the FEC increased the maximum number of participants for its roundtables from 12 to 35 

participants per session, so that members of the regulated community could learn about the Commission’s 

new soft money and electioneering communications 

regulations.4 

Conferences 

Also during 2002, the agency conducted a full program of conferences to help candidates and committees understand and comply with the law. In Washington, DC, the Commission hosted four conferences 

for candidates, parties, corporations, trade associations, membership organizations and labor organizations. In addition, the agency held a regional conference in San Francisco for all types of committees. 

The conferences featured hands-on workshops on 

the fundamental areas of the law and specialized 

sessions on the Commission’s electronic filing program and on changes to the federal campaign finance 

law. 

Tours and Visits 

In addition to holding conferences and roundtable 

sessions, the Commission welcomes individuals and 

groups who visit the FEC. Visitors to the FEC during 

2002, including 37 student groups and foreign delegations, listened to presentations about the campaign 

finance law and, in some cases, toured the agency’s 

Office of Public Disclosure. 

Media Assistance 

The Commission’s Press Office continued to field 

questions from the press and navigate reporters 

through the FEC’s vast pool of information. Press 

Office staff responded to 9,823 calls and visits from 

media representatives and prepared 135 news releases. Many of these releases alerted reporters to 

new campaign finance data and illustrated the statistics in tables and graphs. 

4

 Additional roundtables on other BCRA topics were held 

in early 2003. 
Keeping the Public Informed 7 

Publications 

During 2002, the Commission published several 

documents to help committees, the press and the 

general public understand the law and find information about campaign finance. Specifically, the Commission published a new Campaign Guide for Congressional Candidates and Committees and a new 

Campaign Guide for Nonconnected Committees. 

Given that the guides will be revised again in 2003 in 

order to incorporate changes made by the BCRA, the 

Commission chose to conserve its resources by publishing them only on the Commission’s web site. 

However, paper copies were made available to any 

individual upon request. 

Also during the year, the Commission published 

the eighteenth edition of Selected Court Case Abstracts (CCA). The CCA is a collection of summaries 

of court cases from 1976 to March 2002 pertinent to 

the Federal Election Campaign Act. Most of the summaries originally appeared in the FEC’s monthly 

newsletter, the Record. As in past years, the Commission continued to provide more than 10,000 free 

subscriptions to the Record. The newsletter summarizes recent advisory opinions, compliance cases, 

audits, litigation and changes in regulations. It also 

includes graphs and charts on campaign finance statistics. 

In addition, the FEC provided the public with the 

Combined Federal/State Disclosure Directory 2002, 

which directs researchers to federal and state offices 

that provide information on campaign finance, candidates’ personal finances, lobbying, corporate registration, election administration and election results. The 

disclosure directory was available not only in print and 

on the web, but also on computer disks formatted for 

popular hardware and software. The web page version of the Disclosure Directory includes hyperlinks to 

the web pages of state offices and e-mail addresses 

for state officials. 

Office of Election Administration 

The Commission’s Office of Election Administration 

(OEA) completed a number of significant projects in 

2002. 

On July 12, the Commission approved revisions to 

the national voter registration form’s categories for 

allowing applicants to identify their race and ethnicity. 

The new categories more closely match those used 

by other federal agencies, including the U.S. Bureau 

of Census, and comply with standards set for federal 

programs by the Office of Management and Budget. 

At the same time, the OEA announced changes to the 

state-specific information in the national voter registration forms. These changes comply with revisions 

made to state law since the forms were last revised in 

August 2000. One significant change permits individuals in most states to register by downloading the 

registration form from the FEC web site and sending it 

to their state elections officer.5 

Also during the year, the Commission unanimously 

approved the 2002 Voting Systems Standards for 

release and publication. The Standards are intended 

to ensure that election equipment certified for purchase by participating states will be accurate, reliable 

and dependable. Although the Standards are voluntary, 38 states have chosen to adopt them either in 

whole or in part and currently use them to design 

systems and procure equipment to meet the needs of 

a variety of voting populations and election formats. 

The Commission additionally approved an Implementation Plan for the Standards that provides guidance 

to assist states, voting system vendors and local jurisdictions in the transition from the 1990 Voting Systems Standards to the 2002 Standards. 

The OEA also devoted efforts to preparing for significant changes that will result from legislation 

passed during the year. On October 29, 2002, Congress passed the Help America Vote Act to improve 

election administration in federal elections. PL 107-

252. The Help America Vote Act includes provisions 

that establish: 

5

 Residents of Illinois, Massachusetts, Missouri, New 

Mexico, South Carolina and Ohio must obtain a hard copy 

of the form from their state elections officer in order to register. Additionally, although Wisconsin is exempt from the 

provisions of the National Voter Registration Act, it now 

accepts the national form. 
8 Chapter One 

• A funding program to replace punch card voting 

systems; 

• Minimum election administration standards for states 

and local entities responsible for the administration 

of federal elections; and 

• A new agency—the Election Assistance Commission—to assist in the administration of federal elections. 

Although the Help America Vote Act of 2002 will 

affect the long-term implementation of the Standards, 

it is unclear when and how these changes will take 

effect. The 2002 Standards will serve as a necessary 

policy directive until the new federal law is implemented. 
9 

Chapter Two 

Interpreting and 

Enforcing the Law 

As part of its mission to administer, interpret and 

enforce the Federal Election Campaign Act, the Commission promulgates regulations and issues advisory 

opinions to promote compliance with the law. The 

regulations explain the law in detail, and implement 

the statutory requirements legislated by Congress. 

Advisory opinions, in turn, clarify how the statute and 

regulations apply to real-life situations. 

The agency’s enforcement actions also promote 

compliance by correcting past violations and demonstrating to the regulated community that violations can 

result in civil penalties and remedial action. 

Regulations 

Rulemakings are initiated when Congressional 

action, judicial decisions, petitions for rulemaking or 

other changes in the law or campaign practices make 

it necessary to update the current rules or create new 

ones. 

Proposed rules are published in the Federal Register, and the Commission seeks public comment on 

them. The agency may also invite those making written comments to testify at a public hearing. The 

Commission considers the comments and testimony 

when deliberating on the final rules in open meetings. 

Once approved, the text of the final regulations and 

the accompanying Explanation and Justification are 

published in the Federal Register and sent to the U.S. 

House of Representatives and Senate. The Commission announces the effective date, which is at least 30 

days after the publication of the final rules in the Federal Register, in the Explanation and Justification of 

the final rules. 

Rulemakings Completed in 2002 

The Commission completed an historic set of 

rulemakings in 2002, when in addition to completing 

other rulemaking projects, it met the deadlines imposed by Congress for promulgating regulations to 

implement the BCRA. The BCRA required the Commission to issue its “soft money” regulations within 90 

days of the statute’s enactment, with the remainder of 

the implementing regulations to be completed within 

270 days. 

Specifically, the Commission completed work on 

the following new rules during 2002: 

• Independent expenditure reporting regulations that 

clarified when and how independent expenditures 

must be reported took effect on June 13, 2002. 

• Brokerage loans and lines of credit regulations that 

outlined the circumstances in which brokerage loans 

and lines of credit available to a candidate could be 

used to help finance his or her campaign without 

being considered a contribution took effect on December 31, 2002. 

• A reorganization of the regulations on “contributions” 

and “expenditures” that clarifies the codification of 

these rules took effect on November 6, 2002. 

• Nonfederal funds or “soft money” regulations that 

prohibit national parties from receiving and spending 

soft money, restrict federal candidates’ and officeholders’ raising of soft money and control how state 

and local party committees must and may pay for 

newly defined “federal election activities” took effect 

on November 6, 2002, and January 1, 2003. 

• Regulations defining electioneering communications 

and setting forth the conditions under which persons 

may make them took effect on November 22, 2002. 

• Regulations providing a mechanism by which persons making electioneering communications can 

establish whether their communication can be received by 50,000 or more persons in given area took 

effect on November 22, 2002. 

• Contribution limits and prohibitions regulations that 

increase the individual contribution limits, strengthen 

the foreign national ban and prohibit minors from 

making contributions to candidates and parties took 

effect on January 1 and 13, 2003. 

• BCRA-related regulations addressing disclaimers, 

fraudulent solicitation, civil penalties and personal 

use of campaign funds took effect on January 13, 

2003. 

• Regulations that set forth the new reporting requirements under the BCRA took effect on February 3, 

2003. 

• Coordinated and independent expenditure regulations that determine whether an expenditure is coordinated or independent and that implement new 

restrictions on expenditures by political party com-
10 Chapter Two 

mittees that are made relative to candidates took 

effect on February 3, 2003. 

• BCRA technical amendments regulations that conform citations took effect on December 26, 2002. 

• Regulations that implement the BCRA’s “Millionaires’ 

Amendment,” allowing increased contribution limits 

and other compensating advantages for certain candidates facing wealthy, self-financing opponents, 

took effect on February 26, 2003. 

Other Rulemakings in Progress 

In addition to completing the above rules, the Commission took the following regulatory actions: 

• It approved a Notice of Proposed Rulemaking seeking comments on proposed rules to address when 

and under what circumstances so-called “leadership 

PACs” are affiliated with the authorized committees 

of federal candidates or officeholders and the ramifications of any such affiliation. 

• It approved a Notice of Proposed Rulemaking seeking comments on proposed changes to the administrative fines regulations, including proposals to decrease civil money penalties. 

• It determined that no increases needed to be made 

at this time under the Inflation Adjustment Act to the 

maximum civil penalties that could be assessed for 

violations of the Federal Election Campaign Act. 

• It adopted an interpretive rule to clarify that the travel 

allocation and reporting requirements of 11 CFR 

106.3(b) do not apply to the extent that a candidate 

pays for certain travel expenses using funds authorized and appropriated by the federal government. 

• It held a public hearing concerning the use of the 

Internet for campaign purposes. 

• It published a petition for rulemaking on candidate 

debates, and determined that a rulemaking on this 

issue was not appropriate at this time. 

Advisory Opinions 

The Commission responds to questions about how 

the law applies to specific situations by issuing advisory opinions. When the Commission receives a valid 

request for an advisory opinion, it generally has 60 

days to respond. If, however, a candidate’s campaign 

submits a valid request within 60 days before an election, and the request directly relates to that election, 

the Commission must respond within 20 days. The 

Office of General Counsel prepares a draft opinion, 

which the Commissioners discuss and vote upon 

during an open meeting. A draft opinion must receive 

at least four favorable votes to be approved. 

The Commission issued the following 15 advisory 

opinions in 2002: 

• AO 2001-17: Disclosing the receipt of contributions 

made via a single check that are split between federal and nonfederal accounts (DNC Services Corporation/Democratic National Committee; issued January 30, 2002). 

• AO 2001-18: Affiliation between the PAC of a joint 

venture and the SSFs of its corporate owners 

(BellSouth Corporation; issued January 22, 2002). 

• AO 2001-19: No federal preemption of a state law 

that prohibits the use of bingo as a fundraising device for a local party committee (Oakland Democratic Campaign Committee; issued January 10, 

2002). 

• AO 2002-1: No Presidential public funding for a coalition of minor parties supporting candidate(s) who 

together gain five percent of the vote (Lenora B. 

Fulani and James Mangia, et al.; issued March 6, 

2002). 

• AO 2002-2: Preemption of state law barring a lobbyist from fundraising for a Congressional candidate 

who is a member of the Maryland General Assembly 

(Eric Gally; issued March 6, 2002). 

• AO 2002-3: Qualification as a state committee of a 

political party (Green Party of Ohio; issued April 11, 

2002). 

• AO 2002-4: Official name and abbreviated name of 

SSF (Austin, Nichols & Co./Pernod Ricard USA; 

issued April 25, 2002). 

• AO 2002-5: Use of campaign funds to pay for travel, 

including campaign, local officeholder and personal 

activities, of a federal candidate who is a local officeholder (Mayor Ann Hutchinson; issued May 10, 

2002). 

• AO 2002-6: Qualification as a state committee of a 

political party (Green Party of California; May 16, 

2002). 
Interpreting and Enforcing the Law 11 

• AO 2002-7: Political fundraising services provided 

by an Internet Service Provider (Careau & Co. and 

Mohre Communications; issued October 10, 2002). 

• AO 2002-8: Return of funds transferred from a 

candidate’s federal campaign committee to his state 

exploratory committee (David Vitter for Congress; 

issued August 1, 2002). 

• AO 2002-9: Disclaimer requirements for express 

advocacy communications printed as text messages 

on cell phone screens (Target Wireless; issued August 23, 2002). 

• AO 2002-10: Qualification as state committee of a 

political party (Green Party of Michigan; issued August 1, 2002). 

• AO 2002-11: Non-affiliation of national and state 

trade associations (Mortgage Bankers Association 

of America; issued October 10, 2002). 

• AO 2002-12: Disaffiliation of SSFs of health insurance companies (American Medial Security, Inc.; 

issued December 10, 2002). 

Some of these advisory opinions are discussed in 

greater detail in Chapter 3 “Legal Issues.” 

Enforcement 

The Enforcement Process 

The Commission learns of possible election law 

violations in three ways. The first is the agency’s 

monitoring process—potential violations are discovered through a review of a committee’s reports or 

through a Commission audit. The second is the complaint process—anyone may file a sworn complaint, 

which alleges violations and explains the basis for the 

allegations. The third is the referral process—possible violations discovered by other agencies are 

referred to the Commission. 

Each of these can lead to a Matter Under Review 

(MUR). Internally generated cases include those 

discovered through audits and reviews of reports and 

those referred to the Commission by other government agencies. Externally generated cases spurred 

by a formal, written complaint receive a MUR number 

once the Office of General Counsel (OGC) determines that the document satisfies specific criteria for 

a proper complaint. 

The General Counsel recommends whether the 

Commission should find “reason to believe” and open 

an investigation. If the Commission finds there is 

“reason to believe” the respondents have committed a 

violation, it notifies the respondents and begins to 

investigate the matter. The Commission has authority 

to subpoena information and can ask a federal court 

to enforce a subpoena. At the end of an investigation, 

the General Counsel prepares a brief, which states 

the issues involved and recommends whether the 

Commission should find “probable cause to believe” a 

violation has occurred. Respondents may file briefs 

supporting their positions. 

If the Commission finds “probable cause to believe” 

the respondents violated the law, the agency attempts 

to resolve the matter by entering into a conciliation 

agreement with them. (Some MURs, however, are 

conciliated before the “probable cause” stage.) If 

conciliation attempts fail, the agency may file suit in 

district court. A MUR remains confidential until the 

Commission closes the case with respect to all respondents in the matter and releases the information 

to the public. 

In AFL-CIO v. FEC, the U.S. District Court for the 

District of Columbia found that the FEC’s practice at 

the end of an investigation of disclosing documents 

obtained during an investigation violated the confidentiality provision of the Act. On February 15, 2002, the 

Commission appealed this case to the U.S. Court of 

Appeals for the District of Columbia Circuit. 

Enforcement Initiatives 

During 2002, the Commission continued to use a 

prioritization system to focus its limited resources on 

more significant enforcement cases. 

Now in its tenth year of operation, the Enforcement 

Priority System (EPS) has helped the Commission 

manage a heavy caseload involving thousands of 

respondents and complex financial transactions. The 

Commission instituted the system after recognizing 

that the agency did not have sufficient resources to 

pursue all of the enforcement matters that came before it. Under the system, the agency uses formal 

criteria to decide which cases to pursue. These crite-
12 Chapter Two 

ria include the intrinsic seriousness of the alleged 

violation, the apparent impact the alleged violation 

had on the electoral process, the topicality of the 

activity and the development of the law and the subject matter. The Commission continually reviews the 

EPS to ensure that the agency uses its limited resources to its best advantage. 

Among the cases concluded in 2002, two enforcement actions resulted in the highest and third highest 

civil penalties in the Commission’s history, MUR 

4530 and MUR 5187. These MURs, involving contributions by foreign nationals and the corporate reimbursement of contributions, respectively, resulted in 

almost $1.2 million in civil penalties. These and 

other MURs are further discussed in Chapter 3 “Legal Issues.” 

Administrative Fine Program 

During 2002, the Administrative Fine program 

proved to be a fundamental part of the Commission’s 

effort to promote timely compliance with the law’s 

reporting deadlines. The program began in July 2000 

and was originally mandated to last only through December 31, 2001. However, as part of the FY 2002 

appropriations process, Congress extended it to cover 

reporting periods through December 31, 2003. The 

program allows the Commission to assess civil money 

penalties for violations involving: 

• Failure to file reports on time; 

• Failure to file reports at all; and 

• Failure to file 48-hour notices. 

CHART 2-1 

Conciliation Agreements 

by Calendar Year 

Number of Agreements 

Total Civil Penalty Amount 

Number Thousands of Dollars 

120 2000 

100 

1500 

80 

60 1000 

40 

500 

20 

0 0 93 94 95 96 97 98 99 00 01 02 

CHART 2-2 

Median Civil Penalty 

by Calendar Year 

Dollars 

12000 

10000 

8000 

6000 

4000 

2000 

93 94 95 96 97 98 99 00 01 02 
Interpreting and Enforcing the Law 13 

CHART 2-3 

Ratio of Active to Inactive Cases by Calendar Year 

Active Cases 

Inactive Cases 

1998 1999 2000 2001 2002 

(189 Cases) (193 Cases) (207 Cases) (197 Cases) (166 Cases) 

CHART 2-4 

Cases Dismissed Under EPS 

100 

80 

60 

40 

20 

0 

Stale Cases 

Low-Rated Cases 

1998 1999 2000 2001 2002 

CHART 2-5 

Average Number of Respondents and 

Enforcement Cases by Calendar Year 

Respondents 

Cases 

3000 

2500 

2000 

1500 

1000 

500 

0 

1998 1999 2000 2001 2002 
14 Chapter Two 

How the Program Works 

In the past, the FEC handled reporting violations 

under its regular enforcement procedures, as described above. The Administrative Fine program 

streamlines the process for these violations. 

All administrative fine actions are initiated in the 

Reports Analysis Division (RAD). RAD monitors all 

committees for possible filing violations and recommends to the Commission those committees that 

appear to be in violation. If the Commission finds 

“reason to believe” (RTB) that a committee violated 

the applicable reporting provisions, RAD provides a 

written notification to the committee and its treasurer 

containing the factual and legal basis of its finding and 

the amount of the proposed civil money penalty. The 

respondents have 40 days from the date of the RTB 

finding to either pay the civil money penalty or submit 

to the Office of Administrative Review a written response, with supporting documentation, outlining why 

it believes the Commission’s fine and/or penalty is in 

error. If the committee submits a response to the 

Office of Administrative Review, RAD forwards its 

information to that office for consideration by an impartial Reviewing Officer who was not involved in the 

original RTB recommendation. 

After reviewing the Commission’s RTB finding and 

the respondent’s written response, the reviewing officer forwards a recommendation to the Commission 

along with all documentation. Respondents have an 

opportunity to respond in writing to the reviewing 

officer’s recommendation. The Commission then 

makes a final determination as to whether the respondent violated the law and, if so, assesses a civil 

money penalty based on the appropriate schedule of 

penalties. 

Should a respondent fail to pay the civil money 

penalty or submit a challenge within the original 40 

days, the Commission will issue a final determination 

with an appropriate civil money penalty. The respondent will then have 30 days after receiving the 

Commission’s final determination to pay the penalty 

or seek judicial review. 

When a respondent fails either to pay the civil 

money penalty or to seek judicial review after the 

Commission makes a final determination, the Commission may transfer the case to the U.S. Department 

of Treasury for collection. Alternatively, the Commission may decide to file suit in the appropriate U.S. 

district court to collect owed civil money penalties 

under 2 U.S.C. §437g(a)(6). 

Calculating Penalties 

Under the program, respondents may face administrative penalties that vary depending on the interaction of several factors: 

• Election sensitivity of the report; 

• Whether the committee is a late filer (and the number of days late) or a nonfiler;1 

• The amount of financial activity in the report; and 

• Prior civil money penalties for reporting violations. 

Administrative Fines in 2002 

During 2002, the Commission processed 183 

cases and collected a total of $289,035 in fines. 

Overall, the Commission had publicly released a total 

of 483 cases by the end of 2002, with penalties totaling $700,296. 

Also, during the year, a number of court cases 

challenging the Commission’s final administrative fine 

determinations were resolved in the Commission’s 

favor. Three of these cases, Miles for Senate v. FEC, 

Friends for Houghton v. FEC and Jeremiah T. 

Cunningham v. FEC are summarized in Chapter 3 

“Legal Issues.” 

Alternative Dispute Resolution 

Program 

On September 13, 2002, the Commission voted to 

make the ADR Pilot Program a permanent program at 

the FEC. The Program was established in October 

2000 as a pilot to determine the viability of using Alternative Dispute Resolution (ADR) procedures to 

address and resolve violations of campaign finance 

laws. It seeks to expedite the resolution of enforcement matters through expanded use of negotiations 

with respondents. 

1 A committee is a “nonfiler” if it files its report beyond a 

certain deadline or fails to file at all. 
Interpreting and Enforcing the Law 15 

Cases are accepted into the ADR Program after 

review by the Office of General Counsel and the ADR 

Office for suitability. Cases are excluded from ADR 

consideration if the matter: 

• Raises issues requiring a definitive resolution for 

precedential value; 

• Raises issues that bear on Government policy; 

• May have an impact on other persons or organizations that are not parties to the proceeding; and 

• Would benefit from a full public record of the proceeding. 

Other internal factors are important in determining 

a case’s appropriateness for ADR and are addressed 

on a case-by-case basis. 

Negotiations in the ADR Program are oriented 

toward reaching an expeditious resolution through a 

mutually agreeable settlement that promotes compliance with the Act and the FEC’s regulations. Mediation to resolve a negotiation impasse is available by 

mutual agreement between the respondent(s) and the 

Commission’s representative. Resolutions reached 

through direct and, when necessary, mediated negotiations are submitted to the Commission for final 

approval. None of the cases handled by the ADR 

office have yet required mediation, although the Office 

is committed to calling on the cadre of FEC-designated Mediators when the need arises. 

The ADR Program was evaluated this past summer 

by a national conflict management and resolution firm 

that provided the Commission with an independent 

review of the Program. The evaluation team interviewed respondents and members of the election bar 

and also sought comment from complainants. The 

team concluded, based on comments from 

interviewees, that the Pilot Program had achieved its 

stated goals. The study found that 90 percent of the 

interviewed respondents believed they saved time 

and money using the Program and that, based on 

their initial experience with the program, they would 

be more likely to request or choose to use the process in the future. The evaluation also concluded that 

the Program saved respondents legal fees and enabled the Commission to increase significantly the 

number of cases processed. 

Since the inception of the Program, the Office has 

processed 107 cases, of which 65 percent were accepted into ADR. The other 35 percent of cases were 

either determined to be inappropriate for ADR or involved respondents who rejected the ADR option. 

Seventy-seven percent of this total caseload arose 

from complaints filed with the Commission. The balance of the cases originated as referrals from the 

Reports Analysis or Audit Divisions or from sua 

sponte submissions. Cases not entered in the ADR 

Program were returned to OGC for processing. By 

the end of 2002, the 56 cases assigned to ADR during the Program’s tenure had produced 69 separate 

negotiated agreements based on 47 cases—of that 

total all, except four, were approved by the Commission. A number of cases had multiple parties, which 

led to multiple agreements. The remaining 9 assigned cases were in various stages of negotiations at 

the close of the year. 

The Office concluded the cases in an average of 

110 days from the time the case was assigned to 

ADR until the agreement was reviewed and/or approved by the Commission. The Office, however, 

aims to further expedite the process in order to meet 

its goal of resolving cases, in the negotiation portion 

of the process, within 77 days. 
17 

Chapter Three 

Legal Issues 

As the independent regulatory agency responsible 

for interpreting, administering and enforcing the Federal Election Campaign Act (the Act), the Federal 

Election Commission promulgates regulations implementing the Act’s requirements and issues advisory 

opinions that apply the law to specific situations. The 

Commission also has jurisdiction over the civil enforcement of the Act. In 2002, the majority of the 

legal issues facing the Commission related to the 

implementation of the Bipartisan Campaign Reform 

Act of 2002 (BCRA). This chapter examines major 

legal issues confronting the Commission during 2002 

as it considered regulations, advisory opinions, litigation and enforcement actions. Full summaries of 

BCRA rulemakings appear in Appendix 7. 

BCRA Challenges 

McConnell v. FEC 

On March 27, 2002, the day President Bush signed 

the BCRA into law, Senator Mitch McConnell and the 

National Rifle Association (NRA) each filed a complaint against the Commission with the U.S. District 

Court for the District of Columbia, challenging the 

constitutionality of several provisions of the BCRA. In 

April and early May, nine other lawsuits were filed 

challenging the BCRA. The court consolidated these 

eleven BCRA cases around McConnell v. FEC, and a 

three-judge panel was appointed to hear them. 

On April 3, 2002, Senators John McCain, Russell 

Feingold, Olympia Snowe and James Jeffords and 

Representatives Christopher Shays and Martin 

Meehan (collectively the Reform Act Sponsors) filed 

motions to intervene as defendants. 

Senator McConnell alleges in his complaint that 

aspects of the BCRA violate the First, Fifth and Tenth 

Amendments and the principles of federalism. For 

example, the complaint alleges that the BCRA: 

• Unconstitutionally favors some speakers over others; 

• Unconstitutionally constrains the rights of officeholders and candidates to raise money for tax-exempt 

organizations, political parties and other candidates; 

• Burdens First Amendment associational rights by 

requiring organizations to disclose the identity of 

their supporters to a greater extent than does the 

FECA; and 

• Places unprecedented limits on political parties’ 

ability to make expenditures for political speech. 

The NRA’s complaint alleges similar constitutional 

violations resulting from the BCRA’s limits and prohibitions on electioneering communications. 

The Reform Act Sponsors counter that the BCRA 

“affirmatively promotes and enhances core First 

Amendment values,” and “ensures that candidates, 

parties, and citizens have robust opportunities to exercise their fundamental rights of expression and association.” The court has allowed them to intervene in 

support of the BCRA. 

These cases were pending in the U.S. District 

Court for the District of Columbia at the year’s end.1 

Soft Money 

The BCRA prohibits national party committees, 

without exceptions, and federal candidates and officeholders, with exceptions, from raising funds not subject to the prohibitions, limits and reporting requirements of the Act, i.e. nonfederal funds or “soft 

money.” It additionally addresses fundraising by federal and nonfederal candidates and officeholders on 

behalf of political party committees, other candidates 

and nonprofit organizations. Provisions of the BCRA 

also address the activities of state and local party 

committees, significantly expanding the Act’s treatment of these committees’ activities. For example, 

the rules provide a new definition of “federal election 

activity” and provide for a special category of funds, 

called “Levin funds,” that may be used, usually in 

1 On May 2, 2003, a three-judge panel of the United 

States District Court for the District of Columbia found various provisions of the Bipartisan Campaign Reform Act 

unconstitutional and enjoined the Commission from enforcing these provisions. At this writing, the nearly 1,700-page 

decision, composed of a per curiam decision and three 

separate opinions, concurring and dissenting in pertinent 

parts, has been appealed to the United States Supreme 

Court. For further information on this decision see 

McConnell vs FEC, Civil Action No. 02-582, (D.D.C. May 2, 

2003). 
18 Chapter Three 

allocation with federal funds, by state and local party 

committees for certain federal election activities. The 

BCRA required the Commission to promulgate regulations implementing these provisions by June 25, 

2002. These regulations are briefly summarized below, along with a court challenge to these regulations 

that was filed by two of the BCRA sponsors, Representatives Christopher Shays and Martin Meehan. 

Regulations 

On June 22, 2002, the Commission promulgated 

new and revised rules addressing nonfederal funds or 

“soft money.” The new and revised rules at 11 CFR 

Parts 100, 102, 104, 106, 108, 110, 114, 300 and 

9034 regulate and, in some cases, ban the receipt, 

solicitation and use of nonfederal funds. Specifically, 

these rules: 

• Prohibit national party committees from raising or 

spending nonfederal funds, including funds to purchase or construct a party office facility; 

• Require state, district and local party committees to 

fund certain “federal election activities” with federal 

funds, and, in some cases, allow these committees 

to fund activities with federal funds allocated with 

money raised according to new limitations, prohibitions and reporting requirements (i.e., “Levin funds”) 

or in some limited circumstances solely with Levin 

funds; and 

• Address fundraising by federal and nonfederal candidates and officeholders on behalf of party committees, other candidates and nonprofit organizations. 

The regulations introduce a new category of activities, “federal election activities,” which include: 

• Voter registration activity during the 120 days before 

a regularly scheduled federal election and ending on 

the day of that election; 

• Voter identification, generic campaign activities2

 and 

get-out-the-vote activities that are conducted in connection with an election in which one or more candidates for federal office appear on the ballot (regardless of whether state or local candidates also appear 

refers to a clearlyd that promotes, sup-

 federal candidate (this 

f whether a nonfederal 

r identified in the comwhether the communivote for or against a 

oyee of a state, district 

pends more than 25 

ated time during that 

ion with a federal elecon the ballot); 

• A public communication3

 that 

identified federal candidate an

ports, attacks or opposes any

definition applies regardless o

candidate is also mentioned o

munication and regardless of 

cation expressly advocates a 

federal candidate); and 

• Services provided by an empl

or local party committee who s

percent of his or her compens

month on activities in connect

tion. 

Under the new regulations, state, district and local 

l rule, use federal 

bursements for 

0.32(a)(2). Howre met, they may 

 some limited 

deral election 

e period that be-

 regularly schedhe day of that 

e or generic camparty committees must, as a genera

funds to make expenditures and dis

federal election activity.4

 11 CFR 30

ever, as long as certain conditions a

use Levin funds to pay for part or, in

cases, all of the following types of fe

activity:5 

• Voter registration activity during th

gins 120 days before the date of a

uled federal election and ends on t

election; and 

• Voter identification, get-out-the vot

paign activity conducted in connection with an election in which a federal candidate appears on the 

2

 “Generic campaign activity” means a public communication that promotes or opposes a political party and does 

not promote or oppose a clearly identified federal or 

nonfederal candidate. 11 CFR 100.25. 

3 A “public communication” means any communication by 

means of television (including cable and satellite), radio, 

newspaper, magazine, billboard, mass mailing, telephone 

bank or any other form of general public political advertising. Communications over the Internet are not included in 

the definition of public communication. 11 CFR 100.26. 

4 Additionally, an association or similar group of state or 

local candidates or officeholders must use only federal 

funds to make expenditures or disbursements for federal 

election activity. 11 CFR 300.32(a)(1). 

5 Levin funds may also be used for any purpose that is 

not in connection with a federal election or federal election 

activity as long as this use is lawful in the state in which the 

committee is organized. 11 CFR 300.32(b)(2). 
Legal Issues 19 

ballot (regardless of whether a state or local candidate also appears on the ballot). 

The new rules also address the activities of federal 

and nonfederal candidates and officeholders. For 

example, the regulations include new restrictions on 

general solicitations made by federal candidates and 

officeholders on behalf of nonprofit organizations. 

