i·Qi::.J:'J!27 Al111=37 FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

MEMORANDUM 

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JAN 2 7 2015 

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TO: The Commission 

FROM: Lisa J. Stevenson l Y1_ 

Deputy General Counsel -"Ea~ 

Lorenzo Holloway JB ~r LE-I 

Assistant General Counsel 

Compliance Advice 

Joshua Blume JB 

Attorney 

SUBJECT: Request for Consideration of a Legal Question Submitted by Cantor for Congress 

(LRA # 980) 

I. INTRODUCTION 

On December 23, 2014, the Commission received a Request for Consideration of a Legal 

Question ("Request") from counsel on behalf of Cantor for Congress (the "Committee"), the 

principal campaign committee of former Representative Eric Cantor. 1 See Attachment 1. 

The Request addresses a determination by the Reports Analysis Division, based on 

informal guidance provided by the Office of General Counsel (OGC), that the Committee must 

refund certain contributions designated for the general election that it accepted and spent before 

the date of the primary election, which the Candidate ultimately lost. The Candidate sought reelection to the House of Representatives during the 2013-14 election cycle, and participated in a 

primary election on June 10, 2014.2 Before the primary election took place, the Committee 

At least two or more Commissioners agreed to consider this Request pursuant to the Policy Statement 

Regarding a Program for Requesting Consideration of Legal Questions by the Commission, 78 Fed. Reg. 63203 

(Oct 23, 2013). 

In its Request, the Committee represents that it established separate records for its primary and general 

election contributions; that at all times before the primary election its recorded cash on hand equaled or exceeded the 

total of the general election contributions it received less the total general election disbursements that it made; and 

that it never used general election contributions to pay its primary election expenses. See Attachment I, at 2. We 

have no reason to dispute the Committee's representations at this time, nor has the Reports Analysis Division 

indicated that it has information in its possession that contradicts these representations. Consequently, for the 
Memorandum to Commission 

Cantor for Congress - LRA 980 

Page 2 of6 

accepted general election contributions totaling nearly two million dollars and spent 

approximately $230,000 on expenses incurred in anticipation of the general election.3 Upon 

losing the primary election, the Committee reattributed some contributions from the general to 

the primary election, and refunded all but $230,000 ofthe remaining general contributions, 

representing the amount that the Committee contends it had already spent. The Committee 

argues that it is not required to refund this remaining amount because it was spent on expenses 

relating to the Candidate's anticipated participation in the general election. The Committee 

relies upon 11 C.F.R. §102.9(e)(2), which it interprets to require a refund only ofthe net 

difference between the total amount of general election contributions received and the amount of 

general election contributions spent. 

We have considered the Committee's arguments and the law that governs this area, and 

we recommend that the Commission conclude that the Committee is required to refund all 

general election contributions that it received, including those it already spent on general election 

expenses. 

II. A COMMITTEE MUST REFUND ALL GENERAL ELECTION 

CONTRUBTIONS WHEN THE CANDIDATE DOES NOT PARTICIPATE IN 

THE GENERAL ELECTION 

Under the Federal Election Campaign Act of 1971, as amended (the "Act"), and 

Commission regulations implementing the Act, no person may make contributions to candidates 

and their authorized political committees with respect to any election that, in the aggregate, 

exceed certain limits. See 52 U.S.C. § 30116(a)(1)(A); 11 C.F.R. § 110.1(b)(l). A primary 

election and a general election are each considered a separate "election" for the purpose of 

applying these limits. See 52 U.S.C. § 30101(1)(A); 11 C.F.R. §§ 100.2, llO.l(j)(l). 

Candidates and their authorized committees may accept contributions designated for the 

general election before the date ofthe primary election. 11 C.F.R. § 102.9(e)(l). If a committee 

or its candidate does so, it must use an acceptable accounting method to distinguish the primary 

election contributions from the general election contributions. !d. Regardless of the accounting 

method used, the committee's records must show that at all times before the primary election, the 

committee's recorded cash on hand equaled or exceeded the difference between the total amount 

of general election contributions received and the total amount of general election disbursements 

made. 11 C.F.R. § 102.9(e)(2). 

If the candidate does not participate in the general election, however, the law is clear- the 

committee cannot retain these general election contributions. Rather, the committee must either: 

(1) refund any contributions made for the general election; (2) redesignate such contributions in 

purpose of analyzing the issue raised by the Committee in its Request, we will assume that these representations are 

accurate. 

We are assuming for the purpose of analyzing the issue raised in this Request that all of the Committee's 

expenditures were advance payments for the general election. 
4 

Memorandum to Commission 

Cantor for Congress - LRA 980 

Page3of6 

accordance with 11 C.F.R. §§ 110.1(b)(5) or 110.2(b)(5); or (3) reattribute such contributions in 

accordance with the procedures set forth in 11 C.F.R. § 110.l(k)(3). 11 C.F.R. § 102.9(e)(3); 

Advisory Opinions 2008-04 (Dodd for President) and 1992-15 (Russo). 

