Federal 

Election 

Commission

Annual Report 2006

Federal Election Commission 

Washington, DC 20463
Commissioners

Robert D. Lenhard, Chairman

David M. Mason, Vice Chairman

Hans A. von Spakovsky, Commissioner

Steven T. Walther, Commissioner

Ellen L. Weintraub, Commissioner

Statutory Officers

Patrina M. Clark, Staff Director

Thomasenia P. Duncan, General Counsel

Lynne A. McFarland, Inspector General

The Annual Report is prepared by the Office of Communications:

Gregory J. Scott, Assistant Staff Director, 

 Information Division

Amy L. Kort, Deputy Assistant Staff Director for Publications,

 Information Division

Amy E. Pike, Public Affairs Specialist, 

 Information Division

Chairman 

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

OFFICE OF THE CHAIRMAN

June 30, 2007

The President of the United States

Members of The United States Senate

Members of The United States House of Representatives

Dear Mr. President, Senators and Representatives:

We are pleased to submit for your information the 32nd Annual Report of the Federal 

Election Commission. The Annual Report 2006, which supplements the FEC’s Fiscal Year 

2006 Performance and Accountability Report, describes the Commission’s efforts in the 

last calendar year to enforce and defend the campaign finance law, monitor and disclose 

campaign finance activity and encourage voluntary compliance with the law through 

policy guidance and educational outreach programs.

Throughout the year, the Commission worked to make the agency more efficient and 

responsive to the needs of the public and the regulated community. As highlighted 

in this report, the FEC’s enforcement program reached a milestone in 2006 with the 

Commission’s negotiation of a record $6.2 million in civil penalties for violations involving 

significant legal issues. The Commission also continued its work to provide clear guidance 

to the regulated community with an ambitious schedule of rulemakings and advisory 

opinions and a number of policy statements intended to clarify the Commission’s position 

with regard to the enforcement of certain aspects of the law. The advisory opinion 

process itself offered a venue for innovation during the year, with the Commission’s 

introduction of a new, expedited process for responding to time-sensitive requests. As this 

report documents, the agency continues to demonstrate through all of its programs its 

commitment to providing the highest level of service to the electorate.

We are very pleased at this opportunity to share with all of our stakeholders our progress 

in 2006 and hope that you will find this annual report to be a useful summary of the 

Commission’s efforts to implement the Federal Election Campaign Act.

Respectfully,

Robert D. Lenhard
Table of Contents

Executive Summary 1

Enforcing the Law 1

Interpreting the Law and Encouraging Compliance 1

Defending the Law 1

Administering Public Funding 1

Agency Structure and Mission 3

Chapter One

Enforcing the Law 5

Standard Enforcement Process 5

Administrative Fine and Alternative 7

 Dispute Resolution Programs 

Audit 7

Chapter Two 

Interpreting the Law and Encouraging Compliance 9

Regulations 9

Advisory Opinions 10

Policy Initiatives 13

Disclosure, Review and Outreach 15

Chapter Three

Defending the Law 17

Litigation 17

Chapter Four

Presidential Public Funding 21
Charts and Tables

Agency Mission and Structure

Figure 1:

Organizational Structure of the FEC 4

Chapter One

Enforcing the Law

Figure 2: 5

Compliance fines quintupled from $1.5 million in 

FY02 to $5.56 million in FY06 

Figure 3: 6

Enforcement action cases opened from FY04 to FY06 

increased substantially 

Figure 4: 6

In FY06, OGC increased the number of cases closed 

by 37 percent over cases closed in FY02 

Figure 5: 8

Number of non-Presidential audits completed in 2006 
1

Executive Summary

Enforcing the Law

Perhaps the most noteworthy of the Federal Election Commission’s (FEC’s) accomplishments during 

2006 occurred in its enforcement of the Federal Election Campaign Act (the Act). The Commission closed 

a total of 315 enforcement cases and resolved its 

cases faster and more efficiently than ever. By year’s 

end, the Commission had negotiated a record $6.2 

million in civil penalties for violations that involved significant legal issues, including activity by certain Section 527 organizations and corporate contributions. 

See Chapter 1 for details.

Interpreting the Law and Encouraging 

Compliance

While its improvements in enforcement were certainly among the highlights of 2006, the Commission’s 

long-standing commitment to preventing violations 

by providing clear policy guidance, disclosure and 

educational outreach to the regulated community 

continued to be a source of pride for the agency as 

well. The Commission completed seven rulemakings 

addressing complex provisions of the Bipartisan 

Campaign Reform Act (BCRA), issued 29 advisory 

opinions (AOs) offering guidance on a variety of key 

issues, instituted an expedited process for handling 

time-sensitive AO requests and issued several policy 

statements to clarify the Commission’s intentions with 

respect to enforcing certain provisions of the law. 

In disclosure, the agency processed and reviewed 

78,000 financial disclosure filings comprising 3.9 million pages of data disclosing $2.7 billion in spending. 

While budgetary constraints limited the Commission’s 

educational outreach, the agency hosted seven 

compliance workshops, updated several brochures 

and published monthly supplements to its campaign 

guides as well as the Record newsletter. All of those 

publications and more was made available on the 

FEC’s web site, which averaged nearly 11,000 visitors a day during the 2006 election year, an increase 

of more than 3,500 over the 2005 non-election year 

average. The Commission’s efforts to encourage 

compliance are detailed in Chapter 2.

Defending the Law

Several of the rulemakings the Commission completed during 2006 arose from court decisions involving provisions of BCRA. While the Commission’s litigation staff successfully defended the vast majority o

the Commission’s regulations implementing the statute, courts required the agency to revise some rules 

and to provide additional rationale for others. Other 

significant 2006 court decisions involved political 

committee status, the ability of certain nonprofit corporations to finance electioneering communications 

and the constitutionality of the Millionaires’ Amendment. Details on these and other key cases appear in

Chapter 3.

Administering Public Funding

Having completed five of the 2004 Presidential audits during 2006, the Commission began to focus its 

attention on the public funding of the 2008 Presidential race. Lagging participation in the $3 tax checkoff 

that funds the program, combined with inflation-adjusted payments for the major party conventions and 

nominees and open races for the parties’ nominations, could result in a significant funding shortfall 

in 2008. That potential shortfall—among other factors—has led some candidates to consider bypassing the public funding system entirely. Historically, 

candidates have occasionally chosen not to accept 

primary matching funds but, to date, no major party 

nominee has ever rejected general election funding. 

