RÜBE

Rules and Regulations Federal Register

Vol. 50, No. 46 

Friday, March 8, 1985

This section of the FED ERA L REG ISTER 

contains regulatory documents having 

general applicability and legal effect, most 

of which are keyed to and codified in 

the Code of Federal Regulations, which is 

published under 50 titles pursuant to 44 

U.S.C. 1510.

The Code of Federal Regulations is sold 

by the Superintendent of Documents.

Prices of new books are listed in the 

first FEDERAL R EG ISTER issue of each 

week.

FEDERAL ELE C TIO N COMMISSION

11CFR Parts 9007 and 9038

[Notice 1985-1]

Repayments by Publicly Financed

Presidential Candidates

AGENCY: Federal Election Commission. 

a ctio n: Final rule; Second Transmittal 

to Congress.

sum m ary: The Commission announces 

the resubmission to Congress of revised 

regulations governing certain 

repayments by publicly financed 

Presidential candidates. 11 CFR Parts 

9007 and 9038. These regulations were 

first transmitted to Congress on August 

17,1984. See 49 FR 33225 (August 22, 

1984). However, thirty legislative days 

had not expired when Congress 

adjourned on October 12,1984. The 

Commission is retransmitting these 

regulations prior to final promulgation. 

Further information is provided in the 

supplementary information that follows. 

effectiv e d a t e s : Further action, 

including the announcement of an 

effective date, will be taken by the 

Commission after these regulations have 

been before the Congress 30 legislative 

days.

for f u r th e r in f o r m a t io n c o n t a c t :

Ms. Susan E. Propper, Assistant General 

Counsel (202) 523-4143 or Toll Free (800) 

424-9530.

SUPPLEMENTARY INFORMATION: On 

August 17,1984, the Commission 

transmitted to Congress revised rules 

governing the formula used to determine 

repayments by Presidential candidates 

receiving public financing under Title 26. 

! See 49 FR 33225 (August 22,1984). These 

| regulations had not been before 

Congress for 30 legislative days prior to 

its adjournment on October 12,1984. 

Accordingly, the Commission 

resubmitted these rules and their

explanation and justification to 

Congress on March 5,1985.

Explanation and Justification

On May 15,1984, the U.S. Court of 

Appeals for the D.C. Circuit held that 

repayments by publicly-financed 

Presidential primary candidates for nonqualified campaign expenses should be 

“limited to the amount of federal funds 

that the Commission reasonably 

determined were spent” by the 

candidates for such purposes. Kennedy

for President Committee et al. v. Federal

Election Commission, 734 F.2d 1558 

(D.C. Cir. 1984); Reagan for President

Committee v. Federal Election

Commission, 734 F.2d 1569,1570 (D.C. 

Cir. 1984). In accordance with the court’s 

order, the Commission has revised its 

regulations, which currently require 

repayment of the total amount spent on 

non-qualified campaign expenses. See,

11 CFR 9007.2(b)(2) and 9038.2(b)(2) 

(1983). The revised regulations 

implement a pro-rata formula based on 

the proportion of federal funds to total 

funds received by the candidate. The 

amount of any repayment sought would 

then be a similar proportion of the total 

amount spent on non-qualified campaign 

expenses. In the case of Presidential 

primary candidates, the proportion of 

federal funds certified will be 

determined as of the candidate’s date of 

ineligibility. In the general election, a 

pro-rata formula will only be used for 

major party candidates who had 

received private contributions to make 

up a deficiency in the Fund and for 

minor or new party candidates receiving 

partihl Federal funding. The use of such 

formulas is consistent with the court’s 

opinion, which does not require a 

mathematically precise determination of 

the amount of the Federal funds spent 

improperly but only a reasonable 

determination of the amount of Federal 

matching funds so used. Kennedy supra

at 1562. Moreover, the revisions are 

limited to repayment determinations 

under 26 U.S.C. 9007(b)(4) and 

9038(b)(2), as those were the only types 

of repayment determinations addressed 

in the Kennedy and Reagan decisions.

To demonstrate how these formulas 

will operate, the Commission has' 

prepared two examples of hypothetical 

repayment determinations under 26 

U.S.C. 9038(b)(2). Although the examples 

deal with repayments by Presidential 

primary candidates, they may be

analogized to repayments by general 

election candidates as the issues 

presented in both cases are similar. The 

examples cover hypothetical 

repayments by candidates in a surplus 

and in a deficit position.

Illustration No. 1: Surplus Candidate

Assumptions

Date of ineligibility (DOI): 7/19/84 

Surplus on DOI: $1,000,000 

Matching funds received through DOI: 

$8,000,000 (net)

Total deposits through DOI: $20,000,000 

Non-qualified campaign expenses 

incurred pre-DOI: $100,000 (in excess 

of New Hampshire limit) 

Non-qualified campaign expenses 

incurred post-DOI: $25,000 (purchase 

of 1984 Corvette)

1. Calculate 26 U.S.C. 9038(b)(3) ratio 

and determine amount of 26 U.S.C. 