The new requirements also address federal candidates’ and officeholders’ activities with regard to federal and nonfederal elections. Under the new regulations, federal candidates and officeholders can only 

solicit, receive, direct, transfer, spend or disburse 

federal funds in connection with a federal election or 

to be used for federal election activity. Additionally, 

federal candidates and officeholders can only solicit, 

receive, direct, transfer, spend or disburse funds in 

connection with a nonfederal election in amounts and 

from sources that are both consistent with state law 

and not in excess of the Act’s limits and prohibitions.6 

It is important to note, however, that a federal candidate or officeholder may attend, speak or be a featured guest at a fundraising event for a state, district 

or local party committee, including a fundraising event 

at which nonfederal funds or Levin funds are raised. 

Shays and Meehan v. FEC 

On October 8, 2002, Representatives Christopher 

Shays and Martin Meehan filed a complaint in the 

U.S. District Court for the District of Columbia challenging the Commission’s “soft money” regulations. 

They amended their complaint on January 21, 2003, 

adding challenges to the “coordination” and “electioneering communications” regulations. The complaint 

charges that the FEC regulations “contravene the 

language” of the BCRA and “will frustrate the purpose 

and intent of the BCRA by allowing soft money to 

continue to flow into federal elections and into the 

federal political process.” The plaintiffs ask that the 

court invalidate the FEC regulations on the grounds 

that they are arbitrary and capricious, an abuse of 

discretion, in excess of the FEC’s statutory jurisdiction 

or authority and otherwise not in accordance with law. 

Specifically, the plaintiffs allege, for example, that 

these rules contain amendments that were not made 

available for public comment and that they “undermined the letter and [the] purpose of the BCRA.” The 

plaintiffs contend that these regulations contravene 

the BCRA in terms of the: 

• Creation of so-called “sham party entities”; 

• Definitions of “solicit,” “direct,” “agent” and “federal 

election activity”; 

• Payment of solicitation costs for raising “Levin 

funds”; 

• Treatment of state party office building funds; 

• Exemption for certain charitable corporations; and 

• Description of coordination. 

This cases was pending in the U.S. District Court 

for the District of Columbia at the year’s end. 

Electioneering Communications 

The BCRA amended the Act to address certain 

television and radio ads that refer to a clearly identified federal candidate, but do not necessarily expressly advocate the election or defeat of a federal 

candidate. In the past these ads have commonly been 

referred to as “issue ads,” and often were not subject 

to the Act’s limitations, prohibitions and reporting requirements. However, under the BCRA such communications are considered to be “electioneering communications” when they are distributed to the relevant 

electorate and in proximity to an election. In 2002 the 

Commission promulgated regulations governing the 

making and reporting of electioneering communications.7 

Regulations 

The new rules define an “electioneering communication” as a television or radio communication that 

refers to a clearly identified federal candidate and is 

6 This requirement does not apply to a federal candidate 

or officeholder who is also a candidate for state or local 

office so long as the receipt or spending of funds is permissible under state law and refers only to that state or local 

candidate and/or to any other candidate for that same state 

or local office. 11 CFR 300.63. 

7 See also the discussion of Hawaii Right to Life v. FEC, 

p. 25. 
20 Chapter Three 

publicly distributed for a fee to the relevant electorate 

within 60 days prior to the general election or 30 days 

prior to a primary. To be considered an electioneering communication, the communication must meet 

each of the following conditions:8 

• The communication refers to a clearly identified federal candidate; 

• The communication is publicly distributed for a fee; 

• The communication is distributed during a certain 

time period before an election; and 

• The communication can be received by 50,000 or 

more persons in the relevant Congressional district, 

state or, in the case of a Presidential convention or 

general election, nationwide. 

In implementing the BCRA, the regulations both 

restrict who can pay for electioneering communications and require that the costs of the communications 

be disclosed once they aggregate in excess of 

$10,000, along with other information about the individual or organization who paid for the communication 

and the source of certain funds. Corporations and 

labor organizations may not make or finance electioneering communications and may not provide funds to 

any person if they know that the funds are for the 

purpose of making electioneering communications. 

Individuals and organizations that do make electioneering communications must report their activity to the 

Commission each time that the direct costs for airing 

and producing electioneering communications aggregate in excess of $10,000. 

The Commission also issued interim final rules that 

provide methodologies to determine whether a communication will be capable of being received by 

50,000 or more persons in the relevant jurisdiction. 

Coordinated and Independent 

Expenditures 

The BCRA repealed Commission regulations defining a “coordinated general public political communication” (old 11 CFR 100.23), and instructed the Commission to promulgate new rules on “coordinated 

communications paid for by persons other than candidates, authorized committees of candidates, and 

party committees.” Coordination is important because, in its landmark Buckley v. Valeo decision, the 

Supreme Court ruled that expenditures made in coordination with a campaign are in-kind contributions to 

the campaign. As such, coordinated expenditures are 

subject to the Act’s limits. Independent expenditures, 

on the other hand, are not subject to the contribution 

limits. The new rules, summarized below, also address BCRA-mandated changes to the regulations 

governing coordinated and independent expenditures. 

Regulations 

Commission regulations approved on December 5, 

2002, define “coordinated” to mean “made in cooperation, consultation or concert with, or at the request or 

suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party committee or its agents.”9 The rules focus most closely on 

“coordinated communications,” which are treated as 

an in-kind contribution to the candidate, authorized 

committee or party committee with whom the communication is coordinated, and must be reported as 

such. Apart from communications containing express 

advocacy or the republication of a candidate’s campaign materials, communications that are distributed 

or disseminated prior to 120 days before a primary or 

general election are not subject to the coordination 

regulations. 

8

 However, six types of communications are exempt from 

the definition of “electioneering communication,” including 

communications by 501(c)(3) organizations (which are still 

barred from participating in partisan political activity by the 

Internal Revenue Code) and communications that constitute 

a reported expenditure. The Commission did not specifically 

exempt public service announcements (PSAs). However, 

generally speaking, PSAs can be communications for which 

the broadcaster or satellite or cable systems operator does 

not charge a fee for publicly distributing. See 67 FR 51136. 

If no fee is charged for distribution, the communication 

would not meet the definition of an “electioneering communication.” 

9 For the purposes of 11 CFR part 109 only, “agent” is 

defined at 11 CFR 109.3. 
Legal Issues 21 

The new regulations provide for a three-part test to 

determine whether a communication is coordinated. 

Satisfaction of all of the three specific tests is required 

for the conclusion that payments for the coordinated 

communication are for the purpose of influencing a 

federal election and constitute an in-kind contribution. 

The three parts of the test consider: 

• The source of payment; 

• A “content standard” regarding the timing and subject matter of the communication10; and 

• A “conduct standard” regarding the interactions between the person paying for the communication and 

the candidate or political party committee or their 

agents. 11 CFR 109.21(a).11 

In addition to contributions, national, state and 

subordinate committees of political parties may make 

coordinated expenditures up to prescribed limits in 

connection with the general election campaigns of 

federal candidates without counting such expenditures against the committees’ contribution limits. 2 

U.S.C. §441a(d). These expenditures are commonly 

referred to as “coordinated party expenditures,” and 

the limits for these expenditures can be found in new 

section 11 CFR 109.32.12 Political party committees 

may make coordinated party expenditures in connection with the general election campaign before or after 

the party’s candidate has been nominated. All prenomination coordinated expenditures continue to be 

10 A communication that meets any of these four standards meets the content requirement: (1) A communication 

that is an “electioneering communication”; (2) A public communication that republishes, disseminates or distributes 

candidate campaign materials; (3) A public communication 

that expressly advocates the election or defeat of a clearly 

identified candidate for federal office; (4) A public communication that refers to a clearly identified federal candidate or 

political party, is publicly distributed or disseminated 120 

days or fewer before a primary or general election or a 

convention or caucus with the authority to nominate a candidate and is directed to voters in the jurisdiction of the clearly 

identified candidate or to voters in a jurisdiction where one 

or more candidates of the political party appear on the ballot. 

11 For a further discussion of the conduct standard, see 

Appendix 7, page 95. 

12 These limits were formerly located at 11 CFR 110.7. 

subject to the coordinated party expenditure limitations, whether or not the candidate on whose behalf 

they are made receives the party’s nomination. 11 

CFR 109.34. 

In the BCRA, Congress prohibits political party 

committees, under certain conditions, from making 

both coordinated party expenditures and independent 

expenditures with respect to the same candidate, and 

from making transfers and assignments to other political party committees. 2 U.S.C. §441a(d)(4). For the 

purposes of these restrictions only, all political committees established and maintained by a national 

political party (including all Congressional campaign 

committees), and all political committees established 

and maintained by a state political party (including 

any subordinate committee of a state committee), 

shall be considered to be a single political committee. 

11 CFR 109.35(a). Such a “single” political party 

committee is prohibited from making any post-nomination coordinated party expenditure in connection 

with the general election campaign of a candidate at 

any time after that political party committee makes 

any post-nomination independent expenditure with 

respect to the candidate. 11 CFR 109.35(b)(1). Similarly, such a “single” political party committee is prohibited from making any post-nomination independent 

expenditure with respect to a candidate at any time 

after that political party committee makes a postnomination coordinated expenditure in connection 

with the general election campaign of the candidate. 

11 CFR 109.35(b)(2). 

Finally, the new rules consider independent expenditures by national party committees. Prior to the 

enactment of the BCRA, the Commission’s rules prohibited a national committee of a political party from 

making independent expenditures in connection with 

the general election campaign of a Presidential candidate. See former 11 CFR 110.7(a)(5). Section 

441a(d)(4) added by the BCRA, however, precludes 

such a broad prohibition. As a result, the Commission 

has added a new section that specifically prohibits a 

national committee of a political party from making 

independent expenditures with respect to a Presidential candidate only if it serves as the principal cam-
22 Chapter Three 

paign committee or authorized committee of its Presidential candidate under 11 CFR 9002.1(c). 11 CFR 

109.36. 

Contribution Limitations and 

Prohibitions 

On January 1, 2003, new contribution limits took 

effect under the BCRA. Most of the changes to the 

contribution limits were included in the Commission’s 

final rules on contribution limitations and prohibitions, 

as described below. Regulations included in the 

Commission’s “soft money” rulemaking that increase 

the individual contribution limit to state party committees from $5,000 to $10,000 also took effect with the 

new year. In addition, in 2002, the Commission promulgated regulations to implement the BCRA’s socalled “Millionaires’ Amendment,” which increases the 

contribution limits for certain candidates whose opponent spends large amounts of personal funds on the 

campaign and also, in some cases, suspends the 

limits for coordinated party expenditures made on that 

candidate’s behalf. 

Regulations 

On October 31, 2002, the Commission approved 

final rules to implement provisions of the BCRA that 

increased the following contribution limits and also 

provided for these limits to be indexed for inflation: 

• Contributions to candidates and political party committees. The limits on contributions made by individuals and non-multicandidate committees increased to $2,000 per election to federal candidates 

and to $25,000 per year to national party committees. 

• Aggregate biennial contribution limitations for individuals. The former $25,000 annual limit for individuals has been replaced by a new biennial limit of 

$95,000. This limit includes up to $37,500 in contributions to candidate committees and up to $57,500 

in contributions to any other committees. The 

$57,500 portion of the biennial limit contains a further restriction, in that no more than $37,500 of this 

amount may be given to committees that are not 

national party committees. 

• Special contribution limit to Senate candidates. The 

limit on contributions made to Senate candidates by 

the Republican and Democratic Senatorial campaign 

committees or the national committees of a political 

party, or any combination of these committees, increased to $35,000 per election cycle. 

This rulemaking also included regulations to prohibit contributions and donations by minors to federal 

candidates and political party committees and to revise regulations regarding the reattribution of contributions to different contributors and the redesignation of 

contributions for different elections. 

In December, the Commission approved interim 

final rules to implement the so-called “Millionaires’ 

Amendment,” which increases individual contribution 

limits and coordinated party expenditure limits for 

certain candidates running against self-financed opponents. The rules establish monetary thresholds 

that trigger increased individual contribution and coordinated party expenditure limits, along with computation formulas used to determine the application of the 

increased limits. The computation formulas are necessary in part because the difference between the 

candidates’ expenditures of personal funds is not the 

only factor that determines whether a candidate qualifies for increased limits. The computations also take 

into account other factors, such as a disparity in other 

campaign fundraising. Additionally, the interim rules 

address new reporting and notification requirements 

and repayment restrictions for personal loans from the 

candidate. 

Disclaimers 

Prior to the BCRA, the Act and Commission regulations required that communications that solicited a 

contribution or expressly advocated the election or 

defeat of a clearly identified candidate and were distributed through general public political advertising 

had to contain a disclaimer. 2 U.S.C. §441d and 11 

CFR 110.11. The disclaimer had to indicate who paid 

for the communication and, if made in support of a 

candidate, whether that candidate or a candidate’s 

committee authorized the communication. If the 

candidate’s committee both authorized and paid for 

the communication, then the disclaimer had to state 
Legal Issues 23 

that the communication was paid for by the campaign 

committee. 

In November 2002, provisions of the BCRA took 

affect that amended the Act’s disclaimer requirements 

to require disclaimers on more types of communications and, in some cases, to require that more information be disclosed. In addition to approving regulations to implement these portions of the BCRA, the 

Commission also issued one advisory opinion on this 

issue, and one district court ruled on the matter, 

based on the Commission’s pre-BCRA regulations. 

Regulations 

The new regulations apply to all public communications by all political committees and to any public 

communication made by any person if the communication contains express advocacy, solicits contributions or is an “electioneering communication.” 

Under the new regulations, any public communication13 made by a political committee—including communications that do not expressly advocate the election or defeat of a clearly identified federal candidate 

or solicit a contribution—must display a disclaimer. 

The disclaimer must state that the communication is 

paid for by the committee. Moreover, a disclaimer for 

a communication authorized by a candidate or 

candidate’s committee, but paid for by any other person, must state both who paid for the communication 

and that it was authorized by that candidate. 

Communications not authorized by a candidate or 

his/her campaign committee, including any solicitation, must disclose the permanent street address, 

telephone number or web site address of the person 

who paid for the communication, and also state that 

the communication was not authorized by any candidate. 

13 The new regulations apply to electioneering communications and “public communications,” including any “communication by means of any broadcast, cable or satellite 

communication, newspaper, magazine, outdoor advertising 

facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising.” 

For the purposes of the disclaimer regulations only, the term 

“public communication” also includes political committees’ 

web sites and unsolicited e-mail of more than 500 substantially-similar communications. See 11 CFR 100.26. 

The new rules include additional requirements for 

disclaimers for radio and television communications— 

the so-called “stand by your ad” rules. When such 

communications are authorized by a candidate, he or 

she must deliver an audio statement identifying himself or herself, and stating that he or she has approved the communication. For a television communication, this disclaimer must be conveyed by either a 

full-screen view of the candidate making the statement or a clearly identifiable image of the candidate 

that appears during the candidate’s voice-over statement. Additionally, television communications must 

contain a written disclaimer at the end of the ad. 

For a radio or television communication that is not 

authorized by a candidate, the name of the political 

committee or other person who is responsible for the 

communication and, if applicable, the name of the 

sponsoring committee’s connected organization is 

required in the disclaimer. 

A televised ad must also include a disclaimer conveyed by a full-screen view of a representative of the 

political committee or other person making the statement, or a voice-over by the representative, and a 

written disclaimer must appear at the end of the communication. 

Printed materials must contain a disclaimer in a 

printed box that is set apart from the contents in the 

communication, among other requirements. 

Advisory Opinion 

In AO 2002-9, the Commission ruled that Target 

Wireless may send political ads to wireless phone 

subscribers via Short Messaging Service (SMS) without including a disclaimer stating who paid for the ad 

and whether it was authorized by a candidate. SMS 

messages are limited to 160 characters in length, and 

the entire message—including the primary content, 

the political ad and any disclaimer included—is not 

capable of conveying more than this number of letters, symbols, spaces, punctuation marks and single 

digits. 

The Commission regulations governing disclaimers 

include exceptions for small items upon which a disclaimer cannot be conveniently printed, such as 

bumper stickers, pins, buttons and pens. 11 CFR 
24 Chapter Three 

110.11(a)(6)(i). In this case, the Commission determined that because the SMS messages, like bumper 

stickers, pins and other small objects, are limited in 

the size and length of the messages they can contain, 

the small-item exception from the Commission’s disclaimer requirement applies to SMS messages. 

FEC v. Freedom’s Heritage Forum, et al. 

On March 28, 2002, the U.S. District Court for the 

Western District of Kentucky at Louisville granted the 

Commission’s motion for summary judgment on 

claims that the Freedom’s Heritage Forum, a political 

committee that promotes pro-life and other social 

issues, failed to include the required disclaimers on 

express-advocacy communications.14 The Commission had argued, among other things, that Freedom’s 

Heritage Forum (the Forum), distributed seven flyers 

expressly advocating the election or defeat of a federal candidate, Thomas Hardy,15 and failed to include 

disclaimers. 2 U.S.C. §441d(a). Having previously 

found that three of the Forum’s flyers contained express advocacy, and that none of them stated 

whether they were authorized by a candidate, the 

court granted the Commission summary judgment on 

its claims that the Forum violated 2 U.S.C. §441d(a). 

The court imposed a $3,000 penalty—$1,000 for each 

violation. 

In their counterclaims, the defendants alleged, 

among other things, that the Commission violated 

their rights to equal protection under the Fourteenth 

Amendment by selectively enforcing the Act against 

14 The court also granted the Commission’s motion to 

dismiss with prejudice several counts of its complaint because the FEC had promulgated new coordination regulations since the case first entered the courts. Since this decision, however, the Commission has again revisited its coordination regulations—as described above—as part of its 

BCRA rulemakings. 

15 The Commission also requested summary judgment on 

its claim that Mr. Hardy knowingly accepted corporate contributions in violation of 2 U.S.C. §441b(a). The court determined, however, that although a campaign staff member 

had knowingly accepted the illegal contribution, the Commission had not provided uncontested evidence that the 

staff member acted on Mr. Hardy’s behalf. This issue remains to be resolved during a trial. 

them because of their conservative political views. 

Under the Sixth Circuit’s three-part test for evaluating 

a selective enforcement claim, the enforcement situation in question must: 

• Single out for prosecution a person belonging to an 

identifiable group (such as a group exercising constitutional rights) even though the enforcement official 

has in similar situations decided not to prosecute 

individuals not belonging to that group; 

• Be initiated with a discriminatory purpose; and 

• Have a discriminatory effect on the group to which 

the defendant belongs. 

The defendants contended that the Commission 

did not prosecute any other group involved in the 

election, including a gay or lesbian organization that 

published an express advocacy communication for 

Mr. Hardy’s opponent and did not include a disclaimer. The defendants also generally claimed that 

the Commission does not prosecute “liberal politicians 

and elected officials.” The court, however, granted 

the Commission’s motion to dismiss this counterclaim, 

finding that the defendants had not provided sufficient 

supporting facts. The court also found that the defendants’ general claims of FEC bias were not specific 

enough to withstand scrutiny under the selective enforcement test. 

On December 5, 2002, the court denied the defendants’ requests to alter, amend or vacate this order 

and to file counter claims. 

Corporate Contributions 

The Act prohibits corporations and labor organizations from using their treasury funds to make contributions or expenditures in connection with federal elections. 2 U.S.C. §441b. During 2002, a number of 

lawsuits challenged the constitutionality of that ban 

and related provisions of FEC regulations. Two cases 

involved so-called “MCFL” organizations, which 

qualify for a constitutionally-mandated exception from 

the Act’s prohibition on corporate expenditures in 

connection with a federal election. See FEC v. Massachusetts Citizens for Life, Inc., (MCFL) 479 U.S. 
Legal Issues 25 

238 (1986).16 These cases, along with additional 

enforcement matters, advisory opinions and district 

court decisions involving prohibited corporate contributions, are described below. 

Christine Beaumont v. FEC 

On November 18, 2002, the U.S. Supreme Court 

granted the government’s petition for writ of certiorari 

on behalf of the FEC, agreeing to review this case on 

its merits. On January 25, 2002, the U.S. Court of 

Appeals for the Fourth Circuit found that the Act’s 

prohibitions on corporate contributions and expenditures were unconstitutional as applied to North Carolina Right to Life, Inc., a nonprofit, MCFL-type corporation.17 

Hawaii Right to Life, Inc. v. FEC 

In another case, a nonprofit corporation challenged 

the Commission’s definition of a “qualified nonprofit 

corporation,” along with both its definition of “expressly advocating” and its newly promulgated rules 

on “electioneering communications.” In a complaint 

filed on November 22, 2002, in the U.S. District Court 

for the District of Columbia, Hawaii Right to Life, Inc., 

(HRTL) asked the court to find that it qualifies for the 

constitutionally mandated exception from the Act’s 

prohibition on corporate expenditures. In the alternative, HRTL challenged the constitutionality of the 

Commission’s definitions of “electioneering communication” and “expressly advocating.” 11 CFR 100.29 

and 100.22. HRTL planned, among other things, to 

air radio ads in advance of two Hawaii special elections. 

HRTL asserted that it could run these ads because 

it met the requirements of a protected nonprofit corporation under MCFL, even though it did not meet the 

test of a “qualified nonprofit corporation” under the 

Commission’s regulations at 11 CFR 114.10(c). 

HRTL contended that the Commission’s criteria for 

identifying “qualified nonprofit corporations” are too 

narrow and that, because its business activities and 

corporate contributions are de minimis, it should 

qualify for the exemption. HRTL also claimed that the 

ads would contain issue advocacy rather than express advocacy, and that it would be unable to participate in its planned activity unless the court enjoined 

the Commission from enforcing against HRTL the 

“electioneering communication” and “expressly advocating” regulations. 

The court ruled that HRTL currently is a nonprofit 

organization that qualifies under the MCFL decision 

(as interpreted in the D.C. Circuit) for the exemption 

from the ban on corporate expenditures, despite the 

fact that it engages in de minimis business activities 

and receives insubstantial sums from business corporations. In FEC v. National Rifle Association, the 

court held that $1,000 in contributions from for-profit 

corporations in a single year was de minimis, and 

therefore did not disqualify the NRA from treatment as 

an exempt “MCFL-corporation” during that year. 254 

F.3d 173 (D.C. Cir. 2001). The court chose not to rule 

at any time on HRTL’s challenge regarding the constitutionality of Commission regulations. The court entered a final order that permanently enjoined the 

Commission from acting inconsistently with the court’s 

finding that HRTL is currently a so-called “MCFLcorporation.” 

FEC v. Arlen Specter ’96, Inc. 

Under Commission regulations, a campaign committee must pay the charter fare for air travel on an 

FAA-licensed commercial charter carrier. 11 CFR 

114.9(e). If the campaign pays less than the charter 

rate, then the difference between the usual and nor16 Under Commission regulations a corporation is considered a “qualified nonprofit corporation” if it meets the following criteria: 

• Its only express purpose is the promotion of political ideas; 

• It cannot engage in business activities; 

• It has no shareholders and no persons who are offered or 

receive any benefit that is a disincentive to disassociate 

from the corporation on the basis of the corporation’s 

position on a political issue; 

• It was not established by a business corporation and does 

not directly or indirectly accept donations or anything of 

value from business corporations; and 

• It is described in the Internal Revenue Code at 26 U.S.C. 

§501(c)(4). 11 CFR 114.10(c). 

17 The Supreme Court heard oral arguments in Christine 

Beaumont v. FEC on March 24, 2003. 
26 Chapter Three 

mal cost of the service and the amount paid by the 

candidate or committee represents an in-kind contribution. 11 CFR 100.7(a)(1)(iii)(A). In March 2002, 

the U.S. District Court for the Eastern District of Pennsylvania, pursuant to a stipulation between the Commission and Koro Aviation, Inc., (Koro) held that Koro 

violated 2 U.S.C. §441b(a) by making unlawful in-kind 

corporate contributions to Arlen Specter ’96, Inc., in 

the form of air travel services charged at less than the 

usual and normal rate. The court permanently enjoined Koro from violating 2 U.S.C. §441b(a) by providing goods or services to any federal candidate at 

less than the usual and normal charge and also ordered Koro to pay a $25,000 civil penalty.18 

Advisory Opinion 

In AO 2002-7, the Commission determined that 

Careau & Co. and Moher Communications (the Companies) may require Internet service provider subscribers to pay a monthly service fee that includes up 

to $2.00 per month in contributions to political committees or donations to charities. The Commission found 

that this activity would not result in prohibited corporate contributions to recipient political committees. 

First, no corporate contributions will result from the 

transactions—vendors providing processing services 

will be compensated with contributed funds and the 

Companies will be compensated by the federal political committees for creating the web site and arranging for the processing services. 

Second, the funds contributed will be forwarded, 

minus processing fees, to the political committees or 

charities through the use of a merchant account and, 

thus, will not become corporate treasury funds of the 

Companies. 

Finally, the screening procedure for the electronic 

payment of contributions is well within the “safe harbor” for determining whether individuals can contribute to federal political committees, as discussed in 

previous advisory opinions. AOs 1999-9 and 1999-22. 

Enforcement 

MUR 5187. In MUR 5187 the Commission examined the use of corporate treasury funds to reimburse 

individuals who made contributions to federal candidates and political committees. As a result of this 

enforcement matter, the Commission entered into 

conciliation agreements with Mattel, Inc., (Mattel) 

former Mattel Senior Vice President Fermin Cuza and 

former Mattel consultant Alan Schwartz, resulting in 

civil penalties of $477,000—one of the highest cumulative civil penalties in the history of the Commission. 

The agreements provide for Mattel to pay $94,000, 

Mr. Cuza to pay $188,000 and Mr. Schwartz to pay 

$195,000 in civil penalties. 

In addition to the ban on corporate contributions, 

the Act prohibits making contributions in the name of 

another, knowingly permitting one’s name to be used 

to effect such a contribution and knowingly accepting 

such a contribution. Further, no person may knowingly help or assist any person in making a contribution in the name of another. This prohibition also 

applies to any person who provides the money to 

others to effect contributions in their names. 2 U.S.C. 

§441f. 

Mr. Cuza, who was in charge of Government Affairs at Mattel, directed the hiring of Alan Schwartz— 

the sole proprietor of Asset Management Systems 

(AMS)—as a consultant to Mattel. According to the 

conciliation agreements, Mattel made payments to 

AMS, at Mr. Cuza’s direction, for various consulting 

services and other purposes. In consultation with Mr. 

Cuza, Mr. Schwartz used these funds to make contributions to federal candidates and political committees. Mr. Schwartz also used funds received from 

Mattel to reimburse individuals for contributions to 

various federal political committees. As a result, Mr. 

Cuza and Mr. Schwartz, their spouses and family 

members and other individuals made reimbursed 

contributions totaling $120,714 to federal political 

committees. 

The Commission’s investigation stemmed from a 

sua sponte complaint filed by Mattel. The Commission acknowledged that there was evidence that Mr. 

Cuza concealed the reimbursements from his superiors at Mattel, and it also found no evidence that any 

18 In March 2003, the U.S. District Court entered a settlement agreement among the remaining parties in which 

Arlen Specter ’96, Inc., and Paul S. Diamond as treasurer 

agreed to pay $25,000 to the United States Treasury. 
Legal Issues 27 

of the recipient political committees were aware that 

Mattel was the true source of the contributions. 

MUR 5208. In MUR 5208 the Commission considered Amboy National Bank’s (Amboy) violation of the 

Act’s broad restrictions on contributions and expenditures by national banks. The Act prohibits a national 

bank from making contributions “in connection with 

any election to any political office, or in connection 

with any primary election or political convention or 

caucus held to select candidates for any political office.” Moreover, under the Act, Amboy, which does 

not have a corporate PAC, may not use its resources 

or facilities to engage in fundraising activities—including the collecting and forwarding of contributions. 2 

U.S.C. §441b(b)(2)(A) and 11 CFR 114.2(f) and 

114.3(a)(1); see also AO 1987-29. 

In the early 1990s, Amboy’s Board of Directors 

approved an expense account program wherein senior officers made political contributions from these 

accounts. A Vice President at Amboy performed activities during regular business hours in connection 

with opening the expense accounts, ordering checks 

for drawing on these accounts, drafting, signing and 

transmitting contribution checks and updating spreadsheets to track contributions made from each account. When political solicitations were received by 

Amboy or by individual officers, they were generally 

forwarded to this individual, who worked with Amboy’s 

President and Board of Directors Chairman, George 

Scharpf, to coordinate political contributions and attendance at fundraising events in an informal manner. 

Senior officers used their expense accounts to 

make at least 149 contributions totaling $55,322. In 

addition, Mr. Scharpf directed his executive assistant 

to collect and forward during work hours contributions 

to the New Jersey Bankers Association PAC 

(JebPAC) that were made from staff members’ personal bank accounts. By using its staff and other 

resources to set up and administer the expense account program and to collect and forward contributions, Amboy facilitated the making of these contributions. 

In addition to findings against Amboy concerning 

corporate facilitation, Amboy and JebPAC also admitted to violating the Act’s requirement that a solicitation 

for a contribution to a trade association’s PAC include 

a notice informing the solicitee of his or her right to 

refuse to contribute without reprisal. 11 CFR 

114.5(a)(2)-(5). See also AOs 1998-19 and 1985-12. 

The Commission entered into conciliation agreements 

with Amboy, JebPAC and Mr. Scharpf, resulting in 

$86,000 in civil penalties. 

Personal Use of Campaign Funds 

On November 25, 2002, the Commission approved 

new rules, driven by the BCRA, concerning the personal use of campaign funds. Earlier in the year, the 

Commission also issued one advisory opinion under 

its previous rules. The new rules generally continue 

the existing prohibition against the personal use of 

campaign funds and retain the so-called “irrespective 

test.” Candidates may not, therefore, use funds in a 

campaign account to “fulfill a commitment, obligation, 

or expense of any person that would exist irrespective 

of the candidate’s campaign or duties as a Federal 

officeholder.” 11 CFR 113.1(g). Personal use of 

campaign funds includes, but is not limited to, payment of the following: household items or supplies, 

clothing, except for clothing items of de minimis value 

that are used in a campaign, tuition payments, mortgage, rent or utility payments, vacations and health or 

country club dues. 11 CFR 113.1(g)(1)(i). The regulations have, however, been amended as follows. 

Regulations 

The most notable change to the personal use regulations permits a candidate for federal office to receive 

a salary from the principal campaign committee. According to the regulations, a salary may be received 

only under the following conditions: 

• The salary must be paid by the principal campaign 

committee and may not be paid by any other committee. 

• Incumbent federal officeholders may not receive 

salary payments under this provision. 

• Salary shall not be paid before the filing deadline for 

access to the primary election ballot in the state in 
28 Chapter Three 

which the candidate is running for office, and salary 

may not be paid beyond the date when the recipient 

is no longer a candidate.19 

• The salary must not exceed the lesser of either the 

minimum annual salary for the federal office sought 

or what the candidate received as earned income in 

the previous year.20 

• Payments of salary from the committee must be 

made on a pro-rata basis.21 

• Individuals who elect to receive a salary from their 

campaign committees must provide income tax 

records and additional proof of earnings from relevant years upon request from the Commission. 

