Monday

Novem ber 5, 1979

Part IX

Federal Election 

Commission

Presidential Election Campaign Fund; 

Presidential Prim ary M atching Fund
63756 Federal Register / Vol. 44, No. 215 / Monday, November 5 ,1 9 7 9 / Rules and Regulations

FEDERAL ELECTION COMMISSION

11 CFR Parts 9032,9033,9034, and

9035

[Notice 1979-20]

Presidential Election Campaign Fund;

Presidential Primary Matching Fund

AGENCY: Federal Election Commission. 

ACTION: Transmittal of Regulations to 

Congress.

s u m m a r y : FEC regulations governing 

the administration of the Presidential 

Primary Matching Payment Account 

provided for in Chapter 96 of Title 26, 

United States Code have been revised. 

The revised regulations at 11 CFR 

Chapter I have been transmitted to 

Congress pursuant to 26 USC 9039(c). 

The following revisions to the 

Presidential Primary Matching Fund 

regulations require a candidate to certify 

prior to receiving public funds that he or 

she has not exceeded and will not

exceed the expenditure limitations at 11 

CFR Part 9035. Moreover, under these 

revisions, a candidate who has 

knowingly, willfully and substantially 

exceeded the expenditure limitations at 

11 CFR Part 9035 prior to requesting 

certification for matching funds will be 

ineligible to receive public funds. In 

addition, a number of technical 

amendments are made to 11 CFR Parts 

9033 and 9034 to conform to the new 

regulations. Further information on the 

effect of the revised regulations is 

contained in the supplementary 

information below. 26 USC 9039(c) 

requires that any rule or regulation 

prescribed by the Commission to 

implement Chapter 96 of Title 26, United 

States Code be transmitted to the 

Speaker of the House of Representatives 

and the President of the Senate prior to 

final promulgation. If neither House of 

Congress disapproves the regulations 

within 30 legislative days of their 

transmittal, the Commission may 

prescribe the regulations in question.

The following regulations were 

transmitted to Congress on October 31, 

1979.

EFFECTIVE DATE: Further action, 

including the announcement of an 

effective date, will be taken by the 

Commission after these regulations have 

been before Congress 30 legislative days 

in accordance.with 26 U.S.C. 9039(c).

FOR FURTHER INFORMATION CONTACT:

Patricia Ann Fiori, Assistant General 

Counsel, 1325 K Street N.W., 

Washington, D.C. 20510 (202) 523-4143. 

SUPPLEMENTARY INFORMATION: The 

Commission received two comments in

response to its September 27,1979 

Notice of Proposed Rulemaking (44 FR 

5594). These comments recompiended 

that the proposed regulations be 

modified by removing any option for a 

candidate who has knowingly and 

willfully exceeded expenditure 

limitations to become eligible for public 

funds. This recommendation has been 

incorporated into the revised 

regulations.

Explanation and Justification of Revised 

Regulations Governing Presidential 

Primary Matching Fund Eligibility

The following revisions to the 

Presidential Primary Matching Fund 

regulations require a candidate to certify 

prior to receiving public funds that he or 

she has not exceeded and will not

exceed the expenditure limitations at 11 

CFR Part 9035. Moreover, under these 

revisions, a candidate who has 

knowingly, willfully and substantially 

exceeded the expenditure limitations at 

11 CFR Part 9035 prior to requesting 

certification for matching funds will be 

ineligible to receive public funds.

Statutory provisions at 26 U.S.C. 

9033(b)(1) state that in order to receive 

matching funds, a candidate must certify 

that the candidate and his or her 

authorized committees “will not incur 

qualified campaign expenses in excess 

of the limitations on such expenses 

under [26 U.S.C.] section 9035.” While 

eligibility requirements of Section 

9033(b)(1) may be interpreted as having 

only prospective application, the 

expenditure limitation provisions, as 

well as the legislative history and 

underlying purpose of the public 

financing statute indicate that the 

certification requirements with regard to 

candidate expenditures should have 

retrospective, as well as prospective, 

application.