The Commission has made it clear that the requirement to refund, redesignate, or 

reattribute general election contributions when a candidate does not participate in the general 

election applies even in those limited circumstances where the committee has expended the 

general election contributions for advance payments for the general election. Since 1986, the 

Commission has allowed candidates and their authorized committees to use general election 

contributions accepted before the date of the primary election "exclusively for the purpose of 

influencing the prospective general election in those limited circumstances where it is necessary 

to make advance payments or deposits to vendors for services that will be rendered, or goods that 

will be provided, to [the] committee after [the candidate has] established [his or her] candidacy 

with respect to the general election". Advisory Opinion 1986-17 (Green). However, in so 

permitting, the Commission emphasized the following: 

[T]he Commission concludes that if you do not establish 

your candidacy with respect to the general election, your 

committee must refund within a reasonable time contributions 

designated for the general election, whether or not your committee 

has made any expenditure from these contributions, since a 

separate contribution limitation will not be available to these 

contributors with respect to the general election. See 11 C.F.R. 

[§] 103.3(b); Advisory Opinion 1986-12. 4 

!d. (emphasis added). 

Thus, while candidates may choose to spend some or all of the general election 

contributions they collect before the primary election takes place, they do so at the risk that if 

they do not participate in the general election, the committee will be required to refund the 

general election contributions.5 A general election contribution limit does not exist for a 

candidate who does not participate in the general election, and a committee's spending cannot 

create a legal contribution limit where one would otherwise not exist. 

Advisory Opinion 1986-12 (Ferraro) also concluded that contributions to a candidate with respect to an 

election in which she does not participate as a candidate must be refunded to the contributors. 

The Commission has similarly determined in matters involving special elections that a candidate who had 

both accepted and spent contributions designated for an anticipated special election that did not in fact occur was 

required to refund, redesignate or reattribute all such contributions. See Advisory Opinion 2009-15 (Bill White for 

Texas); Certification In the Matter of Request for Commission Consideration of a Legal Question by the Michael 

Williams for U.S Senate Committee (LRA # 872) (April 12, 20 12); Certification In the Matter of Request for 

Commission Guidance on the Michael Williams for U.S. Senate Committee (LRA # 872) (Feb. 7, 2012); See also 

OGC Memorandum to Commission on Request for Commission Consideration of a Legal Question by the Michael 

Williams for U.S. Senate Committee (LRA # 872), at 5 (Mar. 19, 2012) (discussing AO 2009-15 (Bill White for 

Texas)). 
Memorandum to Commission 

Cantor for Congress - LRA 980 

Page4of6 

III. SECTION 102.9(e)(2) DOES NOT EXEMPT GENERAL ELECTION 

CONTRIBUTIONS SPENT BEFORE THE PRIMARY ELECTION FROM THE 

REFUND OBLIGATION. 

In its Request, the Committee acknowledges the legal authorities discussed above, but 

argues that the Commission's promulgation in 2002 of section 1 02.9(e)(2) altered the approach 

previously adopted by the Commission so as to definitively limit the refund obligation imposed 

by section 102. 9( e )(3) to unspent general election contributions.6 The Committee notes that 

paragraph ( e )(2) requires a committee's records to show only that the committee's cash on hand 

exceeds its "net" general election contributions (contributions collected less contributions 

disbursed), rather than its "gross" general election contributions (all contributions, whether or not 

disbursed). Because paragraph (e)(2) requires only that cash on hand exceed "net" general 

election contributions, the Committee argues that the refund obligation must also now similarly 

be limited to "net" general election contributions. Attachment 1, at 6-8. The Committee posits 

that if this were not the case, paragraph (e)(2) would be rendered meaningless since if the refund 

obligation continues to apply to "gross" general election contributions, then committees would 

be forced to maintain additional cash on hand to exceed the "gross" and not merely the ''net" 

general election contributions. Attachment 1, at 7-8. 

The Committee's arguments are misplaced and misinterpret section 102.9(e)(2). First, 

the plain language and context of paragraph ( e )(2) demonstrate that its intended purpose is to 

mandate an additional accounting method that committees must use to show that they did expend 

general election contributions to pay their primary election expenses. See Notice of Proposed 

Rulemaking on Contribution Limitations and Prohibitions, 67 Fed. Reg. 54366, 54371 (Aug. 22, 

2002) (the Commission proposed to amend section 102. 9( e) out of concern that some committees 

were using general election contributions to pay primary election expenses in spite of the 

requirement that the two types of contributions be distinguished). Paragraph (e)(2) states only 

that a committee's records must demonstrate that its cash on hand exceeded its net general 

election contributions. It does not otherwise specify how much cash on hand a committee must, 

should, or may retain to meet its refund obligations under paragraph (e)(3). Nor did the 2002 

promulgation modify the language in (e)(3) which imposes a refund obligation for "any 

contributions made for the general election." In other words, the requirement that a committee's 

cash on hand always exceed its net general election contributions was adopted as an additional 

safeguard against a committee's inappropriate use of general election contributions to pay 

primary election expenses, in excess of contribution limitations. See Advisory Opinion 1992-15 

(Russo). 

