2 6 0 5 8 Federal R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations

FEDERAL ELECTION COMMISSION

11CFR Parts 102,104 and 106

[Notice 1990-6]

Methods of Allocation Between

Federal and Non-Federal Accounts;

Payments; Reporting

AGENCY: Federal Election Commission.

action: Final rules; transmittal of

regulations to Congress.

su m m ary: The Commission has revised 

its regulations at 11 CFR Parts 102,104 

and 106. These regulations implement 

the contribution and expenditure 

limitations and prohibitions established 

by 2 U.S.C. 441a and 441b, provisions of 

the Federal Election Campaign Act of 

1971, as amended (“the Act” or 

“FECA"), 2 U.S.C. 431 etseq., by 

providing for allocation of expenses for 

activities that jointly benefit both 

federal and non-federal candidates and 

elections. The amended rules apply to 

party committees, nonconnected 

committees, and (under certain 

circumstances) separate segregated 

funds making disbursements on behalf 

of both federal and non-federal 

candidates and elections. The revisions 

provide guidance to committees on how 

to allocate such costs by creating a 

comprehensive set of allocation rules, 

and by enhancing the Commission’s 

ability to monitor the allocation process 

to ensure that prohibited funds are 

excluded from federal election activities. 

In addition, the revisions clarify how 

committees are to allocate expenses 

attributable to more than one clearly 

identified candidate. The revisions also 

specify additional information that is to 

be reported to the Commission by each 

type of committee covered by the rules. 

Further information on these revisions is 

provided in the supplementary 

information which follows.

DATES: Further action, including the 

announcement of an effective date, will 

be taken after these regulations have 

been before Congress for 30 legislative 

days pursuant to 2 U.S.C. 438(d). A 

document announcing the effective date 

will be published in the Federal 

Register.

FOR FURTHER INFORMATION CONTACT:

Ms. Susan E. Propper, Assistant General 

Counsel, 999 E Street, NW., Washington, 

DC 20463, (202) 376-5690 or (800) 424- 

9530.

SUPPLEMENTARY INFORMATION: The 

Commission is publishing today the final 

text of revisions to its regulations at 11 

CFR parts 102,104 and 106. These 

revisions set forth rules for allocation of 

expenses for four categories of activity

that Jointly benefit both federal and nonfederal candidates and elections. These 

include (1) Administrative expenses 

such as rent, utilities, office supplies, 

and salaries; (2) the direct costs of 

fundraising programs or events; (3) state 

and local party activities exempt from 

the definitions of “contribution" and 

“expenditure" under the A c t when 

conducted in conjunction with nonfederal election activities; and (4) 

generic voter drive activity such as voter 

identification, voter registration, and 

get-out-the-vote campaigns. The new 

rules set percentages and methods by 

which committees are to allocate the 

costs of these activities between their 

federal and non-federal accounts. The 

rules also provide procedures for how 

committees are to pay the bills resulting 

from these activities, and require 

disclosure of information related to 

allocated expenses and disbursements.

The final allocation rules published 

today are the result of a long and 

complex rulemaking process. The 

Commission first considered revising its 

allocation regulations in 1984. In 

November of that year, the Commission 

received a petition for rulemaking urging 

it to address the alleged use of funds 

raised outside of the Act’s requirements 

for the prohibited purpose of influencing 

federal elections. The Commission 

received five written comments on the 

petition, in response to a Notice of 

Availability issued on January 4,1985. 

See 50 FR 477. On December 18,1985, 

the Commission published a Notice of 

Inquiry seeking further input on the 

alleged use of undisclosed funds to 

influence federal elections (see 50 FR 

51535), and received seventeen 

comments in response. In addition, a 

public hearing was held on January 29, 

1986, at which three witnesses testified. 

After reviewing all comments and 

testimony, the Commission voted on 

April 17,1986, to deny the petition for 

rulemaking. See 51 FR 15915.

The petitioner subsequently filed suit 

in federal district court for judicial 

review of the denial of the petition. The 

court rejected the claim that the 

Commission was required to prohibit the 

allocation of any expenses to nonfederal accounts. The court did, 

however, direct the Commission to 

revise its allocation regulations to give 

party committees more guidance in 

complying with the FECA. See Common

Cause v. Federal Election Commission, 

692 F. Supp. 1391,1396 (D.D.C. 1987). The 

Commission issued a new Notice of 

Inquiry in compliance with this order on 

February 23,1988 (see 53 FR 5277), and 

received three comments in response.

On September 29,1988, the 

Commission issued a Notice of Proposed

Rulemaking ("NPRM”) in which it

sought comments on proposed revisions

to its allocation regulations. See 53 FR 

38012. In the Notice, the Commission

presented four alternative proposals,

along with draft regulatory language for 

each alternative. These proposals

ranged from complex sets of rules

providing options of allocation methods

for different categories of activity and

varying requirements for different types

of election years, to a uniform

requirement that all committees with

federal and non-federal account$ must

allocate their expenses on a fixed

percentage basis between those

accounts. A public hearing was held on

December 15,1988, at which six

witnesses presented testimony on the

issues raised in the rulemaking. These

witnesses represented national

committees of both major political

parties, a state party committee, and

two public interest organizations. The

Commission also received sixteen

written comments, including several

submitted after the close of the comment

period while the Commission was

considering drafts of final allocation

rules.

In additipn to the Notice of Proposed 

Rulemaking and the public hearing, the 

Commission initiated two other 

measures to obtain input relevant to 

allocation of expenses for federal and 

non-federal activities. On February 10, 

1989, the Commission sent a seven-page 

questionnaire to the 110 Democratic and 

Republican state party chairs, soliciting 

information on current allocation 

practices in the states. Twenty-two 

responses to the questionnaire were 

received, providing a substantial amount 

of new information supplementing the 

comments previously submitted. In 

addition, on April 17,1989, the 

Commission sent letters and questions 

to the chief fundraiser for each of the 

major political parties during the 1988 

election year. These questions focused 

on (1) the fundraisers’ roles in their 

parties’ presidential campaigns and in 

the national party committees during the 

1988 election cycle, (2) the relationship 

between the national party committees' 

fundraising activities and the 

presidential campaigns, and (3) the 

national parties’ involvement in raising 

and spending money not subject to 

federal limits and prohibitions.

Each of these forms of input provided

valuable information which serves as 

the basis for the revised rules published

today. These rules also incorporate 

elements of each of the four proposals 

previously published in the Notice of

Proposed Rulemaking.
Federal R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / R ules and Regulations 2 6 0 5 9

Section 438(d) of title 2, United States 

Code, requires that any rules or 

regulations prescribed by the 

Commission to carry out the provisions 

of title 2 of the United States Code be 

transmitted to the Speaker of the House 

of Representatives and the President of 

the Senate thirty legislative days before 

they are finally promulgated. These 

regulations were transmitted to 

Congress on June 15,1990.

Explanation and Justification

In regulations promulgated in 1977, the 

Commission required political 

committees active in both federal and 

non-federal elections to allocate their 

administrative expenses between 

separate federal and non-federal 

accounts "in proportion to the amount of 

funds expended on federal and nonfederal elections, or on another 

reasonable basis.** 1 1 CFR 106.1(e).

Since 1978, the Commission has also 

recognized that such committees may 

allocate the costs of certain activities 

that affect both federal and non-federal 

elections, provided that they defray a 

reasonable portion of those costs with 

funds permissible under the Act. See 

Advisory Opinion 1978-10.

The revised regulations published 

today provide committees with 

significantly more guidance on how they 

are to allocate their administrative 

expenses and costs for combined federal 

and non-federal activities. Unlike 

current 11 CFR 108.1(e), which 

addresses only administrative expenses, 

the revisions specify explicit 

percentages or methods for allocation of 

each category of allocable expense by 

each type of committee covered by the 

rules. See §§106.5 and 106.6. Similarly, 

new paragraph 106.1(a) extends the 

allocation and reporting requirements of 

ciment 11 CFR 106.1(a) to cover 

payments that include both amounts 

attributable to specific non-federal 

candidates and amounts attributable to 

specific federal candidates, as well as 

expenditures on behalf of specific 

federal candidates alone. The new rules 

also ensure that the public record 

reflects how committees are allocating 

their shared federal and non-federal 

expenses by requiring more detailed 

disclosure of such allocation, to be 

reported on a new set of reporting forms. 

See § 104.10. In addition, the revised 

rules significantly alter the procedure by 

which committees are to pay the bills for 

their allocable activities. For the first 

time, committees are required to pay 

their allocable expenses from their 

regular federal accounts or from new 

separate allocation accounts, rather 

than making such payments from their 

non-federal accounts as permitted under

the Commission's current policy. The 

new rules include specific payment and 

reimbursement procedures to allow the 

Commission to track the flow of nonfederal funds transferred into federal 

accounts, and to ensure that such funds 

are used solely to pay the non-federal 

portion of a committee's allocable 

expenses. See paragraphs 106.5(g) and 

106.6(e). Finally, the new rules provide 

additional safeguards against the use of 

impermissible hinds in federal election 

activity by expanding the disclosure of 

receipts and disbursements by national 

party committees, and by creating a 

presumption that funds solicited by 

party committees with reference to 

federal candidates or elections are 

solicited for the purpose of influencing 

federal elections. See §§ 102.5(a)(3), 

104.8, and 104.9.

Part 102— Registration, Organization

and Recordkeeping by Political

Committees

Section 102.5 Organizations Financing

Political Activity in Connection With

Federal and Non-federal Elections,

Other Than Through Transfers and Joint

Fundraisers

Revised § 102.5 adds a technical 

amendment regarding transfers of nonfederal funds into a committee’s federal 

accounts, and sets forth a presumption 

regarding funds solicited by party 

committees. Current 11 CFR 

102.5(a) (l)(i) prohibits committees from 

transferring fends from a non-federal 

account to a federal account for any 

reason. Under the new rules, committees 

are required to make such transfers for 

the limited purpose of paying for 

allocated expenses. See paragraphs 

106.5(g) and 106.6(e). Thus, paragraph 

(a)(l)(i) has been amended to allow 

transfers of non-federal funds into a 

federal account as provided in 

paragraphs 106.5(g) and 106.6(e) of the 

new rules.

New paragraph (a)(3) creates a 

presumption that any fends solicited by 

a party committee with reference to a 

federal candidate or election are raised 

for the purpose of influencing a federal 

election, and are thus subject to the 

prohibitions and limitations of the Act. 

This presumption may be rebutted by 

demonstrating that the funds were 

solicited with express notice that they 

would not be used for federal election 

purposes. Paragraph (a)(3) has been 

added to the rules to address the 

common perception, reflected in several 

comments, that fends prohibited under 

the Act have been solicited on behalf of 

political parties with the implication 

that they would be used to benefit 

federal candidates when, in fact, the

funds could only be used for non-federal 

election activity. This provision, in 

combination with current 11 CFR 

102.5(a)(2) regarding fends deposited in 

federal accounts, will ensure that fends 

collected by party committees are used 

for the purpose for which they were 

solicited, and will make clear to donors 

that fends prohibited under the Act will 

only be used to support non-federal 

candidates and elections.

Part 104— Reports by Política!

Committees

Section 104.8 Uniform Reporting o f

Receipts

Revised § 104.8 requires national 

party committees to disclose the source 

and amount of receipts by their nonfederal accounts and building funds, as 

well as by their federal accounts as 

required under the current rules. The 

section has therefore been retitled to 

reflect its broadened application to both 

federal and non-federal receipts.

Paragraph (a), which governs 

disclosure of receipts by all reporting 

committees, has been amended to make 

clear that it only applies to committee’s 

federal accounts. New paragraphs (e) 

and (f) require natonal party committees 

to also disclose information about 

receipts to their non-federal accounts 

and buildings funds. The language of 

paragraphs (e) and (f) parallels feat of 

paragraph (a), applying fee same 

itemization threshold to all three types 

of accounts. National party committees 

are to disclose this information on a 

separate Schedule A for each of their 

accounts, but shall list their non-federal 

and building fund receipts as memo 

entries, in order to isolate them from fee 

federal receipts feat are summarized for 

each reporting period.