The new regulations also amend the definition of a 

candidate’s family at 11 CFR 113.1(g)(7). The previous regulations included as a member of a 

candidate’s family “a person who has a committed 

relationship with a candidate, such as sharing a 

household and having mutual responsibility for each 

other’s welfare or living expenses.” 11 CFR 

113.1(g)(7)(iv). This section has been removed from 

the new regulations and replaced with a provision that 

includes any person who shares a residence with the 

candidate. The Commission recognizes that any 

person actually living with the candidate may pay a 

share of his or her living expenses without making a 

contribution to the campaign. The Commission further noted that the personal funds of a candidate 

would include his or her share of a joint account held 

with the person(s) with whom a residence is shared. 

However, gifts from the campaign to family members 

or anyone residing with the candidate are prohibited 

because they may be used to defray the personal 

expenses of the candidate. 11 CFR 113.1 (g)(4). 

19 The filing deadline for the primary election for federal 

candidates is determined by state law. In those states that 

do not have a primary election, candidates may not receive 

payment until after January 1st of each even-numbered 

year. 

20 Additional salary or wages received from other sources 

will count toward the limit that may be received by the candidate. 

21 This provision will prevent a candidate from receiving a 

whole year’s salary for less than a whole year’s candidacy. 

Because the regulations permit, in certain circumstances, the de minimis personal use of campaign 

funds, recordkeeping requirements for expenses that 

may be partly personal in nature have been added to 

the regulations. Such expenses may include, but are 

not limited to, the costs of vehicles, travel, meals and 

legal services. The new provision requires that logs 

of these expenses be maintained to help the Commission determine on a case-by-case basis what portion 

was for personal use rather than for campaign-related 

activity or officeholder duties. 

The Commission has removed from the regulations 

the section referring to “any other lawful purpose” as a 

permitted use of campaign funds. The BCRA made 

such an amendment to the list of permitted uses of 

campaign funds at 2 U.S.C. §439a. Thus, in addition 

to paying expenses in connection with the campaign 

for federal office, campaign funds may be used only 

for those non-campaign purposes included in an exhaustive list found at 11 CFR 113.2 (a), (b) and (c). 

Finally, Congress deleted the statutory phrase “in 

excess of any amount to defray” campaign expenses 

from 2 U.S.C. § 439a. Therefore, the Commission 

revised 11 CFR 113.1 and 113.2 so that officeholders 

may spend money from campaign accounts to pay for 

campaign and non-campaign expenses incurred as a 

consequence of holding federal office. Such expenses, according to the Commission, may be paid in 

any order. 

Advisory Opinion 

The Commission also considered one advisory 

opinion, under the pre-BCRA rules, that dealt with the 

personal use of campaign funds where a federal candidate who was also a city mayor engaged in travel 

that included personal stops, city business and campaign activity. In AO 2002-5, the Commission determined Ann Hutchison, the Mayor of Bettendorf, Iowa, 

could use campaign funds to pay those travel expenses that related to days when she met with party 

officials to discuss her federal candidacy and engaged in other campaign activity, but could not use 

campaign funds to pay expenses related to portions 

of the trip that were devoted to either personal activities or city business. 
Legal Issues 29 

Although the Commission’s regulations at 11 CFR 

106.3 would otherwise require that all travel expenses 

for such a trip be considered campaign related (unless the campaign activity was incidental), the Commission determined that this reasoning would imply 

that campaign funds could be used to pay for all of 

the travel expenses, including sight-seeing and city 

business.22 The Commission concluded that this result would be inconsistent with, or even contrary to, 

the personal use regulations. Thus, the Commission 

applied an incremental approach to determine which 

funds could be used to pay for Mayor Hutchison’s 

travel, subsistence and lodging expenses during the 

trip. However, because the airfare represented a defined expense that would have existed irrespective of 

any personal or campaign-related activities, the entire 

cost of the ticket could be paid for by the city of 

Bettendorf, with no obligation by Ms. Hutchison or her 

campaign committee to reimburse the city. 

Foreign Nationals 

The BCRA strengthened the Act’s prohibitions with 

respect to foreign nationals by explicitly banning contributions, donations, expenditures, independent expenditures and disbursements for electioneering communications by foreign nationals. In addition to promulgating new regulations to implement the BCRA’s 

provisions, during 2002 the Commission concluded 

an enforcement matter involving contributions by foreign nationals, which resulted in record civil penalties. 

This enforcement matter was conducted prior to the 

BCRA. 

New Regulations 

On October 31, 2002, the Commission approved 

regulations that added new section 11 CFR 110.20, 

implementing the BCRA’s prohibition on contributions, 

donations, expenditures, independent expenditures 

and disbursements solicited, accepted, received or 

made directly or indirectly by or from foreign nationals 

in connection with state and local elections as well as 

federal elections. This ban applies to: 

• Contributions and donations to candidates, to political committees23 and to organizations of political 

parties; 

• Contributions and donations to party committee office building funds; 

• Disbursements for electioneering communications; 

• Expenditures, independent expenditures and disbursements in connection with any election; and 

• The solicitation, acceptance or receipt of contributions and donations from foreign nationals. 

The foreign national prohibition also applies to a 

person who knowingly provides substantial assistance 

to foreign nationals in the making of contributions, 

donations, expenditures, independent expenditures 

and disbursements in connection with federal and 

nonfederal elections. This prohibition covers, but is 

not limited to, acting as a conduit or intermediary for 

foreign national contributions and donations and providing substantial assistance in the soliciting, making 

or receiving of such a contribution or donation or the 

making of an independent expenditure or disbursement by a foreign national. 11 CFR 110.20(g) and 

(h). 

The Commission has additionally included a knowledge requirement and defined the term “knowingly” 

with regard to the prohibitions on the solicitation, acceptance or receipt of foreign national contributions or 

donations. The Commission determined that this 

would produce a more appropriate result than a strict 

liability standard. 

MURs 4530, et al. 

Individuals, corporations and political committees 

are subject to civil penalties for soliciting, making and/ 

or accepting prohibited foreign national contributions 

and making or accepting contributions in the name of 

22 An incremental approach toward travel expenses of 

trips with multiple purposes departs from the interpretation 

of 11 CFR 106.3(b)(3) in AOs 1992-34 and 1994-37. Therefore, the portions of these two opinions dealing with section 

106.3(b)(3) that are inconsistent with the analysis adopted 

in this opinion are superseded. 

23 This prohibition applies regardless of whether the committee is a political committee under 11 CFR 100.5. See 11 

CFR 110.20(c)(2). 
30 Chapter Three 

another. 2 U.S.C. §§441e and 441f. On September 

20, 2002, the Commission made public its final action 

on enforcement cases related primarily to foreign 

activity in connection with the 1996 elections—MUR 

4530, et al.24 The combined enforcement actions 

resulted in $719,500 in civil penalties, and committees 

were required to disgorge certain prohibited funds. 

The cumulative civil penalty in these matters is the 

highest in Commission history to date. 

Examples of foreign nationals making contributions 

include Georgios Psaltis, a Greek foreign national, 

who was the sole owner of the Psaltis Corporation. 

The Psaltis Corporation made $50,000 in contributions to the Democratic National Committee (DNC), 

which was also a respondent in these enforcement 

actions. The Psaltis Corporation had no U.S.-derived 

income at the time of the contributions. Rather, the 

funds were provided, at least in part, by Mr. Psaltis 

himself. In another instance, Gilberto Pagan, a citizen 

of the Dominican Republic, contributed $5,000 to the 

DNC using a check drawn on the Royal Bank of 

Canada. Moreover, although the DNC was informed 

of Mr. Pagan’s status as a foreign national, the check 

was not timely refunded or disgorged. The DNC 

agreed to pay a $115,000 civil penalty stemming from 

its acceptance of prohibited contributions. 

The Commission also found violations of the Act in 

cases where a foreign national directed, dictated, 

controlled or directly or indirectly participated in the 

decision-making process of a person, including domestic corporations, with regard to decisions concerning the making of contributions in connection with 

elections for local, state or federal office. For example, when ACPC, Inc., which is incorporated in 

Delaware, made a corporate contribution of $50,000 

to the DNC, Alfredo Riviere, the corporation’s President at the time and a Venezuelan national, participated in that decision. See 11 CFR 110.20. 

Finally, the Commission examined situations where 

contributions—including contributions from foreign 

nationals—were made through another person, in 

violation of the Act’s ban on contributions in the name 

of another. 2 U.S.C. §441f and 11 CFR 110.4(b). 

Yah Lin “Charlie” Trie, a U.S. citizen, was among 

those found to have violated this provision. He made 

numerous contributions to the DNC directly, through 

his wife, his companies and other U.S. residents. 

These contributions were then reimbursed with funds 

primarily from a foreign national, Ng Lap Seng, a citizen of China who resides in Macau. Similarly, 

Pauline Kanchanalak, a foreign national and President of Ban Chang International (USA), Inc., a Cayman Island corporation with offices in Washington, 

DC, channeled over $700,000 through Duangnet 

Kronenberg and Praitun Kanchanalak, both permanent U.S. residents, to the DNC and other political 

committees. These funds came from the treasuries of 

Ban Chang International, a foreign corporation, and 

its U.S. subsidiary, and from the personal funds of 

Pauline Kanchanalak and other foreign nationals. 

Preemption 

The Act and Commission regulations “supersede 

and preempt any provision of State law with respect 

to election to Federal office.” 2 U.S.C. §453; 11 CFR 

108.7(a).25 According to the Conference Committee 

report on the 1974 Amendments to the Act, “Federal 

law occupies the field with respect to criminal sanctions relating to limitations on campaign expenditures, 

the sources of campaign funds used in Federal races, 

24 In addition to violations involving the Act’s prohibitions 

on the contributions from foreign nationals, the conciliation 

agreements addressed violations of the Act’s prohibitions 

on corporate contributions and facilitation and its contribution limits, as well as the requirements of Commission regulations that political committee treasurers refund within 30 

days any deposited contributions that are discovered to be 

illegal. 

25 New regulations that implement the BCRA made two 

additions to the list of state laws that the Act does not supersede: (1) the application of state law to the funds used 

for the purchase or construction of a state or local party 

office building to the extent described in 11 CFR 300.35; 

and (2) donations made by minors to state, district and local 

party committees. 11 CFR 108.7(c)(5) and (6) and 

110.19(b)(3). See also the Explanation and Justification for 

the rules on contribution limitations and prohibitions (67 FR 

69928), pages 69938 and 69939. 
Legal Issues 31 

the conduct of Federal campaigns, and similar offences, but does not affect the States’ rights” as to 

other election-related conduct, such as voter fraud 

and ballot theft. H.R. Rep. No. 93-1438, 93rd Cong. 

2d Sess. 69 and 100-101 (1974). The Commission 

issued two advisory opinions in 2002 relating to the 

Act’s preemption of state law. 

Bingo License. 

In AO 2001-19, the Commission considered a 1995 

Michigan statute that excludes “political committees,” 

as defined by state law, from the list of organizations 

qualified to obtain a bingo license (1995 PA 275, MCL 

432.103 et seq.), and found that the Act did not supersede this law. The Oakland Democratic Campaign 

Committee (the Committee), which operated two bingos to raise funds to influence federal elections, had 

received notification from the Michigan Bureau of 

State Lottery that it fell within the definition of a “committee” under the Michigan statute and, as a result, 

was no longer eligible for a state bingo license. The 

Commission stated no opinion regarding whether the 

Committee falls under the Michigan statute’s definition 

of “political committee,” stating that this is a matter to 

be decided by Michigan officials, pursuant to state 

law. In concluding that the Act did not supersede 

state law, the Commission noted that FEC regulations 

specifically recognize state authority regarding gaming activity by permitting certain committees to use 

gaming devices such as raffles, only “so long as state 

law permits” their use. 11 CFR 114.5 (b)(2). Additionally, the Commission explained that the 

Committee’s situation differed significantly from situations dealt with in past opinions, in which the Commission preempted state laws that disqualified an entire 

class of contributors to federal campaigns. AOs 

2000-23, 1995-48, 1993-25 and 1989-12. 

Soliciting Contributions and Serving on 

Fundraising Committee. 

In AO 2002-2, the Commission determined that the 

Act preempts provisions of Maryland law with respect 

to certain activities planned by Eric Gally, a registered 

lobbyist who intended to: 

• Hold a private fundraiser for friends and family members in his home in order to solicit contributions to a 

federal candidate who was also a member of the 

General Assembly; and 

• Solicit other friends and family for contributions to 

this candidate. 

Provisions of the Maryland statute prohibit lobbyists 

from soliciting or transmitting a political contribution to 

a member of the General Assembly and from serving 

on a fundraising committee or political committee of a 

candidate who is a member of the General Assembly. 

Md. Code Ann., State Gov’t §15-714(d)(1)(i) and (ii) 

(2001). 

Commission regulations, however, provide that 

federal law supersedes state law with respect to federal candidates and political committees with regard 

to the organization and registration of committees, the 

disclosure of receipts and expenditures and the limitations on contributions and expenditures. 11 CFR 

108.7(b).26 The Act and Commission regulations govern the sources of funds used in federal races, prohibiting and limiting contributions and solicitations by 

various entities. Moreover, they specifically cover Mr. 

Gally’s solicitation activities by the application of specific exceptions to the definition of “contribution” for an 

individual’s volunteer services and for a volunteer’s 

use of his or her home for campaign-related activities—including up to $1,000 per election for food, 

beverages and invitations. 2 U.S.C. §431(8)(B)(i) and 

(ii); 11 CFR 100.7(b)(3), (4) and (6). The Act and 

Commission regulations also address the transmittal 

of contributions. For example, they prohibit transmittal by certain persons and set a time period in which a 

person who receives a contribution for a political committee must transmit it to the committee. 2 U.S.C. 

§432(b); 11 CFR 102.6(b)(1), 110.6(b)(2)(ii) and 

102.8. Thus, the Commission determined that, as 

applied to these fundraising activities for a federal 

candidate, these provisions of Maryland law address 

activities reserved for regulation under federal law. 

26 See Federal Election Commission Regulations, Explanation and Justification, House Document No. 95-44, at 51. 

See also, H.R. Rep. No. 93-1438, 93d Cong., 2d Sess. 100-

101 (1974). 
32 Chapter Three 

Administrative Fines 

The Commission’s Administrative Fine program 

was extended in 2001 to cover violations that relate to 

reporting periods through December 31, 2003. Under 

the administrative fines regulations, respondents may 

challenge the Commission’s RTB finding and/or proposed civil money penalty based, among other things, 

on “the existence of extraordinary circumstances beyond the respondents’ control that were for a duration 

of at least 48 hours and prevented them from timely 

filing the report.” 11 CFR 111.35. The regulations 

also provide several broad examples of circumstances that will not be considered “extraordinary 

circumstances.”27 In 2002, district courts ruled on a 

number of challenges to the Commission’s final administrative fine determinations, three of which are 

described below. 

Cunningham v. FEC 

The U.S. District Court for the Southern District of 

Indiana granted the Commission’s motion for summary judgment against the Robert W. Rock for Congress committee (the Committee) and its treasurer, 

Jeremiah T. Cunningham. The Committee had filed 

suit challenging the Commission’s determination that 

the Committee had failed to file timely its 2000 PostGeneral report and alleging that the civil money penalty assessed by the Commission was excessive, 

erroneous and unwarranted. 

The court found that the Committee had waived 

before the court any arguments it failed to raise before the Commission during its administrative proceedings (see 11 CFR 111.38). The court additionally 

ruled that the Commission’s penalty determination, 

assessed in accordance with its administrative fines 

regulations, was not arbitrary and capricious. Under 

the Act, when calculating civil penalties, the Commission must consider the amount of the violation involved (that is, the level of activity of the report that 

was untimely filed) and the existence of any prior 

violations. The Act delegates solely to the Commission the determination of what other factors to take 

into account in calculating the civil penalty at 2 U.S.C. 

§437g(a)(4)(C)(i)(II)—a decision that the court concluded was not for courts “to second guess.” 

Friends for Houghton v. FEC 

The U.S. District Court for the Western District of 

New York granted the Commission’s motion for summary judgment and dismissed this case concerning 

Friends for Houghton’s (the Committee) appeal of a 

civil money penalty for failure to timely file the 

Committee’s 2000 Pre-Primary Report. According to 

the allegations in the complaint, on September 1, 

2000, the Commission sent a notice to the Committee 

indicating that it may have failed to file its pre-primary 

report, and that it would have four business days from 

the date of the notice to file the report. Because of the 

Labor Day holiday, the fourth business day after the 

Commission’s notice was September 8. The Committee filed the report on that day. 

On October 17, 2000, the Commission found reason to believe that the Committee and its treasurer 

had violated 2 U.S.C. §434(a). Having filed its preprimary report less than five days before the election, 

the committee was subject to the schedule of penalties for reports that are “not filed.” The Commission 

assessed a civil money penalty in the amount of 

$9,000 in accordance with 11 CFR 111.43. In its 

complaint, the Committee asked the court to order the 

Commission to modify both its determination that the 

Committee was a nonfiler and its assessment of the 

civil money penalty. 

The Act requires the Commission to notify any 

principal campaign committee of a House or Senate 

candidate that may have failed to file a required preelection report or a quarterly report before an election 

of its failure to file such report, prior to taking action 

against that committee. If the committee does not file 

the report within four business days of the notification, 

the Commission must publish, before the election, the 

name of that committee as having failed to file the 

report. 2 U.S.C. §437g(b). In addition to this statutory 

requirement, Commission regulations provide that 

27 On April 16, 2003, new rules took effect that make 

several amendments to the administrative fine rules. The 

final rules were published in the March 17, 2003, Federal 

Register (67 FR 12572). 
Legal Issues 33 

election-sensitive reports are subject to the schedule 

of penalties for “late” reports if they are filed after their 

due date, but more than four days before an election. 

Committees filing later than that, or failing to file at all, 

are subject to the schedule of penalties for reports 

that are “not filed.” 

The court observed that while the Commission’s 

notice informed the Committee that the Commission 

was considering taking action against it and provided 

the Committee with a four business-day window to file 

its report and avoid the publication of its name, “Section 437g(b) does not . . . attach any additional significance to the four business-day rule. More specifically, 

437g(b) does not indicate that, by filing within four 

business days, the late filing is excused [and] that the 

person avoids a monetary penalty.” 

Thus, while a committee has four additional business days to file a report in order to avoid the publication of its name before the election, neither the Act 

nor Commission regulations provide a grace period 

for calculating a penalty under the Administrative Fine 

program. 

Miles for Senate v. FEC 

The U.S. District Court for the District of Minnesota 

granted judgment in favor of the Commission in this 

case. The Miles for Senate Committee, Steven H. 

Miles and Barbara Steinberg (the plaintiffs) filed suit 

against the Commission on January 18, 2001, appealing a civil money penalty the Commission assessed 

against Miles for Senate (the Committee) and its treasurer, Barbara Steinberg, LTD. The plaintiffs had 

argued, among other things, that Commission regulations that distinguish between certified or registered 

mail and regular mail for the purpose of determining 

when a report is filed are arbitrary and capricious and 

in excess of the Commission’s rulemaking authority. 

11 CFR 104.5(e). 

The court found that Mr. Miles and Ms. Steinberg 

lacked standing to request judicial review, and that 

the plaintiffs’ arguments were untimely because they 

did not raise them during the Commission’s administrative process. Moreover, the court found that, even 

if the plaintiffs had raised their arguments in a timely 

manner, the arguments were unpersuasive and failed 

as a matter of law. In their motion to the court, the 

plaintiffs had argued that the Commission regulation 

that distinguishes between first class mail and registered or certified mail exceeds the Commission’s 

rulemaking authority and draws an arbitrary distinction. 11 CFR 104.5(e). The court, however, did not 

find that the regulation exceeded the Commission’s 

authority to make regulations to implement the Act: 

“Because the regulation merely incorporates the 

same distinction as that made by the statute, it is impossible to find that the regulation is inconsistent with 

the statute.” 2 U.S.C. §434(a)(5). The court also 

concluded that it could not respond to the plaintiffs’ 

arguments concerning whether distinguishing among 

postmarks was a “bad policy.” Such arguments, the 

court explained, should be addressed to legislators 

and administrators rather than to the courts. 
35 

Chapter Four 

Presidential Public Funding 

Public funding has been a key part of our Presidential election system since 1976. The program is 

funded by the $3 tax checkoff and administered by 

the Federal Election Commission. Through the public 

funding program, the federal government provides 

matching funds to qualified candidates for their primary campaigns, federal funds to major and minor 

parties for Presidential nominating conventions and 

grants to Presidential nominees for the general election campaigns. 

Shortfall 

The Commission projects the temporary shortfall in 

matching funds that has occurred in the past two 

Presidential elections may recur in 2004, and it appears that the January 2004 payout may be only 

about 53 cents on the dollar. The funds considered 

“available” by the Department of Treasury will be 

about $19.3 million, and the funds to which candidates will be entitled will be about $36.6 million. 

Thus, the payouts will have to be reduced accordingly. February and March payouts also will be less 

than 100 percent, but by the April 2004 payouts, the 

temporary shortfall will have ended under this projection because the check-off proceeds flowing into 

Treasury Department accounts will be adequate to 

make up the earlier deficiencies. 

Entitlement to Pre-General Election 

Presidential Funding 

In 2002 the Commission continued to examine 

issues related to the public funding of minor party 

Presidential candidates. Under the Presidential Election Campaign Fund Act (the Fund Act), a Presidential 

candidate1 of one or more political parties (not including a major party) is entitled to pre-general election 

payments if he or she was a candidate for such office 

in the preceding election and received between five 

and 25 percent of the popular vote. Additionally, the 

Presidential nominee of a minor party is entitled to 

pre-general election payments if that party’s candidate in the prior election received between five and 25 

percent of the total vote.2

 26 U.S.C. §§9004(a)(2)(A) 

and (B); 11 CFR 9004.2(a) and (b). 

In AO 2002-1, in response to a request from 

Lenora B. Fulani and James Mangia, the Commission 

determined that the entitlement for pre-general election Presidential funding in 2008 may not be determined by aggregating the 2004 vote totals of several 

minor party Presidential candidates. Instead, each 

minor party must use the vote totals received by its 

own Presidential candidate to determine the public 

funding entitlement, if any, of that party’s candidate in 

the next Presidential election. 26 U.S.C. §9004. 

The Commission reached this determination based 

on the language of the Fund Act and Commission 

regulations, which describe one Presidential candidate per political party, rather than several Presidential candidates of either the same party or of multiple 

parties. The Commission additionally considered 

Buckley v. Valeo, in which the Supreme Court examined the legislative history of the Fund Act and determined that “Congress’ interest in not funding hopeless 

candidates with large sums of public money, necessarily justifies the withholding of public assistance 

from candidates without a significant modicum of support.” 424 U.S. 1 at 96 (1976). The Commission 

concluded that providing pre-general election funding 

to a minor party based on the prior performances of 

several minor party candidates within the same party, 

or of a group of Presidential candidates who join together in one coalition despite differing party affiliations, runs counter to these concerns. 

1 The Fund Act defines a Presidential “candidate” in this 

context as an individual who has been nominated by a 

major party to the office of President or Vice President or 

has qualified to have his or her name on the ballot in at 

least 10 states as a party’s Presidential or Vice-Presidential 

candidate. 26 U.S.C. §9002(2). 

2 In both cases, other eligibility conditions must be met. 

The Fund Act defines a “minor party” as a political party 

whose Presidential candidate in the preceding election 

received, as the party’s candidate, at least five percent, but 

less than 25 percent, of the total popular votes for all Presidential candidates in that election. 26 U.S.C. §9002(7). 
36 Chapter Four 

Repayment of Public Funds—2000 

Election 

Once a Presidential election is over, the Commission audits all of the candidates and committees that 

received public funds to ensure that they used those 

funds only for qualified campaign expenses and that 

they maintained proper records and filed accurate 

reports. These audits are mandated under the Fund 

Act. Sometimes an audit finds that a candidate or 

committee exceeded its expenditure limits, spent public funds on nonqualified expenses or ended the campaign with a surplus. In those cases, the Commission 

may require the candidate or committee to make a 

repayment to the U.S. Treasury (the Treasury). 

Repayments may also stem from Commission determinations that contributions that were initially 

thought to be matchable were later found to have 

been nonmatchable. Such determinations may or may 

not result from the FEC’s audit of the committee. During 2002, the Commission made final determinations 

that the campaigns of eight Presidential candidates 

and one convention committee had to make repayments stemming from the 2000 elections. 

Bradley Committee 

The Commission determined that Bill Bradley’s 

primary committee, Bill Bradley for President, Inc., 

had to repay the Treasury $14,055, representing 

matching funds that the committee received in excess 

of its entitlement, and an additional $28,085, representing stale-dated checks. 

Buchanan Committees 

The Commission determined that Patrick 

Buchanan’s general election campaign, Buchanan 

Foster, Inc. (BFI), had to repay $58,033 to the Treasury. This amount represented $33,479 in surplus 

funds and $24,554 that the committee received in 

interest on invested public funds. The audit also 

found that BFI purchased a mailing list from the primary committee, Buchanan Reform, Inc., at a cost 

that was $147,496 in excess of the fair market value 

of the list. Thus, in determining BFI’s assets, the Audit staff listed this overpayment as an amount receivable due from the primary committee.3 

Bush Committees 

The Commission determined that Bush-Cheney 

2000, Inc. (BC2000), President Bush’s general election committee, had to repay $487,222 to the Treasury. The bulk of this amount represented income 

that the committee received from interest earned on 

invested public funds and from selling the use of film 

footage related to its media ads. A portion of this 

repayment, $95,509, represented contributions the 

committee received when it paid the first-class fare for 

air travel on licensed commercial charter carriers, 

rather than the charter rate.4 An additional portion 

represented stale-dated checks. The remaining repayment represented the amount that BC2000 exceeded the $67,560,000 expenditure limitation for 

publicly funded Presidential candidates in the 2000 

general election. 

The Commission additionally determined that the 

Bush-Cheney Compliance Committee, Inc., had to 

make a $33,415 repayment representing stale-dated 

checks. President Bush’s primary election committee 

did not accept public funds and, thus, was not required to be audited. 

3 The Buchanan committees appealed the Commission’s 

determination. 

4 Commission regulations provide that the campaign may 

pay the first-class rate if the airplane is owned or leased by 

a corporation, other than a corporation licensed to offer 

commercial travel services, and the travel is between cities 

served by regularly scheduled commercial service. 11 CFR 

114.9(e)(1). If the corporation is licensed to offer commercial air travel services and the campaign pays the first-class 

rate, rather than the charter rate, then the difference between the first-class and charter rates represents a contribution to the campaign. If the Commission determines that 

a major party Presidential candidate who has accepted 

public funding also accepts contributions to defray qualified 

campaign expenses (other than contributions to make up 

deficiencies in payments from the Presidential Election 

Campaign Fund), then the candidate must repay that 

amount to the Treasury. 11 CFR 9007.2(b)(5). 
Presidential Public Funding 37 

Gore Committees 

The Commission’s final audit found that Gore 2000, 

Inc., former Vice President Al Gore’s primary committee, had to repay $170,591, representing surplus 

funds, and $2,485 representing stale-dated checks. 

Mr. Gore’s general election committee, Gore/ 

Lieberman, Inc. (Gore/Lieberman), had to repay 

$11,625 representing interest earned on invested 

public funds. Gore/Lieberman and the Gore/ 

Lieberman General Election Legal and Accounting 

Compliance Fund were additionally required to repay 

$3,262 to the Treasury, representing stale-dated 

checks. 

Keyes Committee 

The Commission determined that Keyes 2000, Inc., 

Ambassador Alan Keyes’s primary committee, did not 

receive public funds in excess of its entitlement, but 

had to repay $104,448 to the Treasury representing 

both nonqualified campaign expenses and costs associated with continuing to campaign. The largest 

portion of this repayment, $74,439, represented 

nonqualified campaign expenses. In most cases, 

Keyes 2000, Inc., lacked adequate documentation to 

show the purpose of these expenses. Keyes 2000, 

Inc., was also required to repay $30,009, representing 

public funds it spent continuing to campaign after the 

candidate’s date of ineligibility. In addition, Keyes 

2000, Inc., had to pay the Treasury $8,003, representing stale-dated checks. See 11 CFR 9034.3(a)(3)(ii) 

and 9034.4(b)(3). 

McCain Committees 

The Commission’s final audit determined that 

Senator John McCain’s 2000 primary committee, 

McCain 2000, Inc., and the McCain Compliance Committee, Inc., had to repay $99,037 to the Treasury. 

The bulk of the repayment, $85,017, represented 

stale-dated checks. The audit also identified apparent 

non-qualified campaign expenses, which included 

some expenses not related to the campaign and 

some lost or stolen equipment. McCain 2000, Inc., 

did not receive matching funds in excess of its entitlement. 

Nader Committee 

The Commission made a determination that Ralph 

Nader’s primary committee, Nader 2000 Primary 

Committee, Inc. (NPC), did not receive public funds in 

excess of its entitlement, but was required to repay to 

the Treasury $11,398, representing stale-dated 

checks. The audit also found that NPC erroneously 

received 1,550 contributions that were instead intended for the general election campaign. Thus, the 

audit did not consider the resulting $96,744 in contributions when calculating the amount of matching 

funds NPC was entitled to receive after Mr. Nader’s 

date of ineligibility. 

Quayle Committee 

The Commission determined that Dan Quayle’s 

2000 Presidential primary committee, Quayle 2000, 

Inc., did not receive matching funds in excess of its 

entitlement; however, the Commission determined 

that it must repay to the Treasury $5,307, representing stale-dated checks. 

Reform Party 2000 Convention Committee 

Federal law permits all eligible national committees 

of major and minor parties to receive public funds to 

pay the official costs of their Presidential nominating 

conventions. In 2002 the Commission determined 

that the Reform Party 2000 Convention Committee 

(the Convention Committee), which organized the 

Reform Party’s national Presidential nominating convention in Long Beach, California, had to repay the 

Treasury $333,558, primarily representing payments it 

made for activities and services not related to that 

convention. Most of this amount represented funds 

paid to a consulting firm that did not perform services 

for the nominating convention but instead appeared to 

have worked on an Emergency National Convention 

in Las Vegas. In March 2000 the U.S. District Court 

for the Western District of Virginia, Lynchburg Division, concluded that the Las Vegas Convention was 

not a properly convened convention of the Reform 

party. Thus, payments associated with the Las Vegas 

convention were not expenses for which the Convention Committee could use public funds. 
39 

Chapter Five 

The Commission 

Commissioners 

The Commission welcomed two new members 

during 2002. 

Michael E. Toner was nominated to the Federal 

Election Commission by President Bush on March 2, 

2002, and appointed on March 29, 2002. 

Prior to his appointment, Mr. Toner was Chief 

Counsel to the Republican National Committee and 

served as General Counsel to the Bush/Cheney Transition and Bush/Cheney 2000 Presidential Campaign. 