Second, there is no indication in the language of paragraph ( e )(2), nor in the explanation 

and justification accompanying the 2002 Final Rules amending section 102.9(e) generally, that 

the Commission intended to supersede Advisory Opinion 1986-17 (Green), in whole or in part, 

The Committee emphasizes the Commission's statement in the E&J for the 2002 Final Rules that paragraph 

(e)(2) "makes the standard for accounting methods explicit". Attachment 1, at 9. The Committee argues that what 

the Commission made explicit is that from that time forward committees would no longer be required to have 

enough cash on hand to refund amounts spent on the general election and, therefore, committees would no longer be 

required to refund those amounts. /d. As discussed above, that argument is meritless. 
Memorandum to Commission 

Cantor for Congress - LRA 980 

Page5of6 

or intended to achieve this effect by promulgating paragraph (e)(2). The Commission's usual 

practice when promulgating regulations that conflict with previous advisory opinions is to 

declare its intention to supersede those advisory opinions or those portions of the advisory 

opinions that conflict with the new rule. 7 The Commission made no such declaration here. 

Finally, the Commission has continued to cite to Advisory Opinion 1986-17 (Green) 

since 2002 for the proposition that all general election contributions must be refunded in the 

event the candidate does not participate in the general election. In its Factual and Legal Analysis 

for MUR 6057 issued in 2009, for example, the Commission stated: 

Further, general election contributions may be used to make advance payments 

for general election purposes, but should the candidate not win the primary 

election, the committee must have enough cash on hand to refund all general election 

contributions. See MUR 5388 (Jim Treffinger for Senate), Factual and Legal 

Analysis, at 2; 8 see also Advisory Opinion 1986-17 (Friends of Mark Green), at 4 

(concluding that the Act did not prohibit a committee from making expenditures 

for the general election before the primary election, such as advance payments or 

deposits in connection with the general election). 

MUR 6057 (Jennifer Horn for Congress), Factual and Legal Analysis, at 3-4 (Feb. 13, 2009).9 

The Committee argues MUR 6057 merely restates what the Committee characterizes as 

the "uncontroversial" requirement expressed in section 102.9(e)(3) that every general election 

contribution must be refunded. Attachment 1, at 10. The Committee contends, without any 

support, that this principle does not resolve the amount of the general election contributions that 

See, e.g., E&J for Final Rules on Participation by Federal Candidates and Officeholders at Non-Federal 

Fundraising Events, 75 Fed. Reg. 24375, 24382 (May 5, 2010) (discussing new rule's impact on several preceding 

advisory opinions and superseding them in whole or in part); E&J for Final Rules on Internet Communications, 71 

Fed. Reg. 18589, 18604 n.46, 18605 n.49 (Apr. 12, 2006). 

In MUR 5388, the Commission stated: "While general election contributions may be used to make advance 

payments for general election purposes, if the candidate does not win the primary election, the committee must have 

enough cash on hand to refund all general election contributions, including those already used for such payments. 

AO 1986-17 at 5." MUR 5388 (Jim Treffinger for Senate, Inc.), Factual and Legal Analysis, at 2 (July 8, 2004 ). 

While the Factual and Legal Analysis is dated after 2002, the violations alleged in the MUR occurred before the 

enactment of the Bipartisan Campaign Reform Act of2002 ("BCRA"), and the Commission stated that it was 

applying the pre-BCRA Act and regulations to the alleged misconduct in the MUR. ld, at 1, n.1. However, the fact 

that the Commission cited this passage in MUR 6057 suggests that it considered this statement to be an accurate 

reflection of the law after 2002. 

Moreover, the Commission has continued to cite Advisory Opinion 1986-17 (Green) as authority in post2002 advisory opinions for the general proposition that contributions designated for the general election are not 

usable or are to be refunded in the event ofthe candidate's non-participation in that election. See Advisory Opinions 

2003-18 (Smith), 2009-15 (Bill White for Texas). See also MUR 6230 (Wynn for Congress), Factual and Legal 

Analysis, at 5. These authorities lend further support for the fact that the Commission's promulgation of 11 C.F.R. § 

102.9(e)(2) did not modify the scope of a committee's refund obligation. 
Memorandum to Commission 

Cantor for Congress - LRA 980 

Page 6 of6 

must be refunded, which is controlled by section 102.9(e)(2) rather than section 102.9(e)(3). 10 

!d. It is not clear, however, why a requirement to refund "every" general election contribution 

does not simultaneously resolve the question of the amount of general election contributions that 

must be refunded. 

IV. RECOMMENDATION 

For the reasons noted above, we recommend that the Commission conclude that the 

Committee was required to refund all general election contributions it accepted before the 

primary election, including general election contributions it expended on advance expenditures 

relating to the anticipated general election. 