This broadened disclosure provision 

has been added to fee rules based on 

fee Commission's belief feat it will help 

eliminate fee perception that prohibited 

fends have been used to benefit federal 

candidates and elections. This approach 

was supported by several comments on 

fee rules. Representatives of fee major 

parties' national committees testified 

feat their committees did not object to 

broader disclosure at the national party 

level. However, several commentera 

strongly objected to such disclosure at 

either state or local party levels, and 

some Commissioners expressed concern 

about fee FEC’s jurisdiction to require 

such reporting by state and local party 

committees. Based, in part, on this input, 

fee Commission has limited the 

reporting of non-federal receipts to 

national party committees. The 

Commission also took into consideration
26060 Federal R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / R ules and Regulations

the national committees’ primary 

involvement in Presidential and other 

federal elections, such committees’ 

ability to comply with more complicated 

reporting requirements, and the fact that 

there is no comprehensive reporting of 

non-federal activity by national party 

committees that is comparable to the 

non-federal reporting by state and local 

party committees at the state level.

Section 104.9 Uniform Reporting o f

Disbursements

This section has been amended to 

require national party committees to 

disclose disbursements from their nonfederal accounts and building funds, as 

well as from their federal accounts as 

required under the current rules. These 

changes parallel the expansion of 

$ 104.8 regarding national committee 

disclosure of non-federal receipts. 

Section 104.9 has also been retitled to 

reflect its broadened application to both 

federal and non-federal disbursements.

Paragraph (a), which governs 

disclosure of expenditures by all 

reporting committees, has been 

amended to make clear that it only 

applies to a committee’s federal 

accounts. New paragraphs (c) and (d) 

require national party committees to 

also disclose information about 

disbursements from their non-federal 

accounts and building funds. The 

language of paragraphs (c) and (d) 

parallels that of paragraph (a), applying 

the same itemization threshold to ail 

three types of accounts. In addition, new 

paragraph (e) requires national party 

committees to report each transfer of 

funds from their non-federal accounts to 

the non-federal account of a state or 

local party committee. National party 

committees are to disclose this 

information on a separate Schedule B 

for each of their accounts, but shall list 

their non-federal and building fund 

disbursements as memo entries, in order 

to isolate them from the federal 

expenditures that are summarized for 

each reporting period.

These revisions, together with revised 

§ 104.8, have been added to the rules 

based on the belief that increased 

disclosure will help eliminate the 

perception that prohibited funds have 

been used to benefit federal candidates 

and elections. Like the disclosure of 

non-federal receipts, the reporting of 

disbursements from non-federal 

accounts has been limited to national 

party committees.

Section 104.10 Reporting o f Expenses

A llocated Among Candidates and

Activities

Section 104.10 sets forth the rules for 

the reporting of information related to a

committee’s allocable expenses. These 

rules only apply to committees that 

qualify as "political committees” under 

the Ac t See 2 U.S.C. 431(4). Current 11 

CFR 104.10 addresses only the reporting 

of allocation of expenditures made on 

behalf of more than one specific 

candidate. In contrast the revised 

section also covers the reporting of 

allocation of a committee’s 

administrative expenses and its costs 

for fundraising, exempt activities, and 

generic voter drive activity. The new 

section has therefore been retitled to 

reflect its broadened application to the 

reporting of expenses allocated between 

federal and non-federal activities as 

well as expenses allocated between 

specific candidates.

New 8104.10 is based on the reporting 

provisions described in the Notice of 

Proposed Rulemaking. However, several 

additional requirements have been 

added to the final rules to reflect the 

changed procedure by which payment 

for allocable activities is made. Under 

thát procedure, committees are to pay 

their allocable expenses from their 

regular federal accounts or from new 

separate allocation accounts, which are 

also federal accounts and therefore 

subject to the full reporting requirements 

of the Act. See §§ 106.5(g) and 106.6(e). 

Revised § 104.10 requires committees to 

itemize each transfer of non-federal 

funds to their federal or allocation 

accounts, as well as each allocated 

disbursement made from those 

accounts.

These rules were designed to provide

sufficient information to allow the

Commission to monitor committees’

allocation procedures, while reflecting

the Commission’s commitment to

avoiding overly burdensome reporting

requirements. The information required

is the minimum necessary to track the

flow of non-federal funds into federal

accounts, and to ensure that the use of

such funds is strictly limited to payment

for the non-federal share of allocable

activities. In contrast, any information

that could be deduced from a

committee’s reports or calculated by the

Commission will not be required on the

new reporting forms, which are being

designed to implement these reporting

provisions.

It should also be noted that these 

rules have been placed in a different 

section than the reporting provisions 

described in the Notice of Proposed 

Rulemaking. The NPRM alternatives 

addressed reporting in draft § 106.5, 

which was intended to cover all 

allocation issues. In the revised 

regulations, these requirements have 

been moved to § 104.10, so that all 

reporting requirements will continue to

be located together in part 104 of the 

regulations.

Paragraph 104.10(a) Expenses 

Allocated Among Candidates

This paragraph expands current 11 

CFR 104.10 to more dearly describe the 

rules for reporting the allocation of 

expenses attributable to specific 

candidates. In the case of expenditures 

allocated between more than one dearly 

identified federal candidate, political 

committees must report the amount of 

each in-kind contribution, independent 

expenditure, or coordinated party 

expenditure attributed to each 

candidate. In the case of payments 

involving both expenditures on behalf of 

one or more specific federal candidates 

and disbursements on behalf of one or 

more specific non-federal candidates, 

political committees with separate 

federal and non-federal accounts shall 

report the payments according to the 

instructions included in new paragraph 

104.10(a). These instructions parallel 

those contained in paragraph 104.10(b) 

for the reporting of other allocable costs, 

but make clear the added requirements 

for reporting costs attributable to 

specific federal candidates. In 

paragraphs (a)(1) through (a)(4), the new 

rules set forth procedures by which 

committees are to report their allocation 

ratios used, as well as transfers of funds 

between their accounts and 

disbursements made from their federal 

accounts for the purpose of paying for 

activities conducted on behalf of both 

specific federal and specific non-federal 

candidates. Committees are instructed 

to assign a unique identifying title or 

code to each such activity, in order to 

track the funds designated to pay for its 

costs. These identifying titles and codes 

are also intended to decrease the burden 

placed on reporting committees, by 

allowing them to state relevant 

allocation ratios one time only, rather 

than repeating them for every itemized 

expense. Thus, it is especially critical 

that committees use precisely the same 

identifier each time they refer in their 

reports to a particular activity.

Paragraph 104.10(b) Expenses 

Allocated Among Activities

This new paragraph sets forth the 

rules by which political committees with 

separate federal and non-federal 

accounts are to report their allocation of 

administrative expenses and the costs of 

fundraising, exempt activities, and 

generic voter drive activity. In 

paragraphs (b)(1) through (b)(5), the new 

rules set forth procedures by which 

committees are to report their allocation 

ratios used for each category of activity,
Federal R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations 26061

as well as transfers of funds between 

their accounts and disbursements made 

from their federal accounts for the 

purpose of paying their allocable 

expenses. In contrast to the allocation of 

administrative expenses and generic 

voter drive costs, for which one ratio is 

calculated for each category as a whole, 

committees are to calculate a separate 

allocation ratio for each fundraising 

program or exempt activity because the 

allocation methods used for these 

categories would be expected to yield 

different ratios for each such event See 

paragraphs 106.5 (e) and (f) and 106.6(d). 

Committees are also instructed to assign 

a unique identifying title or code to each 

fundraising program or exempt activity, 

in order to track the funds designated to 

pay for its costs.

Part 106— Allocations of Candidate

and Committee Activities

Section 106,1 Allocation o f Expenses

Between Candidates

Current 11 CFR 106.1 contains both 

the rules for allocation between specific 

candidates and the rules for allocation 

of administrative expenses. In the 

revised regulations, the Commission has 

created new § § 106.5 and 106.6 to 

govern allocation of administrative 

expenses and the costs of all activities 

not attributable to specific candidates, 

including fundraising events, exempt 

activities, and generic voter drive 

activity. Thus, new § 106.1 is limited to 

allocation of expenses attributable to 

more than one clearly identified 

candidate, and has been retitled 

accordingly. Paragraph 106.1(a) has been 

revised to clarify how committees are to 

allocate expenses for activities 

conducted on behalf of several specific 

candidates. Paragraph 106.1(e) has been 

revised to cross-reference the reader to 

new § § 106.5 and 106.6 for the rules 

governing allocation of administrative 

expenses, and the costs of fundraising, 

exempt activities, and generic voter 

drive activity.

Paragraph 106.1(a) General Rule

This paragraph has been expanded to 

more fully describe the methods by 

which committees are to allocate 

expenses attributable to more than one 

specific candidate, including in-kind 

contributions, independent 

expenditures, and coordinated party 

expenditures. These rules present no 

change in Commission policy as to when 

a given expense constitutes an in-kind 

contribution or particular type of 

expenditure. Rather, the rules are 

intended to provide guidance as to how 

committees are to allocate such

expenses once they are determined to 

be in-kind contributions, independent 

expenditures, or coordinated party 

expenditures.

The new paragraph retains the 

general rule of current 11 CFR 106.1(a) 

that expenses shall be attributed to each 

candidate according to the benefit 

reasonably expected to be derived. The 

revision adds examples of the general 

rule, specifying allocation methods for 

two different types of activity that may 

be conducted on behalf of several 

specific candidates.

The first example stated in the rules 

covers publications and broadcast 

communications, which are to be 

allocated according to the space or time 

devoted to each candidate as compared 

to the total space or time devoted to all 

candidates. If the costs of a phone bank 

are attributable, in whole or in part, to 

one or more federal candidates as an inkind contribution, independent 

expenditure, or coordinated party 

expenditure, then those costs should be 

allocated on a similar basis, according 

to the number of questions or statements 

devoted to each candidate.

The second example stated in the 

rules covers the costs of fundraising 

events where funds are collected by one 

committee for more than one clearly 

identified candidate. Such costs are to 

be allocated according the amount of 

funds received on behalf of each 

candidate as compared to the total 

receipts by all candidates. This situation 

should not be confused with that 

described in 11 CFR 102.17, which 

concerns joint fundraising activities 

conducted by more than one committee. 

The Commission intends that any other 

types of activity not covered by the 

stated examples are to be allocated 

according to the general rule of this 

paragraph when those activities are 

conducted on behalf of more than one 

clearly identified candidate.

New paragraph 106.1(a) also makes 

clear that committees are to use the 

designated methods to allocate costs 

between specific federal candidates, as 

well as to allocate payments involving 

both expenditures on behalf of specific 

federal candidates and disbursements 

on behalf of specific non-federal 

candidates. In the case of the latter type 

of payments, political committees with 

separate federal and non-federal 

accounts are to make such payments 

according the same procedures required 

for paying administrative expenses and 

the costs of joint federal and non-federal 

activities (see paragraphs 106.5(g) and 

106.6(e)), but shall report such payments 

according to paragraph 104.10(a). It 

should be noted that the methods set

forth in paragraph 106.1(a) will also be 

used by publicly-financed presidential 

general election candidates, who are to 

allocate the costs of joint activities 

pursuant to 11 CFR 9002.11(b)(3). Such 

candidates must keep records of their 

allocable expenses pursuant to 

paragraph 104.10(a).

Paragraph 106.1(e)

This paragraph cross-references the 

reader to new §§ 106.5 (for party 

committees) and 106.6 (for 

nonconnected committees and separate 

segregated funds) for the rules governing 

allocation for administrative expenses 

and all activities not attributable to 

specific candidates. In contrast to 

current 11 CFR 106.1(e), which provides 

only for allocation of administrative 

expenses, the new rules apply the 

referenced allocation requirements to 

fundraising events, exempt activities, 

and generic voter drive activity as well. 