The Commission has, for many years, recommended 

that Congress take action to ensure the solvency of 

the public funding program or to adopt an alternative 

approach to Presidential campaign financing. Without legislative action, the 2008 election could be the 

last for the existing system. The Commission’s 2006 

actions regarding public funding are summarized in 

Chapter 4.

f 
AGENCY STRUCTURE AND 3

MISSION 

Agency Structure and Mission

The FEC is the independent regulatory agency 

responsible for interpreting, administering, enforcing 

and defending the Federal Election Campaign Act 

(FECA or the Act). As part of this task, the Commission promulgates regulations implementing the Act’s 

requirements and issues advisory opinions (AOs) that 

respond to inquiries from those affected by the law. 

Additionally, the Commission has jurisdiction over the 

civil enforcement of the Act. Finally, Commission attorneys handle civil litigation arising out of any legal 

actions brought by or against the Commission. 

The agency is structured to foster bipartisan decision-making. Its work is directed by six Commissioners appointed by the President with the advice and 

consent of the Senate. By law, no more than three 

Commissioners can be members of the same political 

party. Each member serves a six-year term and two 

seats are subject to appointment every two years. 

The Commissioners meet regularly to formulate policy 

and to vote on significant legal and administrative 

matters. At least four votes are required for any official Commission action. The Commission’s balanced 

bipartisan structure leaves open the possibility of 

a tied vote. Because enforcement matters can only 

proceed with a majority vote, effective enforcement 

is, in part, dependent upon the Commission’s ability to reach a consensus. In the 11-year period from 

1995-2006, the Commission voted 8,127 times and 

reached a tie vote on enforcement matters only 105 

times, or 1 percent of overall votes for that period. In 

fact, the Commission unanimously approved action 

on 83 percent of enforcement actions considered 

during the period. 

The Office of the General Counsel and the Office 

of the Staff Director support the Commissioners in accomplishing the FEC’s mission.
4

FIGURE 1: 

Organizational Structure of the FEC

Agency Structure and Mission

The Commissioners

Thomasenia P. Duncan

General Counsel

Patrina M. Clark

Staff Director

Lynne A. McFarland

Inspector General

Vacant

Deputy General Counsel

Carolyn Mackey-Bryant

Equal Employment Opportunity

& Special Programs*

Jonathan Hatfield

Deputy Inspector General

John W. Sigmon

Deputy Staff Director

Management & Administration

John D. Gibson

Deputy Staff Director

Chief Compliance Officer

Arthur C. Forster

Deputy Staff Director

Chief Communications Officer

Erin D. Singshinsuk

Deputy Staff Director

Chief Financial Officer

Alec Palmer

Deputy Staff Director

Chief Information Officer

Lawrence Calvert Jr.

Acting Associate General Counsel

General Law & Advice

Anne Marie Terzaken

Acting Associate General Counsel

Enforcement

Rosemary C. Smith

Associate General Counsel

Policy

David B. Kolker

Acting Associate General Counsel

Litigation

Gregory R. Baker

Special Counsel

Complaints, Examinations

& Legal Administration

* The Director for Equal Employment & Opportunity reports to the Staff Director for management and administrative purposes; however, has direct reporting authority to the Commission on all EEO matters.
Enforcing the Law 5

Chapter One

Enforcing the Law

During 2006, the Commission negotiated substantial 

civil penalties for significant violations of federal election laws and did so more quickly than ever. By any 

measure, it was a watershed year for the Commission’s enforcement program. 

The U.S. Treasury collected more than $6.2 million in civil penalties from FEC enforcement actions, 

which is more than double the total amount of penalties of any other single year in the agency’s 31-year 

history. In fact, nearly a quarter of all FEC enforcement cases with penalties over $100,000 (12 of 49) 

were concluded in 2006. 

One of those cases netted the largest single civil 

penalty in agency history—$3.8 million, paid by Federal Home Loan Mortgage Corporation (Freddie Mac) 

for prohibited corporate activity. The Commission also 

settled cases against three Section 527 groups that 

agreed to pay almost $630,000 in penalties for failing 

to register and file disclosure reports as federal political committees and comply with restrictions placed 

on political committees during the 2004 Presidential 

campaign. While these large penalties involving significant legal issues garnered most of the headlines, 

the Commission’s enforcement program also dramatically improved its efficiency. The average number of 

days for cases to be completed declined for the third 

straight year, making 2006 the agency’s fastest and 

most efficient year for the processing of complaints. 

Standard Enforcement Process

The FEC has exclusive jurisdiction over civil enforcement of the federal campaign finance laws. 

Generally, enforcement cases are generated through 

complaints filed by the public, referrals from other 

federal and state agencies and the FEC’s own internal monitoring procedures.2

 Whether initiated 

by outside complaint or internal referral, the most 

complex and legally significant enforcement matters, 

or matters under review (MURs), are handled by the 

Enforcement Division of the Office of General Counsel (OGC). 

The Enforcement Division:

•	Recommends to the Commission whether to find 

“reason to believe” that the Act has been violated, a 

finding that formally initiates an investigation;

•	Investigates potential violations of the Act by requesting, subpoenaing, and reviewing documents 

and interviewing and deposing witnesses; and

1

FIGURE 2: 

Compliance fines quintupled from $1.5 million in FY02 to 

$5.56 million in FY06

1

 Named for a section of the Internal Revenue Code that 

exempts some of its activities from taxation, a 527 organization is a political organization. Some are required to register with the FEC as “political committees,” others are not.

2

 Under 2 USC §437g, the Commission may also 

investigate possible violations based on a news article or 

similar published account. In addition, a person or entity 

who believes he may have committed a violation may bring 

the matter sua sponte to the Commission’s attention.
6 Chapter One

•	Conducts settlement negotiations on behalf of the 

Commission, culminating in conciliation agreements 

with respondents.

Based on the results of its investigations, OGC recommends to the Commission whether to find “probable cause” to believe the Act has been violated. The 

agency must attempt to resolve enforcement matters 

through conciliation. If conciliation fails, however, the 

Commission may bring suit against a respondent in 

federal district court. 

As noted above, one MUR resolved during 2006 

yielded the largest civil penalty in agency history. 

The $3.8 million penalty resulted from Freddie Mac’s 

prohibited use of corporate resources to facilitate 

campaign fundraising events and to collect and forward political contributions to federal candidates. 

The Commission found that Freddie Mac had illegally 

contributed to political committees using corporate 

funds and used other company resources to facilitate 

additional contributions.

Late in the year, the Commission announced significant conciliation agreements with several Section 

527 organizations whose involvement in the 2004 

Presidential elections had raised questions concerning the legal parameters of unregistered entities’ 

involvement in federal elections. The Swiftboat Veterans and POWs for Truth, the League of Conservation 

Voters 527 and 527II and MoveOn.org Voter Fund, 

collectively paid almost $630,000 for failing to register and file disclosure reports as federal political 

committees and accepting contributions in violation 

of federal limits and source prohibitions. 