Expenditure limitation provisions at 

26 U.S.C. 9035 state that “No candidate 

shall knowingly incur qualified 

campaign expenses in excess o f’ certain 

specified amounts. The term 

“candidate” is defined very broadly to 

mean any “individual who seeks 

nomination for election to be President 

of the United States” (26 U.S.C. 9032(2)). 

Consequently, under 26 U.S.C. 9035, the 

expenditure limitations may be viewed 

as applying to a presidential candidate 

from the time his candidacy begins, not 

only from the time of certification. 

Hence, 26 U.S.C. 9035 strongly indicates 

that expenditure limitations applicable 

to presidential primary candidates who 

seek public funds are to be given 

retrospective, as well as prospective, 

application.

Further indication that the 

expenditure limitations are to be given

retrospective application can also be 

found in the legislative history of the 

statute which established the Primary 

Matching Fund system.1 The 

certification requirements of 26 U.S.C. 

9033(b) were enacted as part of the 

Federal Election Campaign Act 

Amendments of 1974 (Pub. L. 93-443, 88 

Stat. 1263,1974). That law, as originally 

adopted, imposed expenditure 

limitations on all federal candidates, 

regardless of whether those candidates 

accepted public funding. Thus, when 

Congress enacted the expenditure 

limitations and certification 

requirements for publicly financed 

candidates, it did so on the assumption 

that expenditures by all candidates, not 

only publicly financed candidates, 

would be limited.2 In that context, the 

use of the future tense at 26 U.S.C. 

9033(b)(1) does not necessarily indicate 

that Congress intended to give only 

prospective application to the 

expenditure limitations and certification 

requirements. Rather, it is more 

consistent with the legislative history of 

the public financing statute to interpret 

the expenditure limitation and 

certification requirements as having 

both retrospective and prospective 

application.

Moreover, retrospective application of 

the expenditure limitations to 

candidates who seek matching funds is 

consistent with the manifest purpose of 

the statute establishing the public 

financing system for presidential 

candidates.3 The legislative history of 

the matching fund system indicates that 

the primary purpose of that legislation 

was to curb “abuses by special interest 

groups and big money . . . in connection 

with campaigns to the office of 

President.4 Congress sought to further 

this purpose by “drastically reducing the 

amounts which may be expended by the 

candidate.” s It would thus run counter 

to the very purpose of the public 

financing statute to allow candidates 

who knowingly, willfully and 

substantially exceed expenditure

1 Note that in Train v. C olorado Public Interest

R esearch Group, Inc. 426 U.S. 1,9-10 (1976), the 

Court stated that however clear a statute may 

appear on its face, "there certainly is no rule of law 

forbidding a court from resorting to legislative 

history to determine the intent of Congress."

2 Note that in B uckley v. V aleo, 424 U.S. 1 (1976), 

those provisions imposing limitations on campaign 

expenditures by candidates who had not accepted 

public funding were found unconstitutional.

2 In considering statutory language, the court, in 

C artledge v. M iller, 457 F. Supp. 1146,1154 (1978), 

noted that “a literal interpretation of the words of a 

statute is not always a safe guide to its meaning” 

and should be “disregarded when it defeats the 

manifest purpose of the statute as a whole.”

4H.R. Rep. No. 93-1239, 94th Cong., 2nd Sess. 13 

(1974).

&S. Rep. No. 93-689, 94th Cong., 2nd Sess. 5 (1974).
Federal Register / Vol. 44, No. 215 / Monday, November 5, 1979 / Rules and Regulations 63757

limitations prior to seeking certification 

to subsequently receive public funds. 

Such an outcome would permit a 

candidate to make vast amounts of 

campaign expenditures, and 

nevertheless receive matching 

payments, thereby defeating the basic 

purpose underlying the enactment of 

public financing.

An explanation of each revision to 11 

CFR Chapter I follows.

11 CFR 9032.9:

§ 9032.9 Qualified campaign expense.