Attachment 1- Request for Legal Consideration from Cantor for Congress, dated December 23, 

2014. 

The Committee also characterizes the Commission's statement in the Factual and Legal Analysis in MUR 

6057 as dicta because the candidate in that MUR did participate in the general election. Attachment 1, at I 0. 

Although the central issue in MUR 6057 was whether the candidate used general election contributions to pay for 

primary election expenses before the primary election, which is not at issue here, nevertheless, the general statement 

of the law supports the fact that the Commission's position on the scope of a committee's refund obligation has 

remained the same after the 2002 amendment to the regulation at issue. See MUR 6057 (Jennifer Hom for 

Congress), Factual and Legal Analysis, at 3-4 

10 
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December 23.2014 

BY HAND DELIVERY AND E-MAIL 

(LEGALREQUESTPROGRAM(a!FEC.GOV) 

Chairman Lee E. Goodman: Vice Chair Ann .M. Ravel: and Commissioners Ellen L. 

Weintraub. 1'v1atthew S. Petersen. Caroline C. Hunter. and Steven T. Walther 

Federal Election Commission 

do Ms. Shawn Woodhead \\'erth. Secretary 

999 E Street. i\W 

Washington. DC 20463 

Re: Rt:quest for Consideration of Legal Questions bv the Commission 

Dear Commissioners: 

On behalf of our client. Cantor for Congress (the .. Committee .. ). we request 

C'ommission consideration of a determination by the Reports Analysis Division 

( .. RA.D .. ) that the Committee take certain action with respect to contributions it 

n:cei\·ed for the 2014 general election. 1 

This matter is appropriate for Commission consideration because, as discussed 

below, RA[Y s determination- specifically, that the Committee must refund I 00% 

of each contribution regardless of amounts paid for general election expenses-- is 

contrary to the Commission· s regulations.~ 

fhe Commission has long permitted authorized committees to make disbursements 

for general election expenses prior to the primary election using contributions raised 

for the general election. In 2002. the Commission amended its regulations to 

' RAD noti!ied counsel for the Committee by tdcphone on December 5. 2014. ofRAD's 

determination. as \\ell as the legal analysis by the Office of General Counsd r·OGC"'J supporting 

RALYs dctennination. Se.: Fed. Election Comm·n. Policy Statement Regarding a Program for 

Reque~ting Consideration of Legal Questions by the Commission. 78 Fed. Reg. 63203 tOct. 23. 

2013 ) . 

. \<!<!Policy Statement Regarding a Program for Requesting Consideration of Legal Question~ by 

the Commission. supra note I. ("Any request for consideration by a Committee during the report 

n!\ iew process ... shall be I imited to questions of law on material is~ues, when ... the request to 

take corrective a<.:tion is contrary to or otherwise inconsistent with prior Commission matters dealing 

with the same issue."). Alternatively. to the extent OGCs analysis fails to justify RAD's 

determination in this matter. and to the extent RAD's determination is contrary to the policy clearly 

-,<!! fonh in the Commission's rcgulawry approach lO this issue. this maner is ··novel. complex. or 

pen a ins to an unsettled question of law ... Se<! iJ. 

I 

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Wiley 

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December 23. :20 14 

Page 2 

--explicit[lyf pw\ ide an accounting method for this practice that allows authorized 

committees to maintain a ··recorded cash on hand·· balance that. prior to the 

primary. is .. at all times equal to or in excess of the sum of general election 

contributions recei\'ed less the sum o(general election disbursements made... II 

C.F.R. ~ I 09.2(e)(2) (emphasis added). The Committee abided by this regulatory 

allowance. It identified a limited number of expenses that were clearly for the 

general c:lection. deducted those amounts from general ekction contributions. and 

refunded the remaining net amount of its general election contributions to donors. 

The Commission should instruct R!\D that no further actio11 is required and to 

accept the Committee's termination filing. 

FACTS 

Cantor for Congress is the principal campaign committee of former Represcntati\'e 

Eric Cantor. Prior to Representatiw Cantor's June 10.2014 primary. the 

Committee had accepted S 1.817.3 75 in contributions designated for the 2014 

general election. The Committee establish~d separate records for all contributions 

it received for the primary and general elections. and its recorded cash on hand was 

--at all times e4ual to or in excess of the sum of general election contributions 

recei\ed lcs::, the sum of general election disbursements made ... At no point did the 

Committcc usc an) contributions dcsignatl:!d for the general election for any 

1..'\ pcnses related to the primary election . 

. \tter the primary. Representative Cantor was not a candidnte in the general 

ckction. Accordingly. the Committee began winding down and making 

anangements to terminate. First. the Committee identified all outstanding primary 

ekction bills to be paid with primary election contributions. It then obtained 

written rcdesignations and reattributions from general election contributors in the 

amount of $93.550 to be used to settle its primary election obligations. This 

decreased the amount of the Committee· s general election contributions to 

$1.7:?3.825. 