The two League of Conservation Voters groups 

funded door-to-door and phone canvassing activities 

that expressly advocated the election of Senator John 

Kerry and the defeat of President Bush. MoveOn.

org Voter Fund produced television advertisements 

targeted to Presidential battleground states aimed 

at defeating President Bush, and its solicitations for 

FIGURE 4: 

In FY06, OGC increased the number of cases closed by 37 

percent over cases closed in FY02

FIGURE 3: 

Enforcement action cases opened from FY04 to FY06 increased substantially
Enforcing the Law 7

funds clearly indicated that the funds received would 

be used to defeat President Bush in the 2004 general election. Swiftboat Veterans and POWs for Truth 

produced advertisements and sent out direct mail 

pieces attacking Senator Kerry and expressly advocating his defeat. All three groups have agreed to 

cease violating the Act, to file reports disclosing their 

2004 election cycle activity and to register with the 

Commission as political committees if they engage in 

similar conduct in the future. 

The Commission also secured substantial civil 

penalties in cases involving other provisions of the 

campaign finance law. For example, James Treffinger, the James Treffinger for Senate Committee and 

its treasurer, paid civil penalties totaling $171,000 for 

receipt of excessive contributions that should have 

been refunded, redesignated or reattributed. In addition, the respondents used contributions that should 

have been refunded to pay the candidate’s legal 

fees.

Another significant agreement reached during 

the year involved J. Edgar Broyhill, II, the Broyhill for 

Congress committee and its treasurer for failing to file 

in a timely manner the notification forms required by 

the Millionaires’ Amendment.3

 Specifically, Mr. Broyhill 

and his committee failed to file the required notifications within 24 hours of Mr. Broyhill making a series 

of personal loans that triggered personal spending 

notices related to the Millionaires’ Amendment. The 

respondents agreed to pay a $71,000 civil penalty for 

violating the applicable reporting requirements.

Administrative Fine and Alternative 

Dispute Resolution Programs

As supplements to the standard enforcement process, the Alternative Dispute Resolution (ADR) program offers a process for negotiating the settlement 

of cases and the Administrative Fine Program handles late filing and failure to file disclosure reports. 

A permanent Commission program since 2002, 

ADR resolves cases outside the formal enforcement 

process. Instead, cases are settled through informal 

negotiation between the FEC and the respondent. 

Agreements typically involve smaller civil penalties, 

but require respondents to take specific steps to 

prevent repeat infractions.

The Administrative Fine Program promotes timely 

filing by assessing civil money penalties for committees that file reports and notices late or fail to report 

at all. Not only has the program significantly increased the timeliness of committee filings, but it has 

enabled the Commission to devote its enforcement 

resources to more substantive violations. 

In sum, the FEC closed 315 enforcement matters 

in 2006 (including Administrative Fine and Alternative 

Dispute Resolution cases), the largest number since 

2001. At year’s end, the total in civil penalties collected by the Commission in 2006 was $6,262,052, 

with $5,925,800 from enforcement cases, $136,299 

through its Alternative Dispute Resolution program, 

and $201,953 from Administrative Fines.

Audit 

Mandatory audits of publicly funded Presidential 

campaigns have traditionally required a large portion 

of the Audit Division’s resources and, therefore, relatively few audits of non-Presidential candidates were 

completed. Over the past several years, the Audit 

Division has worked to develop a stand-alone audit 

program for non-Presidential committees each election cycle to increase the audit presence in the regulated community. With the increased use of computer 

technology, the streamlining of audit procedures, a 

divisional reorganization and the addition of modest 

staff resources, the non-Presidential audit program 

is making significant progress. In 2006, the Audit 

3

 Under the so-called “Millionaires’ Amendment,” a candidate whose opponent’s personal campaign spending exceeds certain threshold amounts may qualify for increased 

limits on individual contributions and, during the general 

election, increased coordinated party expenditures, as well.
8 Chapter One

Division issued 11 interim audit reports and 18 total 

final audit reports4

 on campaign committees, political 

parties and other political committees. 

The Commission believes that an increased audit 

presence not only contributes to the Commission’s 

enforcement efforts but also encourages voluntary 

compliance among the regulated community. Furthermore, the broader scope of the audit presence 

provides the Commission with information that can be 

used to refine internal procedures and regulation.

FIGURE 5: 

Number of non-Presidential audits completed in 2006. The 

decline is due in part to the growing complexity of Presidential audits

4

 Audits of non-Presidential committees are also referred 

to as Title 2 audits, while audits of Presidential committees 

are also known as Title 26 audits. In 2006, the Audit Division completed 13 Title 2 and five Title 26 audits.
9

Chapter Two

Interpreting the Law and 

Encouraging Compliance

Regulations

Congressional action, judicial decisions, petitions for rulemaking and other changes in campaign 

finance law or practices may necessitate that the 

Commission update or create new regulations. Consequently, the Commission undertakes rulemakings 

to revise existing campaign finance rules and to promulgate new ones. In 2006, the Commission completed seven highly complex and resource-intensive 

rulemakings. 

Background

Proposed rules are published in the Federal Register, on the FEC’s web site and on Regulations.gov to 

provide an opportunity for members of the public and 

the regulated community to submit written comments 

and to testify at public hearings held at the Commission, when appropriate. The Commission considers 

public comments and testimony and deliberates over 

the final rules in agency open meetings. The text of 

final rules and the corresponding Explanation and 

Justification (E&J) are published in the Federal Register and sent to the House of Representatives and 

Senate once they have been approved.

In 2006, the Commission focused much of its time 

and resources on completing revisions to its regulations to comport with court decisions in the Shays v. 

FEC litigation. The court remanded certain regulations to the agency for further action, concluding 

that the Commission either needed to provide additional explanation for its actions or make substantive 

changes to its regulations to fully reflect Congressional intent. After considering public comments 

and testimony, the Commission issued the final rules 

detailed below:

Revised Definition of “Agent”

The Commission voted to retain the current definitions of “agent” and explained that the current definitions, which include only “actual authority,” either 

express or implied, best reflect the intent and purposes of FECA. Furthermore, after examining its pre- and 

post-BCRA enforcement record, the Commission determined that excluding “apparent authority” from the 

definitions of agent had not allowed circumvention of 

the Act nor led to actual or apparent corruption. 

