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0-Hh Con;:re$,· 1st ~"~~ion - - - - · - - - Ilonl'-e nocu;.,\ .. J,i. .. ~o. !U-313 -

. OFFICE ACCOt7XTS 

·co)I)IUNIC.ATION' 

FROlI. 

THE C~AIR.)I.AX, 

.· FEDER .. AL ELECTION .coir~irsSION 

TRANSll!Trr.\G' 

.A PROPOSED REGrJ...ATIOX PERT.\IXIXG TO COXTRIRt:­

TIOXS TO • .\XD EXl,EXDITrRES }"ROll OFFICE. ACCOt:XTS 

0}" .ALL }"EDER.\1., ..\XD STATE iXCt:llBEXT OFFICEHOLDEilS, P'GRSt:AXT TO SECTIOX 316(c) OF THE FEDER.\L 

ELECTJOX C..\lIP ..\IGX ACT OF W71, AS • .\lIEXDED 

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Dt:l'J-:lIDEn 3, 10,;:i.-Referrecl to the Committee -on House .Atlministrntion · 

and ortleretl to be printed 

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u!s. GOVERN)IENT PRL~TING OFFICE . 

. 5':-011 WASHINGTON : 19i5 · 
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-ATT.ACHlfENT. B 

E:s:PL.:\X • .\TIOX · AXD J"CSTIFIC.ATIOX OF P.~RT 113-0FFICE ...\.cco-cxTs; 

· E:s:cESs CAMP .. \IG~ Fuxris 

. . This regulation is a modificntion of the re~ulations on the same subject. which were pre\1ously submitted to tlle Congress 011 July 30, 

. _ 19~5-and September SO, 1975. The first submitted version of this ~egu- · 

lat101!- responded ~o the requests of 221\Iembers_ of C~ngress for gu1d- · . ance m ,the nrea of office acc~nnts nncl ·excess cnmpa1gn fun<ls. In the 

course of tl1e public ·comment period fqllowing publicntion of the 

July 80 regulation in t.11e Federal Register on August 5, 197_5, commu~ 

nica.tfons were received by t.he · Conunission from interested and/ or 

nff'ected persons, nnd r~uests were made to the Commission· to hold 

open hen.rings on the sub3ect matter of the regulation. · 

The Commission responded to these requests and held two dn.ys of ·:· . ··. 

public l1earings at the United States Court of Claims on September 16 

nucl 17, 1965. The Commission found thn.t testimony submitted at the 

hen.rings was most instructi,e and suggested revisions which were incorporated into the regulation submitted to the Congress on Septem- · ber 30, 1975. These regulations were also the subject of public hearings 

before t.he · Senate Committee· on Rules and Administration on Octobe.r 2, 1975, n.nd public clebn.te on the Senate floor when they were 

consiclerecl on October 8, 1975. . . 'I11e present regulntion reflects modifications wl1ich were approved · 

by the Commission inn, unn.nimous vote (6-10) in their public meeting 

.oi1 Thursdn.y, November 20, 19i5. These moclificntions .. which have been 

• mncle by the Commission, reflect the guidelines which were e:s:pressed 

-in tl1e report of the Sennte Committee on Rules and Administration 

( Senate Report X o. 94-400) ~ in the course of Senate debate. on . Octohl'r 8 .. 1975 (121 Cong. Rec. S17872), nnd in public· comments which 

hnYe been recei,ed sincethnt time. · Four si~nificnnt chnnges bn.Ye been ma.de in the present reaulntion : 

( 1). ~he co,·ernge of this· regulntion hns been · extended to include all · 

V · Federal officel1olders;. (2). the regulation hns nlso been equn.lized nnd 

stren!.rthened to brim? stnte nnd local ofliceholclers under similnr cov- ._ -

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. erage nt H1e poii}t whereU1ey. become···a cn.ndidn.te.for Federal office;·:: , 

· · ( 3) the revised rcgttl~tion expressly provides that any persona.I bank' .. account of nn. officeholder, such as· one which· is used for household. 

ancl personal expenses, and which is not us('d prhlcipnlly to support the. 

officeholcler~s legislative or campaign activities, is not an office account, . and consequently is not i·cnche<l by this regulation; and ( 4) all funds , · ·. which ·are expended from an office nccounfin the last calendar· y-ear of· 

an officeholcler~s term will be cori~i~lerecl expenditures under the Federal Election Campaign Act of 1971; ·as·· a.mended (FECA, as 

amenclec.1), and be subject to limitations. 