:\ext. the Committee identified the following limited number of disbursements 

made prior to the primary election that \\erc indisputably general election expenses: 

(I) $116.090 for commissions paid to commercial fundraiscrs specifically for 

general election contributions: and 

ATTACHMENT I Pa~e _ J.. ·---:(\.~-' - O.c "-~-<-. __ 
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l·ederal Election Commission 

December 23. 2014 

Page 3 

r 2) $113.846.75 in administrative expenses that were retuined by joint fundraising 

committees-- and never in the Committee's possession- to colkct general election 

contributions on behalf of the Committee. 

The Committee deducted this $229.936.75 .. sum of general election disbursements 

made·· from its remaining$ L 723.825 ··sum of general election contributions 

received" to determine that it must refund net \!.Cneral election contributions of 

S 1.493.888.25. The Committee then processed those refunds. 3 

fhe Committee reported all of th~:se transactions on its .I uly and Cktober 20 1-+ 

quarter!~ reports. 

Un October 1. 20 I ..f. thl..' Committee received a Request for Additional Information 

(""RFAI"") from ~v1r. Brudky 'v1atheson ofRAD regarding the Committee's July 

1 quart~.:rly report. The RFAl stated. in n:lcvant part: 

Whik it is pennissible for a person to make a contribution for the 

general election prior to the primary election. the recipient 

committee must employ an acceptable accounting method to 

distinguish hen,·een primary and general election contributions. 

(II CFR § 1 02.9(e)) This general election amount must be 

maintained in the committee's account. 

Since the candidate will not participate in the general clcction. any 

contrihution received for the general election must be returned to 

the donors or redesignated to the primary if your committee has net 

debts outstanding for the primary election. 

The letter concluded: 

An) subsequent report(s) filed with the Commission must disclose 

the refund or redesignation of any general election contribution. 

The exact anwunts refunded to contributor~ depentkd ''n whether their g.eneral election 

c,lntributi(lllS ''ere subject to the ab<)\e-described commission~ or joint fundrai~ing committe.: 

e\pen~6. If the~ \\ere. then each refunded contribution was reduced b: the amount of the 

C<)mmission or expense paid for that comribution. All other general election contribution~ \\t:re 

ret'urH.led with no deduction for general election expens.:s. 

A'l"l'ACHMENT 

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Federal Election Commission 

December 23.2014 

Page 4 

Refunds or redesignations must be done within 60 days after the 

2014 Primary Election. 

Although the Commission may take further legal action. your 

prompt action to refund these contributions \viii be taken into 

consideration. 

The Committee provided the follo\:ving timely response on October I 5. 2014: 

"Cant or for Congress has refunded and/or redesignateJ all contributions recei \ eJ 

for the 2014 General election. All refunds and! or redesignations were completed 

\\ithin 60 da~s ofthe Primary election (by August 9. 2014)."~ 

On October 28. 2014. the Committee filed its termination report.h On November 

I 0. 2014. counsel for the Committee participated in a conference call with ;-vtr. 

\latheson. during \\hich RAD questioned why the Committee did not refund the 

'5229.936.75 that the Committee had im:urred for general election expenses. In this 

and subsequent calls with :'vlr. tv1atheson. the Committee's l:ounsel explained that 

the Commission's regulations do not require the Committee to maintain or. 

therefore. refund any portion of a general election contribution used to pay a 

general election expense. 

On l\iovembcr 13.2014. the Committee received another RFAI informing the 

Committee. among other things. that it could not terminate until ··outstanding issues 

previously cited in a lt:tter referencing the 2014 July Quarterly Report" have been 

resolved. 1 

On December 5. 2014. RAD notified the Committcc·s counsel ofR.AD's final 

detennination and OGC s concurrence- which .\Ir. Matheson read to the 

Committee's counsel ovcr the telephone- that the $229,936.75 in gcneral election 

expenses should have been refunded. 

' ., h~ Committee·, responso: i~ a\ailable at 

t: t t p~n ~~, '_\: _g L.!<;.'~ . f e<;_g_tl_\..Jl.clf]_(! 3_1:12 2'S 2 4 _9_7(lj H~l_7Ji~J.2]1Ji . p d f. 

rhe Commitkl··, termination r-:port is available at 

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ATTACHMENT ___ ...., 

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Wiley 

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federal Election Commission 

Dt:cembcr 23. 201-+ 

Page 5 

THE LAW 

The Commission has long recognized that a candidate's authorized committee may 

m:cept contributions for use in a general election prior to a candidate's primary 

election. As e\plained in the Commission's regulations: 

(I) If the candidate. or his or her authorized committee(s). recein~s 

contributions that are designated lor use in connection \\ith the 

general election pursuant to 11 CFR 1 10.1 (b) prior to the date of 

the primary election. such candidate or such committee(s) shall use 

an acceptable accounting method to distinguish between 

contributions receiYed tor the primary dection and contributions 

recei\ ed for the general election. Acceptable accounting methods 

include. but are not limited to: (i) The designation of separate 

accounts for each election. caucus or convention: or (ii) The 

establishment of separate books and records for each election ... 