Final Rules on Definition of FEA

The Commission approved final rules that retain 

the current definitions of federal election activity 

(FEA) for voter registration and modify the definition 

of get-out-the-vote (GOTV) activity as well as clarify 

that those definitions exclude mere encouragement 

to register and/or vote. To provide guidance to the 

regulated community, the Commission provided in 

the E&J several specific examples of what does and 

does not constitute “voter registration activity.” The 

final rules also modify the definition of voter identification to include acquisition of voter lists and to clarify 

the application of the FEA time periods. Finally, the 

exception from the definitions of GOTV and voter 

identification for associations of nonfederal candidates was removed. The revised rules took effect 

March 24, 2006. 

Interim Final Rule 

In order to exclude from federal regulation certain 

voter identification and GOTV activities that are conducted solely in connection with nonfederal elections, 

the Commission promulgated an interim final rule that 

exempts certain activities and communications from 

the definition of FEA when they are in connection with 

a nonfederal election held on a date separate from 

the date of any federal election. This exception ala properly allocated mix of federal and nonfederal 

funds. The interim final rule took effect March 24, 

2006, but will expire on September 1, 2007.

Final Rules on Solicit and Direct 

Final rules issued by the Commission revise the 

definition of “solicit” to encompass written and oral 

communications, construed as reasonably understood in the context in which they are made, that 

contain a clear message asking, requesting or recommending, explicitly or implicitly, that another person make a contribution, donation, transfer of funds, 

or otherwise provide something of value. Similarly, the 

revised definition of “direct” means to guide, directly 

or indirectly, a person who has expressed an intent 

to make a contribution, donation, transfer of funds, 

or otherwise provide anything of value by identifying 

a candidate, political committee or organization for 

the receipt of such funds or things of value. The final 

rules became effective on April 19, 2006.

lows such nonfederal activities to be financed with 
10 Chapter Two

Final Rule on Coordinated Communications

The Commission addressed the Shays court’s 

concerns regarding the “content prong” of the 

three-pronged coordinated communications test by 

gathering quantitative data concerning the timing of 

television advertising run by Presidential, Senate and 

House candidates during the 2004 election cycle. 

After receiving comments and public testimony, 

the Commission published final rules that retain the 

existing content prong but modify the pre-election 

time frame in which certain communications will be 

considered coordinated. The rules establish separate 

time frames for communications referencing political 

parties, congressional and Presidential candidates. 

The rules also create safe harbors for endorsements, 

solicitations for tax-exempt 501(c) organizations and 

the use of publicly available information in creating, 

producing or distributing a communication. The final 

Internet Final Rules

The Commission received more than 800 public 

comments in connection with this rulemaking, the 

majority of which urged limited regulation of Internet 

activity. In response to comments and testimony 

received at two public hearings held in June 2005, 

the Commission approved regulations that include 

only paid Internet advertising in the definition of 

“public communication” while excluding from regulation unpaid Internet communications such as blogs, 

e-mail and a person’s own web site. The final rules 

also modify the scope of the Commission’s disclaimer requirements and make clear that the “media 

exemption”1

 covers qualified online publications. The 

final rules took effect on May 12, 2006.

Contribution Limits between Authorized Committees

The Commission approved regulations that implement an earlier statutory increase in the limit on contributions from one federal campaign to another from 

$1,000 to $2,000 per election. The amount was not 

indexed for inflation. No notice or comment period 

rules took effect on July 10, 2006.

 Costs incurred by media entities in covering or carrying news stories, editorials and commentary are exempt 

from the definitions of “contribution” or “expenditure” unless the facility is owned or controlled by a political committee or candidate.

1

was required as the regulations simply restate the 

language of the Act. The final rules took effect on 

September 20, 2006.

Electioneering Communications Grassroots Lobbying 

Exemption 

The Commission approved a Notice of Disposition 

ending its consideration of a rulemaking petition that 

sought to exempt certain “grassroots lobbying” communications from the electioneering communication 

(EC) rules. The Notice clarified that while the Commission decided not to initiate a rulemaking at that 

time, it may consider doing so in the future. The Commission considered but did not approve a draft interim final rule that would have exempted certain radio 

and television communications from the definition of 

electioneering communication provided they were 

“grassroots lobbying communications.” Currently, 

such communications are subject to funding restrictions and disclosure requirements if they otherwise 

satisfy the EC definition. The Notice of Disposition announcing the Commission’s decision not to proceed 

with a rulemaking at this time appeared in the Federal 

Register on September 5, 2006.

Advisory Opinions

Another way in which the Commission encourages 

compliance with the Act is by issuing advisory opinapply to real-life situations brought to the Commission 

by candidates, political committees and others in the 

regulated community. The FEC received 38 complete 

AO requests and issued 29 AOs in 2006 offering 

guidance to political committees and candidates on 

a variety of key issues. 

Background

The Office of General Counsel (OGC) prepares 

a draft opinion, which the Commissioners discuss 

and vote on usually during a public meeting. A draft 

opinion must receive at least four favorable votes to 

be approved. During 2006, the Commission placed 

special emphasis on expediting its processing and 

consideration of AO requests. The Act allows the 

agency 60 days to respond to most requests, but 

a few time-sensitive matters may qualify for 20-day 

ions (AOs) to clarify how the statute and regulations 
11 Encouraging Compliance

review. Excluding the few cases in which the Commission sought additional information and requesters 

waived the 60-day response requirement, the agency’s average response time during 2006 was just 43 

days. Some opinions were issued within as little as 

two weeks and, in one extraordinary case, just 12 

days after receipt. 

The most notable 2006 AOs are summarized below.

AO 2005-16 (Fired Up): Media Exemption

In AO 2005-16, the Commission found that a limited liability company engaged primarily in online 

activity qualified as a press entity, and its webs sites 

were the online equivalent of a newspaper, magazine 

or other periodical publication. The company retained editorial control, produced many of the stories 

that appear on the web sites and exercised day-today control over all content. Thus, the company qualifies as a press entity and costs incurred to cover or 

carry news stories, commentary or editorials on its 

web sites do not constitute “expenditures” or “contributions” by the company. 

AO 2006-4 (Tancredo): Ballot Initiatives

In AO 2006-4, the Commission determined that 

the principal campaign committee of a federal candidate may donate funds to a state ballot initiative 

committee. However, the proposed donations of 25 

or 50 percent of the ballot initiative committee’s total 

receipts would constitute “financing” by a federal 

candidate and as such, the ballot initiative committee would be subject to the soft money fundraising 

ban that applies to federal candidates and their campaigns. 