Ellen L. Weintraub was appointed to the Commission on December 6, 2002, and sworn-in on December 9. Before joining the Commission, Ms. Weintraub 

was Of Counsel at Perkins Coie, LLP, in Washington, 

DC. 

During 2002, David M. Mason served as Chairman 

of the Commission and Karl J. Sandstrom served as 

its Vice Chairman. On December 18, 2002, the Commission elected Commissioner Weintraub as its Chair 

and Bradley A. Smith as Vice Chairman for 2003. 

For biographies of the Commissioners and statutory officers, see Appendix 1. 

Inspector General 

Under the Inspector General Act, the Commission’s 

Office of the Inspector General (OIG) is authorized to 

conduct audits and investigations of FEC programs to 

find waste, fraud and abuse and to promote economy, 

effectiveness and efficiency within the Commission. 

In 2002, the OIG began an audit of the 

Commission’s disclosure process in response to a 

request from Congressman Stephen Horn, Chairman 

of the Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations. The objectives of the audit are to: 1) determine 

the extent, if any, of disclosure differences between 

candidate contributions reported by political committees and related political committee contributions 

reportedly received by candidates; and 2) determine 

whether an adequate process is in place to remedy a 

reporting discrepancy. The OIG planned to complete 

the audit in early 2003. 

In June 2002, the OIG issued a review entitled 

Limited Scope Building Security Review. The objectives of the study were to assess the effectiveness of 

the FEC closed circuit television (CCTV) security system and provide suggestions to improve overall security. The OIG concluded that the FEC’s CCTV security system is generally effective in providing surveillance of the FEC building. 

Equal Employment Opportunity 

During 2002, the FEC’s Office of Equal Employment Opportunity and Special Programs drafted proposed guidance for the Commission’s EEO Complaint 

Alternative Dispute Resolution Program and policies 

regarding Reasonable Accommodations for People 

with Disabilities. During Black History Month, six outstanding African American employees were recognized. The Office also increased the total participation of Commission employees in both the U.S. Savings Bond Drive and the Combined Federal Campaign. Finally, the EEO Office partnered with the 

Health Unit to sponsor various Health and Welfare 

programs. 

Ethics 

Staff members in the General Counsel’s office 

serve as the Commission’s ethics officials and administer the Ethics in Government Act program. During 

2002, the Office of Government Ethics (OGE) completed a routine review of the Commission’s ethics 

program. OGE found the ethics program to be in 

compliance with applicable statutes and regulations, 

and it noted that the agency’s ethics program is well 

managed by ethics officials. 

The ethics staff provided ethics orientation to all 

new employees and annual ethics briefings to all employees required to file public and confidential financial disclosure reports. Staff also administered the 

financial disclosure report system, which helps ensure 

that employees remain impartial in the performance of 

their official duties. In addition, the ethics staff provided guidance to employees on the Standards of 

Ethical Conduct for Employees of the Executive 

Branch. Finally, the staff submitted required reports 

to the Office of Government Ethics, including the annual agency ethics program report, financial disclo-
40 Chapter Five 

sure reports filed by Presidential candidates and 

travel payment reports. 

Personnel and Labor/Management 

Relations 

The Personnel Office provides policy guidance and 

operational support to FEC managers and staff in the 

area of human resources. During 2002, OPM’s Office 

of Merit Systems Oversight and Effectiveness conducted a review of FEC’s human capital program. 

OPM’s review focused on staffing, workforce management and human resources management accountability. Overall, OPM found the FEC’s human capital 

program operating within the merit system principles. 

In particular, OPM commended the FEC’s personnel 

office for the high level of service they provide to their 

clients, in terms of both quality and timeliness. 

The Personnel Office also developed agency policy 

for the administration of numerous federal leave programs, provided training for senior management in a 

variety of areas, and enhanced Commission security 

by issuing new identification cards for Commission 

employees and contractors. In addition, the Personnel Office represented the Commission as chief negotiator in contract negotiations with the union. 

FEC’s Budget 

Fiscal Year 2002 

The Commission received a fiscal year (FY) 2002 

appropriation of $43,657,000. In addition, the FEC 

received a Supplemental Appropriation of $750,000 

for expenses related to obtaining additional space to 

house staff to implement the Bipartisan Campaign 

Reform Act’s (BCRA) amendments to the Federal 

Election Campaign Act (the Act). The final total FY 

2002 appropriation was $44,407,000 for 362 full-time 

employees (FTE). The Commission obligated over 

$1.2 million of FY 2002 funds for forced move and 

construction costs to obtain additional space. 

FY 2002 Enacted $43,657,000 362 FTE 

FY 2002 Supplemental $ 750,000 0 FTE 

FY 2002 Total $44,407,000 362 FTE 

Fiscal Year 2003 

The initial FEC FY 2003 budget request for the 

FEC was $45,244,000 for 362 FTE. Upon enactment 

of the BCRA amendments to the Act, the Commission 

requested additional funds for implementing the 

BCRA changes. The request included an additional 

31 FTE and brought the total request for FY 2003 to 

$50,610,200 and 393 FTE. (The FEC agreed that 

enactment of a FY 2002 supplemental request for 

$750,000 for additional space would reduce this request by $750,000.) 

Awaiting resolution of the FY 2003 appropriation, 

the Commission operated under a series of Continuing Resolution appropriations at the FY 2002 level. 

The enacted FY 2003 appropriation, reduced by a 

.65% across-the-board rescission, was $49,541,871 

with 389 FTE. 

Budget Allocation: FYs 2002 and 2003 

Budget allocation comparisons for FYs 2002 and 

2003 appear in the table and charts that follow. 

CHART 5-1 

Functional Allocation of Budget 

FY 2002 FY 2003 

Personnel $29,682,755 33,198,800 

Travel/Transportation 229,407 447,000 

Space Rental 3,705,377 3,797,000 

Phones/Postage 454,004 468,500 

Printing 337,039 632,500 

Training/Tuition 216,667 302,000 

Depositions/Transcripts 168,303 125,000 

Contracts 1,418,859 2,985,000 

Equipment Rental/Maint 423,556 470,000 

Software/Hardware 3,481,897 3,508,000 

Federal Agency Services 1,346,096 1,548,571 

Supplies 368,649 405,000 

Publications 433,000 537,000 

Equipment Purchases 1,909,047 983,000 

Other 44,670 134,500 

Total $44,219,324 49,541,871 
The Commission 41 

CHART 5-2 

Divisional Allocation 

FY 2002 Actual 

FY 2003 Projected 

Percent 

Allocation of Budget 0 5 10 15 20 25 30 35

Commissioners 

Inspector General 

Staff Director 

Administration 

Audit 

Information 

Office of Election Administration 

Office of General Counsel 

Data Systems Development 

Public Disclosure Division 

Reports Analysis Division 

ADP/Electronic Filing 

Percent 

0 5 10 15 20 25 30 35 Allocation of Staff 

Commissioners 

Inspector General 

Staff Director 

Administration 

Audit 

Information 

ffice of Election Administration 

Office of General Counsel 

Data Systems Development 

Public Disclosure Division 

Reports Analysis Division 

ADP/Electronic Filing 

O
43 

Chapter Six 

Legislative Recommendations 

In May 2003, the Federal Election Commission 

submitted to Congress and the President seven legislative recommendations. The Commission substantially reduced the number of recommendations for 

legislative action, including only high priority recommendations with broad Commission support. Those 

seven recommendations follow. 

Compliance 

Making Permanent the Administrative Fine 

Program for Reporting Violations (2003) 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends 

that Congress make permanent the Commission’s 

authority to assess administrative fines for straightforward violations of the law requiring timely reporting of 

receipts and disbursements. The Commission’s current Administrative Fine program only covers violations that relate to reporting periods through December 31, 2003. 

Explanation: On November 12, 2001, President 

Bush signed the Fiscal Year 2002 Treasury and General Government Appropriations Act, which extended 

the Administrative Fine Program to cover violations of 

2 U.S.C. § 434(a) that relate to reporting periods 

through December 31, 2003. Since the Administrative 

Fine program was implemented with the 2000 July 

Quarterly report, the Commission has processed and 

made public 519 cases, with $722,221 in fines collected. The Administrative Fine program has been 

remarkably successful: over the course of the program, the number late and nonfiled reports has generally decreased. As a result, the Administrative Fine 

program has become an integral part of the 

Commission’s mission to administer and enforce the 

Act. By making the program permanent, Congress 

would ensure that the Commission would not lose one 

of the most cost-effective and successful programs in 

its history. 

Under the Administrative Fine program, the Commission considers reports to be filed late if they are 

received after the due date, but within 30 days of that 

due date. Election-sensitive reports are considered 

late if they are filed after their due date, but at least 

five days before the election. (Election sensitive reports are those filed immediately before an election 

and include pre-primary, pre-special, pre-general, 

October quarterly and October monthly reports). 

Committees filing reports after these dates are considered nonfilers. Civil money penalties for late reports are determined by the amount of activity on the 

report, the number of days the report was late and 

any prior penalties for violations under the administrative fines regulations. Penalties for nonfiled reports 

are also determined by the amount of activity on the 

report and any prior violations. Committees have the 

option to either pay the civil penalty assessed or challenge the Commission’s finding and/or proposed penalty. 

Ethics 

Allowing the FEC to Restrict the Political 

Activities of its Employees (2003) 

Section: 2 U.S.C. §437c(f), 5 U.S.C. §7323(b)(1) 

Recommendation: The Commission recommends 

that Congress amend the FECA by adding a new 

subsection (f)(5) to 2 U.S.C. §437c, which would prohibit an FEC Commissioner or employee from publicly 

supporting or opposing a candidate, political party or 

political committee subject to the FEC’s jurisdiction, 

regardless of whether the activity is performed in concert with a political party, partisan political group or a 

candidate for partisan public office. 

Explanation: In 1993, the enactment of the Hatch 

Reform Act (Pub. L. 103-94) lifted many of the original 

Hatch Act’s restrictions on many Federal employees 

with regard to participation in political campaigns. 

The Hatch Reform Act places special limitations on 

Commission employees, prohibiting them from requesting or receiving political contributions from, or 

giving political contributions to, an employee, a Member of Congress or an officer of a uniformed service, 

as well as from taking an active part in political management or political campaigns. 5 U.S.C. 

§§7323(b)(1) and 7323(b)(2). 
44 Chapter Six 

The Hatch Reform Act specifically states, “employees should be encouraged to exercise fully, freely, 

and without fear of penalty or reprisal, and to the extent not expressly prohibited by law, their right to participate or to refrain from participating in the political 

processes of the nation.” 5 U.S.C. §7321. It also 

provides that “[a]n employee retains the right to vote 

as he chooses and to express his opinion on political 

subjects and candidates.” 5 U.S.C. §7323(c). OPM 

has authority to issue regulations regarding the Hatch 

Reform Act. See 5 U.S.C §1103(a)(5) and 5 U.S.C. 

§7325. With regard to agencies such as the Commission whose employees are limited in their political 

activity, OPM regulations allow such employees to 

“[e]xpress his or her opinion as an individual privately 

and publicly on political subjects and candidates.” 5 

CFR 734.402. The OPM regulations provide that 

such activity may not be done “in concert with a political party, partisan political group or a candidate for 

partisan political office.” 

There are no provisions in the Hatch Reform Act 

that empower any agency other than OPM to interpret 

its provisions, and there is currently no provision in 

FECA that directly refers to the Hatch Reform Act or 

previous Hatch restrictions. OPM has issued regulations expressly limiting the extent to which the political 

activities of employees may be limited beyond the 

restrictions in the Hatch Reform Act. See 11 CFR 

734.104. These OPM regulations, as well as the 

Commission’s current lack of independent statutory 

authority, could be read to block any additional regulatory restrictions that the Commission might wish to 

place on the political activities of Commission employees. See Statement of Basis and Purpose for 11 

CFR 734.104, 59 Fed. Reg. 48765. The Hatch Reform Act and the OPM regulatory regime also raises 

questions regarding the viability of the foundation for 

Commission’s current regulations on the political activity of Commissioners and Commission employees 

at 11 CFR 7.11. These questions could be resolved if 

the Commission’s regulatory restrictions on political 

activity of employees could be explicitly based on 

independent statutory authority in FECA. 

Given its role in the political process, the Commission believes that public support of, or opposition to, 

any candidate, political party or political committee 

subject to its jurisdiction by Commissioners or employees could seriously harm its credibility as a nonpartisan agency and thus its ability to fulfill its mission. 

Therefore, to provide an independent statutory basis 

for regulating the political activities of its employees 

beyond the Hatch Reform Act, the Commission recommends that Congress enact a new statutory provision, as part of 2 U.S.C. §437c(f), to prohibit an FEC 

Commissioner or employee from publicly supporting 

or opposing a candidate, political party or political 

committee subject to the FEC’s jurisdiction, regardless of whether the activity is performed in concert 

with a political party, partisan political group or a candidate for partisan public office. 

Disclosure 

Increasing and Indexing all Registration and 

Reporting Thresholds for Inflation (2003) 

Section: 2 U.S.C. §§431 and 434 

Recommendation: The Commission recommends 

that Congress increase and index for inflation all registration and reporting thresholds. 

Explanation: Most of the Act’s registration and 

reporting thresholds were set in 1974 and 1979. Because over twenty years of inflation had effectively 

reduced the Act’s contribution limits in real dollars, the 

BCRA increased some contribution limits to partially 

adjust for inflation, and then indexed those limits: 

contributions to candidates and national party committees by individuals and non-multicandidate committees, the biennial aggregate contribution limit for individuals and the limit on contributions to Senate candidates by certain national party committees. The 

Commission proposes extending this approach to all 

registration and reporting thresholds, which have similarly been effectively reduced as a result of inflation. 

Increasing and then indexing these thresholds 

would ease the registration and reporting burdens on 

smaller political committees who, in some cases, are 

unaware of the Act’s registration and reporting provisions. Moreover, by increasing and then indexing the 

thresholds for inflation, Congress would help to ensure that some committees and persons who lack the 
Legislative Recommendations 45 

resources and technical expertise to comply with the 

Act’s registration and reporting requirements would 

not have to do so. Finally, because of the effect of 

inflation, increasing and then indexing the registration 

and reporting thresholds would continue to capture 

the significant financial activity envisioned when Congress enacted the FECA. 

Electronic Filing of Senate Reports 

Section: 2 U.S.C. §§432(g) and 434(a)(11) 

Recommendation: The Commission recommends 

that Congress require: 

• Mandatory electronic filing, at a date to be determined by Congress, for those persons and political 

committees filing designations, statements, reports 

or notifications pertaining only to Senate elections if 

they have, or have reason to expect to have, aggregate contributions or expenditures in excess of 

$50,000 in a calendar year. 

• Electronically filed designations, statements, reports 

or notifications pertaining only to Senate elections to 

be forwarded to the Commission within 24 hours of 

receipt and to be made accessible to the public on 

the Internet, if Congress does not change the point 

of entry for filings pertaining only to Senate elections. 

Explanation: Public Law 106-58 required, among 

other things, that the Commission make electronic 

filing mandatory for political committees and other 

persons required to file with the Commission who, in a 

calendar year, have, or have reason to expect to 

have, total contributions or total expenditures exceeding a threshold set by the Commission. The Commission set this threshold at $50,000 and, in the 

Commission’s experience, that threshold has worked 

well. Extending electronic filing to political committees and persons who file designations, statements, 

reports or notifications pertaining only to Senate elections would standardize the information received, 

thereby enhancing public disclosure of campaign 

finance information. Additionally, data from electronically filed reports is received, processed and disseminated more easily and efficiently, resulting in better 

use of resources. 

Electronic filing (by means other than diskette) is 

also unaffected by disruptions in the delivery of first 

class mail, such as those arising from the terrorist 

attacks on the U.S. Postal Service. As a result of 

these disruptions, some amendments to Senate campaign reports that were filed via regular mail in late 

2001 took months to arrive at the Secretary of the 

Senate (and the FEC), delaying disclosure. In contrast, amendments electronically filed during the same 

time period by other types of filers were received and 

processed in a timely manner. 

Filing Reports Using Overnight Delivery, Priority 

or Express Mail 

Section: 2 U.S.C. §§434(a)(2)(A)(i), (a)(4)(A)(ii) and 

(a)(5) 

Recommendation: The Commission recommends 

that Congress amend 2 U.S.C. §§434(a)(2)(A)(i), 

(a)(4)(A)(ii) and (a)(5) to offer filers additional means 

of ensuring timely filing of designations, reports, and 

statements. Specifically, the Commission recommends that Congress equate the date of receipt by 

one of the following delivery services with the registered or certified mail postmark dates currently set 

forth in section 434: 

• Overnight delivery with an online tracking system 

that allows delivery status to be verified; and 

• Priority Mail or Express Mail with U.S. Postal Service 

delivery confirmation. 

Explanation: Section 434 of the Act permits committees that do not file electronically to rely upon a 

registered or certified mail postmark as evidence that 

their designations, reports and statements were filed 

on time. For example, quarterly, monthly, semiannual 

and post-general election reports must be postmarked 

by the due date, and pre-primary and pre-general 

election reports must be postmarked 15 days before 

the election. 

Overnight delivery, Priority Mail and Express Mail 

were not widely used when the registered or certified 

mail provisions were adopted as part of the 1979 

amendments to the FECA. Since that time, these 

services have come into wide use and are frequently 

used by political committees to file their FEC designations, reports and statements. Equating the date of 

receipt by one of these services with the registered or 

certified mail date would aid the regulated community 
46 Chapter Six 

in its efforts to comply with the Act’s reporting requirements. 

Overnight delivery, Priority Mail and Express Mail 

ensure that there is written evidence that a package 

was mailed and received. Additionally, due to their 

reliability and speed, the Commission’s ability to collect, process and disseminate information would be 

improved if Congress were to amend 2 U.S.C. 

§§434(a)(2)(A)(i), (a)(4)(A)(ii) and (a)(5) to include 

these services. 

Contribution Limits 

Multicandidate Political Committee Contribution 

Limitations and Non-multicandidate Political 

Committee Contribution Limitations (2003) 

Section: 2 U.S.C. §§441a(a)(2) and 441a(c) 

Recommendation: The Commission recommends 

that Congress consider indexing for inflation the contribution limitations applicable to multicandidate political committees and adjusting the amount such committees may contribute to national party committees to 

harmonize these limits with the limits applicable to 

non-multicandidate political committees. 

Explanation: A political committee qualifies for 

multicandidate status if it has been registered with the 

Commission for six months or more, has received 

contributions from more than 50 persons, and has 

contributed to five or more Federal candidates. 2 

U.S.C. §441a(a)(4). FECA, prior to the BCRA, provided a significantly higher limit on contributions to 

candidates for political committees with 

multicandidate status than for those without that status ($5,000 per election versus $1,000 per election). 

The BCRA raised and indexed for inflation the contribution limit on non-multicandidate committees (to 

$2,000 per election), and such limit eventually will 

become higher than the limit imposed on 

multicandidate committees. Thus, this contribution 

limit itself one day will create a substantial disincentive to achieve multicandidate committee status. 

In addition, the limit for contributions to national 

party committees from multicandidate committees is 

$15,000 per year (as it was prior to the BCRA), yet 

the BCRA increased the limit on contributions to the 

same national party committees from nonmulticandidate committees to $25,000 per year. 2 

U.S.C. §441a(a)(2)(B), (1)(B). Moreover, only the 

contribution limit for non-multicandidate committees is 

indexed for inflation, which means that over time the 

current $10,000 difference will only increase. 

Congress should consider revising the statute to 

give multicandidate committees allowances at least 

as generous as those given to non-multicandidate 

committees. 

Public Financing 

Averting Impending Shortfall in Presidential 

Public Funding Program (revised 2003) 

Section: 26 U.S.C. §§6096, 9008(a) and 9037(a) 

Recommendation: The Commission strongly recommends that Congress take immediate action to 

avert a projected impending shortfall in the Presidential public funding program in the 2004 election year. 

Explanation: The Presidential public funding program experienced a shortfall for the election of 2000 

because participation in the check-off program is declining and the checkoff is not indexed to inflation 

while payouts are indexed. This shortfall impacted 

foremost upon primary candidates. In January 2000, 

when the U.S. Treasury made its first payment for the 

2000 election, it was only able to provide approximately 50 percent of the public funds that qualified 

Presidential candidates were entitled to receive. Specifically, only $16.9 million was available for distribution to qualified primary candidates on January 1, 

2000, after the Treasury paid the convention grants 

and set aside the general election grants.1 However, 

the entitlement (i.e., the amount that the qualified 

candidates were entitled to receive) on that date was 

$34 million, twice as much as the amount of available 

public funds. By January 2001, total payments made 

to primary candidates was in excess of $61 million. 

1 The Commission certified a total of $28.9 million in 

convention grants, and $147.2 million was set aside for use 

by general election candidates. 
Legislative Recommendations 47 

The Commission projects the temporary shortfall in 

matching funds that has occurred in the past two 

presidential elections may recur in 2004. Under the 

most realistic assumptions, it appears that the January 2004 payout may be only about 53 cents on the 

dollar. The funds considered ‘available’ by the Department of Treasury will be about $19.3 million, the 

funds to which candidates will be entitled will be about 

$36.6 million and the payouts therefore will have to be 

reduced accordingly. February and March payouts 

also will be less than 100 percent, but by the April 

2004 payouts, the temporary shortfall will have been 

cured under this projection. This is because the 

checkoff proceeds flowing into Treasury Department 

accounts will be adequate to make up the earlier deficiencies. 

The Commission recommends several specific 

legislative changes. First, the statute should be revised so that Treasury will be able to rely on expected 

available proceeds from the voluntary checkoff, rather 

than relying solely on actual proceeds on hand as of 

the dates of the matching fund payments. Since large 

infusions of voluntary checkoff proceeds predictably 

occur in the first few months of the election year, including such estimated proceeds in the calculation of 

funds available for matching fund payouts would virtually eliminate the shortfall in the near future. Because 

estimates for expected payouts are an acceptable 

part of the calculations (e.g., setting aside sufficient 

funds to cover general election payouts), estimates of 

the checkoff proceeds could be incorporated, as well. 

A very simple change in the wording of 26 U.S.C. 

§9037 would accomplish this: changing “are available” to “will be available.” Expected payments 

should be based on sound statistical methods to produce a cautious, conservative estimate of the funds 

that will be available to cover convention and general 

election payments. 

A second revision in the statute would further the 

long-term stability of the presidential public funding 

program: indexing the voluntary checkoff amount to 

inflation. Although the checkoff amount was increased from $1 to $3 beginning with 1993 returns, 

there was no indexing built in to account for further 

inflation thereafter. Since the payments are indexed 

to inflation, the statute all but assures a permanent 

shortfall. 
49 

Chapter Seven 

Campaign Finance Statistics 

Corporate 

Nonconnected 

Trade/Membership/Health 

Labor 

Other 

CHART 7-1 

Number of PACs, 1974-2002 

2000 

1500 

1000 

74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 

500 

0 
50 Chapter Seven 

CHART 7-2 

House Candidates’ 

Sources of Receipts: 

Election Cycle 

Individuals 

PACs 

Candidate 

Other Receipts 

Challengers 

Millions of Dollars 

400 

350 

300 

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 

Incumbents 

Millions of Dollars 

400 

350 

300 

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 

Open Seat Candidates 

Millions of Dollars 

400 

350 

300 

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 
Campaign Finance Statistics 51 

CHART 7-3 

Senate Candidates’ 

Sources of Receipts: 

Election Cycle 

Incumbents 

Millions of Dollars

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 

Individuals 

PACs 

Candidate 

Other Receipts 

Challengers 

Millions of Dollars 

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 

Open Seat Candidates 

Millions of Dollars 

250 

200 

150 

100 

50 

0 1994 1996 1998 2000 2002 
Chapter Seven 

Democratic Candidates 

Republican Candidates 

52 

CHART 7-4 

PAC Contributions to Candidates 

by Party and Type of PAC 

2000 Election Cycle 

Millions of Dollars 

100 

80 

60 

40 

20 

0 

Corp. Labor Trade/ Non- Other 

PACs PACs Member/ Connected PACs 

Health PACs 

PACs 

2002 Election Cycle 

Millions of Dollars 

100 

80 

60 

40 

20 

0 

Corp. Labor Trade/ Non- Other 

PACs PACs Member/ Connected PACs 

Health PACs 

PACs 
1998 

2000 

2002 

Campaign Finance Statistics 53 

CHART 7-5 

PAC Contributions to House and Senate 

Candidates by Party and Candidate Status 

Millions of Dollars 

250 

200 

150 

100 

50 

0 Republicans Democrats Incumbents 

Millions of Dollars 

250 

200 

150 

100 

50 

0 Nonincumbents 
Percent 

100 

80 

60 

40 

20 

0 Corp. Labor Noncon. Trade 

Incumbents 

1998 

2000 

2002 

54 Chapter Seven 

CHART 7-6 

PAC Contributions to House Candidates 

by Type of PAC and Candidate Status 

Percent 

100 

80 

60 

40 

20 

0 Corp. Labor Noncon. Trade 

Challengers 
Campaign Finance Statistics 55 

CHART 7-7 

Major Party Federal 

Account Receipts: 2002 

National Committee

National Senatorial Committe

National Congressional Com

State/Local Committees 

e

mittee 

0 

50 

100 

150 

200 

Democrats Republicans 
Federal Receipts 

Nonfederal Receipts 

CHART 7-8 

Party Federal and 

Nonfederal Receipts 

Democratic National Committee (DNC) 

56 Chapter Seven

1995-96 1997-98 1999-00 2001-02 

$210.3 million $122.6 million $262.7 million $176.8 million 

Republican National Committee (RNC) 

1995-96 1997-98 1999-00 2001-02 

$306.1 million $178.8 million $377.9 million $300.5 million 
2000 

2002 

Campaign Finance Statistics 57 

CHART 7-9 

Sources of Party Receipts 

DNC Federal Receipts by Source 

0 50 

Millions of Dollars 

100 150 200 250 300 

Individuals 

$200 or less 

Individuals 

over $200 

PACs 

Other 

RNC Federal Receipts by Source 

0 50 

Millions of Dollars 

100 150 200 250 300 

Individuals 

200 or less 

Individuals 

over $200 

PACs 

Other 

$

DNC Nonfederal Receipts by Source 

Millions of Dollars 

0 50 100 150 200 250

Individuals 

Other 

Sources 

RNC Nonfederal Receipts by Source 

Millions of Dollars 

0 50 100 150 200 250 

Individuals

Other

Sources
59 

Appendix 1 

Biographies of 

Commissioners 

and Officers 

Commissioners 

David M. Mason, Chairman 

April 30, 20031 

David Mason was nominated to the Commission by 

President Clinton on March 4, 1998, and confirmed by 

the U.S. Senate on July 30, 1998. Prior to his appointment, Mr. Mason served as Senior Fellow, Congressional Studies, at the Heritage Foundation. He joined 

Heritage in 1990 as Director of Executive Branch 

Liaison. In 1995 he became Vice President, Government Relations, and in 1997 Mr. Mason was designated Senior Fellow with a focus on research, writing 

and commentary on Congress and national politics. 

Prior to his work at the Heritage Foundation, Commissioner Mason served as Deputy Assistant Secretary of Defense and served on the staffs of Senator 

John Warner, Representative Tom Bliley and thenHouse Republican Whip Trent Lott. He worked in 

numerous Congressional, Senate, Gubernatorial and 

Presidential campaigns, and was himself the Republican nominee for the Virginia House of Delegates in 

the 48th District in 1982. 

Commissioner Mason attended Lynchburg College 

in Virginia and graduated cum laude from Claremont 

McKenna College in California. He is active in political 

and community affairs at both the local and national 

level. He and his wife reside in Lovettsville, Virginia, 

with their ten children. 

Karl J. Sandstrom, Vice-Chairman 

April 30, 2001 

Karl Sandstrom was nominated to the Commission 

by President Clinton on July 13, 1998, and confirmed 

by the U.S. Senate on July 30, 1998. Prior to his appointment, Commissioner Sandstrom served as 

Chairman of the Administrative Review Board at the 

Department of Labor. From 1988 to 1992 he was Staff 

Director of the House Subcommittee on Elections, 

during which time he also served as the Staff Director 

of the Speaker of the House’s Task Force on Electoral Reform. From 1979 to 1988, Commissioner 

Sandstrom served as the Deputy Chief Counsel to the 

House Administration Committee of the House of 

Representatives. In addition, he has taught public 

policy as an Adjunct Professor at American University. 

Commissioner Sandstrom received a B.A. degree 

from the University of Washington, a J.D. degree from 

George Washington University and a Masters of the 

Law of Taxation from Georgetown University Law 

Center. 

Commissioner Sandstrom departed from the Commission on December 9, 2002. 

Bradley A. Smith, Commissioner 

April 30, 2005 

Bradley Smith was nominated to the Commission 

by President Clinton on February 9, 2000, and confirmed by the U.S. Senate on May 24, 2000. Prior to 

his appointment, Commissioner Smith was Professor 

of Law at Capital University Law School in Columbus, 

Ohio, where he taught Election Law, Comparative 

Election Law, Jurisprudence, Law & Economics and 

Civil Procedure. 

Prior to joining the faculty at Capital in 1993, he 

had practiced with the Columbus law firm of Vorys, 

Sater, Seymour & Pease, served as United States 

Vice Consul in Guayaquil, Ecuador, worked as a consultant in the health care field and served as General 

Manager of the Small Business Association of Michigan, a position in which his responsibilities included 

management of the organization’s political action 

committee. 

Commissioner Smith received his B.A. cum laude 

from Kalamazoo College in Kalamazoo, Michigan, 

and his J.D. cum laude from Harvard Law School. 

Danny L. McDonald, Commissioner 

April 30, 2005 

Now serving his fourth term as Commissioner, 

Danny McDonald was first appointed to the Commission in 1981 and was reappointed in 1987, 1994 and 

2000. Before his original appointment, he managed 

10 regulatory divisions as the general administrator of 

the Oklahoma Corporation Commission. He had pre1

 Term expiration date. 
60 Appendices 

viously served as secretary of the Tulsa County Election Board and as chief clerk of the board. He was 

also a member of the Advisory Panel to the FEC’s 

National Clearinghouse on Election Administration. 

A native of Sand Springs, Oklahoma, Mr. 

McDonald graduated from Oklahoma State University 

and attended the John F. Kennedy School of Government at Harvard University. He served as FEC Chairman in 1983, 1989, 1995 and 2001. 

Scott E. Thomas, Commissioner 

April 30, 2003 

Scott Thomas was appointed to the Commission in 

1986 and reappointed in 1991 and 1998. He served 

as acting Chairman during the last four months of 

1998, and as Chairman throughout 1999. He previously served as Chairman in 1987 and 1993. Prior to 

serving as a Commissioner, Mr. Thomas was the 

executive assistant to former Commissioner Thomas 

E. Harris. He originally joined the FEC as a legal intern in 1975. He worked as a staff attorney in the Office of General Counsel and later became an Assistant General Counsel for Enforcement. 