9038(b)(3) surplus repayment.

The Audit staff verified the 

Candidate’s NOCO statement (as of 7/ 

19/84) and reached agreement with the 

Treasurer as to the amount of the 

surplus at DOI (i.e., $1,000,000). The 

Audit staff then calculated the 26 U.S.C. 

9038(b)(3) ratio using figures developed 

by reviewing reports and records of the 

Committee. The ratio calculated was 

(40%)

$8,000,000

$20,000,000

Applying this ratio (40%) to the verified 

surplus ($1,000,000),1 the 26 U.S.C. 

9038(b)(3) repayment amount becomes 

$400,000. Since some estimates (for 

winding down costs) were used to 

calculate the surplus, adjustments to the 

amount repayable may be appropriate 

as a result of audit fieldwork updates.

2. Calculate 26 U.S.C. 9038(b)(2) ratio 

and determine amount of 26 U.S.C. 

9038(b)(2) repayment for non-qualified 

campaign expenses.

In order to determine the repayment 

for $100,000 in expenditures in excess of 

the New Hampshire state limit, several 

calculations and adjustments were

1 The Treasurer included $25,000 in accounts 

payable for expenses chargeable in the New 

Hampshire limit and arrived at a calculated surplus 

of $975,000. The Audit staff excluded the $25,000 in 

accounts payable for non-qualified campaign 

expenses, thus making the surplus $1,000,000.
9 422 Federal R egister / Vol. 50, No. 46 / Friday, M arch 8, 1985 / Rules and Regulations

Non-qualified type Date incurred Date paid Amount

paid

Non-campaign related (Convention expenses).................................................... July 1,1984..... $20,000

May 4 1985 5,000

25,000

Matching Funds Certified Through DOI: 

$3,000,0003

Total Contributions Deposited Through 

DOI: $6,000,000

Amount of Non-Qualified Expenses 

incurred Pre-DOI:

Undocumented.............. ,....... __________ .hTM...,........ $50,000

Excess lowa...i......................... 25.000

Total 26 U.S.C. 9038(b)(2) incurred Pre-DOI..... 75,000

Amount of Non-Qualified Expenses 

incurred Post-DOI:

performed by the Audit staff. First, the 

ratio had to be calculated. In this case, 

the Treasurer had workpapers 

supporting his calculation of the 26

U.S.C. 9038(b)(2) ratio and the Audit 

staff verified his figures. The Treasurer’s 

ratio was 38.7755%

$7,600,000

$19,600,000

The Treasurer reasoned that since 

$400,000 was to be repaid via the 26

U.S.C. 9038(b)(3) repayment, actual 

matching funds certified (NET) was 

equal to matching funds certified 

through DOI ($8,000,000) less the 

$400,000 to be repaid. A similar 

adjustment was made to the 

denominator. The Audit staff explained 

that for purposes of calculating the 26

U.S.C. 9038(b)(2) ratio, repayments 

pursuant to 26 U.S.C. 9038(b)(1) and

(b)(3) did not come into consideration.2 

The 26 U.S.C. 9038(B)(2) ratio was 

calculated to be 40%

$8,000,000

$20,000,000

Since the $100,000 ($75,000 paid and 

$25,000 yet to be paid) were the only 

non-qualified expenses incurred prior to 

date of ineligibility, the Audit staff 

simply multiplied 40% times $100,000 to 

arrive at the amount ($40,000) repayable 

pursuant to 26 U.S.C. 9038(b)(2).

With respect to the review of postDOI disbursements, the Audit staff 

noted a $25,000 payment for purchase of 

an automobile made on 8/2/84. It was 

also noted that the Treasurer had 

properly: (1) Not included this amount 

for purposes of inclusion in the NOCO 

statement and (2) considered this 

expense to have been defrayed with 

excess campaign funds pursuant to 2

U.S.C. 439a. (The Committee’s 

calculated residual funds after all 

repayments and qualified expenses 

were satisfied, amounted to 

approximately $560,000).

In summary, the total repayment 

requested would have been as follows:

26 U.S.C. 9038(b)(3): ■ ' ,

* There is no adjustment for repayments under 28 

U.S.C. 9038(b)(1) or (b)(3) because the repayment 

formula for 9039(b)(2) is based on the amount offunds certified to the candidate and therefore 

available to defray non-qualified campaign 

expenses. This is so even I f the Commission may 

later determine that the candidate was not entitled 

to a portion of the funds or that the candidate had a 

surplus.