. . As in prcYions proposed regn1ntions on this subject, it should be 

·.'noted· thnt. nll leirislat.frely approprint(\d f11mls of an officeholder arc , . not considere(l.within the scope of this rcgulntion. In nclclition, those'. .. 

funds which are cont.ribnted to a so-('nl1ecl '"franking acconnt~' nre . . exempted from this regulation by 30 u.s.c .. § 8210, except tl1nt ·con-

. tributions to, and expei1ditures from, ,an ncconnt used exclusively for 

mntcrials sent.1inder the frnnk are reporta9le. : .• · . · . · ·. · 

. Other proYisions of this regulntion proYide for full disc.Josnrc and 

reporting of all contribution~ to_ and .n11 expcnclitnrcs from .. nn office · nccouut during the entire term of n coYered officehohler: Furthermore, · 

. all contributions will be subject to the. limitntions of the -FEC.A, .as_ .,. . r , .. nnJenclecl, tl~roughont tl1e :wlw1~. term of. an:r officeholcl~r ,cQr~1.·e~tby ·, • 

I \ ... t.h1s regnlnhon. Although eYery ~;xpenchtnm frqm nn offic~. a.cconnt ·. ..•. during the last calendar year_ of· an officeholcler~s term will be com;;id- · 

· ered subject to the limitations of the FECA, as ri.menclecl, it)1!~i1ld be.-· .. 

emphasized tJ1nt. any expcnclitm~e made from an office nccount prior to . the Jnst calendar year of the officel10lcler's term is a.lso subject, ui1cler 

the. FEC.A, as mllende~l, and this regulation~ to a: factual reYie,...- by·· 

the Commission ,,hen c.ha.l]enged. As ,,;it.h an)·· otl1er such complaint 

. brou!!'ht to the. attention of the Commission_ the final determination 

wl1et'her a pnrticnlnr transaction is n campnign-re1ntecl expenditure,. 

and subject t.o the limits of the FECA, ns nmen<.lcd, will be bnsecl upon .. , the sp<.>cific facts pertaining to that particular expenditure. ·. · ·. 

· 1V''J1en this regnlat~on becomes efl'ecth·r ... the 1)l'actical effect in 1Di6 . 

wi11 he thnt. a11 cnnchclates for Federal office ''"' 10 hnYc office accounts · which nrc. funded out of prh·nte contributfons "ill be treated in the 

snmc mnnner. In 1076, all contributions to, nncl nll expenditures from, . an office acconnt. will be subject to the limitations of tl1e FEC.A,- as 

nmendec1, and will. be fully disclosed in ~. regular public manner. 

Si::cuox-n-r-SEc-nox Ax.\J..Ys·1s · 

: § 113.1 · Definitions~ . . .· . . . . .. . . . . . . . 

. (b) . Fwul.'J · contributed.-This definition is siinilar to· the one for 

''contribution~~ in th~ Feclernl. Election Caii1paign .Act of 1071, ns, · amended. '·Funds contributecP~ nre used f_or the purpose of supporting 

tl1e neth-itics of n. holder of Federal office and simultnneons]y may be . m;ecl for the purpose of influencing the nominntjon for election or elec- ... · tion of nnv })Ci'801l to Federal office. See 2 u~s.c. § -:1,;11 ( e) (1) (.A). . . · ( c) on,:;,r, aaount.-Exnmples of expenditnre:=; which ,rnnltl be made· 

. from an ·oJlicc arconnt nre traY()l expensesnnd telephone onr :md abo,·c 

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appropriated a11owanccs nnd expenditures for printing nonfrankablc ... 

matter. Ofl1ce nccounts of the President, Vice-President, I-louse, Senate . and Stnte officeholders are ~reated equitably. 

§ 113.2 · Oonfributions-Inte1"/Yietations of J:im.itations. 

· Tl1e Commission has made an interpretation tl1at the. contribution 

. limitations of the FECA, as amended, will appply to funds contributed 

. to nn office account for the Federal officeholder's entire term. 

The basis for this interpretation is as follows: · . (n) Tl1e Commission's hearillgs on office accounts were marked by 

unanimous agreement on the point that corporate treasuries should be 

prohibited. (Transcript at pp. 52, 67, 00, 15i, 181, 182, 102, 103.) Since 

the regulation treats some expenditures from an office account as 

campnign-relatccl ancl some as not, it is wholly possible that funds so · 

contributed may be used to influence an election. To clearly segregate 

corporate and union funds from these potentially cnmpaign-relntccl ·. 

uses, contributions from corporate and union treasuries nre prohibited. 