This expanded application is consistent 

with the Commission’s position in 

Advisory Opinions 1978-10,1978-28, 

and 1978-50. These opinions clarified 

the scope of 11 CFR 106.1(e) by 

interpreting "administrative expenses" 

as including generic voter activities such 

as voter registration and get-out-thevote drives, and requiring that such 

activities be allocated according to the 

same methods as approved for other 

administrative expenses. The 

Commission has also interpreted the 

allocation requirement of 11 CFR 

106.1(e) as applying to publications and 

fundraising events. See Advisory 

Opinions 1978-46 and 1979-12.

In addition, the new rules extend the 

allocation requirements to all 

committees that make disbursements for 

joint federal and non-federal election 

activities, whereas current 11 CFR 

106.1(e) applies only to political 

committees with separate federal and 

non-federal accounts. Under the revised 

rules, organizations that are not political 

committees and that maintain only a 

single account shall demonstrate, upon 

the Commission’s request, that their 

expenses for joint activities have been 

allocated as required by these rules, and 

that the federal share of such expenses 

has been paid with funds permissible 

under the Act. See 11 CFR 102.5(b)(l)(ii).

Section 106.5 Allocation o f Expenses

Between Federal and Non-federal

Activities by Party Committees

This section has been added to the 

rules to provide party committees with 

detailed instructions as to how they are 

to allocate their administrative expenses 

and costs for combined federal and nonfederal activities. These rules apply only
26062 Fed eral R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / R ules and Regulations

to those committees that make 

disbursements in connection with both 

federal and non-federal elections. 

Paragraphs 106.5 (a) through (g) specify 

percentages and methods by which 

different types of party committees are 

to allocate expenses for each category 

of allocable activity, and set forth 

procedures by which committees are to 

pay the bills for these allocable 

expenses. The allocation methods 

required by § 108.5 are based on those 

previously approved in Commission 

advisory opinions and described in the 

Notice of Proposed Rulemaking. 

However, following receipt of the 

comments and testimony on the rules, 

the Commission refined several of the 

allocation methods, and combined 

aspects of the four NPRM proposals.

One of the major issues addressed by 

the Commission in developing these 

regulations was whether uniform rules 

should be applied to {ill committees and 

activities, or whether options of 

methods should be available for certain 

committees and circumstances. Of the 

four alternatives described in the Notice 

of Proposed Rulemaking, two specified 

uniform allocation methods to be used 

by all committees, and two offered a 

choice of methods in given situations. 

The latter two alternatives also allowed 

committees the option of allocating 

expenses "on any other reasonable 

basis approved by the Commission in an 

advisory opinion,” based on the 

language of the current allocation rule at 

11 CFR 106.1(e).

In response to the Notice, one nonparty commenter urged the Commission 

to adopt a uniform method for all 

committees, based on the concern that 

too much flexibility would lead to 

confusion in application of the rules.

This comment also suggested that 

allowing different methods for state 

versus local party committees would 

result in a diversion of funds to 

whichever level permitted a higher nonfederal share of allocable expenses. In 

constrast, the party committee 

commenter8 stressed the importance of 

flexibility in the rules, given the 

disparities between political activity at 

different levels of party organizations, 

and in different states and localities.

While concerned about keeping the 

rules as simple as possible, the 

Commission concluded that some 

differences between types of committees 

and activities must be acknowledged. 

Thus, the revised regulations include 

different requirements for national 

versus state and local party committees, 

as well as special variations for the 

House and Senate campaign 

committees, and for state and local

party committees that elect statewide 

offices in years with no regularly 

scheduled federal elections. In the 

course of the rulemaking, it also became 

clear that some allocation methods were 

appropriate for certain activities and 

committees, while inappropriate for 

others. For example, the funds received 

method (see paragraph 106.5(f)) may 

reflect a fair division of costs involved 

in paying for a particular fundraising 

event, but bears no relationship to a 

committee's administrative functions 

and get-out-the-vote activities. Similarly, 

the ballot composition method (see 

paragraph 108.5(d)) may accurately 

reflect the priorities of state and local 

party committees, but is less applicable 

to national party committees primarily 

focused on national candidates and 

elections. Thus, the new regulations 

require different allocation methods for 

different types of committees and 

expenses, and eliminate the option of 

choosing between methods within each 

category of activity. While these 

variations may initially appear complex, 

once a committee determines the 

category into which it falls, the rules 

applied to that class of committee will 

be clear, and will not vary from year to 

year.

A second major issue addressed by 

the Commission in developing these 

regulations was whether committees 

should be required to allocate fixed or 

minimum percentages to their federal 

accounts for certain categories of 

activity. One alternative described in 

the Notice of Proposed Rulemaking 

would have set a minimum federal 

percentage for all allocable expenses, to 

be applied if greater than the 

percentages produced by the specified 

allocation methods. A second 

alternative would have set fixed 

allocation percentages for all activities, 

with a higher federal percentage 

required for generic voter drive costs in 

presidential election years. A third 

alternative would have required 

different allocation methods in federal 

versus non-federal election years, with a 

set minimum federal percentage for 

generic voter drive costs in presidential 

election years.

Following receipt of the comments on 

the NPRM alternatives, the Commission 

considered several variations on the 

concept of minimum or fixed allocation 

percentages. These ranged from 

proposals that would have set minimum

federal percentages only for national 

party committees or in presidential 

election years, to other proposals that 

would have applied minimum 

percentages to all activities by all party 

committees in all years. The

Commission also considered proposals

that would have set fixed allocation

percentages presumed appropriate for

all party committees, but that would

have allowed a committee to rebut the

presumption by demonstrating through

the advisory opinion process that, in its

case, the fixed federal percentage was

too high.

Hie new allocation rules published

today are drawn from the proposals

described in the Notice of Proposed

Rulemaking and from the variations

subsequentiy considered by the

Commission. In the revised rules, the

Commission has retained the concept of

minimum percentages only for

allocation of administrative expenses

and costs of generic voter drive activity

by the House and Senate campaign

committees of the national parties. See

paragraph 106.5(c). For other national

party committees, the Commission has

set fixed percentages for allocation of

these categories of expense. See

paragraph 106.5(b). In contrast, all of

these committees are to allocate their

fundraising costs solely according to the

funds received method, as described in

this section. See paragraph 106.5(f). 

State and local party committees,

nonconnected committees, and separate

segregated funds shall also calculate

allocation ratios according to methods

specified in the rules, with neither fixed

nor minimum federal percentages

required. See paragraphs 106.5 (d), (e)

and (f), and 100.6 (c) and (d).

The revised regulations also eliminate

the option of case-by-case approval of

customized allocation methods through

the advisory opinion process, as well as

the option of allowing committees to

rebut fixed allocation percentages by a

showing of individual circumstances.

These decisions were based on the

Commission's concern that such openended options would be very difficult to

administer, and would potentially allow

many exceptions to the general rules.

They would also risk a return to the

' “any reasonable method” standard of 

the current rules that was disapproved

by the United States District Court See 

Common Cause v. Federal Election

Commission, 692 F.Supp. 1391,1396 

(D.D.C. 1987).

Paragraph 106.5(a) General Rules

This paragraph provides a general

overview of the allocation rules for

party committees and defines the four

categories of activity for which costs are

to be allocated. These include

administrative expenses, fundraising

programs, exempt activities conducted

by state and local parties, and generic

voter drive activity such as voter
Federal R egister / V ol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations 2 6 0 6 3

registration and get-out-the-vote 

campaigns. While earlier drafts of these 

rules and the alternatives described in 

the Notice of Proposed Rulemaking 

included fundraising costs in the 

category of administrative expenses, the 

revised rules divide these expenses into 

two separate categories. This distinction 

became necessary to allow for the 

difference in allocation methods applied 

to each of these types of expense. See 

paragraphs 106.5(b), (c), (d) and (f). 

Please note that all a dministrative

expenses must be allocated between 

federal and non-federal accounts, if 

incurred by a committee that makes 

disbursements in connection with both 

federal and non-federal elections, and 

that chooses to pay any portion of such 

disbursements from its non-federal 

account Such committees must also 

allocate all costs of generic voter drive 

activity, except for get-out-the-vote 

drives conducted on behalf of a wholly 

federal or wholly non-federal special 

election. In contrast fundraising costs 

are allocable only when federal and 

non-federal funds are collected by one 

committee through the same fundraising 

event Similarly, exempt activities are 

allocable only when conducted in 

conjunction with non-federal election 

activities.

One of the alternatives described in 

the Notice of Proposed Rulemaking 

offered committees the option of 

defraying the total cost of an allocable 

activity with funds raised under federal 

law. This option has been retained in 

paragraph 106.5(a)(1), reflecting the 

Commission’s view that allocating a 

portion of certain costs to a committee’s 

non-federal account is a permissive 

rather than a mandated procedure.

Thus, the amounts that would be 

calculated under the rules for a 

committee’s federal share*of allocable 

expenses represent the minimum 

amounts to be paid from the committee’s 

federal account, without precluding the 

committee from paying a higher 

percentage with federal funds.

The 8 ame NPRM alternative offered 

certain local party committees the 

option of selecting fixed allocation 

percentages for their administrative 

expenses and generic voter drive 

activity. In subsequent drafts of this 

paragraph, the Commission considered a 

similar “safe harbor” provision by 

which certain local party committees 

could choose to allocate these 

categories of expense according to a low 

fixed federal percentage. This option 

was originally conceived as a way for 

local party committees with limited 

activity to avoid the burden of 

calculating complicated allocation

ratios, and to be assured of a relatively 

low federal percentage. However, the 

Commission has since revised the ballot 

composition method by which such 

committees are to allocate their 

administrative expenses and generic 

voter drive costs. See paragraph 

106.5(d). Under the revised method, the 

process of calculating an allocation ratio 

is greatly simplified, and the resulting 

federal percentages for all local party 

committees are generally similar to 

those provided by the “safe harbor" 

option. For these reasons, the 

Commission decided to eliminate this 

option from the final allocation rules.

Paragraph 106.5(b) National Party 

Committees Other Than Senate or 

House Campaign Committees; Fixed 

Percentages for Allocating 

Administrative Expenses and Costs of 

Generic Voter Drive Activity

This paragraph sets forth the rules by 

which national party committees other 

than die House or Senate campaign 

committees are to allocate their 

administrative expenses and costs of 

generic voter drive activity. Unlike other 

committees, which are to calculate 

individualized ratios according to 

specified allocation methods for these 

categories of activity, the national party 

committees are to allocate fixed 

percentages to their federal and nonfederal accounts each year. The fixed 

federal percentage is set at 65% in 

presidential election years, and at 60% 

in all other years. While committees are 

free to allocate higher percentages to 

their federal accounts, they may not 

allocate less than the specified 

percentages.

The Commission adopted this fixed 

percentage rule after considering several 

other alternative approaches. Previous 

drafts of the regulations would have 

allowed national party committees to 

allocate their administrative expenses 

and costs of generic voter drive activity 

according to the funds expended method 

or an aggregate ballot composition 

method, in combination with specified 

minimum federal percentages. These 

approaches were ultimately rejected by 

the Commission based on concerns 

about the practicability of applying 

either method at the national committee 

level. The particular percentages 

adopted by the Commission are 

intended to reflect the national party 

committees’ primary focus on 

presidential and other federal 

candidates and elections, while still 

recognizing that such committees also 

participate in party-building activities at 

state and local levels of the party 

organizations.

Paragraph 106.5(c) Senate and House 

Campaign Committees of a National 

Party; Method and Minimum Federal 

Percentages for Allocating 

Administrative Expenses and Costs of 

Generic Voter Drive Activity

This paragraph sets forth the rules by 

which die Senate and House campaign 

committees of the national parties are to 

allocate their a dministrative expenses 

and costs of generic voter drive activity. 

Such expenses shall be allocated 

according to the funds expended 

method, with a minimum of 65% to be 

allocated to the committees’ federal 

accounts each year. This rule differs 

from that applied to the other national 

party committees, which sets fixed 

allocation percentages that need not be 

compared to any other calculated ratios. 

In contrast, the minimum percentages 

required by this paragraph create a floor 

for federal allocation, while requiring a 

higher federal share if a higher 

percentage is calculated under the funds 

expended method. This more stringent 

requirement has been applied to the 

House and Senate campaign committees 

due to their narrower focus on 

Congressional candidates, and their 

limited involvement in non-federal 

elections.