AO 2006-10 (EchoStar): Charitable Solicitations

In AO 2006-10, the Commission ruled that certain 

Public Service Announcements (PSAs) that feature 

federal candidates and are created and broadcast 

by a corporation qualify for the charitable solicitation

exemption to the definition of coordinated communications because the PSAs promote and solicit donations to charitable organizations and do not include 

campaign materials or expressly advocate the election or defeat of a federal candidate. The PSAs do 

not mention a political party, campaign, or election, 

nor do the PSAs solicit contributions for any political 

campaign or committee. The ads also would be aired 

outside of the candidate’s jurisdiction or more than 90 

days before a Congressional election or more than 

120 days before a Presidential election. 

AO 2006-11 (Washington Democratic State Central 

Committee): Attribution

In AO 2006-11, the Commission concluded that 

at least half the cost of mass mailings that expressly 

advocate the election of one clearly-identified federal candidate and other generically-referenced 

candidates must be attributed to the named federal 

candidate, even if the space attributable to that candidate is less than that attributable to the generically 

referenced party candidates. If the space devoted 

to the named federal candidate exceeds the space 

devoted to the generically referenced candidates, the 

costs attributed to the named federal candidate must 

exceed 50 percent and reflect at least the relative 

proportion of space devoted to that candidate.

AO 2006-15 (TransCanada): Foreign Subsidiaries

The Commission ruled in AO 2006-15 that whollyowned domestic subsidiaries of a foreign corporation 

may donate funds in connection with state and local 

elections, subject to state law, as long as no foreign 

national participates in decision-making regarding 

the making of such donations and the funds used do 

not come from a foreign national. The subsidiaries 

must use a reasonable accounting method to show 

that each subsidiary has sufficient funds in its account to make donations, other than funds given or 

loaned by its foreign national parent corporation and 

will ensure that no foreign national has any decisionmaking authority concerning the making of donations 

or disbursements in connection with state or local 

elections. 

AO 2006-20 (Unity 08): Political Committee Status

In AO 2006-20, the Commission determined that 

Unity 08 must register as a political committee once it 

receives more than $1,000 in contributions or makes 

more than $1,000 in expenditures. The Commission found that in promoting itself through petition 

drives to obtain ballot access, Unity 08 is promoting 

its Presidential and Vice-Presidential candidates, 
12 Chapter Two

and any expenses incurred by Unity 08 for this purpose constitute expenditures. Additionally, because 

Unity 08 has publicly stated that its main goal is the 

nomination and election of a Presidential and VicePresidential candidate in 2008, the Commission 

concluded that Unity 08 satisfies the “major purpose” 

standard set forth in Buckley v. Valeo.2

AOs 2006-21 (Cantwell), 2006-25 (Kyle) and 2006-6 

(Busby): Millionaires’ Amendment

In AOs 2006-21 and 2006-25, the Commission 

held that a candidate’s expenditures from personal 

funds made before the primary election will not trigger the Millionaires’ Amendment for a general election opponent. Under the Amendment, the personal 

spending thresholds apply separately to the primary 

and general elections. However, in the general election, any personal funds contributed by the candidates to their campaign committees during the primary that are available for use in the general election 

will count towards the personal spending thresholds 

for the general election. 

In AO 2006-6, the Commission ruled that candidates running in California’s 50th District “special 

gen eral election” must count all personal spending 

from the beginning of the election cycle to the date of 

the special general election as expen ditures for that 

election. Under state law, if a special general election 

runoff is necessary, it will be held on the same day as 

the regularly-scheduled California primary election. 

Given that fact, candidates running in both of those 

elections must count personal spend ing between the 

date of the special general and the runoff/primary 

date as expenditures for both the special general and 

the primary. 

AO 2006-22 (Wallace): Legal Services

In AO 2006-22, the Commission ruled that the 

payment of compensation to employees of an incorporated law firm for legal services provided free 

of charge to the principal campaign committee of a 

federal candidate would be an impermissible corporate contribution. The services provided by the firm 

(specifically, an amicus brief pertaining to ballot ineligibility) did not qualify for the “legal and accounting” 

exemption because they were not provided solely for 

purposes of compliance with the Act nor did the services constitute uncompensated individual volunteer 

activity. 

AO 2006-24 (Republican and Democratic Senatorial 

Committees): Recount Expenses

In AO 2006-24, the Commission concluded that 

funds raised and spent by a federal candidate or 

state party committee to pay recount expenses resulting from the general election are not contributions 

or expenditures but are subject to the amount limitations, source prohibitions and reporting requirements 

of the Act. As such, those funds are not aggregated 

with contributions to the candidate for the general 

election nor are they subject to the aggregate biennial contribution limit. A state party may also pay attorney’s fees or litigation costs of a federal candidate 

involved in a recount from these funds. Candidates, 

state and national party officials may all be involved 

in strategy and planning regarding recounts.

AO 2006-29 (Bono): Coordination

In AO 2006-29, the Commission ruled that an unincorporated convention and visitors authority did not 

make a coordinated in-kind contribution to a federal 

candidate when it paid for an infomercial that featured the federal candidate because the infomercial 

failed to satisfy the “content’ prong of the three-prong 

coordinated communications test. Specifically, the 

infomercial did not qualify as an electioneering communication or a public communication that republishes or distributes campaign materials, did not contain 

express advocacy and did not air in the candidate’s 

congressional district within 90 days of an election. 

AO 2006-30 (ActBlue): Earmarking

The Commission advised a nonconnected political 

committee in AO 2006-30 that it may solicit and accept earmarked contributions on behalf of prospective candidates for the Democratic Party’s nomination 

for President in 2008, even though the individuals 

have not formally declared their candidacy with the 

2

 Beginning with its decision in Buckley, the Supreme 

Court has held only organizations whose “major purpose” 

is the nomination or election of a federal candidate can be 

considered “political committees” under the Act. See also 

FEC v. MCFL and McConnell v. FEC.
13 Encouraging Compliance

FEC. If those individuals do not become candidates 

by a certain date, the committee may instead forward 

the contributions to a national political party committee, provided that the contributor is clearly informed 

of this possibility. In either case, the committee must 

report all earmarked contributions on its report to the 

Commission and must provide all necessary information to the recipient prospective candidate or party 

committee. The Commission advised that listing 

individuals the committee considers to be “serious” 

prospective candidates on its web site does not constitute exercising “direction or control” and therefore, 

the nonconnected committee’s contribution limits 

would not be affected by the earmarked contributions. 

Policy Initiatives

In 2006, the Commission issued several new policy statements in order to clarify its practices and improve transparency in the FEC’s operations. Among 

these were proposals to permit oral hearings in 

certain enforcement cases, to clarify and encourage 

self-reporting of violations, to offer guidance on disclosure efforts including descriptions for the purpose 

of disbursements, and to outline the requirements to 

show “best efforts” to obtain and report financial information by treasurers of committees.