Similarly, government contractors and foreign mttionals ~re not per- mitted to contribute funds to office accounts. . . 

. (b) The limitations on contributions contained in the Fed~ral Elec~ . tion Campaign Act of 1971, ns .amended, are applied to all contribu_- . 

tions to an office account. Since it is possible that office ncconnts willuc · used for campaign purposes durin()" nn officeholcler·s term, contriuu'­

tions to such an account should pe sttl>ject to the approprfote campaign 

limitations throughout· the· e.nlire term. :Moreover, under recent Internal Revenue Code ·amendments in the Upholstery Regulntor Act, 

contributions to office accounts are trented as political contributions. 

The lea.-islath·c history of tl1is Act reflects the iritimnte relntionship · betweeii office funds nncl campaign funds. The conference rt'port to . · 

the Act. states: "Generally newsetter ~ommittecs ( nncl sepnrnte fu.n~ls) 

nre to be treated for tn.x purposes 1n the same mnnneras poht1rnl .· cnmpnian committees/' JI. Rept. 03-1642, 93rd Cong., 2nd 8ess. 22. · Dnrhur .... the clcbnte on this legislation .. se,·ernl :Members further noted 

the siinilnrity between these two types of funds: 

. :\Ir. ScuxEF.UF.LI. Another change of importanre wcmld ; 

nrnke indh·idunl contrib,~tions to candi<lntes for public oflice 

"·hich nre nsed for newsletters to be eligible for the abon~­

mentionccl income tnx credit for deductions. 

)Ir. Uu.:\f.u;.· :\Ir. Speakerthese proyisionsplarc in the.lnw. 

the procrclures mitlining how we can use funds we ha Ye collectc<l .f oJ' vol {tical 7Jur1Jose:'l, f 01~ 11eu·.!letter . .1mrposrs. ,Ye 

think this n,·01cls the necessity for hanng a. separate ncrn·sfott()r fund fol; ~fombcrs who hnYC a. C'Olltinnin,Q." C':Unpni~n 

.fnnd ( rmph:1sis n<lded). ( Oo·ngrN1.~lo-nalReco1'<l, daily (.\dition 

Deccml,er 20, 1!.lT 4,}~nge I-L 1250,.) 

§ 1 V1.:J E;i•pc Jl(l itm·e.j-J.nterprctatio·m1 of L-imitat lonrs. 

The Commission has mncle the following interprctntimis of the 

·.• . n pplicntion of the FEC ... -\.~ ns nmencled, to expcnclitnres from oflice 

nccounts: 

. (a) ...-\.11 funds <'Xp<1nclNlfrom nn office nrcm1nt cluring- the cnl<1nclnr · 

y<'ar in w]1ieh a Federal oflicchohler stnmls :fo1: e1l'ction~ i.e.~. dnring 

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• t!1e Inst year of the term, n1;e· ti~en~ed as expenditures subject to limita- tions. · · . · · · 

(b) All funds expended from a State or local-officeholder's office account are treated as expenditures during the calencfa~, year of the 

election in wllich the officeholder is seekin~ Federal office. 

The basis for these inter1wetations is ns folJows: .. · 

_The Commission, purs~mpt to _its duty to formulnte generaIJ· )o1icy 

with respect to the aclnmustration of the FECA, as amende , [see 

2 U.S.C. § 437cl (n.) (O) ], and to its authority under 2 U.S.C. § 4~17<1 

(a) (8), has determined that expenditures made during this period · should be presumed to be campnign-rehtted. This cleterminnt~on is 

bnsed on comments recefred from the public, as well ns the testimony 

submitted at. the l1enrings held on September 16th and 17th, 1075, by 

· the Feclern.J Election Commission. A comparable treatment of .such 

expenditures during such a l)resumptive period can be fon11Cl in 2 

. r~s.C. ~ 434 ( d) wl1ere recordmg Studio SerYices· nre not e~cmpt from 

the F.EC...A. its. amended, during the lnst calenclar year of nn office- .holcler~s term. . . _j . On Tuescfay, September 16; 1075, at the hearing- held bj .. the Com­ . I 

mission on this regulation, testimony was recefred on the s,1hject of i 

l · wl1en an expendit~1re ·from an office account sh01Jld be considered 

,·.-· ~ political: . . . . · . . . . -

·. Senator JouxsTox. Section 430(a), which is the amendment to· this Act, proYicles that. it may be used ~o <l:efray any 

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I · ordinary and necessary expenses incurred by lum m conneci · 