(:;) If a candidate is not a candidate in the general election. any 

contributions made lor the general election shall be refunded to the 

contributors. redesignated in accordance with 11 CFR 110.1(b)(5) 

or 1 I 0.2( b)( 5 ). or rcattributcd in nccordanc~ with II CFR 

II 0.1 (k )(3 ). as appropriak. 

II C.F.R. ~ 1 09.2(e). 

In 19S6. the Commission began permitting authorized committees to usc 

"contributions designated tor the genera! election to make C\penditures. prior to the 

primary election. exclusively lor the purpose of influencing the prospective general 

election ...... AO 1986-17 (Green) at-+: see also AO 1992-15 (Russo) at n.5. 

Howen~r. the Commission noted that. regardless of "whether or not laJ committee 

has made any expenditure from these [general election] contributions," the 

committee "should make a full refund to those contributors who have made their 

aggregate allowable cnntribution to [the committeeJ with respect to the primary 

election." ld 

In 2002. the Commission amended its regulations to codify the requirements that 

apply when an authorized committee uses general election contributions tor general 

election expenses Importantly. the Commission altered the approach .;;ugge.;;ted hy 

the above-described advisory opinions. Previously. an authorized committee would 

A'fTACHMENT 

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have been required to maintain additional funds- to cover those it disbursed t()r 

general election expenses -to eftect the full general election contribution refunds 

required by those advisory opinions. The new regulation dispensed with that 

obligation. stating: 

Regardless of the [accounting] method used .... an authorized 

committee· s records must demonstrate thaL prior to the primary 

election. recorded cash on hand was at all times equal to or in 

excess of the sum ofgeneral election comrihurion.\ receired less 

rhc sum o(gcncru! election dishursemenrs made. 

11 C.F.R. ~ 102.9(e)(2) {l:mphasis added). 

I he Commission explained that the new regulation .. makes the standard for 

acceptable accounting methods explicit by stating that the committee· s records must 

demonstrate that. prior to the primary election. recorded cash on hand \Vas at all 

times equal to or in excess of the sum of general ekction contributions re<.:eived less 

the sum of general election disbursements made:· Fed. Election Comm ·n. 

Explanation and Justification for Final Rules on Contribution Limitations and 

Prohibitions (hereinafier .. 2002 E&J'"). 67 Fed. Reg. 69928, 699:29 (Nov. 19. :2002) 

(emphasis added). The Commission subsequently explained that the regulation's 

~)riginal purpose- which had been articulated in Advisory Opinion 1992-15 

(Russo) --continues to be served by the ne\\ regulation. stating: .. These regulations 

arc designed to ensure that candidates in !this I situation do not use general election 

contributions for the primary election."' 7V1l.'R 6057 (l lorn). F&LA at 3. 

:\) The Commission· s Re!!.ulations Permit an Authorized Committee to Make 

General Election Expenditures Prior to the Primarv. and Do Not Require 

Refunds of Such Amounts. 

The Commission's 2002 rulemaking was a critical change and maturation in the 

.1gency's approach to how authorized committees are required to account for and 

maintain general election contributions. The Commission made explicit an 

allowance permitting authorized committees to account f()f general election 

contributions by demonstrating that "recorded cash on hand was at all times equal 

to or in excess of the sum of general election contributions received less the sum (~l 

general eleclion disbursements made:· II C.F.R. ~ 102.9(c)(2) (emphasis added) . 

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December 23. 2014 

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Thus, the Commission promulgated a rule of general applicability allowing 

authorized committees to maintain suflicient general election funds of only the net 

amount- after general election expenses arc subtracted-· of the general election 

contributions they rccei\ ed. 

rherefore. an authorized committee can unly be required to refund that same net 

amount. That is the plain meaning and application or the regulation which 

aftirmatively pcm1its and comemplatcs that an authorized committee will spend 

general ekction contributions on general ekction expenses. Accordingly. an 

authorized committee need only maintain general election contributions sufficient 

w refund the remaining balance. 

!'his conclusinn is apparent from the specitic language of the regulation itself. the 

purpose the regulation is meant to serve, and the regulation's proper tit within the 

Commission· s regulatory framev\ork. First. the regulation· s allowance that an 

authorized committee need only maintain the net amount of its general election 

contributions includes no limits or qualifications. The regulation applies "at all 

times" and does not. for example. car\'e out an exclusion for general election 

X n.~funds. 

Second. the Commission's stated purpose for the regulation to ensure that 

authorized committees "do not usc general election contributions for the primary 

election ... Ml'R 6057 (Horn). F&I.A at 3- is fully satis1icd here. It is undisputed 

that the Committee· s general election contributions were used for general election 

expenses. not l~H· primar~ election expenses. Therefore. the Committee is free to 

refund "the sum of general election contributions received less the sum of general 

dcction disbursements made" as stated in II C.F.R. ~ I 02.9(e)(2). 

