FtOc.r<AL ELECTi": ! 

CGMMiSSiCN 

SECRETARIAT 

FEDERAL ELECTION COMMISSION ZOIZ MAR IS P \: m 

WASMINCTON, D.C. 20461 

March 19, 2012 

MEMORANDUM 

TO: The Commission 

THROUGH: Alec Palmer 

Staff Director 

FROM: Christopher Hughey 

Deputy General Counsel 

Lawrence L. Calvert, Jr 

Associate General Cou 

General Law and Adv 

Lorenzo Holloway "^^^"""^ 

Assistant General Counsel 

Public Finance and Audit Advice 

Allison T. Steinle ^ A 

Attomey 

SUBJECT: Request for Commission Consideration of a Legal Question by the Michael 

Williams for U.S. Senate Committee (LRA 872) 

I. INTRODUCTION 

The purpose of this memorandum is to address a Request for Commission Consideration 

of a Legal Question by the Michael Williams for U.S. Senate Committee ("the Committee"), and 

make recommendations about how the Commission should direct the Reports Analysis Division 

("RAD") to proceed with respect to this question. 

Specifically, the Committee asks: "[W]hen a candidate raises funds for an anticipated 

special election that subsequently does not occur, must all funds raised in connection with that 

election be refunded or redesignated in writing, or is the candidate permitted to spend some or all 

of those funds in connection with the anticipated special election?" See Letter from Thomas J. 

Josefiak and Michael Bayes, Counsel to the Committee, to Commission Secretary, at 2 (Feb. 15, 

2012) [hereinafter Committee Request]. We recommend that the Commission conclude that a 

candidate is required to refund or obtain written redesignations for contributions designated in 
Memorandum to the Conunission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Page 2 of7 

writing for a special election that subsequently does not occur. The practical effect of this 

conclusion is that a candidate may not spend these funds, or at least must otherwise retain 

enough funds to cover any potential refunds that would be required if the special election does 

not occur. We also recommend, however, that the Commission conclude that a candidate is 

permitted to treat contributions that were not designated in wrifing for any particular election, or 

those non-specifically designated in writing for "the next upcoming election," as contributions 

made in connection with the next regularly scheduled election in which the candidate is 

participating; and that if the candidate chooses to treat undesignated contributions as having been 

received in connection with the next regularly scheduled election, the candidate is required to 

amend the committee's reports to indicate this. A candidate may spend these funds in any 

maimer consistent with 2 U.S.C. § 439a(a). 

II. BACKGROUND 

Michael Williams filed a Statement of Candidacy with the Commission on December 16, 

2008 indicating that he was a candidate for election in the anticipated 2010 Texas Senate special 

election, which would have occurred had Senator Kay Bailey Hutchison resigned her Senate seat 

to mn for govemor of Texas.' Mr. Williams actively campaigned for the special election 

beginning in December 2008. The Committee accepted approximately $450,000 in contributions 

that it reported as received in connection with the anticipated 2010 special primary election and 

made expenditures in cormection with the anticipated special primary election.^ 

On April 1, 2010, Senator Hutchison armounced that that she would not resign her Senate 

seat, meaning that there would be no 2010 Texas Senate special election. At that time, the 

Committee had spent all but $ 11,566 of the contributions it had received, and it had outstanding 

debts of $4,004 and an outstanding $100,000 loan fi-om the candidate, causing the Committee to 

have a negative net outstanding balance. On April 8,2010, Mr. Williams filed a revised 

Statement of Candidacy for the regularly scheduled 2012 Texas Senate election.^ The 

' Senator Hutchison had discussed the possibility of resigning her Senate seat during the course of her 

gubematorial campaign. Although Mr. Williams filed a Statement of Candidacy for a 2010 Texas Senate special 

election, had Senator Hutchison resigned her seat before her term expired, a special election could have been 

scheduled for November 3, 2009, May 8, 2010, or November 2, 2010, depending on the timing ofthe resignation. 

See Texas Election Code §§ 201.023, 3.003. 

^ The Committee also accepted approximately $32,000 in contributions that it reported as designated for a 

"special runoff' or "special general" election. Under Texas law, a special election would not have been conducted 

as a party primary and all candidates would have appeared on the same ballot, but if no candidate received the 

majority of the vote, the special election would have been be followed by a runoff election between the two 

candidates with the most votes. Texas Election Code § 203.003. The Conimittee either refunded these conu-ibutions 

or reported the contributions as redesignated for the regularly scheduled 2012 Texas Senate election. 