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t.ion with his duties as n holiler of federal office. I T11nt, nccorcling to the Senate report, is furthermodifiecl 

bs this rule, which is eYen more restrict-ive than ordirinry and ! necessnry expenses as a holder of federnl office. . · · I 

I think it is the role of this Commission to define. ·when ! politics start and when duties of a feclernl office end. . · And in a broad sense .. anything a Senator does or doesn~t do 

is politicnl. If he doesn't go home for the Christmas holidays, 

thnf's politicn1. I mean it has political implications. You 

rnn't ~neeze without it. bein~ political. · · But bn~icallv, nncl I think the thrust of the .A.ct .. the intent 

of the Act-t1ie clC'bnte is recorded in the Congressional Rec-. 

ord-distin!ruishes 'the. fnct that there nre hro cliff erent 

. things~. 'nl~lio11gh they ~>Verlap; tl!at expenses of the oftlceancl ' 

cnmpnignmg are. tw? chfferent thmgs.. . ... ·. · ":rhat we. are snymg to the Comm1ss1on 1s that the Commission oug-11t to nclopt a rule that. reali~tically cli~tinguishes. · Senn~or St~Yens sn~·s you ought to say a.nythmg spe!1t before': nn elect10n yen1\ or a year before ·the election, 1s not· 

politiral: anYthina in nn elect.ion. year is political. · The r11lc we 111:!red bnck in June. I t.11ink it was-the. 

Drmocrnt.ic rommittc>C'-is that this Commission ndopt. a rule . of pre1snmption_ so tlint. anyt.hintr spent n.fter a c.ertnin date 

would 1m nr(\sm11ecl to be political.. andanything spent. before 

that wonld he prc>snnwd not to be political. 

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There is n difference. It is hnrd to define .. A.'nd thnt·s the 

reason we put the rule-ma.king power· into the law. 

*·· .•. . ·* * * 

1'Ir. ST.AEBLEil. You are suggesting the· rcasoiiableness of 

limiting it to the last year, ancl presumably you would limit 

it to the period :when your opponent was a candidate, ai1cl · so your opponent was under some limitation. . . 

Senator STEYEXS. Yes, we faced this problem. Incidcnt:11ly, 

t]m one precedent in the .A.ct is on the accounts tht1t we mnin- . tnin to pny tl1c expenses of ii1cnmbent Senators in the Senate Radio aml TeleYision Studio; and we specificnllY proYiclecl in this lnw thnt for the first fh-e years those are not · 

chargeable ngninst the limitations; as you know. 

* * * * * . . )Ir. lI.Anms. I t}1ink the Se11ators haYe mncle a Ycry vnlim-· 

· ble si1ggest.ioh in su!?gesting. this one-year limit; Sennt9r · 

Stc,·ens indicated~ ho,,eYer, there would be certain fyp~s of · expenditures in the period before one year which wonlcl. 

re~lly be politi_cal expenditures attributable to the campnign 

ceilin!!s. 

Se~ntor STEYEXS .. ,Ye wnnt -merely n })resumption! )Ir. 

liarr1s, thnt expenses from th(f nccount n.re presumed not to 

be political, but if they nre political you~Ye got to charge 

them. . ·· ., · ·. · 

·* * * * . * . ·· 2 U.S.C. ·§ 434 ( '1} proYid('S ·further_ rntionale for the interpretn­

.. tion t]int exp~nditm'l'S mncle during the calendar of :m election should 

count towards the limitntions. Thnt section proYides: 

ill cmber.s _of Oongr(}.'JS, 'reporting exemption~ This section 

does not· l'('qnire · n · :\IC'mber of the Congi·ess to report~. ns 

contributions rN.·cin,cl or as expenclitur('S mncle~ the Yalue of 

photogrnphic. matting ... or recording se1-Yircs :furnished to 

liim UY the Sennte Recorclin!! Studio,. the Honse Recofrlin~ 

Studio~ or by n~1 indidclunl ~hose pny is clisbursecl by thr ' the Secretary of the Senate or the Clerk of the House of 

RcprC'scntatfres nncl who furnishes such serdces ns his primnry duty ns nn emplo~·ee of the Sennte or I-Ionse of Repr<'- · se.ntnth·es, or if such scr,·ices were paid for b~· the Republic:m or Democrntic Scnatorinl . Campnign Com1nittee, the 

Demoeratic Xationnl Con!!ressjonnl CoinmittN' .. or the. X:1-

tion:11 TI(\p11bl irnn Cong-ressionn l Committee.. This subsection . docs not nppl~· to ~nch recording sen·iccs furnished during . the cnlent1nr YNn· Le-fore the venr in "·hich the )Iember"s 

: tcri11 expires. · . · ··. · . .. . . . · · 

~ 113.4 · Depo8it.s of Funds Oontribute<l to a Federal 01~·staft~ Office~ · · /,older. · · .· . . . . · . ·. 