A Wyoming native, Mr. Thomas graduated from 

Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member 

of the District of Columbia and U.S. Supreme Court 

bars. 

Darryl R. Wold, Commissioner 

April 30, 2001 

Darryl Wold was nominated to the Commission by 

President Clinton on November 5, 1997, and confirmed by the U.S. Senate on July 30, 1998. Prior to 

his appointment, Commissioner Wold had been in 

private law practice in Orange County, California, 

since 1974. In addition to his own practice, he was 

counsel to Reed and Davidson, a California law firm, 

for election law litigation and enforcement defense 

matters. Mr. Wold’s practice included representing 

candidates, ballot measure committees, political action committees and others with responsibilities under 

federal, state and local election laws. Mr. Wold’s 

business practice emphasized business litigation and 

counseling closely-held companies. 

Commissioner Wold graduated cum laude from 

Claremont McKenna College in California and earned 

an LL.B. from Stanford University. He is a member of 

the California and U.S. Supreme Court bars. 

Commissioner Wold departed from the Commission on March 29, 2003. 

Michael E. Toner, Commissioner 

April 30, 2007 

Michael E. Toner was nominated to the Federal 

Election Commission by President George W. Bush 

on March 4, 2002, and appointed on March 29, 2002. 

Prior to his appointment, Mr. Toner was Chief Counsel to the Republican National Committee. Mr. Toner 

joined the RNC in 2001 after serving as General 

Counsel of the Bush-Cheney Transition and General 

Counsel of the Bush-Cheney 2000 Presidential Campaign. Before joining the Bush campaign in Austin, 

Mr. Toner was Deputy Counsel at the RNC from 

1997-1999. Prior to his tenure at the RNC, he served 

as counsel to the Dole/Kemp Presidential Campaign 

in 1996. 

Commissioner Toner was an associate attorney at 

Wiley, Rein, & Fielding in Washington, DC, from 

1992-1996. His work there included advising political 

committees and corporate clients in federal and state 

election law compliance. He was also involved in a 

number of First and Fourteenth Amendment appellate 

matters, including two cases that reached the U.S. 

Supreme Court. 

Commissioner Toner received a J.D., cum laude 

from Cornell Law School in 1992, an M.A. in Political 

Science from Johns Hopkins University in 1989 and a 

B.A. with distinction from the University of Virginia in 

1986. He is a member of the District of Columbia and 

Virginia bars as well as the United States Supreme 

Court bar, the Fourth U.S. Circuit Court of Appeals 

and the U.S. District Courts for the District of Columbia and the Eastern District of Virginia. 
Appendices 61 

Ellen L. Weintraub, Commissioner 

April 30, 2007 

Ellen Weintraub was appointed to the Federal Election Commission on December 6, 2002, by President 

George W. Bush, and took office on December 9, 

2002. She is the third woman to serve on the Commission. Prior to her appointment, Ms. Weintraub was 

Of Counsel to Perkins Coie, LLP, and a member of its 

Political Law Group. There, she counseled clients on 

federal and state campaign finance laws, political 

ethics, nonprofit law and lobbying regulation. During 

the election contest arising out of the 1996 election of 

Senator Mary Landrieu (D-LA), Ms. Weintraub served 

on the legal team that advised the Senate Rules 

Committee. Her tenure with Perkins Coie represented 

Ms. Weintraub’s second stint in private practice, having previously practiced as a litigator with the New 

York firm of Cahill Gordon & Reindel. 

Before joining Perkins Coie, Ms. Weintraub was 

Counsel to the Committee on Standards of Official 

Conduct for the U.S. House of Representatives (the 

House Ethics Committee). Like the Commission, the 

Committee on Standards is a bipartisan body, evenly 

divided between Democratic and Republican members. There, Ms. Weintraub focused on implementing 

the Ethics Reform Act of 1989 and subsequent 

changes to the House Code of Official Conduct. She 

also served as editor in chief of the House Ethics 

Manual and as a principal contributor to the Senate 

Ethics Manual. While at the Committee, Ms. 

Weintraub counseled Members on investigations and 

often had lead responsibility for the Committee’s public education and compliance initiatives. 

Ms. Weintraub received her B.A., cum laude, from 

Yale College and her J.D. from Harvard Law School. 

A native New Yorker, she is a member of the New 

York and District of Columbia bars and the Supreme 

Court bar. She currently resides in Maryland with her 

husband, Bill Dauster, and their three children. 

Statutory Officers 

James A. Pehrkon, Staff Director 

James Pehrkon became Staff Director on April 14, 

1999, after serving as Acting Staff Director for eight 

months. Prior to that, Mr. Pehrkon served 18 years as 

the Commission’s Deputy Staff Director with responsibilities for managing the FEC’s budget, administration 

and computer systems. Among the agency’s first employees, Mr. Pehrkon is credited with setting up the 

FEC’s data processing department and establishing 

the Data Systems Development Division. He directed 

the data division before assuming his duties as 

Deputy Staff Director. 

An Austin, Texas, native, Mr. Pehrkon received an 

undergraduate degree from Harvard University and 

did graduate work in foreign affairs at Georgetown 

University. 

Lawrence H. Norton, General Counsel 

Lawrence Norton became General Counsel of the 

FEC on September 17, 2001. Prior to joining the 

Commission, Mr. Norton served as an Associate 

Director at the Commodity Futures Trading 

Commission for five years. He also worked as an 

Assistant Director at the Federal Trade Commission 

and as an Assistant Attorney General in the Maryland 

Attorney General’s office. 

Mr. Norton graduated Order of the Coif from the 

University of Maryland School of Law. 

Lynne A. McFarland, Inspector General 

Lynne McFarland became the FEC’s first permanent Inspector General in February 1990. She came 

to the Commission in 1976, first as a reports analyst. 

Later, she worked as a program analyst in the Office 

of Planning and Management. 

A Maryland native, Ms. McFarland holds a sociology degree from Frostburg State College and is a 

member of the Institute of Internal Auditors. 
63 Appendix 2 

Chronology of Events 

January 

1— Chairman David M. Mason and Vice Chairman Karl Sandstrom begin their one-year 

terms of office. 

9— In Miles for Senate v. FEC, the U.S. District 

Court for the District of Minnesota grants 

judgement in the Commission’s favor in 

case challenging administrative fine. 

9— FEC conducts roundtable on “Reporting 

Requirements for 2002.” 

24 — FEC releases semi-annual PAC count. 

25 — In Beaumont v. FEC, the U.S. Court of Appeals for the 4th Circuit upholds a district 

court decision that found that the Act’s corporate contribution ban was 

unconstitutional as applied to MCFL-type 

corporation. 

31 — 2001 year-end report due. 

February 

1— FEC approves notice explaining applicability 

of Commission travel allocation rules. 

5-7 — FEC holds conference for candidates, parties and PACs in San Francisco, CA. 

11 — Robert Biersack appointed to be FEC’s 

Deputy Press Officer. 

March 

20 — FEC holds public hearing on “The Internet 

and Federal Elections.” 

25-26— FEC holds conference for candidates and 

party committees in Washington, DC. 

27 — President Bush signs Bipartisan Campaign 

Reform Act of 2002 (BCRA). 

27 — Senator Mitch McConnell and the National 

Rifle Association each file complaint with 

U.S. District Court for the District of Columbia challenging constitutionality of several 

provisions of BCRA. The complaint is styled 

as McConnell v. FEC. 

29 — Appointment of Michael E. Toner to Commission; Commissioner Darryl Wold departs. 

April 

15 — Quarterly report due 

18 — FEC approves Notice of Proposed 

Rulemaking on reducing administrative fines 

for late filers and nonfilers. 

22-24— FEC holds conference for corporations in 

Washington, DC. 

23 — FEC submits amended FY2003 budget request seeking additional $5,366,200 and 31 

full-time employees in order to fund implementation of BCRA. 

30 — FEC approves Voting Systems Standards 

for release and publication. 

May 

9— FEC approves Notice of Proposed 

Rulemaking on implementing BCRA’s “soft 

money” provisions. 

14 — Revised Campaign Guide for Nonconnected 

Committees available. 

14 — FEC submits 23 legislative recommendations to Congress and President. 

22-24— FEC holds conference for trade associations 

in Washington, DC. 

24 — FEC approves “Brokerage Loans and Lines 

of Credit” final rules. 

June 

1— FEC issues Annual Report 2001. 

4-5 — FEC holds public hearing on “Soft Money.” 

22 — FEC approves “Soft Money” rules, meeting 

90-day deadline of BCRA. 

26-28— FEC holds conference for membership and 

labor organizations. 

July 

12 — FEC approves revisions to National Mail 

Voter Registration Form. 

15 — Quarterly report due. 

15 — FEC releases semi-annual PAC count. 

August 

1— FEC approves Notice of Proposed 

Rulemaking on “Electioneering Communications.” 
64 Appendices 

15 — FEC approves Notice of Proposed 

Rulemaking on “Contribution Limitations and 

Prohibitions.” 

22 — FEC approves Notice of Proposed 

Rulemaking on “Disclaimers, Fraudulent 

Solicitation, Civil Penalties and Personal 

Use of Campaign Funds.” 

28-29— FEC holds public hearing on “Electioneering 

Communications.” 

29 — Revised Campaign Guide for Congressional 

Candidates and Committees available. 

September 

9— Congressional fundraising summary. 

12 — FEC approves Notice of Proposed 

Rulemaking on “Coordinated and Independent Expenditures.” 

October 

2— FEC holds “New Soft Money Rules” 

roundtable. 

3— ADR Program made permanent. 

11 — FEC approves Notice of Proposed 

Rulemaking on “BCRA Reporting.” 

11 — FEC approves “Electioneering Communications” final rules. 

11 — FEC approves “FCC Database on Electioneering Communications” interim final rules. 

15 — FEC publishes filing dates for Hawaii 2nd 

District special election. 

15 — Quarterly report due. 

23-24— FEC holds public hearing on “Coordinated 

and Independent Expenditures.” 

24 — Pre-General report due. 

November 

5— Post-General report due. 

8— FEC approves “Contribution Limitations and 

Prohibitions” final rules. 

25 — FEC approves “Disclaimers, Fraudulent 

Solicitation, Civil Penalties and Personal 

Use of Campaign Funds” final rules. 

29 — FEC approves “Interim Reporting Procedures” policy statement. 

December 

4-5 — Oral arguments on McConnell v. FEC before 

three-judge District Court panel. 

5— FEC approves “Coordinated and Independent Expenditures” final rules. 

6— Appointment of Ellen L. Weintraub to Commission. 

9— Commissioner Karl Sandstrom departs. 

12 — FEC approves “BCRA Reporting” final rules. 

18 — Commission elects Ellen L. Weintraub Chair 

and Bradley A. Smith Vice Chairman for 

2003. 

19 — FEC approves Notice of Proposed 

Rulemaking on “Leadership PACs.” 

19 — FEC approves “Millionaires’ Amendment” 

interim final rules, completing BCRA 

rulemaking within 270 days of enactment of 

BCRA. 
65 

Appendix 3 

FEC Organization Chart 

General Counsel

 Lawrence H. Norton 

Public Financing, 

Ethics and 

Special Projects 

Deputy Staff Director 

for Management 

Data Systems 

Development 

Planning and 

Management 

Administration Equal Employment 

Opportunity 

Commission 

Secretary 

Public 

Disclosure 

Audit 

Inspector General 

Lynne McFarland 

Staff Director 

James A. Pehrkon 

Information 

Congressional 

Affairs 

Personnel 

Labor/Management 

Press Office 

Policy 3 

Reports 

Analysis 

Litigation 

Enforcement 

The Commissioners 

1 Ellen L. Weintraub was elected 2003 Chair. 

Administrative 

Review 

Alternative Dispute 

Resolution 

Election 

Administration 

Deputy Staff Director 

for Audit & Review 

David M. Mason, Chairman1 

Karl J. Sandstrom, Vice Chairman2 

Michael E. Toner, Commissioner 

Danny L. McDonald, Commissioner 

Bradley A. Smith, Commissioner 

Scott E. Thomas, Commissioner 

2 Bradley A. Smith was elected 2003 Vice Chairman. 

3 Policy covers regulations, advisory opinions, legal review and administrative law. 
67 

Appendix 4 

FEC Offices 

This appendix briefly describes the offices within 

the Commission, located at 999 E Street, NW, Washington, DC 20463. The offices are listed alphabetically, with local telephone numbers given for offices 

that provide services to the public. Commission offices can also be reached toll-free at 800-424-9530 

and locally at 202-694-1100. 

Administration 

The Administration Division consists of a Finance 

Office and an Administration Office. The Finance Office administers the agency’s accounting and payroll 

programs. The Administration Office is responsible for 

procurement, contracting, space management, 

records management, telecommunications, building 

security and maintenance. In addition, the office 

handles printing, document reproduction and mail 

services. 

Audit 

Many of the Audit Division’s responsibilities concern the Presidential public funding program. The 

division evaluates the matching fund submissions of 

Presidential primary candidates and determines the 

amount of contributions that may be matched with 

federal funds. As required by law, the division audits 

all public funding recipients. 

In addition, the division audits those committees 

that, according to FEC determinations, have not met 

the threshold requirements for substantial compliance 

with the law. Audit Division resources are also used in 

the Commission’s investigations of complaints. 

Commission Secretary 

The Commission Secretary is responsible for all 

administrative matters relating to Commission meetings, as well as Commission votes taken outside of 

the meetings. This includes preparing meeting agendas, agenda documents, Sunshine Act notices, meeting minutes and vote certifications. 

The Secretary also logs, circulates and tracks numerous materials not related to Commission meetings, and records the Commissioners’ votes on these 

matters. All matters on which a vote is taken are entered into the Secretary’s database. 

Commissioners 

The six Commissioners—no more than three of 

whom may represent the same political party—are 

appointed by the President and confirmed by the Senate. 

The Commissioners serve full time and are responsible for administering and enforcing the Federal Election Campaign Act. They generally meet twice a 

week, once in closed session to discuss matters that, 

by law, must remain confidential, and once in a meeting open to the public. At these meetings, they formulate policy and vote on significant legal and administrative matters. 

Congressional, Legislative and 

Intergovernmental Affairs 

This office serves as primary liaison with Congress 

and Executive Branch agencies. The office is responsible for keeping Members of Congress informed 

about Commission decisions and, in turn, for keeping 

the agency up to date on legislative developments. 

Local phone: 202-694-1006; toll-free 800-424-9530. 

Data Systems Development 

This division provides computer support for the 

entire Commission. Its responsibilities are divided into 

two general areas. 

In the area of campaign finance disclosure, the 

Data Systems Development Division enters information into the FEC database from all reports filed by 

political committees and other entities. The division is 

also responsible for the computer programs that sort 

and organize campaign finance data into indexes. 

These indexes permit a detailed analysis of campaign finance activity and provide a tool for monitoring 
68 Appendices 

contribution limits. The indexes are available online 

through the Data Access Program (DAP), a subscriber service managed by the division. The division 

also publishes the Reports on Financial Activity series 

of periodic studies on campaign finance and generates statistics for other publications. 

Among its duties related to internal operations, the 

division provides computer support for the agency’s 

automation systems and for administrative functions 

such as management information, document tracking, 

personnel and payroll systems as well as the MUR 

prioritization system. 

Local phone: 202-694-1250; toll-free phone: 800-

424-9530. 

Equal Employment Opportunity 

(EEO) and Special Programs 

The EEO Office advises the Commission on the 

prevention of discriminatory practices and manages 

the agency’s EEO Program. 

The office is also responsible for developing a Special Emphasis Program tailored to the training and 

advancement needs of women, minorities, veterans, 

special populations and disabled employees. In addition, the EEO office recommends affirmative action 

recruitment, hiring and career advancement. The 

office encourages the informal resolution of complaints during the counseling stage. 

Additionally, the office develops and manages a 

variety of agency-wide special projects. These include 

the Combined Federal Campaign, the U.S. Savings 

Bonds Drive and workshops intended to improve employees’ personal and professional lives. 

General Counsel 

The General Counsel’s Office consists of four Divisions. The Policy Division drafts, for Commission 

consideration, advisory opinions and regulations as 

well as other legal memoranda interpreting the federal 

campaign finance law. In addition, the Policy Division 

provides legal advice in response to legislative inquiries and advises other divisions within the agency on 

legal matters. The Policy Division also provides staff 

training throughout the agency concerning changes in 

the law. The Enforcement Division investigates alleged violations of the law, negotiates conciliation 

agreements and recommends civil penalties for individuals and entities that have violated the Act. The 

Litigation Division handles all civil litigation, including 

Title 26 cases that come before the Supreme Court, 

and represents and advises the Commission regarding any legal actions brought by or against the Commission. The Public Financing, Ethics and Special 

Projects (PFESP) Division provides legal advice to 

the Commission on matters relating to the public financing program, including eligibility matters, audit 

reviews and repayments. In addition, PFESP is responsible for all of the enforcement matters that relate 

to publicly funded candidates. PFESP also reviews all 

Title 2 (non-Presidential) audit reports, handles all 

enforcement matters stemming from these audits, is 

responsible for debt settlement reviews and administrative termination reviews and administers the 

Commission’s ethics program. 

Information 

In an effort to promote voluntary compliance with 

the law, the Information Division provides technical 

assistance to candidates, committees and others 

involved in elections through the Internet, letters, 

phone conversations, publications and conferences. 

Responding to phone and written inquiries, members 

of the staff provide information on the statute, FEC 

regulations, advisory opinions and court cases. Staff 

also lead workshops on the law and produce guides, 

pamphlets and videos on how to comply with the law. 

Located on the second floor, the division is open to 

the public. Local phone: 202-694-1100; toll-free 

phone: 800-424-9530 (press 1, then 3 on a touchtone phone). 

Inspector General 

The FEC’s Inspector General (IG) has two major 

responsibilities: to conduct internal audits and investigations to detect fraud, waste and abuse within the 

agency and to improve the economy and effective-
Appendices 69 

ness of agency operations. The IG is required to report its activities to Congress on a semiannual basis. 

These reports may include descriptions of any serious 

problems or deficiencies in agency operations as well 

as corrective steps taken by the agency. 

Law Library 

The Commission law library, a government document depository, is located on the eighth floor and is 

open to the public. The library contains a basic reference collection, which includes materials on campaign finance reform, election law and current political 

activity. Visitors to the law library may use its computers to access the Internet and FEC databases. FEC 

advisory opinions and computer indices of enforcement proceedings (MURs) may be searched in the 

law library or the Public Disclosure Division. Local 

phone: 202-694-1600; toll-free: 800-424-9530. 

Office of Administrative Review 

The Office of Administrative Review (OAR) was 

established in 2000 after statutory amendments permitted the Commission to impose civil money penalties for violations of certain reporting requirements. 

Under the program, if the Commission finds “reason 

to believe” (RTB) that a committee failed to file a required report or notice, or filed it late, it will notify the 

committee of its finding and the amount of the proposed civil money penalty. Within 40 days, the committee may challenge the RTB finding. OAR reviews 

these challenges and may recommend that the Commission uphold the RTB finding and civil money penalty, uphold the RTB finding but modify or waive the 

civil money penalty, determine that no violation occurred or terminate its proceedings. OAR also serves 

as the Commission’s liaison with the U.S. Department 

of the Treasury on debt collection matters involving 

unpaid civil money penalties under this program. 

Office of Alternative Dispute 

Resolution 

The FEC established the Alternative Dispute Resolution (ADR) office to provide parties in enforcement 

actions with an alternative method for resolving complaints that have been filed against them or for addressing issues identified in the course of an FEC 

audit. The program is designed to promote compliance with the federal campaign finance law and Commission regulations, and to reduce the cost of processing complaints by encouraging settlements outside the agency’s normal enforcement track. 

Office of Election Administration 

The Office of Election Administration (OEA) assists 

state and local election officials by responding to inquiries, publishing research and conducting workshops on all matters related to election administration. 

Additionally, OEA answers questions from the public 

and briefs foreign delegations on the U.S. election 

process, including voter registration and voting statistics. 

Local phone: 202-694-1095; toll-free phone: 800-

424-9530 (press 4 on a touch-tone phone). 

Personnel and Labor/Management 

Relations 

The Personnel Office provides policy guidance and 

operational support to managers and staff in a variety 

of human resource management areas, including 

position classification, training, job advertising, recruitment and employment. The office also processes 

personnel actions such as step increases, promotions 

and leave administration. In addition, the office performs personnel records maintenance and offers employee assistance program counseling. Finally, the 

Personnel office administers the Commission’s labormanagement relations program and provides a comprehensive package of employee benefits, wellness 

and family-friendly programs. 
70 Appendices 

Planning and Management 

This office develops the Commission’s budget and, 

each fiscal year, prepares a management plan determining the allocation and use of resources throughout 

the agency. Planning and Management monitors adherence to the plan and provides monthly reports 

measuring the progress of each division in achieving 

the plan’s objectives. 

Press Office 

Staff in the Press Office are the Commission’s official media spokespersons. In addition to publicizing 

Commission actions and releasing statistics on campaign finance, they respond to all questions from representatives of the print and broadcast media. Located on the first floor, the office also handles requests under the Freedom of Information Act. Local 

phone: 202-694-1220; toll-free 800-424-9530 (press 1 

on a touch-tone phone). 

Public Disclosure 

The Public Disclosure Division processes incoming 

campaign finance reports from federal political committees and makes the reports available to the public. 

Located on the first floor, the division’s Public 

Records Office has a library with ample work space 

and knowledgeable staff to help researchers locate 

documents and computer data. The FEC encourages 

the public to review the many resources available, 

which include computer indexes, advisory opinions 

and closed MURs. 

The division’s Processing Office receives incoming 

reports and processes them into formats that can be 

easily retrieved. These formats include paper, microfilm and digital computer images that can be easily 

accessed from terminals in the Public Records Office 

and those of agency staff. 

The Public Disclosure Division also manages 

Faxline, an automated faxing service for ordering FEC 

documents, forms and publications, available 24 

hours a day, 7 days a week. 

Local phone: 202-694-1120; toll-free phone: 800-

424-9530 (press 3 on a touch-tone phone); Faxline: 

202-501-3413. 

Reports Analysis 

Campaign finance analysts assist committee officials in complying with reporting requirements and 

conduct detailed examinations of the campaign finance reports filed by political committees. If an error, 

omission or prohibited activity (e.g., an excessive 

contribution) is discovered in the course of reviewing 

a report, the analyst sends the committee a letter 

which requests that the committee either amend its 

reports or provide further information concerning a 

particular problem. By sending these letters (RFAIs), 

the Commission seeks to ensure full disclosure and to 

encourage the committee’s voluntary compliance with 

the law. Analysts also provide frequent telephone 

assistance to committee officials and encourage them 

to call the division with reporting questions or compliance problems. Local phone: 202-694-1130; toll-free 

phone 800-424-9530 (press 2 on a touch-tone 

phone). 

Staff Director and Deputy Staff 

Directors 

The Staff Director is responsible for appointing 

staff, with Commission approval, and for implementing 

agency policy. The Staff Director monitors the administration of the agency by overseeing the 

Commission’s public disclosure activities, audit program, outreach efforts and review of reports. 

Two Deputy Staff Directors assist in this supervision, one in the areas of budget, administration and 

computer systems and the other in the areas of audit 

and review. 
71 Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

2002 

Filers 

Terminated 

as of 

12/31/02 

Continuing 

Filers as of 

12/31/02 

Number of 

Reports and 

Statements 

in 2002 

Gross Receipts 

in 2002 

(dollars) 

Gross 

Expenditures 

in 2002 

(dollars) 

Presidential Candidate 

Committees 

254 49 205 476 17,574,833 26,297,530 

Senate Candidate Committees 567 153 414 3,951 410,878,206 380,989,618 

House Candidate Committees 2,606 690 1,916 26,049 656,362,442 636,039,444 

Party Committees 

Federal Party Committees 592 141 451 5,104 1,463,327,331 1,475,450,141 

Reported Nonfederal 

Party Activity 

194 12 182 631 685,214,286 712,063,343

Delegate Committees 8 5 3 6 15,066 16,764 

Nonparty Committees 

Labor Committees 337 20 317 3,867 167,613,721 157,862,766 

Corporate Committees 1,742 219 1,523 17,179 195,088,306 179,566,144 

Membership, Trade and 

Other Committees 

2,515 279 2,236 22,253 345,068,453 339,156,333

Communication Cost Filers 287 1 286 111 0 10,447,847 

Independent Expenditures by 

Persons Other Than 

Political Committees 

348 30 318 176 1,249,509 2,149,070 
72 Appendices 

Divisional Statistics for Calendar Year 2002 

, 

Total 

Reports Analysis Division 

Documents processed 19,932 

Reports reviewed 46,882 

Telephone assistance and meetings 18,440 

Requests for additional information (RFAIs) 10,593 

Second RFAIs 3,900 

Data coding and entry of RFAIs and 

miscellaneous documents 15,096 

Compliance matters referred to Office 

of General Counsel or Audit Division 16 

Data Systems Development Division * 

Documents receiving Pass I coding 27,224 

Documents receiving Pass III coding 55,685 

Documents receiving Pass I entry 79,803 

Documents receiving Pass III entry 30,739 

Transactions receiving Pass III entry 

• In-house 1,409,409 

• Contract 347,510 

Public Disclosure Division 

Campaign finance material processed 

(total pages) 3,087,490 

Cumulative total pages of documents 

available for review 22,450,832 

Requests for campaign finance reports 5,054 

Visitors 7,527 

Total people served 23,559 

Information telephone calls 10,978 

Computer printouts provided 31,827 

Faxline requests 553 

Total income (transmitted to U.S. Treasury) 18,251 

Contacts with state election offices 4,219 

Notices of failure to file with state 

election offices 12 

, 

Total 

Administrative Division 

Contracting and procurement transactions 1,230 

Publications prepared for print 16 

Pages of photocopying 21,600,200 

Information Division 

Telephone inquiries 31,546 

Information letters 172 

Distribution of FEC materials 5,424 

Prior notices (sent to inform filers 

of reporting deadlines) 24,150 

Other mailings 25,673 

Visitors 90 

Public appearances by Commissioners 

and staff 17 

Roundtable workshops 3 

Publications 29 

Press Office 

News releases 135 

Telephone inquiries from press 8,168 

Visitors 1,055 

Freedom of Information Act 

(FOIA) requests 28 

Fees for materials requested under FOIA 

(transmitted to U.S. Treasury) 0 

Office of Election Administration 

Telephone inquiries 3,715 

National surveys conducted 4 

Individual research requests 344 

Materials distributed * 18,170 

Election presentations/conferences 37 

Foreign briefings 95 

Publications 6 

Public Hearings 1 

* Computer coding and entry of campaign finance information 

occur in two phases. In the first phase, Pass I, summary information is coded and entered into the computer within 48 hours of the 

Commission’s receipt of the report. During the second phase, Pass 

III, itemized information is coded and entered. 

* Figure includes National Voter Registration Act materials. 
Appendices 73 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 2002 5 

Requests received 15 

Issued 15 

Not issued 3 

Pending at end of 2001 2 

Compliance cases † 

Pending at beginning of 2002 166 

Opened 118 

Closed 98 

Pending at end of 2002 186 

Law Library

 Telephone inquiries 768 

 Visitors 542 

Legal Review FECA 

Pending at beginning of 2002 7 

Opened in 2002 29 

Closed in 2002 27 

Pending at end of 2002 9 

Litigation 

Cases pending at beginning of 2002 35 

Cases opened 21 

Cases closed 15 

Cases pending at end of 2002 41 

Cases won 8 

Cases lost 1 

Cases won/lost 2 

Miscellaneous Cases‡ 4 

Regulations 

Notices of Proposed Rulemaking 9 

Final or Interim Final Rules with

 Explanation and Justification 12 

Public Rulemaking Hearings 4 

Audit Reports Publicly Released 

Year Title 2 * Title 26† Total 

1976 3 1 4 

1977 6 6 12 

1978 98 ‡ 10 108 

1979 75 ‡ 9 84

19805 48 ‡ 11 59 

1981 27 ‡ 13 40 

1982 19 1 20 

1983 22 0 22 

1984 15 2 17 

1985 4 9 13 

1986 10 4 14 

1987 12 4 16 

1988 8 0 8 

1989 2 7 9 

1990 1 6 7 

1991 5 8 13 

1992 9 3 12 

1993 10 2 12 

1994 5 17 22 

1995 12 0 12 

1996 23 0 23 

1997 7 6 13 

1998 5 7 12 

1999 20 7 27 

2000 14 0 14 

2001 15 1 16 

2002 20 13 33 

Total 495 147 642 

* Audits for cause: The FEC may audit any registered 

political committee: 1) whose reports do not substantially comply

with the law; or 2) if the FEC has found reason to believe that the 

committee has committed a violation. 2 U.S.C. §§438(b) and 

437g(a)(2). † Title 26 audits: The Commission must give priority to these 

mandatory audits of publicly funded committees. ‡ Random audits: Most of these audits were performed under 

the Commission’s random audit policy (pursuant to the former 2 

U.S.C. §438(a)(8)). The authorization for random audits was repealed by Congress in 1979. 

† In annual reports previous to 1994, the category “compliance 

cases” included only Matters Under Review (MURs). As a result of 

the Enforcement Priority System (EPS), the category has been 

expanded to include internally-generated matters in which the 

Commission has not yet made reason to believe findings. 