The funds expended method was first 

described in Advisory Opinion 1975-21 

and is codified in the current allocation 

rule at 1 1 CFR 106.1(e). It also appeared 

in two of the alternatives described in 

the Notice of Proposed Rulemaking. 

Under one alternative, committees were 

to allocate their administrative expenses 

and costs of generic voter drive activity 

according to the ratio of federal 

disbursements to total federal and nonfederal disbursements made in the year 

four years prior to the year in question. 

The second alternative would have 

required committees to estimate a ratio 

at the beginning of the calendar year 

based upon their federal and nonfederal disbursements in a prior 

comparable year, and to adjust their 

allocation ratio at the end of the year to 

reflect actual disbursements made 

during the year.

These proposals were addressed in 

several of the comments received by the 

Commission. While commenters from 

both national parties endorsed the 

concept of the funds expended method, 

they opposed as unworkable the four 

year “look back” approach described in 

the first NPRM alternative. One nonparty commenter opposed any “prior 

year” model based on the concern that it 

would allow continued misallocation if 

the prior year’s ratio had been 

improperly calculated. Another non-
2 6 0 6 4 Federal R egister / VoL 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations

party commenter described the method 

as circular, requiring a committee to 

have calculated an allocation ratio for a 

prior year without any guidance on how 

the calculation should have been done. 

This commenter supported the use of 

estimated and adjusted allocation ratios, 

using actual disbursements in the prior 

year as a guideline for estimating the 

initial allocation.

The revised regulations incorporate 

elements of several of these approaches. 

New paragraph 108.5(c) requires 

committees to report estimated 

allocation ratios at the beginning of the 

year, and to adjust their ratios on each 

periodic report to reflect the ratio of 

actual federal and non-federal funds 

expended, to date. However, the method 

has been revised from earlier drafts of 

the rules to resolve a concern about its 

application in years in which no federal 

election is held. Under the revised 

method, allocation ratios are determined 

by disbursements made over the twoyear federal election cycle, rather than 

by disbursements made in the current 

calendar year. Thus, committees would 

have a basis for allocating their 

administrative expenses and costs of 

generic voter drive activity each year, 

including years in which no federal 

election is held. Such allocation is 

necessary to account for the portion of a 

committee’s off-year administrative 

functions and generic activities that 

impact on future federal elections. The 

estimated ratio reported at the beginning 

of the year may be based either on 

disbursements from a prior comparable 

election cycle, or on a reasonable 

prediction of disbursements in the 

coming election cycle if no data from 

prior years is relevant or available. The 

revised rule also requires committees to 

transfer funds from their federal to their 

non-federal accounts to reflect their 

adjusted ratios, if the non-federal 

account has paid more than its allocable 

share due to an estimate later shown to 

he incorrect.

Paragraph 106.5(d) State and Local 

Party Committees; Method for 

Allocating Administrative Expenses and 

Costs of Generic Voter Drive Activity

This paragraph sets forth the rules by 

which state and local party committees 

are to allocate their administrative 

expenses and costs of generic voter 

¿hive activity. Paragraph 108.5(d)(1) 

states the general rule that such 

committees are to allocate these 

categories of expense according to the 

ballot composition method, as set forth 

in paragraphs (d)(1) (i) and (ii).

The ballot composition method was 

first described in the Commission’s 

response to Advisory Opinion Request

1976-72, which permitted committees to 

allocate expenses according to the ratio 

of federal offices on the ballot to total 

federal and non-federal offices on the 

ballot, with the federal offices given 

proportionately more weight. It also 

appeared in three of the alternatives 

described in the Notice of Proposed 

Rulemaking, with two of them 

specifically limiting use of the method to 

allocation of administrative expenses 

and costs of generic voter drive activity 

by state and local party committees. The 

new rule replaces the poorly defined 

”weighting” concept with an ’’average 

ballot” approach, as suggested by 

several of the comments received on this 

method. Under this approach, 

committees are to calculate a ballot 

composition ratio according to the ballot 

which an average voter would face in 

that committee's state or geographic 

area, rather than basing the ratio on the 

aggregates of all federal and all nonfederal reaces on the ballot The method 

has been further simplified to produce a 

ratio by counting the categories of 

offices on the ballot rather than counting 

each individual officerParagraph 

106.5(d)(l)(ii) specifies the categories to 

be included in the ratio, and the number 

of federal or non-federal offices to be 

counted for each such category.

It should be noted that in states where 

candidates for governor and lieutenant 

governor run on a single ticket, the latter 

office may not be separately counted in 

the category of “other partisan 

statewide executive candidates.” The 

same principle applies to the offices of 

president and vice president, which are 

counted together as one federal office.

In contrast, in states where the governor 

and lieutenant governor are 

independently elected, the office of 

lieutenant governor may be counted 

separately from the governor, in the 

category of “other partisan statewide 

executive candidates.” California is one 

example of such a state, where 

candidates from different parties may be 

simultaneously elected to the offices of 

governor and lieutenant governor.

The ballot composition method was 

the subject of several late comments 

from national and state party 

committees, expressing concern that the 

scope of party activity at state and local 

levels was not adequately reflected in 

the method, as revised. In response to 

this concern, the Commission 

reexamined the method and further 

refined the ballot composition rules. In 

the final version of paragraph 

106.5(d)(l)(ii), the Commission deleted 

the category of “partisan statewide 

judicial offices,” which would have 

benefited onlv those states that elect

statewide judges through partisan 

elections. In its place, the Commission 

added to the ratio an additional nonfederal office to reflect state party 

support for partisan local candidates. 

Thus, this non-federal slot is now 

available to virtually every state party 

committee.

It should be noted that the ballot 

composition method has also been 

revised from earlier drafts of the rules to 

resolve a concern about its application 

in years in which no federal election is 

held. Under the revised method, 

allocation ratios are determined by the 

offices expected on the ballot in the next 

general election to be held in the 

committee’s state or geographic area. 

Thus, committees would have a basis 

for allocating their administrative 

expenses and costs of generic voter 

drive activity each year, including years 

in which no federal election is held 

Such allocation is necessary to account 

for the portion of a committee’s off-year 

administrative; functions and generic 

activities that impact on future federal 

elections.

The broader language of new 

paragraph 106.5(d)(1) also generally 

covers years in which a special election 

is held. However, because of the varying 

situations that might arise, the 

Commission has not spelled out rules to 

cover each variation. The allocation 

formula to be used and attribution of 

disbursements to specific candidates 

will have to be determined on a case-bycase basis.

In the course of refining the ballot 

composition method the Commission 

became aware of an additional problem 

in applying the method to states that do 

not hold federal and non-federal 

elections in the same year. The method 

as described in paragraph 106.5(d)(1) 

would have allowed these states to 

allocate 100% of their administrative 

expenses and costs of generic voter 

drive activity to their non-federal 

accounts in years in which “the next 

general election” was only for nonfederal offices. Such an allocation would 

not account for the impact of these 

activities on upcoming federal elections. 

Thus, the Commission adopted an 

exception to the regular rule for states 

that hold non-federal elections in oddnumbered years when no special federal 

election is scheduled. Paragraph 

108.5(d)(2) describes a variation of the 

ballot composition method to be used by 

such states, whereby one ratio is 

calculated for generic voter drive costs 

based on the election to be held that 

year, and a separate ratio is calculated 

for administrative expenses based on 

the federal election cycle. This variation
Federal R egister / Y o l. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations 26065

will ensure that committees allocate a 

portion of their administrative expenses 

to their federal a ccounts even in solely 

nan-federal election years, as well as 

providing guidance on how to allocate 

costs in years in which no elections are 

held.

Paragraph 108.5(e) State and Local 

Party Committees; Method for 

Allocating Costs of Exempt Activities

This paragraph sets forth the rules by 

which state and local party committees 

are to allocate the costs o f activities h a t 

are exempt from the definitions of 

“contribution” and “expenditure” under 

the Act (see 1 1 CFR 100^(bM9), (15) and 

(17), and 100¿{b)(lQ), (1«) and (18)), 

when such activities are conducted in 

conjunction with non-federal election 

activities. Committees are to allocate 

these expenses according to the time or 

space devoted to federal elections as 

compared to the total tiste or space 

devoted to federal and non-federal 

elections in a particular publication or 

phone hank. This method was described 

in Advisory Opinion 1978-46, and 

appeared in two of the alternatives 

included in the Notice of Proposed 

Rulemaking. Under the method, 

committees are to calculate a separate 

allocation ratio for each individual 

exempt activity, unlike administrative 

expenses and generic voter drive 

activity, which are allocated according 

to a single ratio calculated for the entire 

category of activity. This procedure is 

. necessary because each exempt 

communication is likely to devote a 

different amount of time or space to 

federal and non-federal elections. It 

should also be noted that an exempt 

activity may be conducted in 

conjunction with a non-exempt activity 

that is attributable to one or more 

clearly identified candidates. In that 

case, the costs of the activity must be 

proportionally allocated between the 

committee’s federal and non-federal 

accounts according to this paragraph, 

and allocated between candidates as 

required by paragraph 198.1(a).

Paragraph 10&5[f) All Party 

Committees; Method for Allocating 

Direct Costs of Fundraising

Paragraph 196.5(f) sets forth fee redes 

by which all party committees are to 

allocate the direct costs of each 

fundraising program or event, where 

both federal and non-federal fends are 

collected by one committee through sue 

program or event. These rules should 

not be confused with 11 CFR 102.17, 

which concerns joint fern ¿raising 

activities conducted by more than one 

committee. Under this paragraph, 

committees are to allocate their

fundraising costs according to the funds 

received method. As with allocation of 

exempt activity costs, committees are to 

calculate a separate allocation ratio for 

each individual fundraising event.

The funds received method was first 

described in the FEC R ecord of 

December 1977 as an example of an 

allocation procedure that would meet 

the “reasonable basis” requirement o f 

current 11 CFR 106.1(e). The method was 

subsequent^ cited in several advisory 

opinions as a permissible method for 

allocating administrative expenses (later 

extended to include voter registration 

and get-out-the-vote drives), along with 

the fends expended and ballot 

composition methods. See, e.g„

Advisory Opinion 1978-46.

Of the four alternatives described in 

the Notice c f Proposed Rulemaking, only 

one retained the fends received method, 

proposing that it be used to allocate 

administrative expenses and costs of 

generic voter drive activity in nonfederal election years. All o f the 

comments received on this method 

expressed concern that the amount o f 

federal versas non-federal funds 

received by a committee is not 

meaningfully related to how expenses 

for joint federal and non-federal 

activities should be divided. However, 

several commenters suggested that the 

method be retained for the narrow 

purpose o f allocating die costs of 

fundraising activities, because it 

provides the most accurate basis fer 

division of these costs. Based on these 

comments; the Commission adopted this 

method for allocating the direct costs of 

fundraising programs and events 

through which both federal and nonfederal fumds are obtained.

Paragraph 106.5(g) Payment of 

Allocable Expenses by Committees 

With Separate Federal and Non-federal 

Accounts

This paragraph sets forth the 

procedures by winch party committees 

with separate federal and icon-federal 

accounts are to pay the bills for their 

administrative expenses and shared 

federal and non-federal activities. These 

rules do not apply to organisations that 

maintain only a single account even 

though such organizations may be 

required to demonstrate to the 

Commission that they have allocated 

their expenses as required by other 

sections of the alloca tion regulations.

The provisions o f new paragraph

106.5(g) represent a significant departure 

from the Commission’s current policy. In 

enforcing the euiTent allocation rule at 

1 1 OFR Ifle ife), the Commission has 

permitted tiwee procedures by which

committees may pay their 

administrative expenses. Under current 

policy, committees are allowed to write 

two separate checks from their federal 

and non-federal accounts to cover the 

respective portions of each expense. 

Alternatively, committees could pay the 

entire expense from their non-federal 

accounts, which would then be 

reimbursed by their federal accounts. 