Thi8 Sl'etion proYillPS for th(\ deposit o-f ,n n · fnnds C'ontribnt('d to nn 

oflicehohlr•r into nny ofthrrc sPp:regntetl ncr91111ts: (1) principn 1 cam-
\ c· .· ... .,, ....... 

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pnign c~mmittec, (2) offi~c,. and (3). § 3210. or so.:cn11ed ''frnnking 

acc61mt .·' .An officeholder 1s not rcqmred to set up any of these nc- . counts if he or she does 11ot·receh·e contributions or make expenclitt1rcs 

oYcr and nboYc nppropriuted n11owances. Further, e,·en jf nn olliccholcler receiYE>s contributions, to support his or her n~tiYitics ns a 

holder of such office, the officeholder need not-. neress:uily establish 

a principal cnmpnign committee. Instead~ nn ofliceholder mny haYe 

nn office ncconnt nnd not create a prindpnl campn.ign committee until 

required to do so by other proYisions of the FECA, as amenclccl. 

'§ 113.5 · E:ec:c.~.'J Oampa.ign Ji'wuls. 

If, after a. cnndidnfe for Federal Office, a Feclern 1 officcholcler, or n. 

treasurer of a principal cnmpnign committee cleterminlls there· is n 

surplus of cnmpnign receipts after meeting all debts ancl other obli­

~ntions~ the excess cnn be giYen to chnrits, trai1sfefred to nn oflicc 

n<:connt. or deposited in nn account to ·p:1y for the prepnrntion of 

franknble materials. For exnmp]e, if a successful candidate for the 

I-louse. of Representati.ves raises $100~000 in contributions for the gen-·""· 

_ernl election nncl ex1">encls only $60:-000, he or she hns $40~000 in excess 

cnmpnign fnncls. 9f this sum: only $10:-000 cnn be ~xpcncled out of nn . offiee account clnrmg the period bet.ween the elect.1011 ancl J nnunry 3 .. · of the·following y~a1-_ becam:e of the $70,000 expenditure limit·im­

. ' posed bv 18 u:s.C. § ·608. However, tl1e. remaining $30,000 cnil be 

. trunr-;f<'ri·ecl to. and·by. the ncconnt. which pays for the preparation of 

frnnknble materials without breaching the $70'.'000 expenditure limitation. The excess could· also be given to charity· without limit. It 

should be noted thnt. more thnn $10,000 could be deposited in the oflie~ · . account: howeYer, no more t.hnn $10,000 may be e~pended from this 

acr.onnt before .T:mnnry 3rd of the next. :rear. · ·· ·. • . · 

This section has.bee 0 n proposed purstiant to the Commission's rulemaking authority t1i1der 2 U.S.C. § 43!ln. . · . 

§ 113.6 · Re1Jorts of office accounts.. . · . · 

· Office accounts .which nre co,·ered by this regulation nrc reqnirecl to 

file quarterly reports of receipts nncl ~xpcnditures in the snme manner. · 

· ns political C'ommittees. "'."hen the officeholder has designated a prin- . cipnl cnmpni!!'n committee, the office account ,d11 file reports-"·ith the 

principal cnn1paign ·committee.If the officel1olclerlrns not designnted n 

principal campaign committee, the. office. account reports will be filed 

with the appropriate plnce clesignntecl in § 113.6 (~), depending on tlrn \. officeholder. · .. 2. U.S.C. 439a provides that contributions to a Federal officeholder 

for the purpose of supporting his or her activities as an officeholder 

nncl expenclitures thereof "sha.ll be fullv disclosed in accordnnce ,·dth 

rules promulgated by the Commission_;, Th~ Commission determined 

thnt office accounts mny be used for cnmpa1gn-relatecl purposes, nnd 

therefore, should file in the same mnnner nncl nt the snme time as political committees~ 

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§ 113.7 Reports of §113.4(c) accounts~ 

§ 113.4 ( c) accounts are usccl exclusively to pay for the :preparntion 

of frankable materials and nre not subject to the limitations of this . regulation. Reports of such accounts_ are required twice a year with 

either the Secretary of the Senate or the Clerk of the I-louse. These 

reports will include the saine type of information that is required in 

reports of political commit.tees. · · .·. .· · · . . 0. . 

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