‡Three cases were voluntarily withdrawn by the plaintiff: one 

was withdrawn prior to a deposition motion; two were withdrawn 

after deposition motions. One case was concluded pursuant to a 

settlement agreement. 
74 Appendices 

Audits Completed by Audit Division, 1975 – 2002 

Total 

Presidential 126 

Presidential Joint Fundraising 12 

Senate 28 

House 182 

Party (National) 47 

Party (Other) 159 

Nonparty (PACs) 88 

Total 642 

Status of Audits, 2002 

Pending Opened Closed Pending 

at Beginning at End 

of Year of Year 

Presidential 17 0 14 3 

Presidential Joint Fundraising 0 0 0 0 

Senate 3 0 3 0 

House 12 1 11 2 

Party (National) 0 0 0 0 

Party (Other) 2 6 1 7 

Nonparty (PACs) 0 8 4 4 

Total 34 15 33 16 
75 

Appendix 6 

2002 Federal Register 

Notices 

2002-1 

Interpretation of Allocation of Candidate Travel Expenses; Interpretation (67 FR 5445, February 6, 

2002) 

2002-2 

The Internet and Federal Elections; Candidate-Related Materials on Web Sites of Individuals, Corporations and Labor Organizations; Notice of Public Hearing (67 FR 6883, February 14, 2002) 

2002-3 

Independent Expenditure Reporting; Final Rule (67 

FR 12834, March 20, 2002) 

2002-4 

The Voting System Standards and an Opportunity to 

Publicly Voice Previously Submitted Comments; Notice of Public Hearing (67 FR 13334, March 22, 2002) 

2002-5 

Administrative Fines; Notice of Proposed Rulemaking 

(67 FR 20461, April 25, 2002) 

2002-6 

Candidate Debates; Petition for Rulemaking and Notice of Availability (67 FR 31164, May 9, 2002) 

2002-7 

Prohibited and Excessive Contributions: Non-Federal 

Funds or Soft Money; Notice of Proposed Rulemaking 

(67 FR 35654, May 20, 2002) 

2002-8 

Brokerage Loans and Lines of Credit; Final Rule (67 

FR 38353, June 4, 2002) 

2002-9 

Reorganization of Regulations on “Contribution” and 

“Expenditure”; Notice of Proposed Rulemaking (67 FR 

40881, June 14, 2002) 

2002-10 

Independent Expenditure Reporting; Final Rule and 

Effective Date (67 FR 40586, June 13, 2002) 

2002-11 

Prohibited and Excessive Contributions: Non-Federal 

Funds or Soft Money; Final Rule (67 FR 49064, July 

29, 2002) 

2002-12 

Reorganization of Regulations on “Contribution” and 

“Expenditure”; Final Rule (67 FR 50582, August 5, 

2002) 

2002-13 

Electioneering Communications; Notice of Proposed 

Rulemaking (67 FR 51131, August 7, 2002) 

2002-14 

Contribution Limitations and Prohibitions; Notice of 

Proposed Rulemaking (67 FR 54366, August 22, 

2002) 

2002-15 

Disclaimers, Fraudulent Solicitation, Civil Penalties 

and Personal Use of Campaign Funds; Notice of Proposed Rulemaking (67 FR 55348, August 29, 2002) 

2002-16 

Coordinated and Independent Expenditures; Notice of 

Proposed Rulemaking (67 FR 60042, September 24, 

2002) 

2002-17 

Contribution Limitations and Prohibitions; Cancellation 

of Public Hearing (67 FR 62410, October 7, 2002) 

2002-18 

Filing Dates for the Hawaii Special Election in the 2nd 

Congressional District (67 FR 63658, October 15, 

2002) 

2002-19 

Bipartisan Campaign Reform Act of 2002 Reporting; 

Notice of Proposed Rulemaking (67 FR 64555, October 21, 2002) 
76 Appendices 

2002-20 

Electioneering Communications; Final Rule (67 FR 

65190, October 23, 2002) 

2002-21 

FCC Database on Electioneering Communications; 

Interim Final Rules with Requests for Comments (67 

FR 65212, October 23, 2002) 

2002-22 

Contribution Limitations and Prohibitions; Final Rule 

(67 FR 69928, November 19, 2002) 

2002-23 

Filing Dates for the Hawaii Special Election in the 2nd 

Congressional District (67 FR 70599, November 25, 

2002) 

2002-24 

FEC Policy Statement: Interim Reporting Procedures 

(67 FR 71075, November 29, 2002) 

2002-25 

Disclaimers, Fraudulent Solicitation, Civil Penalties 

and Personal Use of Campaign Funds; Final Rule (67 

FR 76962, December 13, 2002) 

2002-26 

Bipartisan Campaign Reform Act of 2002 Reporting; 

Final Rule (68 FR 404, January 3, 2003) 

2002-27 

Coordinated and Independent Expenditures; Final 

Rule (68 FR 421, January 3, 2003) 

2002-28 

Leadership PACs; Notice of Proposed Rulemaking 

(67 FR 78753, December 26, 2002) 

2002-29 

BCRA Technical Amendments; Final Rule (67 FR 

78679, December 26, 2002) 

2002-30 

Contribution Limitations and Prohibitions; Delay of 

Effective Date and Correction; Final Rule (67 FR 

78959, December 27, 2002) 

2002-31 

Brokerage Loans and Lines of Credit; Final Rule and 

Announcement of Effective Date (67 FR 79844, December 31, 2002) 
Appendices 77 

Appendix 7 

Summaries of Selected 

BCRA-Related 

Rulemakings 

This appendix summarizes the regulatory changes 

the Commission has made as a result of the Bipartisan Campaign Reform Act of 2002. The excerpts are 

arranged chronologically. 

Nonfederal Fund or “Soft Money” 

On June 22, 2002, the Commission promulgated 

new and revised rules based on provisions of the 

Bipartisan Campaign Reform Act of 2002 (BCRA) that 

restrict and, in some cases, ban the receipt, solicitation and use of nonfederal funds (sometimes called 

“soft money”). These rules: 

• Prohibit national parties from raising or spending 

nonfederal funds; 

• Require state, district and local party committees to 

fund certain “federal election activities” with federal 

funds and, in some cases, with money raised according to new limitations, prohibitions and reporting 

requirements (i.e., “Levin funds”1 ), or with a combination of such funds; and 

• Address fundraising by federal and nonfederal candidates and officeholders on behalf of party committees, other candidates and nonprofit organizations. 

The final rules and their Explanation and Justification were published in the July 29 Federal Register 

(67 FR 49064) and are available on the FEC web site 

at http://www.fec.gov/pdf/nprm/soft_money_nprm/ 

fr67n145p49063.pdf. 

Part I: General Information and Terminology 

Organization. In order to implement the BCRA, the 

Commission has revised its existing regulations and 

added new 11 CFR part 300, which contains most of 

the rules governing party committees’ use of 

nonfederal funds and the so-called “Levin funds.” New 

part 300 contains five subparts, which address the 

use of nonfederal funds by each of the following entities: 

• National party committees; 

• State, district and local party committees; 

• Federal candidates and officeholders; 

• State and local candidates; and 

• Tax-exempt organizations. 

The rules applicable to each of these entities are 

addressed in detail below, in Part II: Application. 

Federal election activity. Many provisions of the 

BCRA are framed in terms of “federal election activities.” As used in 11 CFR part 300, “federal election 

activity” means any of the following activities: 

• Voter registration activity during the 120 days before 

a regularly-scheduled federal election and ending on 

the day of that election; 

• Voter identification, generic campaign activities2 and 

get-out-the-vote activities that are conducted in connection with an election in which one or more candidates for federal office appear on the ballot (regardless of whether state or local candidates also appear 

on the ballot); 

• A public communication3 that refers to a clearly 

identified federal candidate and that promotes, supports, attacks or opposes any federal candidate 

(This definition applies regardless of whether a 

nonfederal candidate is also mentioned or identified 

in the communication and regardless of whether the 

communication expressly advocates a vote for or 

against a federal candidate.); and 

• Services provided by an employee of a state, district 

or local party committee who spends more than 25 

percent of his or her compensated time during that 

month on activities in connection with a federal election. 11 CFR 100.24(b). 

The Commission has also adopted regulations at 

11 CFR 100.24(a) that define certain terms used in 

the above definition of “federal election activity”: 

• “In connection with an election in which a candidate 

for federal office appears on the ballot” means: 

1 See p. 80 for a full description of “Levin funds.” 

2 “Generic campaign activity” means a public communication that promotes or opposes a political party and does 

not promote or oppose a clearly identified federal or 

nonfederal candidate. 11 CFR 100.25. 

3 A “public communication” means any communication 

by means of television (including cable and satellite), radio, 

newspaper, magazine, billboard, mass mailing, telephone 

bank or any other form of general public political advertising. Communications over the Internet are not included in 

this definition of public communication. 11 CFR 100.26. 
78 Appendices 

• In an even-numbered year, the period beginning

 on the day of the earliest filing deadline for primary

 election ballot access under state law—or on

 January 1 in states that do not hold primaries—

 and ending on the day of the general election or

 the general election runoff if a runoff is held; or

 • In an odd-numbered year, the period beginning

 on the day that the date is set for a special election

 in which a federal candidate appears on the ballot,

 and ending on the day of that election. 

• “Voter registration activity” means contacting individuals by telephone, in person or by other individualized means to assist them in registering to vote. 

This activity includes, but is not limited to, printing 

and distributing registration and voting information, 

providing individuals with voter registration forms 

and assisting individuals with completing and filing 

these forms. 

• “Get-out-the-vote activity” means contacting registered voters by telephone, in person or by other 

individualized means in order to assist them in voting 

(unless the activity is undertaken by state or local 

candidates and/or officeholders, or an organization 

of such candidates or officeholders, and refers only 

to one or more state or local candidates). This activity includes, but is not limited to:

 • Providing individual voters, within 72 hours of an

 election, with information about when and where

 polling places are open; and

 • Transporting, or offering to transport, voters to

 polling places. 

• “Voter Identification” means creating or enhancing 

voter lists by adding information about voters’ likelihood of voting in a particular election or voting for a 

particular candidate (unless the activity is undertaken by state or local candidates and/or officeholders, or an organization of such candidates or officeholders, and refers only to one or more state or local 

candidates). 

The regulations also identify activities that are not 

included in the definition of “federal election activity.” 

These are: 

• A public communication that refers solely to one or 

more clearly identified candidate(s) for state or local 

office and does not promote, support, attack or oppose a clearly identified candidate for federal office. 

A public communication would, however, be considered a federal election activity if it constituted voter 

registration, generic campaign activity, get-out-thevote activity or voter identification; 

• A contribution to a candidate for state or local office, 

unless the contribution is designated for voter registration, voter identification activity, generic campaign 

activity, get-out-the vote activity, employee services 

for these activities or a public communication; 

• The costs of state, district or local political conventions, meetings or conferences; and 

• The costs of grassroots campaign materials that 

name or depict only a candidate for state or local 

office. 11 CFR 100.24(c). 

Agent. In most cases, regulations that apply to a 

party committee, a federal candidate or officeholder or 

a state or local candidate also apply to any “agent” 

acting on behalf of that individual or organization. For 

the purposes of 11 CFR part 300, the term “agent” is 

defined as any person who has “actual authority, either express or implied” to engage in specificallylisted activities on behalf of another person or organization. 11 CFR 300.2(b). 

Directly or indirectly established, maintained, financed or controlled. Most of the new regulations that 

apply to a party committee or a federal candidate or 

officeholder also apply to any entity “directly or indirectly established, maintained, financed or controlled” 

by the committee, candidate or officeholder. The new 

regulation at 11 CFR 300.2(c), which is based on the 

existing “affiliation” regulation at 11 CFR 100.5(g)(4), 

includes a series of factors that must be considered, 

in the context of an overall relationship, to determine 

whether the presence of one or more of these factors 

indicates that the individual or committee established, 

finances, maintains or controls the organization. An 

entity will not be considered to be directly or indirectly 

established, financed, maintained or controlled based 

solely upon activities undertaken before November 6, 

2002. 
Appendices 79 

Part II: Application 

National Party Committees, Including National 

Congressional Campaign Committees 

General prohibitions. Beginning on November 6, 

2002, national party committees may not solicit,4 receive, direct to another person or spend nonfederal 

funds, that is, funds that are not subject to the limits, 

prohibitions and reporting requirements of the Act. 

Moreover, such committees must use only federal 

funds to raise funds that are used, in whole or in part, 

for expenditures and disbursements for federal election activity. 11 CFR 300.10. 

Tax-exempt organizations. National party committees may not solicit funds for, or make or direct donations to, tax-exempt 501(c) organizations, or an organization that has applied for this tax status, if the organization makes expenditures or disbursements in 

connection with federal elections, including federal 

election activity.5 11 CFR 300.11(a). The committee 

may establish whether or not the organization makes 

expenditures or disbursements in connection with 

federal elections by obtaining a signed certification 

from an authorized representative of the organization. 

The certification should state that within the current 

election cycle the organization has not made, and 

does not intend to make, such expenditures and disbursements, including payments for debts incurred in 

an earlier cycle.6 11 CFR 300.11(c) and (d). 

4 For the purposes of 11 CFR part 300, to “solicit” 

means to “ask that another person make a contribution, 

donation, transfer of funds, or otherwise provide anything of 

value, whether the contribution, donation, transfer of funds, 

or thing of value, is to be made or provided directly, or 

through a conduit or intermediary.” Merely providing information or guidance as to the requirement of a particular law 

does not constitute a solicitation. 11 CFR 300.2(m). 

5 Note that national party committees may solicit funds 

for, or make or direct donations to, permissible tax-exempt 

organizations only if the funds are subject to the limitations, 

prohibitions and reporting requirements of the Act. 

6 In no case is a committee prohibited from responding 

to a request for information about a tax-exempt group that 

shares the party’s political or philosophical goals. 11 CFR 

300.11(f). 

National party committees may solicit funds for, or 

make or direct donations to, so-called “527 organizations” only if these organizations are: 

• Political committees under Commission regulations; 

or 

• State, district or local party committees or authorized 

campaign committees of state or local candidates. 

11 CFR 300.11(a)(3). 

Office Building Funds. After November 5, 2002, 

national party committees may no longer accept funds 

into party office building accounts and may not use 

such funds for the purchase or construction of any 

office facility. Any funds remaining in an office building 

account on November 6 must be disgorged to the 

U.S. Treasury or returned to donors no later than 

December 31, 2002. Any refund check not cashed by 

February 28, 2003, must be disgorged to the Treasury 

by March 31. 11 CFR 300.12. 

Transition rules. If a national party committee has 

nonfederal funds in its possession on November 6, 

2002, it may use these funds to retire outstanding 

debts or other obligations relating to the 2002 elections, including runoff elections and recounts, until 

January 1, 2003. Any remaining nonfederal funds 

must be disgorged to the Treasury or returned to donors no later than December 31, 2002. Any refund 

checks not cashed by February 28, 2003, must be 

disgorged to the Treasury by March 31. The 

nonfederal accounts of national party committees 

must file termination reports with the Commission 

disclosing the disposition of all funds deposited in 

nonfederal accounts and building fund accounts. 11 

CFR 300.12 and 300.13. 

State, District and Local Party Committees and 

Organizations 

Under the new regulations, state, district and local 

party committees that have receipts or make disbursements for federal election activity may maintain, 

as appropriate, up to four different types of accounts: 

• Federal accounts, for deposit of funds that comply 

with the limitations, prohibitions and reporting requirements of the Act; 

• Nonfederal accounts, for deposit of funds that are 

governed by state law; 
80 Appendices 

• Allocation accounts, which may be established to 

make allocable expenditures and disbursements; 

and 

• Levin accounts, for deposit of a new category of 

funds, called “Levin funds,” that comply with some of 

the limits and prohibitions of the Act and are also 

governed by state law.7 

Levin funds. A state, district or local party committee may spend only those Levin funds that it raises for 

itself, and these funds can be used only for certain 

types of voter registration, voter identification, get-outthe-vote and generic campaign activity. Note that 

certain types of federal election activities may not be 

financed with Levin funds: 

• Public communications that refer to a clearly identified candidate; and 

• The services of employees who devote more than 

25 percent of their compensated time to activities in 

connection with a federal election. 

National party committees may not raise or spend 

Levin funds. 

When a party committee receives a donation of 

Levin funds, this donation: 

• Must be permissible under the laws of the state in 

which the party committee raising and spending the 

funds is organized; 

• May be solicited from some sources that cannot 

contribute under the Act (e.g., corporations, unions 

and federal government contractors) so long as the 

donation is not from foreign nationals or from 

sources that are impermissible under state law; 

• Is limited to $10,000 in a calendar year from any 

person, including any entity established, maintained, 

financed or controlled by that person (if state law 

limits donations to an amount less than $10,000, 

then the lower limit applies); and 

• Must be raised using only federal funds or Levin 

funds to pay the direct costs of the fundraising (including expenses for the solicitation of funds and for 

the planning and administration of actual fundraising 

activities and programs) if any portion of the funds 

will be used for federal election activity. 11 CFR 

300.31 and 300.32(a)(4). 

Each state, district and local party committee has a 

separate Levin fund donation limit, and such committees are not considered to be affiliated for the purposes of determining Levin fund donation limits. Levin 

funds expended or disbursed by a given state, district 

or local party committee must be raised solely by that 

particular committee, and these committees cannot 

raise Levin funds through joint fundraising efforts or 

accept transfers of Levin funds from other committees. Additionally, these committees cannot accept or 

use as Levin funds any funds that come from, or in 

the name of, a national party committee, federal candidate or federal officeholder. 11 CFR 300.31 and 

300.34(b). 

Levin fund expenditures and disbursements. As a 

general rule, state, district and local party committees 

must use federal funds to make expenditures and 

disbursements for federal election activity.8 11 CFR 

300.32(a)(2). However, as long as certain conditions 

are met, a state, district, or local party committee may 

use Levin funds to pay for part, or is some limited 

circumstances, all of the following types of federal 

election activity:9 

• Voter registration activity during the period that begins 120 days before the date of a regularly-scheduled federal election and ends on the day of that 

election; and 

• Voter identification, get-out-the vote activities or 

generic campaign activity conducted in connection 

with an election in which a federal candidate ap8 Additionally, an association or similar group of state or 

local candidates or officeholders must use only federal 

funds to make expenditures or disbursements for federal 

election activity. 11 CFR 300.32(a)(1). 

9 Levin funds may also be used for any purpose that is 

not federal election activity as long as this use is lawful in 

the state in which the committee is organized. 11 CFR 

300.32(b)(2). 

7 An organization may also deposit Levin funds in a 

nonfederal account that must function as a nonfederal and 

Levin account. In order to make a disbursement of Levin 

funds from such an account, the organization must be able 

to show through a reasonable accounting method approved 

by the Commission that the organization had received into 

this account sufficient federal contributions or Levin donations to make the disbursement. 11 CFR 300.30(c)(3)(ii). 
Appendices 81 

pears on the ballot (regardless of whether a state or 

local candidate also appears on the ballot). 11 CFR 

300.32(b). 

Levin funds may not be used, however, to pay for 

any part of a federal election activity if: 

• The activity refers to a clearly identified federal candidate; or 

• Any portion of the funds will be used to pay for a 

television or radio communication, other than a communication that refers solely to a clearly identified 

state or local candidate. 11 CFR 300.32(c). 

Levin funds may be used to pay for the entirety of 

permissible federal election activity disbursements 

only if the party committee’s disbursements do not 

exceed $5,000 in the aggregate in a calendar year. 

Disbursements and expenditures that aggregate in 

excess of $5,000 per year must be paid entirely with 

federal funds or allocated between federal funds and 

Levin funds, according to the minimum allocation 

percentages described below. 11 CFR 300.33(a). 

Allocating expenses. State, district and local party 

committees that allocate federal election activity expenses between federal and Levin funds must allocate to their federal account one of following minimum 

percentages, depending on the composition of the 

ballot for that year: 

• If a Presidential candidate, but no Senate candidate, 

appears on the ballot, then at least 28 percent of the 

expenses must be allocated to the federal account. 

• If both a Presidential candidate and a Senate candidate appear on the ballot, then at least 36 percent of 

the expenses must be allocated to the federal account. 

• If a Senate candidate, but no Presidential candidate, 

appears on the ballot, then at least 21 percent of the 

expenses must be allocated to the federal account. 

• If neither a Presidential nor a Senate candidate appear on the ballot, at least 15 percent of the expenses must be allocated to the federal account. 

An organization must make payments for allocable 

expenses either from a federal account or from an 

allocation account. If payments are made from a federal account, Levin funds may be transferred to this 

account, during the 70-day window for such transfers, 

in order to cover the Levin-fund portion of the expense. 11 CFR 300.33(d). 

Expenses that may not be allocated. Certain costs 

of federal election activity are not allocable: 

• Expenditures for public communications that refer to 

a clearly identified federal candidate and that promote, support, attack or oppose any federal candidate must be paid entirely with federal funds. 

• Salaries and wages for employees who spend more 

than 25 percent of their compensated time per 

month on federal election activities, or on activities in 

connection with federal elections, must be paid entirely with federal funds. Salaries and wages for employees who spend 25 percent or less of their compensated time in this manner must be paid with 

funds that comply with state law. 

• The direct costs of raising federal funds to be used 

for federal election activities must be paid with federal funds; if Levin funds are being raised, federal 

funds or Levin funds may be used. No nonfederal 

funds may be used to pay for an allocable portion of 

the fundraising costs for federal or Levin funds used 

for federal election activity. 11 CFR 300.33(c). 

Office buildings. Under the amended Act and regulations, a state, district or local party committee may 

spend federal funds or nonfederal funds (including 

Levin funds) to purchase or construct a party office 

facility, so long as the funds are not contributed or 

donated by a foreign national. If a committee chooses 

to use nonfederal funds or Levin funds, the funds are 

subject to state law, and the Act will not preempt the 

limits and prohibitions of state law except to prohibit 

donations by foreign nationals. Moreover, if 

nonfederal or Levin funds are used, the office facility 

must not be purchased or constructed for the purpose 

of influencing the election of any federal candidate in 

any particular election. If federal funds are used to 

purchase or construct the facility, the Act will preempt 

the limits and prohibitions of state law. 11 CFR 

300.35(a) and (b). 

Additionally, a state, district or local party committee may generate income by leasing out a portion of 

its office building at the usual and normal charge. If 

the building is purchased in whole or in part with 

nonfederal funds, then all rental income must be deposited in the committee’s nonfederal account and 
82 Appendices 

used only for nonfederal purposes. The rental income 

and its use must also comply with state law. If the 

building is purchased entirely with federal funds, then 

the rental income may be deposited in the 

committee’s federal account. Any such income must 

be disclosed in the committee’s reports to the Commission. 11 CFR 300.35(c). 

Reporting and recordkeeping for organizations that 

are not political committees. A state, district or local 

party committee (or an association of state or local 

candidates or officeholders) that is not a political committee under the Act is not required to file reports, but 

must be able to demonstrate through a reasonable 

accounting method that it has enough funds on hand 

that comply with the limits and prohibitions of the Act 

to cover any payment of federal funds (or Levin funds) 

that it makes for federal election activity. The organization must keep records to this effect and make 

these records available to the Commission upon request. Payments by such organizations for federal 

election activity are not “expenditures” for the purpose 

of determining whether an organization qualifies as a 

political committee with registration and reporting 

requirements, unless the payment otherwise qualifies 

as an expenditure under 2 U.S.C. §431(9).10 11 CFR 

300.36(a). 

Reporting and recordkeeping for political committees.

11 A state, district or local party committee (or an 

association of state or local candidates or officeholders) that is a political committee under the Act must 

file on a monthly schedule and report all receipts and 

disbursements of federal funds for federal election 

activity, including the federal portion of allocated expenses. 11 CFR 300.36(b)(1) and (b)(2). See also 11 

CFR 100.5. 

A state, district or local party committee that is a 

political committee but that has less than $5,000 of 

aggregate receipts and disbursements for federal 

election activity per calendar year—and any association of state or local candidates or officeholders that is 

a political committee—must report all receipts and 

disbursements of federal funds. (The party committee 

need not report receipts and disbursements of Levin 

funds.) Such a committee or association of candidates and officeholders should not report federal 

funds or Levin funds disbursed for federal election 

activity as “expenditures” on their reports, unless the 

disbursement otherwise qualifies as an expenditure.12 

11 CFR 300.36(b)(1) and 300.36(c)(1). See also 2 

U.S.C. §421(9) and 11 CFR 100.8. 

A state, district or local party committee that has 

$5,000 or more of aggregate receipts and disbursements for federal election activity per calendar year 

must disclose its activity in greater detail, including 

receipts and disbursements of federal funds and of 

Levin funds used for federal election activity. 11 CFR 

300.36(b)(2) and 300.36(c)(1). Such a committee 

must also report the allocation percentages used. 

Contributions and expenditures of federal funds for 

federal election activity apply toward the $50,000 

threshold for determining whether a committee must 

file its reports electronically under the Commission’s 

mandatory electronic filing program. Receipts and 

disbursements for federal election activity that do not 

qualify as contributions and expenditures (including 

Levin fund receipts and disbursements) do not, however, count toward this threshold. 11 CFR 104.18 and 

300.36(c)(2). See also 11 CFR 100.7 and 100.8. 

Tax exempt organizations. Like national party committees, state, district and local party committees may 

not solicit funds for, or make or direct donations to, 

tax-exempt 501(c) organizations, or to organizations 

that have applied for tax-exempt status, if the organi10 Certain organizations that make “expenditures,” as 

defined at 11 CFR 100.8(a), in excess of $1,000 in a calendar year become political committees under the Act and 

must register and report with the Commission. 11 CFR 

100.5. In a separate rulemaking, the Commission has reorganized 11 CFR 100.7 and 100.8. See “Reorganization of 

Regulations on “Contribution” and “Expenditure” (67 FR 

50582, August 5, 2002). 

11 These requirements added by the BCRA are in addition to the Act’s existing requirements to report expenditures 

of federal funds. 2 U.S.C. §434 and 11 CFR part 104. 

12 Associations, or other similar organizations, of state or 

local candidates may spend federally permissible funds for 

federal election activity, but they cannot raise or spend 

Levin funds. 
Appendices 83 

zation makes expenditures or disbursements in connection with federal elections, including federal election activity.13 Committees may solicit funds for, or 

make or direct donations to, so-called “527 organizations” only if these organizations are: 

• Political committees under Commission regulations; 

• State, district or local party committees; 

• Authorized campaign committees of state or local 

candidates; or 

• A political committee under state law that supports 

only state or local candidates and that does not 

make expenditures or disbursements in connection 

with federal elections, including expenditures or 

disbursements for federal election activity. 

In order to establish whether or not an organization 

makes expenditures or disbursements in connection 

with federal elections, party committees may obtain a 

signed certification from an authorized representative 

of the organization. The certification should state that 

within the current election cycle the organization has 

not made, and does not intend to make, such expenditures and disbursements, including payments for 

debts incurred from making such expenditures and 

disbursements in an earlier cycle. 11 CFR 300.37. 

Contribution limit. In addition, the new rules raise 

the individual contribution limit to a state party committee to $10,000 per year. 

Fundraising by Federal Candidates and 

Officeholders 

The new regulations restrict and, in some cases, 

prohibit the solicitation and use of nonfederal funds by 

federal candidates and federal officeholders,14 including agents acting on their behalf and entities that are 

directly or indirectly established, maintained, financed 

or controlled by one or more federal candidate or 

officeholder. 11 CFR 300.60 and 300.61. 

Federal elections. Under the Act and regulations, 

federal candidates and officeholders can only solicit, 

receive, direct, transfer, spend or disburse federal 

funds in connection with a federal election or for federal election activity in amounts subject to the limits, 

prohibitions and reporting requirements of the Act. 11 

CFR 300.61. 

Nonfederal elections. Federal candidates and officeholders can only solicit, receive, direct, transfer, 

spend or disburse funds in connection with a 

nonfederal election in amounts and from sources that 

are both consistent with state law and not in excess of 

the Act’s limits and prohibitions. However, if a federal 

candidate or officeholder is also a candidate for state 

or local office, then he or she may raise and spend 

nonfederal funds that only comply with state law, so 

long as the solicitation, receipt and spending of funds 

refers only to the state or local candidate and/or another state or local candidate for that same office. 

Individuals simultaneously running for federal and 

nonfederal office may only raise and spend federal 

funds for the federal election. 11 CFR 300.62 and 

300.63. 

Attending, speaking or appearing as a featured 

guest at a fundraising event. A federal candidate or 

officeholder may attend, speak or be a featured guest 

at a fundraising event for a state, district or local committee of a political party, including a fundraising 

event at which nonfederal funds or Levin funds are 

raised. The committees may advertise, announce or 

otherwise publicize that a federal candidate or officeholder will attend, speak or be a featured guest at the 

fundraising event. Candidates and federal officeholders may speak at such an event without restriction or 

regulation. 11 CFR 300.64. 

Tax-exempt organizations. A federal candidate or 

officeholder may make a general solicitation on behalf 

of a tax-exempt organization, without limits on the 

source or amount of funds, if the organization does 

not make expenditures or disbursements in connection with federal elections, including the federal election activities listed below. Moreover, a candidate or 

office holder may make a general solicitation on be13 In no case is a committee prohibited from responding 

to a request for information about a tax-exempt group that 

shares the party’s political or philosophical goals. 11 CFR 

300.37(f). 

14 The regulations at 11 CFR 300.2(o) define an “Individual holding Federal office” as an individual elected to or 

serving in the office of the U.S. President or Vice President, 

or in the U.S. Congress. 
84 Appendices 

half of an organization that conducts activities in connection with an election if: 

• The organization’s principal purpose is not to conduct election activities, including the federal election 

activities listed below; and 

• The solicitation is not to obtain funds for activities in 

connection with an election, including federal election activities. 11 CFR 300.65(a) and (c). See 

300.52(a)(2)(ii). 

Under certain circumstances, a federal candidate 

or officeholder may also make a specific solicitation 

explicitly to obtain funds to pay for federal election 

activities conducted by a tax-exempt organization 

whose principal purpose is to undertake such activities. The federal election activities for which such a 

specific solicitation may be made are: 

• Voter registration activity during the period that begins 120 days before the date of a regularly scheduled federal election and ends on the day of that 

election; and 

• Voter identification, get-out-the vote activity or generic campaign activity conducted in connection with 

an election in which a federal candidate appears on 

the ballot (regardless of whether a state or local 

candidate also appears on the ballot). 11 CFR 

300.65(c). 

Such solicitations are permissible, however, only if 

they are made solely to individuals and the amount 

solicited does not exceed $20,000 during any calendar year. 11 CFR 300.65(b) and (c). 

Because the BCRA permits limited solicitations by 

federal candidates and officeholders only for the specific federal election activities listed above, these individuals must not make any solicitations on behalf of a 

501(c) organization, or an organization that has applied for this tax status, for other types of election 

activities, such as public communications promoting 

or supporting federal candidates. 300.65(d). 

Determining “principal purpose.” A federal candidate or officeholder may determine a tax-exempt 

organization’s “principal purpose” by obtaining a 

signed certification from an authorized representative 

of the organization stating that: 

• The organization’s principal purpose is not to conduct election activities, including the federal election 

activities listed above; and 

• The organization does not intend to pay debts incurred from making federal election disbursements 

and expenditures (including debts for federal election activity) in a prior election cycle. 11 CFR 

300.65(e). 

State and Local Candidates 

The new regulations prohibit a state or local candidate or officeholder, or any agents acting on his or her 

behalf,15 from spending nonfederal funds on a public 

communication that refers to a clearly identified federal candidate (regardless of whether a state or local 

candidate is also identified) and that promotes, supports, attacks or opposes a federal candidate. This 

prohibition applies whether or not the communication 

expressly advocates a vote for or against a federal 

candidate. 

Tax-Exempt Organizations 

The Commission has also added a subpart to 11 

CFR 300, subpart C, which addresses the BCRA’s 

limits and prohibitions on the use of soft money from 

the perspective of certain tax-exempt organizations. 

The regulations under this subpart contain the restrictions on fundraising and donations by national party 

committees and state, district and local party committees and fundraising by federal candidates and officeholders that are also addressed in the subparts devoted to each of these types of entity. 11 CFR 

300.50, 300.51 and 300.52. 

Advisory Opinions Superseded 

These new and revised rules partially supersede 

the following advisory opinions relating to party office 

building funds: AOs 2001-12, 2001-1, 1998-8, 1998-7, 

1997-14, 1993-9, 1991-5 and 1986-40. Other advisory 

opinions may no longer be relied upon to the extent 

that they conflict with the BCRA. 