Finally, committees could pay the 

expense through a separate “escrow” 

account established solely for the 

purpose of paying for allocable 

expenses. Reimbursement of a federal 

account by anon-federal account that 

contains fends prohibited by the A ct is 

not permitted under the current rules. 

See 11 CFR 102.5(a)(ll(i) and Advisory 

Opinion 1978-6.

While tiie Commission has interpreted 

11 CFR 106.1(e3 to also require allocation 

of fundraising, exempt activity, and 

generic voter drive costs (see Advisory 

Opinions 1978-1Q, 1978-28,1978-40, 

1978-50 and 1979-12), it has limited the 

option ofpaying allocable bills through 

a non-federal account to the payment of 

administrative expenses. This 

distinction has been based on the 

premise that fundraising, voter drives, 

and exempt activities have a direct 

impact on federal elections, and thus 

committees should not be permitted to 

advance non-federal fends for those 

purposes.

This distinction was incorporated into 

three of the alternatives described in the 

Notice of Proposed Ridemaking. Those 

alternatives would have allowed 

payment of an entire administrative 

expense by a committee’s non-federal 

account, provided that it was 

reimbursed by the committee's federal 

account within ten days after the bill 

was paid. All other allocable exp ense«

were to be paid by two separate checks 

from the federal and non-federal 

accounts, which was also provided as 

an option for payment of a dministrative

expenses. The fourth NPRM alternative 

permitted the same two procedures, but 

made no distinction between different 

categories of expense. The option of 

paying expenses through a separate 

“escrow” account was eliminated in all 

four of the NPRM alternatives, but was 

raised for comment as an additional 

issue.

The Commission received 

considerable comment on these 

proposed payment procedures. First, the 

ten-day reimbursement limitation was 

unanimously rejected as unworkable. 

Several commenters asserted that at 

least thirty days were needed for such 

reimbursement to realistically occur. 

Second, two commenters expressed the
26066 Federal Register / V ol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations

concern that federal account 

reimbursement of a state account could 

trigger state law disclosure requirements 

for the federal account, thus creating a 

duplicate federal and state-level 

reporting burden. Third, the same two 

commenter8 proposed that the current 

"escrow" procedure be retained as a 

payment option, even though it had been 

excluded from the alternatives 

described in the Notice of Proposed 

Rulemaking. Finally, one commenter 

suggested that the Commission consider 

changing its policy to allow a committee 

to pay an entire allocable expense 

through its federal account, with 

reimbursement from its non-federal 

account. This procedure would ensure 

that disbursements for allocable 

expenses would be disclosed by a 

committee's federal accounts under the 

Act’s reporting requirements.

Based on these comments, die 

Commission significantly revised the 

proposed payment procedures described 

in the Notice of Proposed Rulemaking. 

Paragraph 106.5(g)(1) of the rules 

published today offers committees an 

option of two procedures by which they 

may pay for their administrative 

expenses and shared federal and nonfederal activities. Under the first 

procedure, committees would pay an 

entire bill from their regular federal 

accounts, and would transfer funds from 

their non-federal accounts to their 

federal accounts to cover the nonfederal share of the allocable expense. - 

The second procedure would allow 

committees to establish a separate 

allocation account (referred to 

previously as an "escrow” account), 

which is considered by the Commission 

to be a federal account, and to transfer 

funds to that account from their regular 

federal accounts and their non-federal 

accounts solely for the purpose of 

paying allocable expenses. Under both 

procedures, transfers of non-federal 

funds must be itemized in the 

committee’s reports to show the 

allocable activities for which they are 

intended to pay, and must occur within 

ten days before or thirty days after the 

bills for those activities are paid. Each 

allocated disbursement from a 

committee’s federal account or 

allocation account must also be 

itemized, to show the particular 

expenses covered by that disbursement. 

These requirements will allow the 

Commission to track the flow of nonfederal funds into federal accounts, and 

to ensure that the use of such funds is 

strictly limited to payment for the nonfederal share of allocable activities.

It should be noted that this is the first 

time that the Commission has allowed

non-federal funds to be transferred to a 

committee's federal account, and that it 

does so now only for the limited purpose 

of paying allocable expenses. Under the 

new rules, committees are prohibited 

from making such payments through 

their non-federal accounts, as permitted 

under the Commission’s current policy. 

That procedure has failed to provide 

sufficient disclosure of the federal and 

non-federal portions of allocated 

disbursements. Such disclosure is 

critical to the Commission’s ability to 

monitor whether expenses have been 

allocated as required, and is the basis 

for the procedures adopted by the new 

allocation rules.

It should also be noted that the new 

rules allow committees to transfer funds 

to their federal account or allocation 

account prior to actual payment of a 

vendor’s bill, as well as allowing 

reimbursement of those accounts after 

the bill has been paid. This rule is more 

flexible than that proposed by the 

NPRM alternatives, which would have 

limited such transfers to post-payment 

reimbursement. However, the new rules 

set a ten-day time limit on pre-payment 

transfers that are made from a nonfederal account, in order to prevent such 

accounts from subsidizing federal 

election activity with prohibited funds. 

This ten-day limit differs from the one 

objected to by the commentera in 

response to the Notice, as the new rules 

provide for a total forty-day time period 

in which transfers for allocation 

purposes may occur.

The procedures contained in 

paragraph 106.5(g) are intended to 

provide committees the flexibility to 

make single payments to their vendors, 

rather than requiring that every expense 

be paid with two separate checks. Such 

flexibility is indispensable for 

committees paying large numbers of 

bills from many different vendors. In 

fact, the new rules have eliminated the 

two-check option altogether, as that 

procedure does not provide sufficient 

disclosure of how funds allocated for 

shared federal and non-federal activity 

are actually spent. Instead, committees 

must choose from the two payment 

procedures authorized by the new 

allocation rules.

Section 106.6 Allocation o f Expenses

Between Federal and Non-Federal

Activities by Separate Segregated Funds

and Nonconnected Committees

This section has been added to the 

rules to provide separate segregated 

funds and nonconnected committees 

with detailed instructions as to how 

they are to allocate their administrative 

expenses and costs for combined federal 

and non-federal activities. These rules

apply only to those committees that 

make disbursements in connection with 

federal and non-federal elections. For 

purposes of this section, "nonconnected 

committee” includes any committee that 

conducts activities in connection with a 

federal election, but which is not a party 

committee, an authorized committee of 

any candidate for federal office, or a 

separate segregated fund.

Paragraph 106.6(b) describes the 

categories of activity that are to be 

allocated by each type of committee. 

These categories are generally the same 

as those defined in paragraph 106.5(a)(2) 

for party committees, with one 

important difference. Unlike party 

committees and nonconnected 

committees, separate segregated funds 

need only allocate their administrative 

and fundraising expenses if those 

expenses are not paid by their 

connected organizations, as permitted 

by 1 1 CFR 114.5(b).

Paragraph 106.6(c) specifies the 

method for allocating administrative 

expenses and the costs of generic voter 

drive activity. Separate segregated 

funds and nonconnected committees are 

to allocate these expenses according to 

the funds expended method calculated 

over a two-year federal election cycle. 

This method is identical to that 

described in paragraph 106.5(c) for use 

by the Senate and House campaign 

committees, except that no minimum 

federal percentages are required for 

separate segregated funds or 

nonconnected committees.

Paragraph 106.6(d) specifies the 

method for allocating die direct costs of 

each fundraising program or event, 

where both federal and non-federal 

funds are collected by one committee 

through such program or event. Separate 

segregated funds and nonconnected 

committees are to allocate these 

expenses according to the funds 

received method, which is identical to 

that described in paragraph 106.5(f) for 

use by all party committees.

Paragraph 106.6(e) sets forth 

procedures by which separate 

segregated fluids and nonconnected 

committees are to pay the bills for their 

allocable expenses. These procedures 

are identical to those described in 

paragraph 106.5(g) for use by all party 

committees.

In earlier drafts of these regulations, 

the Commission considered combining 

the allocation rules for separate 

segregated funds and nonconnected 

committees with those required for party 

committees. However, the Commission 

was concerned that different types of 

committees might have difficulty sorting 

out the particular rules that applied to
Federal Register / Vol.

them. By creating new § 106:8, the 

Commission intends lo make it as 

simple as possible for each type o f 

committee to easily locate die 

appropriate set o f allocation redes. In 

contrast, the reporting requirements o f 

part 104 apply to all political 

committees, fadudmg party committees, 

separate segregated funds, and 

nonconnected committees. Similarly, the 

rules set forth in § 166.1 apply to all 

committees that make disbursements on 

behalf of more than one clearly 

identified candidate.

List o f Subjects

11CFR Part 102

Political committees and parties, 

Campaign hinds.

11 CFR Part 104

Campaign funds, Political committees 

and parties, Reporting requirements, 

Political candidates.

11 CFR Part 106

Campaign funds, Political committees 

and parties, Political candidates.

Certification of No Effect Pursuant to 5 

U.S.C. 605(b) (Regulatory Flexibility 

Act)

The attached final rules, if 

promulgated, «dll not have a significant 

economic impact on a substantial 

number of small entities. The primary 

purpose of the revision is to clarify the 

Commission’s rules governing allocation 

of certain costs by party committees, 

nonconnected committees and separate 

segregated funds.

For the reasons set out in die 

preamble, title 11, chapter 1, subchapter 

A of the Code Df Federal Regulations, is 

amended as follows:

PART 102— REGISTRATION,

ORGANIZATION, AND

RECORDKEEPING BY POLITICAL

COMMITTEES (2 U & C . 433)

1. The authority citation for part 162 

continues to read as follows:

Authority: 2 U.S.C.432,433,438{aH&), 441d.

2. Section 162.5 is amended by 

revising paragraph (a)(l)(i), rad by 

adding paragraph (a)(3) aa follows:

§ 102.5 Organizations financing political

activity In connection with Federal and non*

federal elections, other fitan through

transfers and Joint fundraisers.

(a )* * *

nr * •

(i) Establish a separate federal 

account in a depository in accordance 

with 11 CFR part 163. Such account shall 

be treated as a separate federal political 

committee which shall comply with foe

55 No. 123 ] Tuesday, June 20, 1990

requirements of foe Act including the 

registration and reporting requirements 

of 11 CFR part 162 and 104. Only funds 

subject to the prohibitions and 

limitations of the Act shall be deposited 

in such separate federal account. AH 

disbursements, contributions, 

expenditures and transfers by foe 

committee in connection with ray 

federal election shall be made from its 

federal account. No transfers may be 

made to such federal account from ray 

other account(s) maintained by such 

organization for the purpose of financing 

activity in connection with non-federal 

elections, exoept as provided in 11 CFR 

106.5(g) rad 106.6(e). Administrative 

expenses shall be allocated pursuant to 

11 CFR part 106 between such federal 

account and ra y other account 

maintained by such committee lor the 

purpose of financing activity in 

connection with nan-federal elections; 

or

* * «9 A *

(3) Any party committee solicitation 

that makes reference to a federal 

candidate or a federal election shall be 

presirmed to be for foe purpose o f 

influracing a federal election, and 

Contributions resulting from that 

solicitation shall be subject to the 

prohibitions rad limitations o f foe Act. 

This presumption may be rebutted by 

demonstrating to foe Comnussiorc that 

the funds wens solicited with express 

notice foat they would not be used lor 

federal election purposes.

* * * t, *

PART 104— REPORTS B Y POLITICAL

COMMITTEES (2 U.S.C. 434)

3. The authority citation for part 164 

continues to read as follows:

Authority: 2 U.S.C. 431(1), 431(8), 431(9),

432(i), 434, 438(a)(8), 438(b).

4. Section 164.6 is amended by 

revismg foe heading and paragraph (a), 

and by adding paragraphs fe) and ff) as 

follows:

§104.8 Uniform reporting of receipts.

(a) A reporting committee shall 

disclose the identification of each 

individual who contributes an amount hi 

excess of $200 to foe committee’s federal 

accountfs). This identification shall 

include foe individual's name, maümg 

address, occupation, foe name o f hss or 

her employer, if any, rad foe date of 

receipt rad amount of ra y such 

contribution. If an individual 

contributor's name is known to have 

changed since an earlier contribution 

reported during foe calendar year, tire 

exact name or address previously used 

shall be noted with the first reported

7 R u les and Regulations 2 6 0 6 7

contribution from that contributor 

subsequent to the name change.