$8,000,000

--------------- X$l,000,000=$400,000

$ 20,000,000

26 U.S.C. 9038(b)(2):

$8,000,000

------------------------ X $100,000=$40,000

$20,000,000

Total Repayment—$440,000 

Illustration No. 2: Deficit Candidate

Assumptions

Date of ineligibility (DOI): 3/20/84

Amount of Last Matching Fund 

Payment: $1,750 on 2/5/85

1. Calculate 26 U.S.C. 9038(b)(2) ratio 

and resultant repayment amount.

During initial fieldwork, the Audit 

staff reviewed workpapers prepared by 

the Treasurer concerning the 

Committee’s NOCO position and 26 

U.S.C. 9038(b)(2) repayment situation. 

The Audit staff verified the Committee’s 

NOCO position (entitlement). Several 

differences were noted between the 

CommitteeTreasurer’s calculations and 

those performed by the Audit staff.

The Treasurer did not include the 

$300,000 matching payment received on 

3/23/84 in computing the 26 U.S.C. 

9038(b)(2) ratio. This appeared to be an 

oversight on the Treasurer’s part. The 

Audit staff pointed out that the 26 U.S.C. 

9038(b)(2) ratio (both numerator and 

denominator) is to include the amount of 

matching funds certified through the 

date of ineligibility, whether or not 

received by that date. Hence, the correct 

ratio for 26 U.S.C. 9038(b)(2) repayment 

purposes was

$3,000,000

$3,000,000+$6,000,000

or 33.3333%) 

not the 31.0345% or

$2,700,000

$2,70Ö,Ü00+$6,000,000

* Actual matching funds received through DOI 

totaled $2,700.000; however, a certification for

as originally calculated by the 

Treasurer. Applying the 33.3333% ratio 

to the amount of non-qualified campaign 

expenses incurred prior to the date of 

ineligibility ($75,000), the repayment 

amount was $25,000.

The Audit staff verified the figures 

contained on the Treasurer’s NOCO 

workpapers. It was noted that the 

Treasurer has included $25,000 in nonqualified expenses as a payable on her 

NOCO statement. This amount 

represented expenses for materials and 

services used in February 1984 which 1 

had not been paid and are included in q 

the pre-ineligibility non-qualified 

expenses included above. The Audit 

staff explained that, if permitted, 

inclusion of the $25,000 in non-qualified 

campaign expenses could result in an 

additional $25,000 in matching fund . 

entitlement.

During the audit fieldwork update, the 

Audit staff reviewed expenses incurred 

after the date of ineligibility, the 

updated NOCO statements sumbitted, 

and the liquidation of matching fund 

payments received after the date of 

ineligibility. It was noted that the 

Treasurer included on her NOCO 

statement, $20,000 in expenses relating 

to the candidate’s and his staffs travel, 

food and lodging costs at the nominating 

convention. The Audit staff pointed out 

two problems with the Treasurer’s 

approach.

F irst, th e $ 2 0 ,0 0 0 in convention-related

expenses were not valid winding down 

costs and, therefore, could not be 

defrayed with matching funds. The

$300,000 was approved on 3/18/84, with the 

resulting payment not received until 3/23/84.
Federal Register / Vol. 50, No. 46 / Friday, M arch 8, 1985 / Rules and Regulations 9423

Audit staff informed the Treasurer that 

the $20,000 payment was a non-qualified 

campaign expense subject to repayment 

pursuant to 26 U.S.C. 9038(b)(2). The 

Treasurer agreed.

Second, for the same reasons that the 

$25,000 in pre-DOI non-qualified 

campaign expenses could not be 

included on the NOCO statement, the 

$20,000 in post-DOI non-qualified 

campaign expenses also could not be 

included.

Thus, the entitlement as calculated by 

the Treasurer was reduced by $20,0004 

and the 26 U.S.C. 9038(b)(2) ratio was 

applied to the $20,000 which resulted in 

a repayment amount of $6,666.67 for 

convention expenses. It should be noted 

that the $5,000 transfer (dated 5/4/85) 

was made after all matching funds 

received had been disposed of and thus, 

this transfer was considered to have 

been made using non-federal monies.

The total 26 U.S.C. 9038(b)(2) 

repayment is $31,666.67, comprised of 

the following:

Pre-DOI nonqualified campaign expenses

($75,000 x 33.3333%)........... .......................i... $25,000.00

Post-DOI nonqualified expenses

($20,000 x 33.3333%)........................................ 6,666.67

Total 26 U.S.C. 9038(b)(2) Repayment..... 31,666.67

At the close of follow-up fieldwork, 

the Treasurer inquired concerning the 

possible impact of settling a $500,000 

debt for $50,000 in the near future. The 

Audit staff advised her of the 

Commission’s debt settlement 

procedures and informed the Treasurer 

that all NOCO statements filed carried 

this debt at $500,000. Should the debt be 

settled for less, it was the Commission’s 

policy to recalculate entitlement based 

on the $50,000 settlement amount, and 

seek a 26 U.S.C. 9038(b)(1) repayment, if 

appropriate.