The only revisiod in the definition of 

qualified campaign expense is to specify 

that if the incurrence or payment of an 

expenditure violates any regulation 

prescribed under federal or appropriate 

State law, that expenditure will not be 

considered a qualified campaign 

expense. Regulations promulgated on 

May 7,1979, follow the statutory 

language of 26 U.S.C. 9032(9) (B) and 

provide only that an expenditure which 

violates any law of the United States or 

of the State in which the expense is 

incurred or paid is not a qualified 

campaign expense. Extending the 

exclusion to expenditures which violate 

regulations prescribed under such 

federal or State law furthers the intent 

of 26 U.S.C. 9032(9)(B) and is sound 

public policy.

With this revision, it will be clear that 

any expenditure made by a candidate in 

excess of the expenditure limitations 

under 11 CFR Part 9035 will not be 

considered a qualified campaign 

expense. Regulations at 11 CFR Part 

9035 provide that no candidate, from the 

time he or she becomes a candidate, 

may exceed specified limitations on 

campaign expenditures. Thus, any 

expenditures made by a candidate prior 

to certification in excess of those 

limitations will not be considered 

qualified campaign expenses and hence 

are subject to repayment under 11 CFR

9038.2

11 CFR 9033.2(b):

§ 9033.2 Candidate certification;

th re s h o ld amount.

Subsection (b) is revised to require a 

candidate and that candidate’s 

authorized committees to certify prior to 

receiving matching funds that they have

not exceeded and will not exceed 

expenditure limitations at 11 CFR Part 

9035. Regulations promulgated on May 7, 

1979 required only that the candidate 

and his or her committees certify that 

they will not exceed expenditure 

limitations at 11 CFR Part 9035. As 

discussed above, this revision is 

consistent with the basic underlying 

purposes of the public financing statute.

[See also explanation and justification 

of 11 CFR Part 9035.]

11 CFR 9033.3:

§ 9033.3 Expenditure limitation

certification.

A new section dealing with the

expenditure limitation certification is

created. Under this section, if the

Commission determines that a

candidate has knowingly, willfully and

substantially exceeded the expenditure

limitations at 11 CFR Part 9035 prior to 

applying for certification, that candidate

is ineligible to receive matching funds.

As discussed above, it would be

inconsistent with the basic underlying *

purposes of the public financing statute

to permit such candidates^to receive

public funds.

This section also sets forth a

procedure under which a candidate may

challenge the Commission’s initial

determination that he or she is

ineligible. This procedure includes the

following elements: Notice to the

candidate of the legal and factual

reasons for the Commission’s

determination; opportunity for the

candidate to present, in writing, legal

and factual materials to demonstrate

that he or she has not knowingly and

willfully exceeded expenditure

limitations; a final determination by the

Commission on the basis of all evidence

presented; and a statement of reasons

underlying the Commission’s

determination.

The procedure set forth in this section

comports with due process

requirements. The Federal Election

Campaign Act does not provide that

Administrative Procedure Act (APA)

requirements for adjudicative hearings

(5 U.S.C. 554-557) apply to

determinations by the Commission,

while APA requirements for a full trial

type hearing may not be applicable,

procedural due process requirements

mandate that prior to denial of eligibility

a candidate be afforded some type of

opportunity to demonstrate to the

Commission that such denial is not

warranted. (See K. Davis,

Administrative Law of the Seventies, 

section 7.00-1-3 (Supp. 1977); Mathews

v. Eldridge, 424 U.S. 319 (1976).) (It 

should be noted that even if the APA 

requirements were applicable to 

determinations by the Commission, the 

APA itself contains a significant 

exception to the requirement for a full 

trial type hearing by providing for the 

submission of evidence in written form 

under 5 U.S.C. 556(d).)

11 CFR Part 9035:

Part 9035 Campaign expenditure

limitations.

This section is revised to provide that 

no "candidate” shall exceed certain 

specified limitations. The term 

"candidate” is very broadly defined at 

11 CFR 9032.2 to include all candidates 

who seek nomination for election to the 

office of President. Regulations 

promulgated on May 7,1979, made the 

expenditure limitations applicable to 

only those candidates who had accepted 

matching funds. With this revision, it is 

clear that the expenditure limitations 

apply to a candidate from the time the 

individual becomes a candidate, rather 

than from the time of certification for 

matching funds.