* * * A *

(e) National party committees shall 

disclose in a memo Schedule A 

information about each individual, 

committee, corporation, labor 

organization, or other entity foat 

donates an aggregate amount ra excess 

of $200 in a calendar year to the 

committee's non-federal account(s). This 

information shall include foe donating 

individual’s or entity's name, mailing 

address, occupation or type of business, 

and foe date of receipt and amount of 

any such donation. If a donor’s name is 

known to have changed since an earlier 

donation reported during foe calendar 

year, tire exact name or address 

previously used shad be noted with foe 

first reported donation from foat donor 

subsequent to the name change. The 

memo entry shall also include, where 

applicable, foe information required by 

paragraphs (b) through {d| of this 

section.

(f) National party committees shall 

also disclose in a memo Schedule A 

information about each individual, 

committee, corporation, labor 

organization, or other entity that 

donates an aggregate amount in excess 

of $200 in a calendar year to foe 

committee’s building fund accounts). 

This information shall include foe 

donating individual’s or entity’s name, 

mailing address, occupation or type of 

business, and the date of receipt and 

amount of any such donation. If a 

donor’s name is known to have changed 

since an earlier donation reported 

daring foe calendar year, the exact 

name or address previously used shall 

be noted with foe first reported donation 

from that donor subsequent to the name 

change. The memo entry shall also 

include, where applicable, the 

information required by paragraphs (b) 

through (d) o f this section.

5. Section 104.6 is amended by 

revismg foe beading and paragraph (a), 

rad by adding paragraphs (c), (d) and

(e) as follows:

§104.9 Uniform reporting of

disbursements.

(a) Political committees shall report 

the frill name rad mailing address of 

each person to whom an expenditure in 

an aggregate amount or value in excess 

of $260 within foe calendar year is made 

from foe reporting committee’s federal 

accounf(s), together with foe date, 

amount and propose of such 

expenditure, In accordance with 11 CFR 

104.9(b). As used in 1 1 CER 104.9, 

“purpose" means a brief statement or
26068 Federal R egister / V ol. 55 No. 123 / Tuesday. June 26, 1990 / Rules and Regulations

description as to the reasons for the 

expenditure. See 1 1 CFR 

104.3(b)(3)(i)(A).

*****

(c) National party committees shall 

report in a memo Schedule B the full 

name and mailing address of each 

person to whom a disbursement in an 

aggregate amount or value in excess of 

$200 within the calendar year is made 

from the committee's non-federal 

account(s), together with the date, 

amount and purpose of such 

disbursement, in accordance with 11 

CFR 104.9(b). As used in 11 CFR 104.9, 

“purpose” means a brief statement or 

description as to the reasons for the 

disbursement. See 11 CFR 

104.3(b)(3)(i)(A).

(d) National party committees shall 

report in a memo Schedule B the full 

name and mailing address of each 

person to whom a disbursement in an 

aggregate amount or value in excess of 

$200 within the calendar year is made 

from the committee’s building fund 

account(s), together with the date, 

amount and purpose of such 

disbursement, in accordance with 11 

CFR 104.9(b). As used in 11 CFR 104.9, 

“purpose” means a brief statement or 

description as to the reasons for the 

disbursement. See 11 CFR

104.3 (b) (3) (i) (A).

(e) National party committees shall 

report in a memo Schedule B each 

transfer from their non-federal 

account(s) to the non-federal account(s) 

of a state or local party committee.

6. Section 104.10 is revised to read as 

follows:

S 104.10 Reporting of expenses allocated

among candidates and activities.

(a) Expenses allocated among

candidates. A political committee 

making an expenditure on behalf of 

more than one clearly identified 

candidate for federal office shall 

allocate the expenditure among the 

candidates pursuant to 11 CFR part 106. 

Payments involving both expenditures 

on behalf of one or more clearly 

identified federal candidates and 

disbursements on behalf of one or more 

clearly identified non-federal candidates 

shall also be allocated pursuant to 11 

CFR part 106. For allocated 

expenditures, the committee shall report 

the amount of each in-kind contribution, 

independent expenditure, or 

coordinated expenditure attributed to 

each federal candidate. If a payment 

also includes amounts attributable to 

one or more non-federal candidates, and 

is made by a political committee with 

separate federal and non-federal 

accounts, then the payment shall be

made according to the procedures set 

forth in 11 CFR 106.5(g) or 106.6(e), as 

appropriate, but shall be reported 

pursuant to paragraphs (a)(1) through

(a)(4), as follows:

(1) Reporting o f allocation o f expenses

attributable to specific federal and nonfederal candidates. In each report 

disclosing a payment that includes both 

expenditures on behalf of one or more 

federal candidates and disbursements 

on behalf of one or more non-federal 

candidates, the committee shall assign a 

unique identifying title or code to each 

program or activity conducted on behalf 

of such candidates, shall state the 

allocation ratio calculated for the 

program or activity, and shall explain 

the manner in which the ratio was 

derived. The committee shall also 

summarize the total amounts attributed 

to each candidate, to date, for each joint 

program or activity.

(2) Reporting o f transfers between

accounts fo r the purpose o f paying

expenses attributable to specific federal

and non-federal candidates. A political 

committee that pays allocable expenses 

in accordance with 11 CFR 106.5(g) or 

106.6(e) shall report each transfer of 

funds from its non-federal account to its 

federal account or to its separate 

allocation account for the purpose of 

paying such expenses. In the report 

covering the period in which each 

transfer occurred, the committee shall 

explain in a memo entry the allocable 

expenses to which the transfer relates 

and the date on which the transfer was 

made. If the transfer includes funds for 

the allocable costs of more than one 

program or activity, the committee shall 

itemize the transfer, showing the 

amounts designated for each program or 

activity conducted on behalf of one or 

more clearly identified federal 

candidates and one or more clearly 

identified non-federal candidates.

(3) Reporting o f allocated

disbursements attributable to specific

federal and non-federal candidates. A 

political committee that pays allocable 

expenses in accordance with 11 CFR 

106.5(g) or 106.6(e) shall also report each 

disbursement from its federal account or 

its separate allocation account in 

payment for a program or activity 

conducted on behalf of one or more 

clearly identified federal candidates and 

one or more clearly identified nonfederal candidates. In the report 

covering the period in which the 

disbursement occurred, the committee 

shall state the full name and address of 

each person to whom the disbursement 

was made, and the date, amount and 

purpose of each such disbursement. If 

the disbursement includes payment for 

the allocable costs of more than one

program or activity, the committee shall 

itemize the disbursement, showing the 

amounts designated for payment of each 

program or activity conducted on behalf 

of one or more clearly identified federal 

candidates and one or more clearly 

identified non-federal candidates. The 

committee shall also report the amount 

of each in-kind contribution, 

independent expenditure, or 

coordinated expenditure attributed to 

each federal candidate, and the total 

amount attributed to the non-federal 

candidate(s). In addition, the committee 

shall report the total amount expended 

by the committee that year, to date, for 

each joint program or activity.

(4) Recordkeeping. The treasurer shall 

retain all documents supporting the 

committee’s allocation on behalf of 

specific federal and non-federal 

candidates, in accordance with 11 CFR 

104.14.

(b) Expenses allocated among

activities. A political committee that has 

established separate federal and nonfederal accounts under 11 CFR 

102.5(a)(l)(i) shall allocate between 

those accounts its administrative 

expenses and its costs for fundraising, 

exempt activities, and generic voter 

drives according to 11 CFR 106.5 or 

106.6, as appropriate, and shall report 

those allocations according to 

paragraphs (b) (1) through (5), as 

follows:

(1) Reporting o f allocation of

administrative expenses and costs of

generic voter drives.

(i) In the first report in a calendar year 

disclosing a disbursement for 

administrative expenses or generic voter

drives, as described in 11 CFR 

106.5(a)(2) or 106.6(b), the committee 

shall state the allocation ratio to be 

applied to these categories of activity 

according to 11 CFR 106.5 (b), (c) or (d)

or 106.6(C), and the manner in which it 

was derived. The Senate and House 

campaign committees of each political 

party shall also state whether the 

calculated ratio or the minimum federal

percentage required by 11 CFR 

106.5(c)(2) will be used.

(ii) In each subsequent report in the 

calendar year itemizing an allocated 

disbursement for administrative 

expenses or generic voter drives:

(A) The committee shall state the 

category of activity for which each 

allocated disbursement was made, and

shall summarize the total amount spent

by the federal and non-federal accounts

that year, to date, for each such 

category.

(B) Nonconnected committees, 

separate segregated funds, and Senate

and House campaign committees of a
Federal R egister / Vol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations 26069

national party that have allocated 

expenses according to the funds 

expended method as described in 11 

CFR 106.5(c)(1) or 106.6(c) shall also 

report in a memo entry the total 

amounts expended in donations and 

direct disbursements on behalf of 

specific state and local candidates, to 

date, in that calendar year.

(2) Reporting o f allocation o f the

direct costs o f fundraising and costs o f

exempt activities. In each report 

disclosing a disbursement for the direct 

costs of a fundraising program or an 

exempt activity, as described in 11 CFR 

106.5(a)(2) or 106.6(b), the committee 

shall assign a unique identifying title or 

code to each such program or activity, 

shall state the allocation ratio calculated 

for the program or activity according to 

11 CFR 106.5 (e) and (f) or 106.6(d), and 

shall explain the manner in which the 

ratio was derived. The committee shall 

also summarize the total amounts spent 

by the federal and non-federal accounts 

that year, to date, for each such program 

or activity.

(3) Reporting o f transfers between

accounts for the purpose o f paying

allocable expenses. A political 

committee that pays allocable expenses 

in accordance with 11 CFR 106.5(g) or 

106.6(e) shall report each transfer of 

funds from its non-federal account to its 

federal account or to its separate 

allocation account for the purpose of 

paying such expenses. In the report 

covering the period in which each 

transfer occurred, the committee shall 

explain in a memo entry the allocable 

expenses to which the transfer relates 

and the date on which the transfer was 

made. If the transfer includes funds for 

the allocable costs of more than one 

activity, the committee shall itemize the 

transfer, showing the amounts 

designated for administrative expenses 

and generic voter drives, and for each 

fundraising program or exempt activity, 

as described in 11 CFR 106.5(a)(2) or 

106.6(b).

(4) Reporting o f allocated

disbursements. A political committee 

that pays allocable expenses in 

accordance with 11 CFR 106.5(g) or 

106.6(e) shall also report each 

disbursement from its federal account or 

its separate allocation account in 

payment for a joint federal and nonfederal expense or activity. In the report 

covering the period in which the 

disbursement occurred, the committee 

shall state the full name and address of 

each person to whom the disbursement 

was made, and the date, amount and 

purpose of each such disbursement. If 

the disbursement includes payment for 

the allocable costs of more than one

activity, the committee shall itemize the 

disbursement, showing the amounts 

designated for payment of 

administrative expenses and generic 

voter drives, and for each fundraising 

program or exempt activity, as 

described in 11 CFR 106.5(a)(2) or 

106.6(b). The committee shall also report 

the total amount expended by the 

committee that year, to date, for each 

category of activity.

(5) Recordkeeping. The treasurer shall 

retain all documents supporting the 

committee’s allocated disbursement for 

three years, in accordance with 11 CFR 

104.14.

PART 106— ALLOCATIONS OF

CANDIDATE AND COMMITTEE

ACTIVITIES

7. The authority citation for part 106 is 

revised to read as follows:

Authority: 2 U.S.C. 438(a)(8), 441a(b),

441 a(g).

8. Section 106.1 is amended by 

revising the heading and paragraphs (a) 

and (e) to read as follows:

§ 106.1 Allocation of expenses between

candidates.