Policy Statement on Initial Stage of Enforcement Process

The Commission approved a policy statement that 

clarifies the various actions the Commission may 

take when beginning the enforcement process. The 

Commission will find “reason to believe” in situations where there is enough evidence to warrant an 

investigation and where the alleged violation is serious enough to require an investigation or immediate 

conciliation. Previously, the Commission used the 

finding “reason to believe, but take no further action” 

when the Commission found a basis for investigating 

or attempting to conciliate but declined to investigate 

or conciliate. The Commission has determined that 

“dismissals” or “dismissals with admonishment” are 

clearer explanations about the Commission’s intentions than “reason to believe but take no further action.” 

The Commission may dismiss a matter when it 

concludes that a violation did occur, but the violation 

is of minor significance. In such a matter, the Commission will send a letter admonishing the respondent. If available information provides no basis for 

proceeding with the matter, the Commission will find 

“no reason to believe.” Such a finding occurs when 

the complaint, the response by the respondent and 

any publicly available information, taken together, fail 

to suggest that a violation has occurred.3

Pilot Program for Probable Cause Hearings

The Commission proposed a pilot program that 

would permit respondents in enforcement matters 

to request a Commission hearing before it considers whether there is probable cause to believe that 

a violation of the Act or Commission regulations has 

occurred. 

Under the program, any respondent who reaches 

the “probable cause determination” stage of the 

enforcement process may submit a request for a 

hearing with his or her brief to the Commission. The 

request would state why the hearing was being requested and what issues the respondent expects to 

address. The request for a hearing is optional and the 

respondent’s decision as to whether or not to request 

a hearing will not influence the Commission’s decision as to a probable cause finding. The program 

can be modified or terminated at any time during the 

eight month period by the approval of a majority of 

the Commission.4

 

Policy Statement on Self-Reporting of Campaign Finance 

Violations 

The Commission proposed an enforcement policy 

designed to encourage political committees and 

other persons to self-report possible violations of 

3

 The final policy statement was published in the March 

16, 2007 Federal Register (72 FR 12545) and is posted on 

the FEC website at http://www.fec.gov/law/cfr/ej_compilation/2007/notice_2007-6.pdf.

4

 The final policy statement was published in the 

February 16, 2007 Federal Register (72 FR 7551) and 

is posted on the FEC website at www.fec.gov/law/cfr/

ej_compilation/2007/notice_2007-4.pdf.
14 Chapter Two

the Act. These self-reported violations— also known 

as sua sponte submissions—are generally resolved 

more quickly and result in lower civil penalties than 

matters arising by other means, such as complaints 

or the Commission’s own review of reports. The proposed policy seeks to increase the number of sua 

sponte submissions in order to expedite the enforcement process and decrease the number of litigation and enforcement matters that the Commission 

must address. The policy details the various factors 

the Commission may consider in deciding how to 

proceed regarding sua sponte submissions. The 

factors include the nature of the violation, the extent 

of corrective action (including new self-governance 

measures taken by the respondent), and the level 

of cooperation and disclosure with the Commission 

once the violation has been reported. Based on its 

consideration of these factors, the Commission may 

choose to reduce the amount of the civil money penalty it would otherwise have sought in the enforcement process. Additionally, a limited number of cases

of self-reported violations may be subject to an expedited “Fast-Track Resolution,” which may be granted 

at the Commission’s discretion.5

Policy Statement on Purpose of Disbursement 

Under the Act, political committees and other FEC 

filers must provide a brief description of the purpose of certain disbursements they make, and that 

description must be sufficiently specific to provide 

a clear reason for the payment. Commission regulations provide examples of acceptable and unacceptable descriptions, but the list is not exhaustive, 

and Commission staff often encounters “purpose of 

disbursement” entries that are not listed in the regulations. Therefore, in order to provide further guidance 

to filers and to encourage consistency between filers,

the proposed guidance offers general rules of thumb 

and also lists specific “purpose of disbursement” 

descriptions that are generally acceptable and others 

that are generally not acceptable.6

Proposed Rules and Policy Statement on Best Efforts

Under the Act, if a political committee treasurer 

demonstrates that best efforts have been used to 

obtain, maintain and submit required information, the 

committee’s report or records will be considered in 

compliance. During 2006, the Commission issued a 

policy statement and an NPRM that would apply the 

best efforts defense to obtaining, maintaining and 

submitting all required information under the Commission’s regulations, not just contributor identification. The Commission also issued an NPRM proposing to incorporate a best efforts defense into the administrative fine program for late filers. To show that 

it used best efforts to file in a timely manner, a committee would need to demonstrate that unforeseen 

circumstances beyond its control caused the tardiness and the report was filed within 24 hours after 

those circumstances were resolved. The proposed 

regulations list examples of circumstances that may 

be considered “unforeseen” and beyond the control 

of the committee, including a failure of Commission 

computers, Commission-provided software or the 

Internet and severe weather or other disaster-related 

incidents. The NPRM also lists examples of circumstances that may not be considered “unforeseen” 

and beyond the control of the committee including 

vendor or contractor problems, inexperience, illness 

or unavailability of committee staff and a failure of 

committee computers.7

Policy Statement on Payroll Deduction Recordkeeping

The separate segregated fund (SSF) of corporations, labor organizations, and trade associations 

must maintain payroll deduction records allowing 

5

 The final policy statement was published in the April 5, 

2007 Federal Register (72 FR 16695) and is posted on the 

FEC website at www.fec.gov/law/cfr/ej_compilation/2007/

notice_2007-4.pdf.

6

 The final policy statement was published in the January 9, 2007 Federal Register (72 FR 887) and is posted on 

the FEC website at www.fec.gov/law/policy/purposeofdisbursement/notice_2006-23.pdf.

7

 The final rule was published in the March 29, 2007 

Federal Register (72 FR 14662) and is posted on the FEC 

website at www.fec.gov/law/policy/bestefforts/notice_2006-

21.pdf.
15 Encouraging Compliance

the Commission to determine whether the source 

and amount of contributions are accurately reported. 

In the past, the Commission has required original 

signed payroll deduction authorizations (PDAs) as 

proof that an SSF had fulfilled its recordkeeping requirements. The policy statement announced that 

the Commission no longer intends to require original 

PDAs as the sole proof that a committee has fulfilled 

its recordkeeping requirements. The statement also 

explains that other evidence may be acceptable, 

including records of the transmittal of funds from employers or collecting agents, such as spreadsheets, 

computerized records, wire transfer records, or other 

written or electronic records. 