Third. the regulation· s aftimH:tti\e allowance permitting authorized committees to 

maintain only net general election contribution amounts is rendered meaningless if 

that allowance does not apply to general election contribution refunds. What 

' !lad the Commission intended to limit the allowance of II C.LR. ~ 102.9(e)(:2) so that it did not 

~tppl~ w refund~. it \\OUid have said so explicitly in order to mercome the regulation's plainly stated 

compr<.'iH.:nsi\1.: application. And it is no ..::..cusc LO sa~ that the Cclmmission may not have con~idcrcd 

the regulation·, ..:fleet on r..:funds when it promulgated this n~'' r~gulatorj allowanct•. At th..: ,amc 

t1tnc the Comm1~siun 11as promulgating the regulation at II C.F.R. ~ I02.9(e)(:2). it was 

,Jmultaneclusly addr..:ssing the gen..:ral election r~fund requirement now at ~ubparagraph ( ~ )( 3) 11 hich 

dlles not modity to Circumscribe the allo\vance of subparagraph (c )(2 ). S<!.: 2001 E&J. 6 7 Feel. Reg. 

at <>99:29. 

I ATTACHMENT·-~-. -·-

Page I _ of ,J __ \. . j 
Wiley 

Bf'HJ II P 

Federal Flection Commission 

December 23. 2014 

Page 8 

benefit would there be of maintaining only net general election contribution 

amounts if the gross amount must be refunded'? There \\ oLtld be none. An 

authorized committee would be forced to maintain gross general election 

contribution amounts to ensure sufficient funds to make general election refunds. 

This \\Ould nullify the effect of the regulation which. by its clear terms. permits 

authorized committees to maintain net general election contribution amounts. As 

with a statut..:. familiar rul..:s of interpretation instruct that a regulation should be 

construed in a manner that gi\ es it full effect and does not render it mere 

:,urplusage. See .1srorio Fed. .\m·ing.\ & /.oan.-1ss ·n \'. S'o/imino. 501 L'.S. 104. 112 

1 1991) ("But of course we construe statutes. where possible. so as to avoid 

rendering supcrtluous any parts thereof."). 

In sum. the Commission's regulatory allowance permits authorized committees to 

maintain and refund only the net amounts of their general election contributions. 

The terms of this allowance arc comprchensi\e and contain no exclusions. The 

fumlamental purpose sen ed by the regulation is consisknt with this allowance . 

. \nd to impose any qualifications. for refund or any other purpose. would nullify the 

:.1llowan-:c's cft~ct. 

B) The RAD and OGC Interpretation of the Regulation Fails to Recognize its 

Plain Sil.!.nili~:ance. 

'Joncthckss. RAD and OGC assert that the regulation requires an authorized 

committee to refund the gross amount of its general election contributions. They 

rely on Advisory Opinions 1986-1 7 (Green) and 199.2-15 (Russo) for the 

proposition that full refunds- induding the portions of general election 

contributions used to pay general election expenses-- are required when an 

authurizcd committee does not participate in a general election.') Their reliance on 

these ad\isory opinions is critically misplaced: these authorities pre-date the 2001 

promulgation of II C.F.R. § I 02.9(e)(2). As just explained. the Commission 

clarifted and altered the requirements of those ad\isory opinions to permit an 

authorized committee to maintain only net general election contributions. 

·· RAD <11H.l OGC emphasize the Commission· s statement in Advisory Opmion 1986-17 (Green) that 

th~: requester must mah.c a "full r.;ofund" of general election contributions should the candidate lose 

the primary. The Commissinn notabl) did not repeat that language in Advisory Opinion 1992-15 

\Russo). but simply stated that a conunittet: must "make refunds of ge-neral election contributions" 

anu· a primary loss. 

AT'l'ACH.MENT _ _j_ ___ _ 

Page _ ..... £,.. __ of._...w.--
Federal Election Commission 

December 23,2014 

Page 9 

RAD and O(i{' attempt to downplay the significance of this development. Mr 

\;lathcson explained over the phone that the Commission· s promulgation of 11 

C.F.R. ~ 102.9(c)(2) did not affect Advisory Opinions 1986-17 (Green) and 1992-

15 (Russo). Rather, the 2002 rulemaking merely created a new accounting method 

intended as an additional safeguard against the use of general election contributions 

for primary election expenses. These claims do not withstand scrutiny. 