^ On June 1S, 2011, Mr. Williams filed another revised Statement of Candidacy indicating that he was now 

a candidate for election in the 2012 election to the U.S. House of Representatives from the 33"* Congressional 

Disu-ict of Texas. The Committee likewise amended its Statement of Organization to change its name to Michael 

Williams for Congress. The Committee did not ask about, and this memorandum does not address, any issues 

arising from the application of the previous-to-current or currenl-to-current transfer rules of 11 C.F.R. § 110.3(c)(4) 

and (5) to these events. 
Memorandum to the Commission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Page 3 of7 

Committee has not refunded any of the contributions that it reported as received in connection 

with the anticipated 2010 Texas Senate special primary election, nor has it reported any of the 

contributions as redesignated for the 2012 Texas Senate election. It appears that the Committee 

only secured refunds or redesignations for contributions designated for a "special mnoff' or 

"special general" election, and as of April 1, 2010 had already spent or obligated contributions 

that it reported as received in connection with the anticipated special primary election. 

The Committee has stated that some of the contributions received prior to April 1,2010 

were "non-specifically designated for the 'next upcoming elecfion.'" Letter from Thomas J. 

Josefiak and Michael Bayes, Counsel to the Committee, to Bradley Matheson, Senior Campaign 

Finance Analyst, at 2 (July 22, 2011). We are unsure whether the Committee means that these 

contributions were in fact contributions that were not designated in writing by the contributor for 

a particular election, see 11 C.F.R. §§ 110.1(b)(2Xii), 110.2(b)(2)(ii), or whether it means that 

these contributions were designated in writing by the contributor for "the next upcoming 

election." The Committee, however, reported all contribufions received prior to April 1,2010 as 

received in connection with the anticipated 2010 Texas Senate special election, and never 

amended its reports to change these contributions' designations after Senator Hutchison's April 

1, 2010 armouncement. Accordingly, RAD has no way of determining how many contributions 

received during this time period were designated in writing for the 2010 Texas Senate special 

election, and how many were not designated in writing for any election or were designated in 

writing for "the next upcoming election." 

The Office of General Counsel ("OGC") and the Office of Compliance ("OC") recently 

sought the Commission's guidance on this issue pursuant to Direcfive 69. See Memorandum to 

the Commission, Request for Commission Guidance on the Michael Williams for U.S. Senate 

Committee (LRA 872) (Dec. 13, 2011). On Febmary 6, 2012, the Commission adopted OGC 

and OC's recommendation and voted to conclude that "the Committee was required to refund, 

redesignate, or reattribute the contributions designated in writing for the anticipated 2010 Texas 

Senate special election within sixty days of April 1, 2010; that the Committee was permitted to 

treat contributions that were not designated in writing for any particular election, or those nonspecifically designated in writing for 'the next upcoming election,' as contribufions made in 

cormection with the 2012 Texas Senate primary election; and that the Committee, if it chose to 

treat undesignated contributions as having been received in connection with the 2012 Texas 

Senate primary election, was required to amend its reports to indicate this." 

On Febmary 9, 2012, RAD informed the Committee that OGC and OC had submitted a 

request for guidance pursuant to Directive 69, and that the Commission had voted to approve 

OGC and OC's recommendafion on the issue. On Febmary 15,2012, the Committee submitted 

its Request for Commission Consideration of a Legal Question pursuant to the Commission's 

Policy Statement Regarding a Program for Requesting Consideration of Legal Questions by the 

Commission, 76 Fed. Reg. 45,798 (Aug. 1,2011). RAD subsequenfiy provided the Committee 

with a copy of the Directive 69 memorandum and the Commission's vote certification. The 

Committee, however, stated that it wished to proceed with its request. On Febmary 23, 2012, 

the Commission granted the Committee's request for consideration. 
Memorandum to the Commission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Page 4 of7 

III. ANALYSIS 

The Committee asks: "[W]hen a candidate raises funds for an anticipated special election 

that subsequently does not occur, must all funds raised in connection with that election be 

refunded or redesignated in writing, or is the candidate permitted to spend some or all of those 

fijnds in connecfion with the anticipated special election?" Committee Request at 2. To address 

this question, it is important to define at the outset the meaning of the Committee's phrase, 

"raised in connection with [the anticipated special] election." The contribution limits of 2 U.S.C. 

§ 441a(a) apply "with respect to" any election. By regulation, the Commission has provided that 

"with respect to any election" means: 

(i) [i]n the case of a contribution designated in writing by the contributor for a 

particular election, the election so designated .. . [and] 

(ii) [i]n the case of a contribution not designated in writing by the contributor for 

a particular election, the next election for Federal office after the contribution is 

made. 

11 C.F.R. §§ 110.1(b)(2), 110.2(b)(2). Presumably, the Committee's reference to ftinds "raised 

in connecfion with [an anticipated special] election that subsequently does not occur" is limited 

to contributions designated in writing for the special election. If this is so, then we believe that 

the answer to the Committee's quesfion is that those contributions must be refunded or 

redesignated in writing if the anticipated special election does not occur; and that a committee in 

that situation must keep on hand sufficient funds with which to meet any subsequent refiind 

obligafion. 