15 For example, this prohibition would apply to an individual who is both a federal office holder and a state candidate. The regulations at 11 CFR 300 subpart E do not apply 

to an association of state or local candidates or officeholders. 
Appendices 85 

Electioneering Communications 

On October 10, 2002, the Commission approved 

final rules to implement provisions of the BCRA regulating television or radio communications that refer to 

a clearly identified federal candidate and are distributed to the relevant electorate within 60 days prior to 

the general election or 30 days prior to a primary. 

The final rules and their Explanation and Justification were published in the October 23, 2002, Federal 

Register (67 FR 65190) and are available on the FEC 

web site at www.fec.gov/pages/bcra/rulemakings/ 

electioneering_communications.htm.

 “Electioneering Communication” Defined 

An electioneering communication is any broadcast, 

cable or satellite communication which fulfills each of 

the following conditions: 

The communication refers to a clearly identified 

candidate. A communication refers to a clearly identified federal candidate if it contains the candidate’s 

name, nickname or image, or makes any unambiguous reference to the person or their status as a candidate, such as “the Democratic candidate for Senate.” 

11 CFR 100.29(b)(2). 

The communication is publicly distributed. Generally, a communication is publicly distributed if it is 

disseminated for a fee by a television station, radio 

station, cable television system or satellite system. 

In the case of Presidential and Vice-Presidential 

candidates, the communication is publicly distributed 

if it can be received by 50,000 or more people: 

• In a state where a primary election or caucus is being held within 30 days; 

• Anywhere in the United States during the period 

between 30 days prior to the nominating convention 

and the conclusion of that convention; or 

• Anywhere in the United States within 60 days prior 

to the general election. 11 CFR 100.29(b)(3)(ii). 

The Commission will publish on its web site a list of 

the applicable event in each state that triggers the 30-

day period for Presidential and Vice-Presidential candidates. 

Electioneering communications are limited to paid 

programming. The station must seek or receive payment for distribution of the communication. Both 

infomercials and commercials are included within the 

definition. 11 CFR 100.29(b)(3)(i). 

The communication is distributed during a certain 

time period before an election. Electioneering communications are transmitted within 60 days prior to a 

general election or 30 days prior to a primary election 

for federal office, including elections in which the candidate is unopposed. A “primary election” includes 

any caucus or convention of a political party which 

has the authority to nominate a candidate to federal 

office. 11 CFR 100.29(a)(2). 

This condition regarding the timing of the communication applies only to elections in which the candidate 

referred to is running. 

In the case of Congressional candidates only, the 

communication is targeted to the relevant electorate. 

The communication targets the relevant electorate if it 

can be received by 50,000 or more people in the district (in the case of a U.S. House candidate) or state 

(in the case of a Senate candidate) that the candidate 

seeks to represent. 11 CFR 100.29(b)(5). 

The Federal Communications Commission (FCC) 

will provide on its web site the information necessary 

to determine whether a communication can be received by 50,000 people. Under interim rules promulgated by the FEC, if this information is not yet available, the person making a communication may argue 

that it could not have been received by 50,000 people 

of the relevant electorate. 16 To make this argument, 

they may: 

• Use written documentation from the entity that transmitted the communication; 

• Demonstrate that the communication is not distributed on a station located in a metropolitan area; or 

• Demonstrate that the person possesses information 

which leads them to reasonably believe that the 

communication could not be received by 50,000 or 

more people in the relevant area. 

16 The interim rules were published in the October 23, 

2002, Federal Register (67 FR 65212). The full text of the 

final rules and the Explanation and Justification is available 

on the FEC web site at http://www.fec.gov/register.htm. 
86 Appendices 

Exemptions 

The regulations at 11 CFR 100.29(c)(1) through (6) 

exempt certain communications from the definition of 

“electioneering communication:” 

• A communication that is disseminated through a 

means other than a television station, radio station, 

cable television system or satellite system. For example, printed media—including newspapers, magazines, bumper stickers, yard signs and billboards— 

are not included, nor are communications over the 

Internet, e-mail or the telephone; 

• A news story, commentary or editorial broadcast by 

a television station, radio station, cable television 

system or satellite system. However, the facilities 

may not be owned or controlled by a political party, 

political committee or candidate, unless the communication satisfies the exemption for news stories at 

11 CFR 100.132(a) and (b); 

• Expenditures or independent expenditures that must 

otherwise be reported to the FEC; 

• A candidate debate or forum or a communication 

that solely promotes a debate or forum. Communications promoting the debate or forum must be made 

by or on behalf of the sponsor; 

• Communications by state or local candidates that do 

not promote, support, attack or oppose federal candidates; and 

• Communications by 501(c)(3) organizations. However, these organizations are still barred from participating in partisan political activity by the Internal 

Revenue Code. Making electioneering communications may jeopardize their tax-exempt status. 

Application 

Corporations and Labor Organizations. Corporations and labor organizations are prohibited from making or financing electioneering communications. 11 

CFR 114.2(b)(2)(iii). Further, they may not provide 

funds to any person if they know, have reason to 

know or are willfully blind to the fact that the funds are 

for the purpose of making electioneering communications. 11 CFR 114.14(a) and (c). 

Qualified Nonprofit Corporations. Qualified nonprofit corporations (QNC) may make electioneering 

communications. To qualify, the entity must be a nonprofit corporation incorporated under 26 U.S.C. 

§501(c)(4) that is ideological in nature and qualifies 

for exemptions under 11 CFR 114.10. 

If a QNC makes electioneering communications 

that aggregate in excess of $10,000 in a calendar 

year, it must certify that it is eligible for the QNC exemption. The certification must include the name and 

address of the corporation and the signature and 

printed name of the individual making the qualifying 

statement. It must also certify that the corporation 

meets the standards of a QNC, either by satisfying all 

of the qualifications at 11 CFR 114.10(c)(1)-(5), or 

through a court ruling pursuant to 11 CFR 

114.10(e)(1)(i)(B). The certification is due no later 

than when the first electioneering communications 

report is required to be filed. 11 CFR 100.29(e). 

QNCs still may not make contributions to federal 

political committees, nor may they accept any funds 

from corporations or labor organizations. 11 CFR 

114.10(d)(2) and (3). Also, these regulations do not 

supercede any section of the Internal Revenue Code 

regarding 501(c)(4) organizations. 11 CFR 100.29(i). 

“527” Organizations. The prohibition against the 

use of corporate funds to make or finance electioneering communications does not apply to certain organizations incorporated under 26 U.S.C. §527. 

Incorporated state party committees and state candidate committees registered as 527 organizations 

are exempt from the corporate prohibition provided 

that the committee: 

• Is not a political committee as defined at 11 CFR 

100.5; 

• Incorporates for liability purposes only; 

• Does not use any funds donated by corporations or 

labor organizations to fund the electioneering communication; and 

• Complies with the FEC’s reporting requirements for 

electioneering communications. 11 CFR 

114.2(b)(2)(iii). 

Unincorporated, unregistered “527” organizations 

may also make electioneering communications, subject to the disclosure requirements and the prohibition 

against corporate and labor funds. 

Individuals and Partnerships. Individuals and partnerships may make or finance electioneering communications, provided that certain conditions are met. 

Those that accept funds provided by corporations or 
Appendices 87 

labor organizations may not use those funds to pay 

for electioneering communications, nor may they give 

these funds to another to defray the costs of making 

an electioneering communication. 11 CFR 114.14(b). 

They must be able to demonstrate through a reasonable accounting procedure that no prohibited 

funds were used to pay for the electioneering communication. 11 CFR 114.14(d). 

Disclosure Requirements 

The BCRA requires that persons who make electioneering communications that in the aggregate cost 

more than $10,000 must file disclosure reports with 

the FEC within 24 hours of the disclosure date. Reporting requirements for electioneering communications are included in the reporting rulemaking summarized on page 98. 

Contribution Limitations and 

Prohibitions 

On October 31, 2002, the Commission approved 

final rules to implement provisions of the BCRA that: 

• Increase the contribution limits for individuals and 

political committees; 

• Modify recordkeeping requirements for political committee treasurers; 

• Prohibit certain contributions and donations by minors; and 

• Strengthen the current statutory prohibitions on contributions and donations by foreign nationals. 

The final rules and their Explanation and Justification were published in the November 19, 2002, Federal Register (67 FR 69928) and are available on the 

FEC web site at www.fec.gov/pages/bcra/ 

rulemakings/part_110_rules.htm. 

Contribution Limits Increased 

On January 1, 2003, a number of contribution limits 

increased, and some of the limits became indexed for 

inflation. 

Contributions to candidates and political party committees. The limits on contributions made by individuals and non-multicandidate committees increased to 

$2,000 per election to federal candidates and $25,000 

per year to national party committees. 11 CFR 

110.1(b)(1) and 110.1(c)(1). These limits will be indexed for inflation, as described below. 

Aggregate biennial contribution limitations for individuals. The former $25,000 annual limit for individuals has been replaced by a new biennial limit of 

$95,000. This limit includes up to $37,500 in contributions to candidate committees and up to $57,500 in 

contributions to any other committees. The $57,500 

portion of the biennial limit contains a further restriction, in that no more than $37,500 of this amount may 

be given to committees that are not national party 

committees. 11 CFR 110.5(b)(1).17 The biennial limit 

will be indexed for inflation. 

Special contribution limit to Senate candidates. 

The limit on contributions made to Senate candidates 

by the Republican and Democratic Senatorial campaign committees or the national committees of a 

political party, or any combination of these committees, will increase to $35,000 per election cycle. 11 

CFR 110.2(e)(1). This special limit will also be indexed for inflation. 

Indexing. Under the old regulations, the coordinated party expenditure and Presidential candidate 

expenditure limits were indexed for inflation. The new 

rules extend the inflation indexing to contributions to 

candidates and national party committees by individuals and non-multicandidate committees, the biennial 

aggregate contribution limit for individuals and the 

limit on contributions to Senate candidates by certain 

national party committees. 11 CFR 110.17(a) and (b). 

For the “per election” limit on contributions to candidates, the indexing changes will take effect on the day 

after the general election and remain in effect through 

the day of the next regularly scheduled general election. 11 CFR 110.1(b)(1)(ii). For example, an increase in the limit made in January 2005 would be 

17 Under the so-called Millionaires’ Amendment, individual limits to Congressional candidates increase if the 

candidate’s opponent makes expenditures from his or her 

personal funds above a certain threshold. Contributions 

excess of the Act’s limits made under this provision will not 

be subject to the overall biennial limit. The Commission has 

address the Millionaires’ Amendment in a separate 

rulemaking, described on page 100. 
Contribution Limits 

Donors Recipients Special Limits 

Candidate PAC1 State, District and National Party 

Committee Local Party Committee2 Committee3 

Individual $2,000* per $5,000 $10,000 per year $25,000* Biennial limit of 

election4 per year combined limit per year $95,000* 

($37,500 to all 

candidates and 

$57,5005

 to all 

PACs and parties) 

State, District $5,000 $5,000 Unlimited transfers 

and Local per election per year to other party committees 

Party combined combined 

Committee2 limit limit 

National Party $5,000 per $5,000 Unlimited transfers $35,000*

 to 

Committee3 election per year to other party committees Senate candidate 

per campaign6 

PAC $5,000 per $5,000 $5,000 per year $15,000 

Multicandidate7 election per year combined limit per year 

PAC $2,000*

 per $5,000 $10,000 per year $25,000* 

Not election per year combined limit per year 

Multicandidate7 

88 Appendices 

* These limits will be indexed for inflation. 

1 These limits apply to both separate segregated funds (SSFs) and political action committees (PACs). Affiliated committees 

share the same set of limits on contributions made and received. 

2 A state party committee shares its limits with local and district party committees in that state unless a local or district 

committee’s independence can be demonstrated. These limits apply to multicandidate committees only. 

3 A party’s national committee, Senate campaign committee and House campaign committee are each considered national party 

committees, and each have separate limits, except with respect to Senate candidates—see Special Limits column. 

4 Each of the following is considered a separate election with a separate limit: primary election, caucus or convention with the 

authority to nominate, general election, runoff election and special election. 

5 No more than $37,500 of this amount may be contributed to state and local parties and PACs. 

6 This limit is shared by the national committee and the Senate campaign committee. 

7 A multicandidate committee is a political committee that has been registered for at least six months, has received contributions 

from more than 50 contributors and—with the exception of a state party committee—has made contributions to at least five 

federal candidates. 
Appendices 89 

effective from November 3, 2004, to November 7, 

2006, and would only affect elections held after November 3, 2004. On the other hand, the indexing 

changes for the calendar-year-based limits will affect 

the calendar-based period that follows, or from January 1 of the odd-numbered year through December 31 

of the next even-numbered year. 11 CFR 110.1(c)(ii), 

110.2(e)(2) and 110.5(b)(3). The Commission will 

announce the amount of the adjusted expenditure and 

contribution limits in the Federal Register and on the 

FEC web site at www.fec.gov. These indexing provisions will first be applied in 2005. 11 CFR 110.17(e). 

The applicable expenditure and contribution limits 

will be adjusted according to the Consumer Price 

Index (CPI). The limits will be adjusted in odd-numbered years, and will be increased by the percentage 

difference between the CPI during the 12 months 

preceding the beginning of that calendar year and the 

CPI during the base year, which is 2001. The rules 

contain a rounding provision so that the inflation-adjusted amount will be rounded to the nearest multiple 

of $100. 11 CFR 110.17(c) and (d). 

Redesignations and Reattributions 

The Commission has streamlined its rules for designating contributions to a particular election. When 

an individual or non-multicandidate committee makes 

an excessive contribution to a candidate’s authorized 

committee, the committee may automatically redesignate excessive contributions to the general election if 

the contribution: 

• Is made before that candidate’s primary election; 

• Is not designated in writing for a particular election; 

• Would be excessive if treated as a primary election 

contribution; and 

• As redesignated, does not cause the contributor to 

exceed any other contribution limit. 11 CFR 

110.1(b)(5)(ii)(B)(1)-(4). 

In the case of an authorized committee of a Presidential candidate who accepts public funding for the 

general election, this presumption is available only to 

the extent that the candidate is permitted to accept 

contributions to a general election legal and accounting compliance (GELAC) fund. 

The redesignation presumption also includes a 

backward-looking provision where an undesignated, 

excessive contribution made after the primary, but 

before the general election, may be automatically 

applied to the primary if the campaign committee has 

more net debts outstanding from the primary than the 

excessive portion of the contribution. The 

redesignation, of course, may not cause the contributor to exceed any contribution limits. 11 CFR 

110.1(b)(5)(ii)(C). 

The candidate committee is required to notify the 

contributor of the redesignation by paper mail, e-mail, 

fax or other written method within 60 days of the 

treasurer’s receipt of the contribution. Also, at the 

time of notification, the contributor must be given the 

opportunity to request a refund. 11 CFR 

110.1(b)(5)(ii)(B)(5)-(6) and 110.1(b)(5)(ii)(C)(6)-(7). 

Similarly, the Commission has also updated its 

rules regarding reattributions. When an excessive 

contribution is made via a written instrument with 

more than one individual’s name imprinted on it, but 

only has one signature, the permissible portion will be 

attributed to the signer and the excessive portion may 

now be attributed to the other individual whose name 

is imprinted on the written instrument, without obtaining a second signature, so long as the reattribution 

does not cause the contributor to exceed any other 

contribution limit. 11 CFR 110.1(k)(3)(ii)(B)(1). 

Political committees employing this presumption 

must notify all contributors in writing or via e-mail 

within 60 days of the committee treasurer’s receipt of 

the check. At the time of notification, the committee 

must offer the contributor who signed the check a 

refund of the excessive portion. 11 CFR 

110.1(k)(3)(ii)(B)(2) and (3). 

Recordkeeping. To facilitate audits that determine 

compliance with the contribution limits, political committee treasurers are now required to maintain either 

a full-size photograph or a digital image of each check 

or written instrument by which a contribution of $50 or 

more is made. 11 CFR 102.9(a)(4). Under a new 

section added to the rule outlining the explicit standard for acceptable accounting methods, the 

committee’s records must demonstrate that, prior to 

the primary election, recorded cash on hand was at all 

times equal to or in excess of the sum of general election contributions received minus the sum of general 

election disbursements made. 11 CFR 102.9(e)(2). In 
90 Appendices 

addition, for the political committee redesignations or 

reattributions to be effective, any signed writings from 

contributors that accompany the contribution and the 

committee’s notices must be retained. 

Prohibition on Contributions and Donations by 

Minors 

Under the new regulations, individuals who are 

under 18 years old are prohibited from making contributions to federal candidates and contributions or 

donations to committees of political parties 11 CFR 

110.19(a) and (b). By including the term “donation” in 

this regulation, the prohibition encompasses both 

federal and nonfederal accounts of political party 

committees. Thus, this provision preempts state law 

to the extent that state law may permit minors to 

make donations to state, district and local party committees. In the Explanation and Justification for this 

rule, the Commission indicated that prohibiting donations by minors to all committees of state, district and 

local parties has a federal purpose because donations 

of nonfederal funds to state parties could otherwise 

be used, in part, to finance “federal election activities.”18 

The final rules make clear that individuals under 18 

may, however, participate in volunteer work for federal candidates and political party committees and 

may continue to make contributions to unauthorized 

committees that are not political party committees, 

such as PACs, under certain conditions. See 11 CFR 

110.19(c). 

Prohibition on Contributions, Donations, 

Expenditures, Disbursements by Foreign 

Nationals 

New section 11 CFR 110.20 implements BCRA’s 

prohibition on contributions, donations, expenditures 

and disbursements solicited,19 accepted, received or 

made directly or indirectly by or from foreign nationals 

18 “Federal election activity,” is defined on page 77. 

19 The term “solicit” at section 11 CFR 110.20 has the 

same meaning as in section 11 CFR 300.2(m), “to ask another person to make a contribution or donation, or transfer 

of funds, or to provide anything of value, including through a 

conduit or intermediary.” 

in connection with state and local elections as well as 

federal elections. This ban applies to: 

• Contributions and donations to political committees 

and organizations of political parties; 

• Contributions and donations to party committee 

building funds; 

• Disbursements for electioneering communications;20 

and 

• Expenditures, independent expenditures, and disbursements in connection with any election.21 

The Commission has included a knowledge requirement and knowledge standards with regard to 

the solicitation, acceptance or receipt of foreign national contributions or donations, determining that this 

would produce a less harsh result than a strict liability 

standard. 

Knowledge. The final rules contain in the definition 

of “knowingly” three standards of knowledge that focus on the sources of funds received. Meeting any 

one of these standards would satisfy the knowledge 

element of this rule. 

The first standard is actual knowledge that funds 

have come from a foreign source. The second is an 

awareness on the part of the person soliciting, accepting or receiving the contribution or donation of certain 

facts that would lead a reasonable person to conclude 

that there is a substantial probability that the contribution or donation is coming from a foreign source. The 

third standard is an awareness on the part of the 

person soliciting, accepting or receiving a contribution 

or donation of facts that should have prompted a reasonable inquiry into whether the source of the funds is 

a foreign national, but the person neglected to undertake such an inquiry. 11 CFR 110.20(a)(4)(i)-(iii). 

The rule further outlines the types of information 

that should lead a recipient to question the origin of a 

contribution or donation under this section. They are: 

• Use by a contributor or donor of a foreign passport 

or passport number; 

• Use by a contributor or donor of a foreign address; 

20 “Electioneering communication” is defined on page 85. 

21 An additional ban on foreign national donations to 

Presidential inaugural committees will be addressed in a 

later rulemaking. 
Appendices 91 

• A check or other written instrument is drawn on an 

account or a wire transfer from a foreign bank; or 

• Contributors or donors live abroad. 11 CFR 

110.20(a)(5)(i)-(iv). 

Knowledge safe harbor. The Commission has 

adopted a narrowly tailored safe harbor for the knowledge standards in 11 CFR 110.20(a)(4)(iii). A person 

shall be deemed to have conducted a reasonable 

inquiry into a possible foreign national contribution if 

he or she seeks and obtains copies of current and 

valid U.S. passport papers for U.S. citizens who are 

contributors or donors and to whom any of the above 

four types of information are applicable. 11 CFR 

110.20(a)(7). 

Assisting foreign national contributions or donations. The foreign national prohibition applies to a 

person who knowingly provides substantial assistance 

to foreign nationals in the making of contributions, 

donations, expenditures, independent expenditures 

and disbursements in connection with federal and 

nonfederal elections. This prohibition covers, but is 

not limited to, acting as a conduit or intermediary for 

foreign national contributions and donations. The 

prohibition does not, however, include those who 

perform strictly ministerial activity undertaken pursuant to the instructions of a employer, manager or supervisor. 11 CFR 110.20(g). 

Disclaimers, Fraudulent 

Solicitation, Civil Penalties and 

Personal Use of Campaign Funds 

On November 25, 2002, the Commission approved 

final rules to implement provisions of the BCRA that: 

• Specify new requirements for disclaimers accompanying radio, television, print and other campaign 

communications; 

• Make changes regarding the personal use of campaign funds by candidates and federal officeholders; 

• Allow non-incumbent federal candidates to pay 

themselves salaries from campaign funds if they 

follow a number of important conditions, as described below: 

• Expand the scope of the statutory prohibition on 

fraudulent misrepresentation; and 

• Increase the civil penalties for violating the prohibition on contributions made in the name of another. 

The final rules and their Explanation and Justification were published in the December 13, 2002, Federal Register (67 FR 76962) and are available on the 

FEC web site at www.fec.gov/pages/bcra/ 

rulemakings/other_provisions.htm. 

Disclaimers 

The new regulations replace pre-BCRA 11 CFR 

110.11 with a new section of the same number that 

implements statutory changes to the disclaimer requirements. The disclaimer requirements in this new 

section apply to public communications, including any 

“communication by means of any broadcast, cable or 

satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone 

bank to the general public, or any other form of general public political advertising.” See 11 CFR 100.26. 

These requirements also apply to political committees’ web sites, to unsolicited e-mail of more than 500 

substantially-similar communications and to any “electioneering communication.” All disclaimers must be 

“clear and conspicuous” regardless of the medium in 

which the communication is transmitted. A disclaimer 

is not clear and conspicuous if it is difficult to read or 

hear, or if its placement is easily overlooked. 11 CFR 

110.11(c)(1). 

Basic Requirements. Any public communication 

made by a political committee—including communications that do not expressly advocate the election or 

defeat of a clearly identified federal candidate or solicit a contribution—must display a disclaimer. 11 CFR 

110.11(a)(1). 

The disclaimer for a communication paid for and 

authorized by a candidate or candidate’s committee 

must state that the communication is paid for by the 

candidate’s committee. The disclaimer for a communication authorized by the candidate or candidate’s 

committee, but paid for by any other person, must 

state both who paid for the communication and that it 

was authorized by that candidate. 

Communications not authorized by a candidate or 

his/her campaign committee, including any solicitation, must disclose the permanent street address, 

telephone number or web site address of the person 
92 Appendices 

who paid for the communication, and also state that 

the communication was not authorized by any candidate. 11 CFR 110.11(b). 

Specific requirements for radio and television communications. For radio and television communications 

authorized by a candidate, the candidate must deliver 

an audio statement identifying himself or herself, and 

stating that he or she has approved the communication. For a television communication, this disclaimer 

must be conveyed by either: 

• A full-screen view of the candidate making the statement; or 

• A “clearly identifiable photographic or similar image 

of the candidate” that appears during the candidate’s 

voice-over statement. 11 CFR 110.11(c)(3)(ii)(A) and 

(B). 

Additionally, television communications must contain a “clearly readable” written statement that appears at the end of the communication for a period of 

at least four seconds with a reasonable degree of 

color contrast between the background and the disclaimer statement. The written statement must occupy 

at least four percent of the vertical picture height. 11 

CFR 110.11(c)(3)(iii). 

For a radio or television communication that is not 

authorized by a candidate, the name of the political 

committee or other person who is responsible for the 

communication and, if applicable, the name of the 

sponsoring committee’s connected organization is 

required in the disclaimer.22 

In the case of a televised ad, the disclaimer must 

also include a statement that is conveyed by a full 

screen view of a representative of the political committee or other person making the statement, or a 

voice-over by the representative. In addition, the 

disclaimer must appear in writing at the end of the 

communication in a “clearly readable” manner with a 

reasonable degree of color contrast to the background, and it must be shown for a period of four seconds. 11 CFR 110.11(c)(4). 

The regulations include safe harbor guidelines for 

television communication disclaimers: 

22 In addition, communications transmitted through telephone banks, as defined by 11 CFR 100.28, must carry this 

same disclaimer statement. 

• A still picture of the candidate shall be considered 

“clearly identifiable” if it occupies at least 80 percent 

of the vertical screen height; and 

• Disclaimers that are printed in black text on a white 

background, as well as disclaimers that have at least 

the same degree of contrast with the background 

color as the degree of contrast between the background color and the color of the largest text used in 

the communication, will be considered “clearly readable.” 11 CFR 110.11(c)(3)(iii)(C). 

Specific requirements for printed communications. 

Printed materials must contain a printed box that is 

set apart from the contents in the communication. 

The disclaimer print in this box must be of sufficient 

type size to be “clearly readable” by the recipient of 

the communication, and the print must have a reasonable degree of color contrast between the background 

and the printed statement. 11 CFR 110.11(c)(2)(ii) 

and (iii). 

The regulations contain a safe harbor that establishes a fixed, twelve-point type size as a sufficient 

size for disclaimer text in newspapers, magazines, 

flyers, signs and other printed communications that 

are no larger than the common poster size of 24 

inches by 36 inches. 11 CFR 110.11(c)(2)(i). Disclaimers for larger communications will be judged on 

a case-by-case basis. 

The regulations additionally provide two safe harbor examples that would comply with the color-contrast requirement: 

• The disclaimer is printed in black text on a white 

background; or 

• The degree of contrast between the background 

color and the disclaimer text color is at least as great 

as the degree of contrast between the background 

color and the color of the largest text in the communication. 11 CFR 110.11(c)(2)(iii).23 

Personal Use of Campaign Funds 

The new rules retain the existing prohibition against 

the personal use of campaign funds, as well as the 

so-called “irrespective test.” Candidates may not, 

therefore, use funds in a campaign account to “fulfill a 

23 Please note these examples do not constitute the only 

ways to satisfy the color contrast requirement. 
Appendices 93 

commitment, obligation, or expense of any person 

that would exist irrespective of the candidate’s campaign or duties as a Federal officeholder.” 11 CFR 

113.1(g). Personal use of campaign funds includes, 

but is not limited to, payment of the following: household food items or supplies, clothing (except for clothing items of de minimis value), tuition payments (other 

than those associated with training campaign staff), 

mortgage, rent or utility payments, vacations and 

health or country club dues, unless they are part of a 

specific campaign activity that takes place on the 

premises. 11 CFR 113.1(g)(1)(i). The regulations 

have, however, been amended as follows. 

Candidate salaries. The most notable change permits a candidate for federal office to receive a salary 

from his or her principal campaign committee.24 According to the regulations, a salary may be received 

under the following conditions: 

• The salary must be paid by the principal campaign 

committee only, and not any other authorized committees. 

• Incumbent federal officeholders may not receive 

salary payments from campaign funds. 

• The salary must not be paid before the filing deadline for access to the primary election ballot in the 

state in which the candidate is running for office, and 

salary may not be paid beyond the date when he or 

she is no longer a candidate.25 

• The salary must not exceed the lesser of either the 

minimum annual salary for the federal office sought 

or what the candidate received as earned income in 

the previous year. Thus, any salary paid by the campaign committee will be equal to the lesser of these 

two amounts. 

• Additional salary or wages received from other 

sources count toward the limit that may be received 

by the candidate. 

• Payments of salary from the committee must be 

made on a pro-rata basis. 

24 This amendment to the regulations supersedes Advisory Opinion 1999-1. 25 The filing deadline for the primary election for federal 

candidates is determined by state law. In those states that 

do not have a primary election, candidates may not receive 

payment until after January 1st of each even-numbered 

year. 

• Individuals who elect to receive a salary from their 

campaign committees must provide income tax 

records and additional proof of earnings from relevant years upon request from the Commission. 

Members of a candidate’s family. The new regulations amend the definition of a candidate’s family at 

11 CFR 113.1(g)(7). The previous regulations included as a member of a candidate’s family, “a person who has a committed relationship with a candidate, such as sharing a household and having mutual 

responsibility for each other’s welfare or living expenses.” 11 CFR 113.1(g)(7)(iv). This section has 

been removed from the new regulations and replaced 

with a provision that includes any person who shares 

a residence with the candidate. 

The Commission recognized that any person actually living with the candidate may pay a share of his or 

her living expenses without making a contribution to 

the campaign. The Commission further noted that the 

personal funds of a candidate would include his or her 

share of a joint account held with the person(s) with 

whom a residence is shared. However, gifts from the 

campaign to family members or anyone residing with 

the candidate are prohibited because they may be 

used to support personal expenses of the candidate. 

11 CFR 113.1(g)(4). 

Recordkeeping of personal uses. Because the 

regulations permit, in certain circumstances, the de 

minimis personal use of campaign funds, 

recordkeeping requirements for expenses that may be 

partly personal in nature have been added to the 

regulations. Such expenses may include, but are not 

limited to, the costs of vehicles, travel, meals and 

legal services.26 The new provision requires that logs 

of these expenses be maintained to help the Commission determine on a case-by-case basis what portion 

was for personal use rather than for campaign related 

activity or officeholder duties. 

“Any other lawful purpose.” The BCRA deleted the 

phrase “for any other lawful purpose” from the list of 

26 See 11 CFR 113.1(g)(1)(ii)(A), (B), (C), and (D) and 11 

CFR 113.2. 
94 Appendices 

permitted uses of campaign funds at 2 U.S.C. §439a. 

Therefore, the Commission has removed the section 

referring to “any other lawful purpose” regarding the 

use of campaign funds. Thus, in addition to paying 

expenses in connection with the campaign for federal 

office, campaign funds may be used only for noncampaign purposes included in an exhaustive list 

found at 11 CFR 113.2 (a), (b), and (c). 

Contributions to other candidates. In a previous 

rulemaking, the Commission amended the regulations 

regarding contribution limits. The Commission has 

noted, however, that the contribution limits for authorized candidate committees has not changed as a 

result of the BCRA. Authorized committees may make 

contributions of $1,000 or less to authorized committees of other federal candidates. U.S.C. 

§432(c)(3)(B). They may also make contributions to 

state and local candidates in furtherance of the federal candidate’s election. See 2 U.S.C. §439a(a)(1). 

Payment of campaign and officeholder expenses 

from campaign accounts. Congress has deleted the 

phrase “in excess of any amount to defray” campaign 

expenses from 2 U.S.C. §439a. Therefore, the Commission has revised 11 CFR 113.1 and 113.2 so that 

officeholders may spend money from campaign accounts to pay for campaign and non-campaign expenses incurred as a consequence of holding federal 

office. Such expenses, according to the Commission, 

may be paid in any order. 