First. 11 C.F.R. ~ 1 02.9(c)(2)'s new accounting method included a major 

;;ubstantin~ change to the amount of general election funds that an authorized 

..:ommitke is required to maintain. The Commission made it "explicit"- to use the 

Commission's own word- that an authorized committee did not ha\e to maintain 

general election funds that were used for general election expenses and, therefore. 

could be under IlL) obligation to refund those amounts. Any requirement in the 

advisory opinions that an authorized committee must make those refunds no longer 

applied once the Commission promulgated II C.F.R. ~ 102.9(e)(2). 10 

Second. the RAD and OGC characterization of 11 C.F.R. ~ I09.2(e)(2) as an 

additional safeguard against an authorized committee's inappropriate use of general 

ckction contributions is specious. lfthat were the Commission's intent, it would 

have written the regulation to require that cash on hand equal the xross amount of 

the general cb.:tion contributions. But that is not \'ohat the regulation says. and the 

Commission should be \Vary of a proffered interpretation that cont1icts with the 

regulation's plain meaning and can be justified only as "prophylaxis-uponFun!H:nnorc. providing grcato:r 1\o:ight to thes~ ad\ isory opinions than to the regulation inverts th~ 

Drdo:r of the w~ight ofth~ authoriti~s. A regulation validly promulgated by th~ Commission must 

uli.c pr~cedenc~ 0\er the Commission's advisory opinions. Set: 52 L.S.C. ~ 30108(b) (a "rule ofla>' 

11hich is not stated in this Act or in chapter 95 or chapt~r 96 of title 26 may be initially proposed by 

th~ Commission only as a rule or regulation pursuant to procedures cstabl ished in section [ 30 I II] of 

thi~ titk." and not as an advisory opinion). In addition. advisory opinions are intended to be u~ed 

,mly do:f~nsiwly a-; shields against liability for parties who rei) on them. and not as authorities to b<" 

u>~o:d oftl:nsivcl) b) th<" Commission against regulat~d parties. s·ee id. ~ 30 I OS( c). This is even more 

"l \\hen analyzing an advisor) opinion against a pennissi\i.: allowanco: contained in a subsequently 

1ssued regulation. 

ATTACHMENT,--~-------­

Page _ _,C!..___ of ''-~1,,..... _..,J 
Wile'' i ) ., ' \f")_~l l.LP 

Federal Election Commission 

Lkcember 23. 2014 

Page I 0 

prophylaxis·· incompatible with campaign tinance regulation. Sec: .\kCwchc:on , .. 

/· '/"(' ) -7) l' ) ... 

s ('"~OJ -'- : . _ _ 't .l ). s I' 1 p op. at _, ~., _,. II 

The only authority cited by RAD and OGC that post-dates the promulgation of 1 I 

C.F.R. ~ 109.2(e)(2) is MUR 6057 (Horn). which contirms the regulation's 

fundamental purpose and basic application. hut is otherwise inapposite. As stated 

there. 11 C.F.R. ~ 109.2(e)(2) is ··designeJ to ensure that candidates in !this] 

situation do not use general election contributions for the primary election." F&LA 

at 3. An authorized committee that pays general eledion expenses vvith general 

election contributions and then refunds the net amount of its general election 

contributions is operating entirely consistent \\ith this purpose. In addition. the 

Commission in ivlUR 6057 (Horn) restated the rule that "should the candidate not 

win the primary election. the committee must have enough cash Lm hand to refund 

all general election contributions ... /d. That statement merely n:pt:ats the 

uncontroversial requirement at 1 1 C.F.R. ~ I 02.9( e )(Y) and ~ II 0.1 (b)( 3 )( i)(C) that 

t:r(;'l'y general election contribution must be refunded. The amount of the general 

election contribution refunds- to the extent any general election expenses have 

been incurred is dictated by II C.F.R. ~ 109.:2(e)(2) and its specific allo\\ance 

permitting an authorized committee to maintain and. therefore. refund only the net 

amoum of its general election contributions. 

But aside from these statements. the MCR was not addressing the question at issue 

here. The candidate there was participating in the general election and was not 

required to make any general election contribution refunds. Therefore. the 

Commission did not address what the general election refund amounts might 

othemisc be. Accordingly. the \1UR offers no authority on that point. 

CONCLl'SIOl" 

fhe plain language of II C.F.R. s 102.9(e)(2) permits an authorized committet: to 

maintain only the net amount of its general election contributions for refund or any 

l)ther purposes. That is what the Committee did. Therefore. the Commission 

should instruct RAD that the Committee ·s refund of all general election 

: l The Commission's restrictions at what are nm\ II CF.R. ~ I 09.2 (e)( I) and (3) already 

prohibited the use of general election funds for primary c:-.pcnscs and predated the 2002 rulemaking. 

hut were I"'~' iow,l) lllllnhered a~ suh-.ections (e)( I) and (2 ). S'c•e :\0 1992-15 (Russo) at 2 ("The'>e 

regulations are des1gned to ensure that candidate~ ... do not use general election contributions for 

the primary ekction."). 

ATTACHMENT. _ __:. ___ .,. 

Page I 0 0 f \ ! ~ '--"-~

·'""~' 
Wiley I~( j {I 

.lP 

Federal Election Commission 

D~:c~:mber 23. :!Ol.f 

Page 11 

contributions. less disbursements made for general election expenses, is consistent 

with the Cornmission·s regulations and accept the Committee·s termination report. 

Sincerely. 

I 

I 

. n Witold Baran 

Caleb P. Burns 

Eric \\"ang 

A.T'I'ACHl~EN't ___ .:...-.--

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