(a) General rule. (1) Expenditures, 

including in-kind contributions, ' 

independent expenditures, and 

coordinated expenditures made on 

behalf of more than one clearly 

identified federal candidate shall be 

attributed to each such candidate 

according to the benefit reasonably 

expected to be derived. For example, in 

the case of a publication or 

broadcast communication, the 

attribution shall be determined by the 

proportion of space or time devoted to 

each candidate as compared to the total 

space or time devoted to all candidates. 

In the case of a fundraising program or 

event where funds are collected by one 

committee for more than one clearly 

identified candidate, the attribution 

shall be determined by the proportion of 

funds received by each candidate as 

compared to the total receipts by all 

candidates. These methods shall also be 

used to allocate payments involving 

both expenditures on behalf of one or 

more clearly identified federal 

candidates and disbursements on behalf 

of one or more clearly identified nonfederal candidates.

(2) An expenditure made on behalf of 

more than one clearly identified federal 

candidate shall be reported pursuant to 

11 CFR 104.10(a). A payment that also 

includes amounts attributable to one or 

more non-federal candidates, and that is 

made by a political committee with 

separate federal and non-federal 

accounts, shall be made according to the

procedures set forth in 11 CFR 108.5(g) 

or 106.6(e), as appropriate, but shall be 

reported pursuant to 11 CFR 104.10(a). 

*****

(e) Party committees, separate 

segregated funds, and nonconnected 

committees that make disbursements for 

administrative expenses, fundraising, 

exempt activities, or generic voter drives 

in connection with both federal and nonfederal elections shall allocate their 

expenses in accordance with § 106.5 or 

§ 106.6, as appropriate.

9. Part 106 is amended by adding 

§ 106.5 as follows:

§ 106.5 Allocation of expenses between

federal and non-federal activities by party

committees.

(a) General rules. (1) Party 

committees that make disbursements in 

connection with federal and non-federal 

elections shall make those 

disbursements entirely from funds 

subject to the prohibitions and 

limitations of the Act, or from accounts 

established pursuant to 11 CFR 102.5. 

Political committees that have 

established separate federal and nonfederal accounts under 11 CFR 

102.5(a)(l)(i) shall allocate expenses 

between those accounts according to 

this section. Organizations that are not 

political committees but have 

established separate federal and nonfederal accounts under 11 CFR 

102.5(b)(l)(i), or that make federal and 

non-federal disbursements from a single 

account under 11 CFR 102.5(b)(l)(ii) 

shall also allocate their federal and nonfederal expenses according to this 

section. This section covers (i) General 

rules regarding allocation of federal and 

non-federal expenses by party 

committees, (ii) percentages to be 

allocated for administrative expenses 

and costs of generic voter drives by 

national party committees, (iii) methods 

for allocation of administrative 

expenses, costs of generic voter drives, 

and exempt activities by state and local 

party committees, and of fundraising 

costs by all party committees, and (iv) 

procedures for payment of allocable 

expenses. Requirements for reporting of 

allocated disbursements are set forth in 

11 CFR 104.10.

(2) Costs to be allocated. Committees 

that make disbursements in connection 

with federal and non-federal elections 

shall allocate expenses according to this 

section for the following categories of 

activity:

(i) Administrative expenses including 

rent, utilities, office supplies, and 

salaries, except for such expenses 

directly attributable to a clearly 

identified candidate:
26070 Federal R egister / V ol. 55 No. 123 / Tuesday» June 26, 1990 / R ules and Regulations

(ii) The direct costs of a fundraising 

program or event including 

disbursements for solicitation of funds 

and for planning and administration of 

actual fundraising events» where federal 

and non-federal funds are collected by 

one committee through such program or 

event;

(iii) State and local party activities 

exempt from the definitions of 

“contribution” and "expenditure” under 

1 1 CFR 100.7(b) (9), (15) or (17), and 

100.8(b) (10), (16) or (18) ("exempt 

activities”) inducting the production and 

distribution of slate cards and sample 

ballots, campaign materials distiibuted 

by volunteers, and voter registration and 

get-out-the-vote drives on behalf of the 

party's presidential and vicepresidential nominees, where such 

activities are conducted in conjunction 

with non-federal election activities; and

(iv) Generic voter chives inducting 

voter identification, voter registration, 

and get-out-the-vote drives, or any other 

activities that urge the general public to 

register, vote or support candidates of a 

particular parly or associated with a 

particular issue, without mentioning a 

specific candidate.

(b) National party committees other

than Senate or House campaign

committees; fixed percentages for

allocating administrative expenses and

costs o f generic voter drives—(1) 

G eneral rule. Each national party 

committee other than a Senate or House 

campaign committee shall allocate a 

fixed percentage of its administrative 

expenses and costs of generic voter 

drives, as described in paragraph (a)(2) 

of this section, to its federal and nonfederal account(s) each year. These 

percentages shall differ according to 

whether or not the allocable expenses 

were incurred in a presidential election 

year. Such committees shall allocate the 

costs of each combined federal and nonfederal fundraising program or event 

according to paragraph (f) of this 

section, with no fixed percentages 

required.

(2) Fixed percen tages according to

type o f election year. National party 

committees other than the Senate or 

House campaign committees shall 

allocate their administrative expenses 

and costs of generic voter drives 

according to paragraphs (b)(2) (i) and (ii) 

as follows^

(i) Presidential election years. In 

presidential election years, national 

party committees other than the Senate 

or House campaign committees shall 

allocate to their federal accounts at 

least 65% each of their administrative 

expenses and costs of generic voter 

drives.

(ii) Non-presidential election years. In 

all years other than {»residential election 

years, national party committees other 

than the Senate or House campaign 

committees shall allocate to their 

federal accounts at least 60% each of 

their administrative expenses and costs 

of generic voter drives.

(c) Senate and House campaign

committees o f a national party; method

and minimum federal percentage for

allocating administrative expenses and

costs o f generic voter drives—{1\

M ethod fo r allocating administrative

expenses and costs o f generic voter

drives. Subject to the minimum 

percentage set forth in paragraph (c)(2) 

of this section, each Senate or House 

campaign committee of a national party 

shall allocate its administrative 

expenses and costa of generic voter 

drives, as described in paragraph (a)(2) 

of this section, according to the funds 

expended method, described in 

paragraphs (c)(1) (i) and (ii) as follows:

(1) Under this method, expenses shall 

be allocated based on the ratio of 

federal expenditures to total federal and 

non-federal disbursements made by the 

committee during the two-year federal 

election cycle. This ratio shall be 

estimated and reported at the beginning 

of each federal election cycle, based 

upon the committee's federal and nonfederal disbursements in a prior 

comparable federal election cycle or 

upon the committee's reasonable 

prediction of its disbursements for the 

coming two years. In calculating its 

federal expenditures, the committee 

shall include only amounts contributed 

to or otherwise spent on bekalf of 

specific federal candidates. Calculation 

of total federal and non-federal 

disbursements shall also be limited to 

disbursements for specific candidates, 

and shah not include overhead or other 

generic costs.

(ii) On each of its periodic reposts, the 

committee shall adjust its allocation 

ratio to reconcile it with the ratio of 

actual federal and non-federal 

disbursements made, to date. If the nonfederal account has paid more than its 

allocable share, the committee shall 

transfer funds from its federal to its nonfederal account, as necessary, to reflect 

the adjusted allocation ratio. The 

committee shall make note of any such 

adjustments and transfers on its 

periodic reports, submitted pursuant to 

11 CFR 104.5.

(2) Minimum federal percentage fo r

administrative expenses and casts o f

generic voter drives. Regardless of the 

allocation ratio calculated under 

paragraph (c)(1) of this section, each 

Senate or House campaign committee of 

a national party shall allocate to its

federal account at least 65% each of its 

administrative expenses and costa of 

generic votes drives each year. If the 

committee’s own allocation calculation 

under paragraph (e)(1) of this section 

yields a federal share greater than 65%, 

then the higher percentage shall be 

applied. If such calculation yields a 

federal share lower than 65%, then the 

committee shall report its calculated 

ratio according to 11 CFR 104.10(b), and 

shall apply the required minimum 

federal percentage.

(3) Allocation o f fundraising costs.

Senate and House campaign committees 

shall allocate the costs of each 

combined federal and non-federal 

fundraising program or event according 

to paragraph (f) of this section, with no 

minimum percentages required.

(d) Sitóte and local party committees;

m ethod fo r allocating administrative

expenses and costs o f generic voter

drives—(1) G eneral rule. All state and 

local party committees except those 

covered by paragraph (d)(2) of this 

section shall allocate their 

administrative expenses and costs of 

generic voter drives, aa described in 

paragraph (a)(2) of tiña section, 

according to the ballot composition 

method, described in paragraphs

(d)(lKi) and (ii) aa follows:

(i) Under this method, expenses shall 

be allocated based on the ratio of 

federal offices expected on the ballot to 

total federal and non-federal offices 

expected on the ballot in the next 

general election to be held in the 

committee's state or geographic area. 

This ratio shall be determined by the 

number of categories of federal offices 

on the ballot and the number of 

categories of non-federal offices on the 

ballot, as described in paragraph

(d)(l)(ii) of this section.

(ii) In calculating a ballot composition 

ratio, a state or local party committee 

shall count the federal offices of 

President, United States Senator, and 

United States Representative, if 

expected on the ballot in the next 

general election, as one federal office 

each. The committee shall count the 

non-federal offices of Governor, State 

Senator, and State Representative, if 

expected on the ballot in the next 

general election, aa one non-federal 

office each. The committee shall count 

the total of all other partisan statewide 

executive candidates, if expected on the 

ballot in the next general election, as a 

maximum of two non-federal offices. 

State party committees shall also 

include in the ratio one additional nonfederal office if any partisan local 

candidates are expected on the ballot in 

that election. Local party committees
Federal Register / Vol. 55 No. 123 / Tuesday, June 26, 1990 / Rules and Regulations 260 7 1

shall also include in the ratio a 

maximum of two additional non-federal 

offices if any partisan local candidates 

are expected on the ballot in that 

election.

(2) Exception fo r states that do not

hold federal and non-federal elections

in the same year. State and local party 

committees in states that do not hold 

federal and non-federal elections in the 

same year shall allocate the costs of 

generic voter drives according to the 

ballot composition method described in 

paragraph (d)(1) of this section, based 

on a ratio calculated for that calendar 

year. These committees shall allocate 

their administrative expenses according 

to the ballot composition method 

described in paragraph (d)(1) of this 

section, based on a ratio calculated for 

the two-year Congressional election 

cycle.

(e) State and local party committees;

method fo r allocating costs o f exem pt

activities. Each state or local party 

committee shall allocate its expenses for 

activities exempt from the débilitions of 

“contribution” and "expenditure” under 

11CFR 100.7(b) (9), (15) or (17), and 

100.8(b) (10), (16) or (18), when 

conducted in conjunction with nonfederal election activities, as described 

in paragraph (a)(2) of this section, 

according to the proportion of time or 

space devoted in a communication.

Under this method, the committee shall 

allocate expenses of a particular 

communication based on the ratio of the 

portion of the communication devoted to 

federal candidates or elections as 

compared to the entire communication.

In the case of a publication, this ratio 

shall be determined by the space 

devoted to federal candidates or 

elections as compared to the total space 

devoted to all federal and non-federal 

candidates or elections. In the case of a 

phone bank, the ratio shall be 

determined by the number of questions 

or statements devoted to federal 

candidates or elections as compared to 

the total number of questions or 

statements devoted to all federal and 

non-federal candidates or elections.

(f) All party committees; method for

allocating direct costs o f fundraising. If 

federal and non-federal funds are 

collected by one committee through a 

joint activity, that committee shall 

allocate its direct costs of fundraising, 

as described in paragraph (a)(2) of this 

section, according to the funds received 

method. Under this method, the 

committee shall allocate its fundraising 

costs based on the ratio of funds 

received into its federal account toits 

total receipts from each fundraising 

program or event. This ratio shall be

estimated prior to each such program or 

event based upon the committee’s 

reasonable prediction of its federal and 

non-federal revenue from that program 

or event, and shall be noted in the 

committee’s report for the period in 

which the first disbursement for such 

program or event occurred, submitted 

pursuant to 11 CFR 104.5. Any 

disbursements for fundraising costs 

made prior to the actual program or 

event shall be allocated according to 

this estimated ratio. The committee shall 

adjust its estimated allocation ratio 

following each fundraising program or 

event from which both federal and nonfederal funds are collected, to reflect the 

actual ratio of funds received. If the nonfederal account has paid more than its 

allocable share, the committee shall 

transfer funds from its federal to its nonfederal account, as necessary, to reflect 

the adjusted allocation ratio. The 

committee shall make note of any such 

adjustments and transfers in its report 

for the period in which the fundraising 

program or event occurred.