Policy Statement on Embezzlement 

The Commission also requested public comment 

on a proposed enforcement policy regarding reporting errors that result from a misappropriation of funds. 

A companion document lists additional steps that 

political committees can take to guard against embezzlement and unintentional reporting errors. Under 

the proposed policy, committees that implement certain minimum safeguards would not be held liable if a 

subsequent misappropriation led to reporting errors. 

The Commission’s proposal responds to a recent increase in the number of enforcement cases involving 

misappropriation of committee funds, often by committee employees. Some of these proposals include 

regular account reconciliations and the separation of 

accounting duties. 

Disclosure, Review and Outreach

The Commission’s efforts to promote compliance 

are not limited to promulgating regulations, responding to AO requests and issuing policy statements. 

The agency’s disclosure, reports analysis and educational outreach programs also play significant roles in 

that process. 

Disclosure

Making available to the public the campaign finance reports disclosing the sources and amounts of 

funds used to finance federal elections is one of the 

most important of the FEC’s duties. Through its website, the Commission makes the financial disclosure 

reports of all federal political committees accessible 

to the general public. This easy online access to reports provides an added incentive for the regulated 

community to comply with the campaign finance law.

During 2006, the Commission received and processed nearly 78,000 financial disclosure filings, the 

equivalent of 3.9 million pages of financial data, disclosing about $2.7 billion in spending related to federal elections. When a committee files its FEC report 

on paper, the Commission’s Office of Public Records 

ensures that a copy is available for public inspection 

within 48 hours at the FEC’s headquarters. Simultaneously, the FEC Public Disclosure Division enters 

the information disclosed in the report into the FEC 

computer database. Campaign finance reports filed 

electronically are made available to the public within 

24 hours, if not immediately. 

The amount of information disclosed on campaign 

finance reports has grown dramatically—by December 2004, more than 28 million pages of information 

dating back to 1972 were available for public review. 

Despite the increase in activity reported to the Commission, the Public Disclosure Division continues to 

improve upon efficient processing of reports. 

Review

In addition to making campaign finance reports 

available to the public, the Commission also works 

to ensure that the information disclosed is accurate 

and complete. The Commission’s Reports Analysis 

Division (RAD) reviews all reports to track compliance 

with the law and to ensure that the public record provides a full and accurate representation of campaign 

finance activity. If a RAD analyst sees an apparent violation or has questions about information disclosed on 

a report, the analyst may send a request for additional 

information to the committee’s treasurer. If the committee is able to correct the error or otherwise resolve 

the analyst’s concerns, it will often be able to avoid an 

enforcement action. Analysts are also available to answer treasurers’ technical reporting questions through 

the FEC’s toll-free information line.

RAD has made significant improvements in the 

timeliness of the review of financial disclosure reports. 

In fact, RAD reviewed 14 percent more reports in 

2006 than during 2004. This additional improvement is 

particularly noteworthy given that the amount of disbursements in Congressional elections increased by 

approximately $284 million from 2004 to 2006.
16 Chapter Two

Outreach

Throughout 2006, the Commission continued to 

promote voluntary compliance with the law by educating committees about the law’s requirements. In 

February, the Commission held a regional conference 

in Tampa, Florida, where Commissioners and staff 

explained how the Act applies to House and Senate 

campaigns, political party committees and corporations, labor organizations, trade associations, membership organizations and their respective PACs. The 

workshops specifically addressed recent changes 

to campaign finance law and focused on fundraising 

and reporting rules. While budgetary constraints prevented the Commission from conducting its typical 

schedule of conferences during 2006, the agency 

did offer a variety of educational workshops on campaign finance at its headquarters in Washington, DC. 

In May, Commissioners and staff conducted one-day 

seminars on fundraising and reporting for federal 

candidates and political party committees. In addition, each week in June Commission staff hosted 

roundtable workshops to review revisions to Commission regulations and other legal developments. Finally, in early September, the agency hosted a workshop 

on general election filing requirements.

The agency also expanded its educational offerings on the web to include online presentations, a 

hypertext version of the E&J for all FEC regulations 

and a Tips for Treasurers page that features weekly 

updates available by RSS (really simple syndication) 

feed. The RSS technology allows committee treasurers and other interested individuals to receive automatic updates on information provided on the Tips 

for Treasurers page, without having to visit the FEC’s 

web site. 

The Commission also tested a new e-mail distribution program aimed at improving customer service 

while simultaneously saving tax dollars. The program 

will, among other things, allow the agency to get 

time-sensitive information to the regulated community 

more quickly and more efficiently than ever before, 

and thereby improve compliance.
17 Chapter Three

Defending the Law

Litigation

In fulfilling its statutory mission, the Commission 

often finds itself in the midst of a delicate balancing 

act. On one hand, the Commission must administer, 

interpret and enforce the Federal Election Campaign 

Act which the Supreme Court has said serves a compelling government interest. On the other hand, the 

Commission must remain mindful of the constitutional 

freedom of speech and association, and the practical 

implication of its actions. During 2006, these tensions 

between valid governmental interests and certain 

constitutional guarantees were keenly evident in the 

significant litigation involving the Commission.

Shays v. FEC (Shays I)

On July 15, 2005, the U.S. Court of Appeals for the 

DC Circuit upheld the appealed portion of the district court’s decision in Shays v. FEC that invalidated 

several Commission regulations implementing BCRA, 

finding that some of the agency’s regulations either 

failed to follow Congressional intent or did not comply 

with the Administrative Procedures Act for promulgating regulations. After the D.C. Circuit declined 

to rehear the appeal en banc, the Commission announced that it would expedite work on the affected 

regulations and complete the necessary revisions in 

time to be effective during the 2006 election cycle. 

The Commission began promulgating new regulaCommission had concluded all rulemakings and 

approved final rules in response to the Shays decision. For more information on the final rules, see the 

“Regulations” section above.

Shays v. FEC (Shays III)

Shortly after the Commission promulgated new 

regulations in response to the decision in Shays I ,

U.S. Representatives Christopher Shays and Martin 

Meehan (the Plaintiffs) filed a complaint in district 

court challenging certain regulations once again. 

The Plaintiffs claim that the rules regarding coordinated communications, FEA and solicitations by 

federal candidates and officeholders at state party 

fundraising events do not comply with the judgment 

in Shays I or with BCRA and allege the FEC did not 

tions in 2005 at a rapid pace and, by July 2006, the 

adequately explain and justify its actions. The Plaintiffs have asked the court to declare the referenced 

regulations to be contrary to law, arbitrary and capricious, and an abuse of discretion and also ask 

the court to enjoin the operation of the regulations 

and order the Commission to commence expedited 

rulemaking proceedings. The case was pending at 

year’s end.