In Advisory Opinion 2009-15 (White), the Commission addressed several questions by 

Mayor Bill White, who had filed a Statement of Candidacy for the regularly scheduled 2012 

Texas Senate election, conceming the same anticipated 2010 Texas Senate special elecfion at 

issue here. The Commission concluded that an undesignated contribution of $2,400 or less 

would be available for the White Committee to use if a 2009 or 2010 Texas Senate special 

election was subsequently scheduled because contributions are limited to $2,400 "with respect to 

any election," and a "special election that has been called would be the next Federal election 

after the undesignated contribufion is made." See 2 U.S.C. §§ 441a(aXl)(A), 441 a(c); 11 C.F.R. 

§ 110.1(b)(2). The Commission also concluded that a contributor could designate a $4,800 

contribution in the altemative such that $2,400 would be for a special election if one was held, or 

for the regularly scheduled 2012 Texas Senate primary elecfion if a special elecfion was not held, 

and $2,400 would be for a mnoff special election if one was held, or for the regularly scheduled 

2012 Texas Senate general election if a special election was not held. The Commission noted 

that by designating contributions in the altemative, "the specific use of the contribution will be 

clear to both the Committee and the contributor based on circumstances that will be a matter of 

public record: that the Govemor would have to call a special elecfion following the resignafion 

of Senator Hutchison." The Commission concluded that the White Committee could not 

presumpfively redesignate contribufions designated in writing for the 2012 Texas Senate primary 

or general elections for a special election if one was called. 
Memorandum to the Commission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Pages of7 

Most importanfiy as it pertains to this matter, however, the Commission concluded that if 

the White Committee raised money for the special election, and the special election did not 

occur, the White Committee was required to refimd any contribufions designated for the special 

elecfion to the contributor within sixty days of the last date that a special election could be 

scheduled under Texas law, unless the committee received a written redesignafion or combined 

redesignafion or reattribution. The Commission noted that "contribufions designated for an 

election that does not occur... must be refunded, redesignated for another elecfion in which the 

candidate has participated or is participafing in accordance with 11 C.F.R. § 110.1(b)(5), or 

redesignated and reattributed to another contributor in accordance with 11 C.F.R. § 110.1(k)(3)." 

Finally, the Commission noted that the White Committee would be required to file amended 

reports if the designation of a contribufion would change depending on whether a special election 

was scheduled. 

The Committee asks the Commission to conclude that "committees may legitimately 

incur expenses in connecfion with a special elecfion that does not materialize, and that such 

expenses do not need to be recouped and refunded or redesignated, or misleadingly attributed to 

a future, regularly-scheduled election where the candidate was not in fact a candidate for such 

election." Committee Request at 6-7. However, as we noted in our Directive 69 memorandum, 

a conclusion that the Committee may retain contributions designated in writing for the special 

election appears contrary to the Commission's conclusion in Advisory Opinion 2009-15. 

Notiiing in Advisory Opinion 2009-15 suggests that its conclusion that contribufions designated 

for the special election had to be refunded or redesignated if the special election did not occur 

tums on the fact that Mayor White was registered with the Commission as a candidate in the 

regularly scheduled 2012 Texas Senate election. By permitfing the White Committee to "raise 

money for a special election" but requiring it to refund or redesignate contribufions designated 

for that election if the special elecfion did not occur, it appears that the Commission concluded 

that committees that chose to raise and spend money designated for special elections tiiat have 

not yet been scheduled do so at their own risk. 

Accordingly, we recommend that the Commission conclude that the Committee was 

required to refiind, or obtain redesignations or reattributions of, the contributions designated in 

writing for the special election within sixty days of Senator Hutchison's April 1, 2010 

announcement that she would not resign her seat, meaning that the special election would not 

occur. 

We also recommend, however, that the Commission conclude that the Committee could 

treat contributions that were not designated in wrifing for any particular election, or those nonspecifically designated in wrifing for "the next upcoming election," as contributions made in 

connection with the regularly scheduled 2012 Texas Senate primary election. The necessary 

corollary to the conclusion in Advisory Opinion 2009-15 that a "special elecfion that has been 

called would be the next Federal elecfion after the undesignated contribution is made" is that if 

no special election is ever called, the next regularly scheduled election for that office would be 

the "next Federal elecfion." While at several points the request seems to complain that treafing 

undesignated contribufions as made with respect to the regulariy scheduled 2012 primary 
Memorandum to the Conimission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Page 6 of 7 

election would be "misleading," Committee Request at 4, 6-7, we note that Mr. Williams 

amended his Statement of Candidacy to declare himself a candidate in the regularly scheduled 