Statutory Authority 

(26 U.S.C. 9007, 9038)

List of Subjects 11 CFR Parts 9007 and 

9038

Campaign funds, Administrative 

practice and procedure, Political 

candidates.

PART 9007— [AM EN D ED ]

11. CFR Part 9007 is amended by 

revising § § 9007.2(b)(2)(i) introductory 

text, and (b)(2)(ii)(B), (C) and (D); and 

adding (b)(2)(iii) as follows:

4To the extent the candidate's entitlement was 

•fiilated by this amount, a repayment determination 

would also be made under 26 U.S.C. 9038(b)(1).

§ 9007.2 Repayments.

* * * ★

(b) * * *

(2) * * *

(1) If the Commission determines that 

any amount of any payment to an 

eligible candidate from the Fund was 

used for purposes other than those 

.described in paragraphs (A) through (C) 

below, it will notify the candidate of the 

amount so used, and such candidate 

shall pay to the United States Treasury 

an amount equal to such amount.

* ★ ★ * ★

(ii) * * *

(B) Determinations that amounts spent 

by a candidate, a candidate’s authorized 

committee(s), or agent(s) from the Fund 

were not documented in accordance 

with 11 CFR 9003.5;

(C) Determinations that any portion of 

the payments made to a candidate from 

the Fund was expended in violation of 

State or Federal law; and

(D) Determinations that any portion of 

the payments made to a candidate from 

the Fund was used to defray expenses 

resulting from a violation of State or 

Federal Law, such as the payment of 

fines or penalties.

(iii) In the case of a candidate who 

has received contributions pursuant to 

11 CFR 9003.3 (b) or (c), the amount of 

any repayment sought under this section 

shall bear the same ratio to the total 

amount determined to have been used 

for non-qualified campaign expenses as 

the amount of payments certified to the 

candidate from the Fund bears to the 

total amount of deposits of contributions 

and federal funds, as of December 31, of 

the Presidential election year.

★ it ■ ★ - *

P A R T 9038— [AM EN D ED ]

11 CFR Part 9038 is amended by 

revising §9038.2(b)(2)(i) introductory 

text, adding (b)(2)(iii) and revising (b)(3) 

as follows:

§ 9038.2 Repayments.

•k ★ * * *

(b) * * *

(2 ) * * *

(i) The Commission may determine 

that amounts of any payments made to a 

candidate from the matching payment 

account were used for purposes other 

than those set forth in (A)-(C) below:

* * * * ★

(iii) The amount of any repayment 

sought under this section shall bear the 

same ratio to the total amount 

determined to have been used for nonqualified campaign expenses as the 

amount of matching funds certified to 

the candidate bears to the total amount 

of deposits of contributions and

matching funds, as of the candidate’s 

date of ineligibility.

(3) Failure to Provide Adequate

Documentation. The Commission may 

determine that amount(s) spent by the 

candidate, the candidate’s authorized 

commit'teefsj, or agents were not 

documented in accordance with 11 CFR 

9033.11. The amount of any repayment 

sought under this section shall be 

determined by using the formula set 

forth in 11 CFR 9038.2(b)(2)(iii).

* * , * * *

Dated: March 5,1985.

John Warren McGarry,

Chairman.

[FR Doc. 85-5591 Fifed 3-7-85; 8:45 amj

BILLING CODE 6715-01-M

D EP A R TM EN T O F H EA LTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 5

Delegations of Authority and

Organization; Director, Center for

Devices and Radiological Health

AGENCY: Food and Drug Administration. 

ACTION: Final rule.

SUMMARY: The Food and Drug 

Administration (FDA) is amending the 

regulations for delegations of authority 

on medical devices and electronic 

products to add new delegations to the 

Director and Deputy Director, Center for 

Devices and Radiological Health 

(CDRH).

EFFECTIVE DATE: March 8,1985.

FOR FURTHER INFORMATION CONTACT: 

Robert L. Miller, Office of Management 

and Operations (HFA-340), Food and 

Drug Administration, 5600 Fishers Lane, 

Rockville, MD 20857, 301-443-4976.

SUPPLEMENTARY INFORMATION: FDA is 

amending the delegations of authority to 

redelegate the authority to CDRH 

officials to issue notices relating to the 

approval, denial of approval, or 

withdrawal of approval of premarket 

approval applications (PMA’s) or 

supplemental PMA’s and to issue 

notices of the availability of approved 

variances, and amendments or 

extensions thereof, for electronic 

products. This document amends § 5.53 

Approval, disapproval, or withdrawal of

approval o f product development

protocols and applications for

prem arket approval for m edical devices

(21 CFR 5.53) and § 5.86 Variances from

perform ance standards for electronic

products (21 CFR 5.86) to delegate