(g) Payment o f allocable expenses by

committees with separate federal and

non-federal accounts—(1) Payment

options. Committees that have 

established separate federal and nonfederal accounts under 11 CFR 102.5 

(a)(l)(i) or (b)(l)(i) shall pay the 

expenses of joint federal and nonfederal activities described in paragraph 

(a)(2) of this section according to either 

paragraph (g)(1) (i) or (ii), as follows:

(i) Payment by federal account;

transfers from non-federal account to

federal account The committee shall 

pay the entire amount of an allocable 

expense from its federal account and 

shall transfer funds from its non-federal 

account to its federal account solely to 

cover the non-federal share of that 

allocable expense.

(ii) Payment by separate allocation

account; transfers from federal and nonfederal accounts to allocation account.

(A) The committee shall establish a 

separate allocation account into which 

funds from its federal and non-federal 

accounts shall be deposited solely for 

the purpose of paying the allocable 

expenses of joint federal and nonfederal activities. Once a committee has 

established a separate allocation 

account for this purpose, all allocable 

expenses shall be paid from that 

account for as long as the account is 

maintained.

(B) The committee shall transfer funds 

from its federal and non-federal 

accounts to its allocation account in 

amounts proportionate to the federal or 

non-federal share of each allocable 

expense.

(C) No funds contained in the 

allocation account may be transferred to 

any other account maintained by the 

committee.

(2) Timing o f transfers between

accounts, (i) Under either payment 

option described in paragraphs (g)(1) (i) 

or (ii) of this section, the committee shall 

transfer funds from its non-federal 

account to its federal account or from its 

federal and non-federal accounts to its 

separate allocation account following 

determination of the final cost of each 

joint federal and non-federal activity, or 

in advance of such determination if 

advance payment is required by the 

vendor and if such payment is based on 

a reasonable estimate of the activity’s 

final cost as determined by the 

committee and the vendor(s) involved.

(ii) Funds transferred from a 

committee’s non-federal account to its 

federal account or its allocation account 

are subject to the following 

requirements:

(A) For each such transfer, the 

committee must itemize in its reports the 

allocable activities for which the 

transferred funds are intended to pay, as 

required by 11 CFR 104.10(b)(3); and

(B) Such funds may not be transferred 

more than 10 days before or more than 

30 days after the payment for which 

they are designated is made.

(iii) Any portion of a transfer from a 

committee’s non-federal account to its 

federal account or its allocation account 

that does not meet the requirements of 

paragraph (g)(2)(ii) of this section shall 

be presumed to be a loan or contribution 

from the non-federal account to a 

federal account, in violation of the Act.

(3) Reporting transfers o f funds and

allocated disbursements. A political 

committee that transfers funds between 

accounts and pays allocable expenses 

according to this section shall report 

each such transfer and disbursement 

pursuant to 11 CFR 104.10(b).

10. Part 106 is amended by adding 

new § 106.8 as follows:

§ 106.6 Allocation of expenses between

federal and non-federal activities by

separate segregated funds and

nonconnected committees.

(a) General rule. Separate segregated 

funds and nonconnected committees 

that make disbursements in connection 

with federal and non-federal elections 

shall make those disbursements either 

entirely from funds subject to the 

prohibitions and limitations of the Act, 

or from accounts established pursuant 

to 11 CFR 102.5. Separate segregated 

funds and nonconnected committees 

that have established separate federal 

and non-federal accounts under 11 CFR
26072 Federal R egister / V ol. 55 No. 123 / Tuesday. June 26, 1990 / Rides and Regulations

102.5 (a)(l)(i) or (h)(l)(i), or that make 

federal «nd non-federal disbursements 

from a single account under 1 1 CFR 

102.5(b)(l)(ii), shall allocate their federal 

and non-federé expenses according to 

paragraphs (cl and (d) of this section.

For purposes of this section,

“nonconnected committee” includes any 

committee which con ducts activities in 

connection with an election, but which 

is n o ta party committee, an authorized 

committee af any candidate for federal 

election, or a separata segregated fund.

0 4 Costs to be allocated—(1)

Separate segregated funds. Separate 

segregated funds that make 

disbursements in connection with 

fed eré and non-federé elections shall 

allocate expenses for the following 

categories of activity:

(1) Administrative expenses including 

rent, utilities, office supplies, and 

salaries not attributable to a clearly 

identified candidate, if such expenses 

are not paid by the separate segregated 

fund’s connected organization;

(ii) The direct costs of a fundraising 

program or event including 

disbursements for solicitation of funds 

and for planning and administration of 

actual fundraising events, where federal 

and non-federé funds are collected 

through such program or event, if such 

expenses are not paid by the separate 

segregated fund’s connected 

organization; and

(in) Generic voter drives including 

voter identification, voter registration, 

and get-out-the-vote drives, or any other 

activities that urge the generé public to 

register, vote or support candidates of a 

particular party or associated with a 

particular issue, without mentioning a 

specific candidate.

(2) Nonconnected committees,

Nonconnected committees that make 

disbursements in connection with 

federé and non-federé elections shall 

allocate expenses for the following 

categories of activity:

(i) Administrative expenses including 

rent, utilities, office supplies, and 

salaries, except for such expenses 

directly attributable to a clearly 

identified candidate;

(ii) The direct costs of a fundraising 

program or event including 

disbursements for solicitation of funds 

and for planning and administration of 

actu é fundrésing events, where federé 

and non-federé funds are collected 

through such program or event; and

(iti> Generic voter drives including 

voter identification, voter registration, 

and get-out-the-vote drives, or any other 

activities that urge the generé public to 

register, vote or support candidates of a 

particular party or associated with a

particular issue, without mentioning a 

specific candidate.

(c) M ethod fa r allocating

administrative expenses and casts o f

generic voter drives. Nonconnected 

committees and separate segregated 

funds shall allocate their administrative 

expenses and costs of generic voter 

drives, as described in paragraph (b) of 

this section, according to the funds 

expended method, described in 

paragraphs (c) (1) and (2) as follows:

(1) Under this method, expenses shall 

be allocated based on the ratio of 

federal expenditures to total federal and 

non-federal disbursements made by the 

committee during the two-year federé 

election cycle. This ratio shall be 

estimated and reported at die beginning 

of each federé election cycle, based 

upon the committee's fed eré and nonfederal disbursements in a prior 

comparable federé election cycle or 

upon the committee’s reasonable 

prediction o f its disbursements for the 

coming two years. In calculating its 

federal expenditures, the committee 

shall include only amounts contributed 

to or otherwise spent on behalf of 

specific federal candidates. Calculation 

of total federal and non-federé 

disbursements shall also be limited to 

disbursements for specific candidates, 

and shall not include overhead or other 

generic costs.

(2) On each of its periodic reports, the 

committee shall adjust its allocation 

ratio to reconcile it with the ratio of 

actual federé and non-federé 

disbursements made, to date. If the nonfederal account has paid more than its 

allocable share, the committee shall 

transfer funds from its federal to its nonfederal account, as necessary, to reflect 

the adjusted allocation ratio The 

committee shall make note of any such 

adjustments and transfers on its 

periodic reports, submitted pursuant to 

11 CFR 104.5.

(d) M ethod fa r edlocating direct costs

o f fundraising. If federal and non-federal 

fends are collected by one committee 

through a joint activity, that committee 

shah allocate its direct costs of 

fundraising according to the funds 

received method. Under this method, the 

committee shall allocate its fundraising 

costs based on the ratio of funds 

received into its federal account to its 

to té receipts from each fundraising 

program or event This ratio sh é l be 

estimated prim* to each such program or 

event based upon the committee’s 

reasonable prediction of its federal and 

non-federal revenue from that program 

or event, and sh é l be noted in the 

committee’s report for the period in 

which the first disbursement for such 

program or event occurred, submitted

pursuant to 11 CFR 104.5. Any 

disbursements for fundraising costs 

made prior to the a ctu é program or 

event shall be allocated according to 

this estimated ratio. The committee shall 

adjust its estimated allocation ratio 

following each fundraising program or 

event from which both fed eré and nonfed eré funds are collected, to reflect the 

a ctu é ratio of funds received. If the nonfederal account has p é d more than its 

allocable share, the committee shall 

transfer funds from its fed eré to its nonfederal account, as necessary, to reflect 

the adjusted allocation ratio. The 

committee shall make note o f any such 

adjustments and transfers in its report 

for the period in which the fundrésing 

program or event occurred.

(e) Payment o f allocable expenses by

committees with separate fed era l and

non-federal accounts—(1) Payment

options. Nonconnected committees and 

separate segregated funds that have 

established separate federal mid nonfed eré accounts under 11 CFR 102.5

(a] (l)(i) or (b)(l)(i) shall pay the 

expenses of joint federé and nonfed eré activities described in. paragraph

(b) o f this section according to either 

paragraph (e)(1) (i) or (ii), aa fellows:

(1) Payment by fed era l account;

transfers from non-federal account to

fed era l account The committee shall 

pay the entire amount of an allocable 

expense from its fed eré account and 

shall transfer funds from its non-federé 

account to its federé account solely to 

cover the non-federé share of that 

allocable expense.

(ii) Payment by separate allocation

account transfers from federal and nonfederal accounts to allocation account

(A) The committee s h é l establish a 

separate allocation account into which 

funds from its federal and non-federé 

accounts shall be deposited solely for 

the purpose of paying the allocable 

expenses of joint fed eré and nonfederal activities. Once a committee has 

established an allocation account for 

this purposes all allocable expenses 

shall be p é d from that account for as 

long as the account is maintained.

(B) The committee shall transfer funds 

from its federal and non-federé 

accounts to its allocation account in 

amounts proportionate to the federal or 

non-federé share of each alloeable 

expense.

(C) No funds contained in the 

allocation account may be transferred to 

any other account maintained fay the 

committee.

(2) Timing o f transfers between

accounts, (i) Under either payment 

option described in paragraphs (e){l)W 

or (ii) of this section, the committee shall
26073 Federal Register / V ol. 55 No. 123 / Tuesday. lune 26. 1990 / Rules and R ésiliations

_______

transfer funds from its non-federal 

account or from its federal and non* 

federal accounts to its separate 

allocation account following 

determination of the final cost of each 

joint federal and non-federal activity, or 

in advance of such determination if 

advance payment is required by the 

vendor and if such payment is based on 

a reasonable estimate of the activity’s 

final cost as determined by the 

committee and the vendor(s) involved.

(ii) Funds transferred from a 

committee’s non-federal account to its 

federal account or its allocation account

are subject to the following 

requirements:

(A) For each such transfer, the 

committee must itemize in its reports the 

allocable activities for which the 

tranferred funds are intended to pay, as 

required by 1 1 CFR 104.10(b)(3); and

(B) Such funds may not be transferred 

more than 10 days before or more than 

30 days after the payment for which 

they are designated is made.

(iii) Any portion of a transfer from a 

committee’s non-federal account to its 

federal account or its allocation account 

that does not meet the requirements of 

paragraph (e)(2)(ii) of this section shall

be presumed to be a loan or contribution 

from the non-federal account to a 

federal account, in violation of the Act.

(3) Reporting transfers o f funds and

allocated disbursments. A political 

committee that transfers funds between 

accounts and pays allocable expenses 

according to this section shall report 

each such transfer and disbursement 

pursuant to 11 CFR 104.10(b).

Dated: June 15,1990.

Lee Ann Elliott,

Chairman, Federal Election Commission.

[FR Doc. 90-14481 Filed 8-25-90; 8:45 lm]

BILUNQ CODE «71S-01-M