2012 Texas Senate elecfion within a week of Senator Hutchison's April 1, 2010 announcement. 

Under those circumstances, it seems both consistent with the plain language of the Commission's 

regulations, and equitable in terms of how Mayor White was permitted to treat undesignated 

contributions, to permit the Committee to treat undesignated contribufions as having been made 

for the regularly scheduled 2012 Texas Senate primary election.^ Under this theory, because the 

Committee never amended its reports to change these contributions' designations after the April 

1, 2010 announcement, it would need to file amended reports designafing those contributions 

that were non-specifically designated for the 2012 Texas Senate primary election under the 

guidance on reporting provided in Advisory Opinion 2009-15. The Committee could spend 

these fiinds in any manner consistent with 2 U.S.C. § 439a(a), including for expenditures made 

in anficipafion ofthe special election. Based on the Commission's guidance in Advisory 

Opinion 2009-15, however, the Committee is not entitied to a separate contribution limit with 

respect to the special election because the special election did not occur. See Advisory Opinion 

2009-15 (requiring the White Committee to refiind or redesignate contributions designated for 

the special election if the special elecfion did not occur). 

The Committee cites to several regulafions and advisory opinions for the proposition that 

the Commission has previously addressed special elecfion spending without suggesting that it 

might be impermissible, and has permitted committees to raise and spend funds in connection 

with other elections that never occur. See Committee Request at 4-5. We note, however, that 

these regulations and advisory opinions do not address the exact issue that the Commission 

appears to have directly addressed in Advisory Opinion 2009-15: If a committee raises money 

for the 2010 Texas Senate special election, and the special election does not occur, whether the 

committee is required to rel\md, or obtain redesignations or reattribufions of, the contribufions 

designated in writing for the special election. Compare Advisory Opinion 2009-15 (White), with 

11 C.F.R. § 110.1(j)(2)-(3) (addressing only scheduled elecfions in which candidates are 

unopposed, or that are not held because the candidate is unopposed or received the majority of 

the votes in a previous election). Advisory Opinion 2006-22 (Wallace) (addressing only whether 

a potential candidate in a special election was a candidate that could accept contributions and 

make expenditures after raising and spending money for that special election, not whether that 

candidate was entitled to retain those contributions if the special election did not occur), 

Advisory Opinion 1986-21 (Owens) (addressing only a scheduled election in which the 

candidate was unopposed), Advisory Opinion 1986-19 (DSCC) (addressing only contribufion 

limits in states where no popular primary occurs). Advisory Opinion 1978-65 (Ireland) 

(addressing only a scheduled elecfion in which the candidate's name would not be on the ballot 

" The Committee complains that "at least one other candidate who informed the Commission of his intention 

to raise funds and run in the 2010 special election appears to have escaped this same scrutiny simply by reporting 

that all funds raised and spent during the same time period were in connection with the 2012 regular election. This 

candidate terminated in November 2010, and we think it fair to conclude that he was never actually a candidate for 

the 2012 election." Committee Request at 6. It appears the Commitlee is referring to Mayor White and his 

conimittee. These facts do not, however, change the facts either that Mayor White was a candidate in the 2012 

election at the time he sought AO 2009-15, or that he was permitted to treat undesignated contributions in precisely 

the same manner we recommend here for Mr. Williams. 
Memorandum to the Commission 

Michael Williams for U.S. Senate (LRA 872) 

Request for Commission Consideration of a Legal Question 

Page 7 of7 

because he was unopposed), Advisory Opinion 1978-41 (Solomon) (addressing only a scheduled 

election in which the candidate was unopposed), and Advisory Opinion 1975-09 (Thurmond) 

(same). 

Accordingly, we recommend that the Commission conclude that a candidate is required 

to refund, redesignate, or reattribute the contributions designated in writing for a special election 

that subsequently does not occur. The practical effect of this conclusion is that a candidate may 

not spend these funds or must otherwise retain enough funds to cover any potential refunds that 

would result if the special election does not occur. We also recommend, however, that the 

Commission conclude that a candidate is permitted to treat contribufions that were not 

designated in wrifing for any particular election, or those non-specifically designated in wrifing 

for "the next upcoming elecfion," as contributions made in connecfion with the next regularly 

scheduled election in which the candidate is participating; and that if the candidate chooses to 

treat undesignated contributions as having been received in connection with the next regularly 

scheduled election, the candidate is required to amend the committee's reports to indicate this. A 

candidate may spend these fimds in any maimer consistent with 2 U.S.C. § 439a(a). The 

Commission may express these conclusions by reaffirming the conclusions it made in this matter 

on Febmary 6, 2012. 

IV. RECOMMENDATION 

Reaffirm the conclusions the Commission made in this matter on Febmary 6, 2012. 

Attachment 

1. Letter from Thomas J. Josefiak and Michael Bayes, Counsel to the Committee, to 

Commission Secretary, at 6-7 (Feb. 15, 2012) 
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