This section is also revised to broaden 

the reference to expenditures which are 

subject to limitation. Regulations 

promulgated on May 7,1979 provided 

that a candidate was limited in the 

amount of "qualified campaign 

expenses” he or she could incur. The 

revised regulation provides that a 

candidate and his or her authorized 

committees will not incur "expenditures 

in connection with the candidate’s 

campaign for nomination” in excess of 

the specified limitation. Any 

expenditure which is in excess of the 

specified limitations is by definition not 

a “qualified campaign expense” because 

the incurring or payment of that 

expenditure constitutes a violation of 

federal law and regulation prescribed 

thereunder. Nevertheless, expenditures 

in excess of the limitations should 

obviously be considered expenditures 

which count against the candidate’s 

limitation.

11 CFR 9032.9 (a) and (a)(1) through 

(a)(3) are revised to read as follows:

§ 9032.9 Qualified campaign expense.

(a) “Qualified campaign expense” 

means a purchase, payment, 

distribution, loan, advance, deposit, or 

gift of money or anything of value:

(1) Incurred by a candidate or his or 

her authorized committees from the date 

the individual becomes a candidate 

through the last day of the candidate’s 

eligibility as determined under 11 CFR 

9033.4;

(2) Made in connection with his or her 

campaign for nomination; and

(3) Neither the incurrence nor 

payment of which constitutes a violation 

of any law of the United States or of any 

law of any State in which the expense is 

incurred or paid, or of any regulation 

prescribed under such law of the United 

States or of any State, except that any 

State law which has been preempted by 

the Federal Election Campaign Act of 

1971, as amended, shall not be
63758 Federal Register / Vol. 44, No. 215 / Monday, November 5, 1979 / Rules and Regulations

considered a State law for purposes of 

this Subchapter.

* h ★ * *

11 CFR 9033.2(b) is revised to read as 

follows:

§ 9033.2 Candidate certifications;

threshold amount.

fir fir fir ' fir fir

(b) The candidate and his or her 

authorized committee(s) shall certify 

that they have not incurred and will not 

incur expenditures in connection with 

the candidate’s campaign for 

nomination, which expenditures are in 

excess of the limitations under 11 CFR • 

Part 9035.

fir fir * * *

Present § § 9033.3 through 9033.8 are 

redesignated as § § 9033.4 through 9033.9 

respectively. A new § 9033.3 is added to 

read as follows:

§ 9033.3 Expenditure limitation

certification.

(a) If the Commission makes an initial 

determination that a candidate or the 

candidate’s authorized committee(s) 

have knowingly, willfully, and 

substantially exceeded the expenditure 

limitations at 11 CFR Part 9035 prior to 

that candidate’s application for 

certification, the Commission may make 

an initial determination that the 

candidate is ineligible to receive 

matching funds.

(b) The Commission shall notify the 

candidate of its initial determination, 

provide the legal and factual reasons for 

its initial determination and advise the 

candidate of the evidence upon which 

its initial determination is based. The 

candidate will be given an opportunity, 

within 20 days of the Commission’s 

notice, to submit written legal or factual 

materials to demonstrate that he or she 

has not knowingly, willfully and 

substantially exceeded the expenditure 

limitations at 11 CFR Part 9035.

(c) The Commission will consider all 

written legal or factual materials 

submitted by the candidate under 11 

CFR 9033.3(b) in making its final 

determination. These materials may be 

submitted by counsel on the candidate’s 

behalf.

(d) A final determination of the

candidate’s ineligibility by the

Commission shall be accompanied by a

written statement of reasons for the

Commission’s action. This statement

shall explain the reasons underlying the

Commission’s determination and shall

summarize the results of any

investigation upon which the

determination is based.

(e) A candidate who receives a final 

determination of ineligibility under 11 

CFR 9033.3(d) shall be ineligible to

receive matching fund payments under 

11 CFR 9034.1.

fir r * fir fir *

11 CFR 9035.1 is revised, including the 

caption to read as follows:

§ 9035.1 Campaign expenditures

limitations.