Prohibitions on Fraudulent Solicitations 

The final rule prohibits a person from fraudulently 

misrepresenting that the person is speaking, writing or 

otherwise acting for, or on behalf of, a federal candidate or political party, or an employee or agent of 

either, for the purpose of soliciting contributions or 

donations. Persons are also banned from willfully and 

knowingly participating in, or conspiring to participate 

in, any scheme to do so. 11 CFR 110.6(b)(1) and (2). 

The regulation implementing this new provision, together with the pre-BCRA fraudulent misrepresentation regulation formerly found at 11 CFR 110.9(b), is 

combined in new 11 CFR 110.16. 

Civil Penalties 

The BCRA amends the Federal Election Campaign 

Act (the Act) to impose greater penalties for knowing 

and willful violations of the Act regarding contributions 

made in the name of another.27 The Commission has 

amended the regulations to impose a civil penalty for 

such violations that is not less than 300 percent of the 

amount of any contribution, but is no more than 

$50,000 or 1,000 percent of the amount of the contribution involved. 11 CFR 111.24. 

Coordinated and Independent 

Expenditures 

On December 5, 2002, the Commission approved 

final rules to implement provisions of the BCRA that: 

• Define coordination between a candidate or a political party and a person making a communication; 

• Define coordination between a candidate and a political party committee making a communication; and 

• Set forth requirements for political party committees 

regarding the permitted timing of independent and 

coordinated expenditures, and transfers and assignments. 

Note that new reporting requirements for certain 

independent expenditures are summarized on p. 98. 

The final rules and their Explanation and Justification were published in the January 3, 2003, Federal 

Register (68 FR 421) and are available on the FEC 

web site at www.fec.gov/pages/bcra/rulemakings/ 

coordinated_independent_expenditures.htm. 

Coordination 

The BCRA repealed Commission regulations defining a “coordinated general public political communication” (old 11 CFR 100.23), and instructed the Commission to promulgate new rules on “coordinated 

communications paid for by persons other than candidates, authorized committees of candidates, and 

27 The Act’s civil penalties are set forth in two tiers of 

monetary penalties at 2 U.S.C. §§437g(a)(5), (6), and (12). 

The first tier addresses violations of the Act, whereas the 

second tier speaks to “knowing and willful” violations of the 

Act. The Commission addressed changes to the second tier 

regarding contributions in the name of another. 
Appendices 95 

party committees.” Pub. L. 107-155, sec. 214(c) 

(March 27, 2002). 

New 11 CFR 109.20(a) implements 2 U.S.C. 

§§441a(a)(7)(B)(i) and (ii) by defining “coordinated” to 

mean “made in cooperation, consultation or concert 

with, or at the request or suggestion of, a candidate, a 

candidate’s authorized committee, or their agents, or 

a political party committee or its agents.”28 

The rules in section 109.21 define a “coordinated 

communication,” which is treated as an in-kind contribution to the candidate, authorized committee or party 

committee the communication is coordinated with, 

and must be reported as such. The new regulations 

provide for a three-part test to determine whether a 

communication is coordinated. Satisfaction of all of 

the three specific tests justifies the conclusion that 

payments for the coordinated communication are for 

the purpose of influencing a federal election. The 

three parts of the test consider: 

• The source of payment; 

• A “content standard” regarding the subject matter of 

the communication; and 

• A “conduct standard” regarding the interactions between the person paying for the communication and 

the candidate or political party committee. 11 CFR 

109.21(a). 

Source of Payment. A coordinated communication 

is paid for by someone other than a candidate, an 

authorized committee or a political party committee. 

However, a person’s status as a candidate would not 

exempt him or her from the coordination regulations 

with respect to payments he or she makes on behalf 

of a different candidate. 11 CFR 109.21(a)(1). 

Content Standard. The purpose of the four content 

standards is to determine whether the subject matter 

of a communication is reasonably related to an election. A communication that meets any of these four 

standards meets the content requirement: 

• A communication that is an “electioneering communication”; 

• A public communication that republishes, disseminates or distributes candidate campaign materials, 

unless the activity meets one of the exceptions at 11 

CFR 109.23(b) discussed in the conduct standards 

below; 

• A public communication that expressly advocates 

the election or defeat of a clearly identified candidate 

for federal office; or 

• A public communication that:

 • Refers to a political party or a clearly identified

 federal candidate;

 • Is publicly distributed or disseminated 120 days or

 fewer before a primary or general election or a

 convention or caucus with the authority to nominate a candidate; and

 • Is directed to voters in the jurisdiction of the clearly

 identified candidate or to voters in a jurisdiction

 where one or more candidates of the political party

 appear on the ballot. 11 CFR 109.21(c)(1)-(4). 

Conduct Standard. Under the final rules, if one of 

the conduct standards is met, and the first two parts 

of the test (the content standards and the source of 

payment) are also met, then the communication is 

coordinated. 11 CFR 109.21(d). The conduct standards are as follows: 

• Request or Suggestion. This test has two prongs, 

and satisfying either satisfies the test. The first prong 

is satisfied if the person creating, producing or distributing the communication does so at the request 

or suggestion of a candidate, authorized committee, 

political party committee or agent of any of these. 

The second prong of the “request or suggestion” 

conduct standard is satisfied if a person paying for 

the communication suggests the creation, production 

or distribution of the communication to the candidate, authorized committee, political party committee 

or agent of any of the above, and the candidate or 

political party committee assents to the suggestion. 

11 CFR 109.21(d)(1). 

• Material Involvement. This test is satisfied if a candidate, candidate committee, political party committee 

or an agent of any of these was “materially involved 

in decisions” regarding any of the following aspects 

of a public communication paid for by someone else:

 • Content of the communication;

 • Intended audience; 

28 “Agent” is defined at 11 CFR 109.3, for the purposes of 

part 109 only. 
96 Appendices 

• Means or mode of the communication;

 • Specific media outlet used;

 • Timing or frequency of the communication; or

 • Size or prominence of a printed communication or

 duration of a communication by means of broadcast, cable or satellite. 11 CFR 109.21(d)(2). 

• Substantial Discussion. A communication meets this 

standard if it is created, produced or distributed after 

one or more substantial discussions between the 

person paying for the communication, or the 

person’s agents, and the candidate clearly identified 

in the communication or that candidate’s committee, 

that candidate’s opponent or opponent’s committee, 

a political party committee, or an agent of the above. 

A discussion would be “substantial” if information 

about the plans, projects, activities or needs of the 

candidate or political party committee that is material 

to the creation, production or distribution of the communication is conveyed to the person paying for the 

communication. 11 CFR 109.21(d)(3). 

• Employment of Common Vendor. This conduct standard explains what a common vendor is and provides that the use of a common vendor in the creation, production or distribution of a communication 

satisfies the conduct standard if:

 • The person paying for the communication contracts with, or employs, a “commercial vendor” to

 create, produce or distribute the communication.29

 • The commercial vendor, including any officer,

 owner or employee of the vendor, has a previous

 or current relationship with the candidate or political party committee that puts the commercial vendor in a position to acquire information about the

 campaign plans, projects, activities or needs of the

 candidate or political party committee. This previous relationship is defined in terms of nine specific

 services related to campaigning and campaign

 communications. Note that these services would

 have to have been rendered during the election

 cycle in which the communication is first publicly

 distributed. 

• The commercial vendor uses or conveys information about the campaign plans, projects, activities

 or needs of the candidate or political party committee, or information previously used by the commercial vendor in serving the candidate or political

 party committee, to the person paying for the communication, and that information is material to the

 creation, production or distribution of the communication. 11 CFR 109.21(d)(4). 

• Former Employee/Independent Contractor. This 

standard applies to communications paid for by a 

person who has previously been an employee or an 

independent contractor of a candidate’s campaign 

committee or a political party committee during the 

election cycle. The standard requires that the former 

employee use or convey material information about 

the plans, projects, activities or needs of the candidate or political party committee, or material information used by the former employee in serving the 

candidate or political party committee, to the person 

paying for the communication, and the information is 

material to the creation, production or distribution of 

the communication. 11 CFR 109.21(d)(5).30 

• Dissemination, distribution or republication of campaign material. A communication that republishes, 

disseminates or distributes campaign material only 

satisfies the first three conduct standards on the 

basis of the candidate’s conduct—or that of his or 

her committee or agents—that occurs after the original preparation of the campaign materials that are 

29 The term “commercial vendor” is defined at 11 CFR 

116.1(c). 

30 A candidate or political party committee would not be 

held responsible for receiving or accepting an in-kind contribution that resulted only from conduct described in the 

fourth and fifth conduct standards. 11 CFR 109.21(d)(4) and 

(d)(5). However, the person paying for a communication 

that is coordinated because of conduct described in the 

fourth or fifth conduct standards would still be responsible 

for making an in-kind contribution for purposes of the contribution limitations, prohibitions and reporting requirements of 

the Act. 11 CFR 109.21(b)(2). 
Appendices 97 

disseminated, distributed or republished. 11 CFR 

109.21(d)(6).31 

Agreement or formal collaboration. Neither agreement (defined as a mutual understanding on any part 

of the material aspects of the communication or its 

dissemination) nor formal collaboration (defined as 

planned or systematically organized work) is necessary for a communication to be a coordinated communication. 11 CFR 109.21(e). 

Safe harbor for responses to inquires about legislative or policy issues. A candidate’s or political party 

committee’s response to an inquiry about that 

candidate’s or party’s positions on legislative or policy 

issues, which does not include discussion of campaign, plans, projects, activities or needs, will not 

satisfy any of the conduct standards. 11 CFR 

109.21(f) 

Party Coordinated Communications. Although Congress did not specifically direct the Commission to 

promulgate a new regulation on coordinated communications paid for by political party committees, the 

Commission promulgated final rules to set forth the 

circumstances under which communications paid for 

by a party committee would be considered to be coordinated with a candidate, a candidate’s authorized 

committee or their agents. These rules generally 

apply the same coordination standards that are applied to communications paid for by other persons. 

11 CFR 109.37. 

Coordinated and Independent Expenditures by 

Party Committees 

National, state and subordinate committees of political parties may make expenditures up to prescribed 

limits in connection with the general election campaigns of federal candidates without counting such 

31 Please note that the financing of the distribution or 

republication of campaign materials, while considered an inkind contribution by the person making the expenditure, is 

not considered an expenditure by the candidate’s authorized committee unless the dissemination, distribution or 

republication of campaign materials is coordinated. Additionally, republications of campaign materials coordinated 

with party committees are in-kind contributions to such party 

committees, and are reportable as such. 11 CFR 109.23(a). 

expenditures against the committees’ contribution 

limits. 2 U.S.C. §441a(d). These expenditures are 

commonly referred to as “coordinated party expenditures,” and the limits for these expenditures can be 

found in new section 11 CFR 109.32.32 

When coordinated party expenditures can be 

made. Political party committees can make coordinated party expenditures in connection with the general election campaign before or after the party’s candidate has been nominated. All pre-nomination coordinated expenditures continue to be subject to the 

coordinated party expenditure limitations, whether or 

not the candidate on whose behalf they are made 

receives the party’s nomination. 11 CFR 109.34. 

Restrictions on making both independent expenditures and coordinated expenditures. In BCRA, Congress prohibits political party committees, under certain conditions, from making both coordinated party 

expenditures and independent expenditures with respect to the same candidate, and from making transfers and assignments to other political party committees. 2 U.S.C. §441a(d)(4). Congress plainly intended to combine certain political party committees 

into a collective entity or entities for purposes of these 

restrictions. 2 U.S.C. §441a(d)(4)(B). 

For the purposes of these restrictions only, all political parties established and maintained by a national 

political party (including all Congressional campaign 

committees), and all political committees established 

and maintained by a state political party (including 

any subordinate committee of a state committee), 

shall be considered to be a single political committee. 

11 CFR 109.35(a). 

Under the BCRA and the new regulations, a political party committee is prohibited from making any 

post-nomination coordinated party expenditure in 

connection with the general election campaign of a 

candidate at any time after that political party committee makes any post-nomination independent expenditure with respect to the candidate. 11 CFR 

109.35(b)(1). Similarly, a political party committee is 

prohibited from making any post-nomination independent expenditure with respect to a candidate at any 

time after that political party committee makes a post32 These limits were formerly located at 11 CFR 110.7. 
98 Appendices 

nomination coordinated expenditure in connection 

with the general election campaign of the candidate. 

11 CFR 109.35(b)(2). 

Prohibited Transfers. Congress provided in the 

BCRA that a “committee of a political party” that 

makes coordinated party expenditures with respect to 

a candidate must not, during an election cycle, transfer any funds to, assign authority to make coordinated 

party expenditures under 2 U.S.C. §441a(d) to, or 

receive a transfer of funds from, a “committee of the 

political party” that has made or intends to make an 

independent expenditure with respect to the candidate. 2 U.S.C. §441a(d)(4)(C). The final rules generally track this statutory language. 11 CFR 109.35(c). 

National party independent expenditures on behalf 

of Presidential candidates. Prior to the enactment of 

the BCRA, the Commission’s rules prohibited a national committee of a political party from making independent expenditures in connection with the general 

election campaign of a Presidential candidate. See 

former 11 CFR 110.7(a)(5). However, section 

441a(d)(4), added by the BCRA, precludes such a 

broad prohibition. As a result, the Commission has 

added a new section that specifically prohibits a national committee of a political party from making independent expenditures with respect to a Presidential 

candidate if it serves as the principal campaign committee or authorized committee of its Presidential 

candidate under 11 CFR 9002.1(c). 11 CFR 109.36. 

BCRA Reporting 

On December 12, 2002, the Commission approved 

final rules on reporting requirements related to the 

BCRA, including: 

• Reporting of independent expenditures; 

• Reporting of electioneering communications; 

• Quarterly reporting by the principal campaign committees of House and Senate candidates; 

• Monthly reporting by national committees of political 

parties; and 

• Reporting funds for state and local party office buildings. 

The final rules and their Explanation and Justification were published in the January 3, 2003, Federal 

Register (68 FR 404) and are available on the FEC 

web site at http://www.fec.gov/pages/bcra/ 

rulemakings/rulemakings_bcra.htm. 

Independent Expenditures 

The BCRA requires political committees and other 

persons who make independent expenditures at any 

time during a calendar year—up to and including the 

20th day before an election—to disclose this activity 

within 48 hours each time that the expenditures aggregate $10,000 or more. This reporting requirement 

is in addition to the pre-BCRA requirement to file 24-

hour notices of independent expenditures each time 

that disbursements for independent expenditures 

aggregate at or above $1,000 during the last 20 

days—up to 24-hours—before an election. 2 U.S.C. 

§§434(b), (d) and (g). The new rules address when 

and how such reports should be filed. 

Independent expenditures aggregating less than 

$10,000. Committees must report on Schedule E of 

Form 3X independent expenditures that aggregate 

less than $10,000 with respect to a given election 

during the calendar year that are made up to and 

including the 20th day before an election. The report 

must be filed no later than the filing date of the 

committee’s next regularly scheduled report. 11 CFR 

104.4(a) and (b)(1). Individuals other than political 

committees disclose on FEC Form 5 independent 

expenditures aggregating in excess of $250 with respect to a given election during the calendar year that 

are made during this time period. The report must be 

filed by the filing deadline of the next report under the 

quarterly filing schedule. 11 CFR 109.10(b). 

Both committees and individuals must file an additional report each time that independent expenditures 

made less than 20 days, but more than 24 hours, 

before an election aggregate in excess of $1,000. 

These reports must be received by the Commission 

by the end of the day following the date that the communication is publicly disseminated. All individuals 

and committees, even those supporting or opposing 

Senate candidates, must file 24-hour notices of independent expenditures with the Commission. Electronic filers must file these reports electronically, and 
Appendices 99 

paper filers may file by fax or e-mail. Additionally, 

electronic filers and paper filers may file 24-hour reports using the FEC web site’s online program. 11 

CFR 104.4(c), 109.10(d) and 100.19(d)(3). 

Independent expenditures aggregating $10,000 

and above. Once an individual’s or committee’s independent expenditures reach or exceed $10,000 in the 

aggregate at any time up to and including the 20th day 

before an election, they must be reported within 48 

hours of the date that the expenditure is publicly distributed. All 48-hour reports must filed with and received by the Commission at the end of the second 

day after the independent expenditure is publicly distributed. Electronic filers must file these reports electronically, and paper filers may file by fax or e-mail. 11 

CFR 104.4(b)(2), 109.10(c) and 100.19(d)(3). 

Verification of independence. All 24- and 48-hour 

reports must contain, among other things, a verification under penalty of perjury as to whether the expenditure was made in cooperation, consultation or concert with a candidate, a candidate’s committee, a 

political party committee or an agent of any of these. 

11 CFR 104.4(d)(1) and 109.10(e)(1)(v). 

Aggregating independent expenditures for reporting purposes. Independent expenditures are aggregated toward the various reporting thresholds on a 

per-election basis within the calendar year. Consider, 

as examples, the following scenarios, all of which 

occur outside of the 20-day window before an election 

when 24-hour notices are required: 

• If a committee makes $5,000 in independent expenditures with respect to a Senate candidate, and 

$5,000 in independent expenditures with respect to 

a House candidate, then the committee is not required to file 48-hour reports, but must disclose this 

activity on its next regularly-scheduled report. 

• If the committee makes $5,000 in independent expenditures with respect to a clearly identified candidate in the primary, and an additional $5,000 in independent expenditures with respect to the same candidate in the general, then again no 48-hour notice is 

required and the expenditures are disclosed on the 

committee’s next report. 

• If the committee makes $6,000 in independent expenditures supporting a Senate candidate in the 

primary election and $4,000 opposing that Senate 

candidate’s opponent in the same election, then the 

committee must file a 48-hour report. 

The date that a communication is publicly disseminated serves as the date that a person or committee 

must use to determine whether the total amount of 

independent expenditures has, in the aggregate, 

reached or exceeded the threshold reporting amounts 

of $1,000 or $10,000. The calculation of the aggregate amount of the independent expenditures must 

include both disbursements for independent expenditures and all contracts obliging funds for disbursements of independent expenditures. 11 CFR 104.4(f). 

Electioneering Communications 

The BCRA requires persons who make electioneering communications that aggregate more than 

$10,000 to file disclosure statements with the Commission within 24 hours of the disclosure date. 2 

U.S.C. §434(f)(1). The new regulations implement this 

provision, and require that the statement be received 

by the Commission by 11:59 on the day following the 

disclosure date. Electronic filers must file these reports electronically, and paper filers may file by fax or 

e-mail. 11 CFR 100.19(f). 

The regulations define “disclosure date” as: 

• The first date on which an electioneering communication is publicly distributed, provided that the person making the electioneering communication has 

made disbursement(s), or has executed contract(s) 

to make disbursements, for the direct costs of producing or airing33 one or more electioneering communication aggregating in excess of $10,000; or 

• Any other date during the same calendar year on 

which an electioneering communication is publicly 

distributed, provided that the person making the 

communication has made disbursement(s) or executed contract(s) to make disbursements for the 

33 The direct costs of producing or airing electioneering 

communications are defined as the costs charged by a 

vendor, such as studio rental time, staff salaries, costs of 

video or audio recording media and talent, or the cost of 

airtime on broadcast, cable and satellite radio and television 

stations, studio time, material costs and the charges for a 

broker to purchase the airtime. 11 CFR 104.20(a)(2). 
100 Appendices 

direct costs of airing one or more electioneering 

communication aggregating in excess of $10,000 

since the most recent disclosure date. 11 CFR 

104.20(a)(1)(i). 

Disbursements made at any time for the direct 

costs of producing or airing the publicly-distributed 

electioneering communication, or other unreported 

electioneering communications, count toward the 

threshold. However, costs already reported for earlier 

electioneering communications are not included. 

Each statement must disclose: 

• The identification of the person who made the disbursement, or who executed a contract to make a 

disbursement, and the person’s principal place of 

business if the person is not an individual; 

• The identification of any person sharing or exercising 

direction or control34 over the activities of the person 

who made the disbursement or executed the contract; 

• The identification of the custodian of books and accounts from which the disbursements were made; 

• The amount of each disbursement or amount obligated in excess of $200 during the period covered 

by the statement, the date of the transaction and the 

person who received the funds; 

• All clearly-identified candidates referred to in the 

electioneering communication and the elections in 

which they are candidates; 

• The disclosure date; and 

• The name and address of each donor who, since the 

first day of the preceding calendar year, has donated 

in the aggregate $1,000 or more to the person making the disbursements, or to the separate segregated bank account if the disbursements were paid 

exclusively from that bank account. 11 CFR 

104.20(c). 

Filing Frequency for House and Senate 

Committees and National Party Committees 

House and Senate Candidates. The BCRA requires that all principal campaign committees of 

House and Senate candidates file quarterly in nonelection years as well as in election years. 2 U.S.C. 

§434(a)(2)(B). As a result, House and Senate campaign committees may no longer file on a semi-annual 

basis during non-election years. 11 CFR 104.5(a). 

National party committees. Under the BCRA, national party committees must file on a monthly basis in 

all years. 2 U.S.C. §434(a)(4)(B). Thus, under the 

new regulations a national committee of a political 

party, including a national Congressional campaign 

committee, must always file monthly and may no 

longer file on a quarterly basis in election years and 

semi-annually in non-election years. 11 CFR 

104.5(c)(4). 

Funds for Party Office Buildings 

Commission regulations on nonfederal funds (or 

“soft money”) provide that donations used by a state, 

district or local party committee for the purchase or 

construction of an office building are subject to state 

law if they are donated to a nonfederal account. However, if funds or things of value are contributed to or 

used by the party’s federal account to buy or build an 

office building, then the amounts donated are contributions. 11 CFR 300.12 and 300.35. The new rules 

clarify that any funds or things of value received by a 

federal account and used for the purchase or construction of an office facility, regardless of any specific 

contributor designation, are contributions and not 

treated any differently from other funds or goods donated to the federal account. 11 CFR 104.3(g). 

Millionaires’ Amendment 

On December 19, 2002, the Commission approved 

interim final rules that increase individual contribution 

limits and coordinated party expenditure limits for 

certain candidates running against self-financed opponents. The rules address: 

34 Persons sharing or exercising direction or control 

means officers, directors, executive directors or their 

equivalent, partners and, in the case of unincorporated 

organizations, owners of the entity or person making the 

disbursement for the electioneering communication. 11 CFR 

104.20(a)(3). 
Appendices 101 

• Monetary thresholds that trigger the increased individual contribution and coordinated party expenditure limits; 

• Computation formulas used to determine the application of the increased limits; 

• The specific amounts of the increases in individual 

contribution limits; 

• New reporting and notification requirements; and 

• Repayment restrictions for personal loans from the 

candidate. 

Threshold Amounts 

The provisions of the BCRA’s Millionaires’ Amendment increase the individual contribution and coordinated party expenditure limits for House and Senate 

candidates whose opponents’ personal spending 

exceeds their own by more than certain threshold 

amounts. The difference between the candidates’ 

expenditures of personal funds can be reduced by a 

disparity in other campaign fundraising. The threshold 

amounts for House and Senate candidates differ. For 

House candidates, the threshold amount is $350,000; 

for Senate candidates, it is two times the sum of 

$150,000 plus an amount equal to the voting age 

population of the state in question multiplied by 

$0.04.35 

Opposition Personal Funds Amount 

As noted above, opposition personal spending that 

exceeds the threshold amounts does not by itself 

trigger increased contribution limits. The regulations 

also take into account expenditures from the personal 

funds of the candidate seeking increased limits under 

the Millionaires’ Amendment as well as fundraising by 

the campaigns. 

Campaigns must use the appropriate “opposition 

personal funds amount” formula to determine whether 

an opposing candidate has spent sufficient personal 

funds in comparison to the amounts raised by the 

campaigns to trigger increased contribution and coordinated party expenditure limits. The opposition personal funds formula takes half the difference between 

the gross receipts of the candidate and the gross 

35 Differently formulated: Two times $150,000 + (.04 x 

(voting age population)) = Senate threshold. 

receipts of the opponent and subtracts that from the 

amount by which the opponent is outspending the 

candidate using their personal funds.36 Hence, a candidate with a significant fundraising advantage over a 

self-financed opponent might not receive an increased contribution limit. In this way, the new rules 

avoid giving increased contribution limits to candidates whose campaigns have a significant fundraising 

advantage over their opponents. 

Increased Contribution Limits 

When a House candidate’s opposition personal 

funds amount exceeds the $350,000 threshold: 

• The contribution limits for the candidate triple; and 

• The national and state party committees may make 

coordinated expenditures on behalf of the candidate 

that are not subject to the usual 2 U.S.C. §441a(d) 

limits. 

For Senate candidates, the extent to which a 

candidate’s opposition personal funds amount exceeds the threshold determines the amount of the 

increase in contribution limits. If it exceeds: 

• Twice the threshold,37 then the contribution limits for 

the candidate are tripled; 

36 Depending on the date of computation, the formula is 

either a – b; a – b – ((c – d)/2); or a – b – ((e – f)/2), where: 

• a = opponent’s personal funds

 spending; 

• b = candidate’s personal funds

 spending; 

• c = candidate’s receipts

 (contributions not from candidate); 

• d = opponent’s receipts (contributions

 not from opponent); 

• e = candidate’s receipts

 (contributions not from candidate); 

• f = opponent’s receipts (contributions

 not from opponent). 

The values for c and d are determined on June 30 of the 

year before the election (report due on July 15), and the 

values for e and f are determined on December 31 of the 

year before the election (year-end report due on January 

31). Prior to July 16 of the year before the election, values 

for c, d, e, and f are not included in the equations, and the 

“opposition personal funds amount” formula is a – b. 

37 $300,00 + ($0.08 x VAP). 
102 Appendices 

• Four times the threshold,38 then the contribution 

limits for the candidate are raised six-fold; 

• Ten times the threshold,39 then the contribution limits 

for the candidate are raised six-fold, and the national 

and state party committees may make unlimited 

coordinated expenditures on the candidate’s behalf. 

Avoiding Excessive Contributions Under the 

Increased Limits 

Campaigns that accept contributions under the 

increased limits must continually monitor the opposition personal funds amount to ensure their continued 

eligibility for the increased limits and to make sure 

that they have not accepted excessive contributions. 

Similarly, national and state party committees must 

monitor the opposition personal funds amount for 

campaigns in which they are making coordinated 

party expenditures in excess of the regular coordinated party expenditure limits (at 11 CFR 109.32(b)). 

Senate candidates (and their authorized committees) must not accept and national and state party 

committees making coordinated party expenditures 

on behalf of Senate candidates must not make any 

contribution or coordinated party expenditure that 

causes the aggregate contributions accepted and 

coordinated party expenditures made under the increased limits to be greater than 110 percent of the 

opposition personal funds amount. 

Similarly, House candidates (and their authorized 

committees) must not accept and national and state 

party committees making coordinated party expenditures on behalf of House candidates must not make 

any contribution or coordinated party expenditure that 

causes the aggregate contributions accepted and 

coordinated party expenditures made under the increased limits to be greater than 100 percent of the 

opposition personal funds amount. 

Reporting and Notification 

In order to facilitate this continual monitoring of 

fundraising and personal spending by candidates and 

party committees, new reporting and notification requirements have been added to the regulations. 

At the outset, candidates must declare on their 

Statement of Candidacy (FEC Form 2) the amount by 

which their personal spending on the campaign will 

exceed the applicable threshold amount. 11 CFR 

101.1(a). Also, to facilitate opposition personal funds 

calculations, by July 15 of the year before the election 

and January 31 of the year in which the election takes 

place, each principal campaign committee must file a 

report disclosing the aggregate gross receipts for the 

primary and general elections, and the candidate’s 

aggregate contributions from personal funds for the 

primary and general elections (FEC Form 3Z-1). 11 

CFR 104.19. 

Additionally, a Senate candidate’s principal campaign committee must notify the Secretary of the Senate, the Commission and each opposing candidate 

within 24 hours when the candidate makes an expenditure from personal funds that aggregates in excess 

of the threshold (FEC Form 10). 11 CFR 400.21(a). A 

House candidate’s principal campaign committee 

must notify the Commission, each opposing candidate 

and the national party committee of each opposing 

candidate within 24 hours when the candidate makes 

an expenditure from personal funds that aggregates 

in excess of the threshold (FEC Form 10). 11 CFR 

400.21(b). 

From that time on, the committee must also notify 

all of the above-listed entities within 24 hours whenever the candidate makes an additional expenditure 

from personal funds in excess of $10,000. 11 CFR 

400.22. Both the initial and additional notifications 

must be made by faxing or e-mailing a copy of FEC 

Form 10 to all of the entities mentioned above.40 11 

CFR 400.24. 

Within 24 hours after they become eligible, candidates who qualify for increased coordinated party 

expenditure limits (or their principal campaign commit38 $600,000 + ($0.16 x VAP). 

39 $1,500,000 + ($0.40 x VAP). 

40 Note that, for Senate candidates, the original Form 10 

will be filed with the Secretary of the Senate in the manner 

that all forms are normally filed. Similarly, for House candidates, the original Form 10 will be filed electronically with 

the Commission. 
Appendices 103 

tees) must file FEC Form 11 to inform their national 

and state party committees and the Commission of 

the opposition personal funds amount. 

National or state political party committees that 

make coordinated expenditures on behalf of a candidate whose limits have been raised must notify the 

Commission and the candidate on whose behalf the 

expenditure is made within 24 hours, using Schedule 

F. 11 CFR 400.30(c)(2). 

Senate candidates operating under the increased 

limits (or their principal campaign committees) must 

file FEC Form 12 within 24 hours after the aggregate 

amount of contributions accepted and coordinated 

party expenditures made under the increased limits 

reaches 110 percent of the opposition personal funds 

amount. 

House candidates operating under the increased 

limits (or their principal campaign committees) must 

file FEC Form 12 within 24 hours after the aggregate 

amount of contributions accepted and coordinated 

party expenditures made under the increased limits 

reaches 100 percent of the opposition personal funds 

amount. 

Repayment of Personal Loans from Candidate 

Apart from the calculations and disclosure requirements surrounding the increased contribution limits, 

the new rules also restrict the repayment of loans 

made by the candidate to his or her committee. The 

new rules apply to all candidates, without regard to 

any of the Millionaires’ Amendment provisions. For 

personal loans from the candidate to his or her authorized committee that aggregate more than $250,000, 

the following rules apply: 

• The committee may use contributions to repay the 

candidate for the entire amount of the loan or loans 

only if those contributions were made on or before 

the day of the election; and 

• The committee may use contributions to repay the 

candidate only up to $250,000 from contributions 

made after the date of the election. 

11 CFR 116.11(b). 

Furthermore, if the committee uses the amount of 

cash-on-hand as of the date of the election to repay 

the candidate for loans in excess of $250,000, it must 

do so within 20 days of the election. 11 CFR 

116.11(c). During that time, the committee must treat 

the portion of candidate loans that exceed $250,000, 

minus the amount of cash-on-hand as of the day after 

the election, as a contribution by the candidate. 11 

CFR 116.11(c). 

Additional Information 

These rules, and their Explanation and Justification, were published in the January 27, 2003, Federal 

Register (68 FR 3970) and are available on the FEC 

web site at http://www.fec.gov/pages/bcra/ 

rulemakings/millionaire.htm.