(a) No candidate or his or her 

authorized committee(s) shall knowingly 

incur expenditures in connection with 

the candidate’s campaign for 

nomination, which expenditures, in the 

aggregate, exceed $10,000,000 (as 

adjusted under 2 USC 441a(c)), except 

that the aggregate expenditures by a 

candidate in any one State shall not 

exceed the greater of: 16 cents (as 

adjusted under 2 USC 441a(c)) 

multiplied by the voting age population 

of the State (as certified under 2 USC

441a(e)); or $200,000 (as adjusted under 2 

USC 441a(c)).

(b) The expenditure limitations of 11 

CFR 9035.1 shall not apply to a 

candidate who at no time receives 

matching funds.

The following technical amendments 

are made to 11 CFR Parts 9033 and 9034:

1.11 CFR 9033.1(c): Delete “§ 9033.8” 

and substitute “11 CFR 9033.9.”

2.11 CFR 9033.2(f): Delete “2 U.S.C. 

441a(b)” and substitute “11 CFR 9035”; 

and delete “11 CFR 9033.8” and 

substitute “11 CFR 9033.9.”

3.11 CFR 9033.5, as redesignated: 

Delete “paragraph (a), (b) or (c) (11 CFR 

9033.4(a), (b) (c))” and substitute “11 

CFR 9033.5(a), (b) or (c).”

4.11 CFR 9033.5(a)(3), as redesignated: 

Delete “§ 9033.5” and substitute “11 CFR 

9033.6.”

5.11 CFR 9033.5(b)(1), as 

redesignated: Delete “11 CFR 9033.6” 

and substitute “11 CFR 9033.7.”

6.11 CFR 9033.6(a), as redesignated: 

Delete "subsection (e) (11 CFR 

9033.5(e))” and substitute “11 CFR 

9033.6(e).”

7.11 CFR 9033.7(a), as redesignated: 

Delete § 9033.4(b)” and substitute "11 

CFR 9033.5(b)”; and delete “11 CFR 

9033.5(e)” and substitute “11 CFR 

9033.6(e).”

8.11 CFR 9033.7(c), as redesignated: 

Delete 11 CFR 9033.5(e)” and substitute 

"11 CFR 9033.6(e).”

9.11 CFR 9033.7(d), as redesignated: 

Delete “this section (11 CFR 9033.6)” and 

substitute “11 CFR ,9033.7.”

10.11 CFR 9033.8(a), as redesignated: 

Delete “§ 9033.4(a)” and substitute “11 

CFR 9033.5(a);” and delete “11 CFR 

9033.5(e)” and substitute “11 CFR 

9033.6(e).”

11.11 CFR 9033.8(b), as redesignated: 

Delete “11 CFR 9033.4(b)” and substitute 

“11 CFR 9033.5(b).”

12.11 CFR 9033.9(a), as redesignated: 

Delete “2 U.S.C. 441a(b)” and substitute 

“11 CFR 9035”.

13.11 CFR 9034.1(a): Delete “11 CFR 

9033.4” and substitute “11 CFR 9033.5.’’

14.11 CFR 9034.1(c): Delete “§ 9033.7” 

and substitute “11 CFR 9033.8;” and 

delete “11 CFR 9033.8(e)” and substitute 

"11 CFR 9033.9(e).”

15.11 CFR 9034.1(d): Delete “2 U.S.C. 

441a(b)(l)(A) as adjusted by 2 U.S.C. 

441a(c)” and substitute “11 CFR 9035.”

16.11 CFR 9034.4(b): Delete "11 CFR 

9033.4” and substitute “11 CFR 9033.5.”

17.11 CFR 9034.4(d): Delete “2 U.S.C. 

441a(b)(l)(A)” and substitute "11 CFR 

9035.”

18.11 CFR 9034.4(h): Delete “11 CFR 

9033.7” and substitute “11 CFR 9033.8;” 

and delete “11 CFR 9033.8(e)” and 

substitute “11 CFR 9033.9(e).”

19.11 CFR 9034.5(a)(1): Delete “11 

CFR 9033.4” and substitute “11 CFR 

9033.5.”

Dated: October 30,1979.

Robert O. Tieman,

Chairman, Federal Election Commission,

[FR Doc. 79-34146 Filed 11-2-79; 8:45 am]

BILLING CODE 6715-01-M