Shays v. FEC (Shays II)

In November 2004, the Commission issued final rules that require organizations to treat more of 

their receipts as contributions1

 and to use a greater 

percentage of federal funds for certain allocable expenses. While these rules could trigger registration 

as “political committees” for some groups, the Commission did not directly modify its definition of that 

term. Rather, the Commission decided that it would 

continue to construe the definition of “political committee” on a case-by-case basis. Christopher Shays, 

Martin Meehan and Bush-Cheney ’04, Inc. (the Plaintiffs) filed suit and argued that the Commission’s decision to continue deciding case-by-case whether a 

group is a “political committee,” as defined in FECA, 

was arbitrary and capricious. They also argued that 

the Commission should be compelled to issue a new 

rule. 

The district court rejected plaintiffs’ contention 

that selecting adjudication rather than rulemaking 

was an abuse of discretion. Nevertheless, the court 

remanded the case to the FEC and ruled that the 

Commission must either provide a more expansive 

explanation and justification for its decision to review 

the political committee status of unregistered organizations on a case-by-case basis or issue a new 

regulation. In response to the district court decision, 

the Commission published a supplemental E&J in 

the Federal Register on February 7, 2007 to explain 

its approach (72 FR 5595). The supplement explains 

that determining political committee status under the 

Act, as interpreted by the Supreme Court in Buckley 

v. Valeo, requires an analysis of both an organization’s specific conduct (whether it received $1,000 in 

1

 Generally, once such funds exceed $1,000, the group 

is required to register with the FEC as a political committee. 
18 Chapter Three

contribution or made $1,000 in expenditures) as well 

as overall conduct (whether its major purpose is federal campaign activity). An organization’s status as a 

Section 527 organization is insufficient evidence of its 

major purpose.

The supplemental E&J also highlights the sufficiency of the 2004 revised regulations as demonstrated 

by the recent enforcement matters settled against the 

Swiftboat Veterans for Truth, the League of Conservation Voters, the Leadership Forum, and Freedom, 

Inc. In each of these matters, the Commission conducted a thorough investigation of all aspects of the 

organization’s statements and activities to determine 

if the organization exceeded the $1,000 threshold 

for contributions or expenditures and whether the 

organization’s major purpose was federal campaign 

activity. These matters are significant because they 

demonstrate that an organization may satisfy the 

political committee status threshold based on how 

the organization raises funds and illustrate well the 

Commission’s application of the major purpose doctrine to the conduct of particular organizations.

FEC v. Club for Growth

In response to a complaint filed by the Democratic 

Senatorial Campaign Committee, the Commission 

found reason to believe that the Club for Growth, Inc. 

(the Club) accepted contributions and made expenditures in excess of the $1,000 registration threshold, 

and violated the Act by failing to register as a political 

committee. Following the Commission’s vote finding 

probable cause to believe and unsuccessful conciliation efforts, the FEC filed an enforcement lawsuit 

in district court on September 19, 2005. The Club 

moved to dismiss the complaint based on several 

alleged procedural violations of the Act. 

The U.S. District Court for the District of Columbia 

issued a memorandum opinion and order denying 

the Club’s motion to dismiss on June 5, 2006, finding 

that the FEC was in compliance with the enforcement 

provisions of FECA and that the agency’s failure to 

provide timely notice of the administrative complaint 

constituted harmless error. The Club asked the court 

to certify its June 5, 2006 decision for an interlocutory appeal, which would allow the appellate court to 

review a lower court’s decision prior to the final judgment in the case. One requirement for granting such 

certification is that there must be a substantial basis 

for a difference of opinion about the ruling. The court 

stated that the June 5, 2006, decision was not based 

on “novel and untested legal theories.” Rather, the 

decision was based on the legal doctrine of harmless 

error, deference to the FEC, the plain language of the 

Act and settled principles of law regarding agency 

ratification actions. Since the Club did not show a 

substantial ground for difference of opinion, on October 10, 2006, the court denied the Club’s motion to 

certify the decision for an interlocutory appeal.

Davis v. FEC

On March 30, 2006, Jack Davis, a candidate for 

the House of Representatives in New York, asked 

the U.S. District Court for the District of Columbia 

to declare the Millionaires’ Amendment unconstitutional and to issue an injunction barring the FEC from 

enforcing those provisions. Mr. Davis contends that 

the Amendment infringes upon his First Amendment 

right to free speech and his Fifth Amendment right to 

equal protection. He also alleges that the additional 

disclosure requirements for self-financed candidates 

required by the Amendment impose an unfair burden 

on his right to speak in support of his own candidacy. 

Mr. Davis asserts that the Millionaires’ provisions 

“dramatically tilt the field” in favor of incumbents by 

allowing larger contributions and by not adequately 

factoring in large “war chests” of campaign funds 

raised in previous elections in determining whether 

a candidate is eligible to receive contributions at an 

increased limit. On July 11, 2006, the district court 

granted the plaintiff’s request that the case be heard 

by a three-judge panel of the U.S. Court of Appeals 

for the District of Columbia. The case was pending at 

year’s end.

Christian Civic League of Maine v. FEC

In the fall of 2006, two courts ruled against the 

Christian Civic League of Maine (CCL) in its challenge to the ban on corporate financing of electioneering communications (ECs). On September 27, 

2006, the U.S. District Court for the District of Columbia granted the FEC’s partial motions to dismiss 

and for judgment on the pleadings, and dismissed 
19 Defending the Law

all other CCL claims for permanent relief as moot. On 

October 2, 2006, the Supreme Court dismissed as 

moot CCL’s appeal of the district court’s earlier decision from May 2006 that had denied CCL’s request 

for temporary relief in the form of a preliminary injunction.

Under BCRA, corporate treasury funds cannot be 

used to finance an EC. CCL, a nonprofit 501(c)(4) 

corporation, wanted to use its general treasury funds 

to broadcast a radio ad prior to a 2006 Senate vote 

on a particular proposed constitutional amendment. 

CCL’s suit contends that the EC restriction prevents 

it from exercising its First Amendment right to free 

speech. The Supreme Court upheld the EC provision 

in McConnell v. FEC, stating that, although the provision might apply to some so-called “issue ads,” it is 

narrowly tailored to meet a compelling government 

interest. After McConnell, the Supreme Court held in 

Wisconsin Right to Life v. FEC that McConnell had not 

foreclosed all as-applied challenges to the EC provision. CCL did not broadcast its proposed ad, and the 

Senate voted on the legislation it referenced in early 

June 2006.

The district court dismissed CCL’s request for a 

permanent injunction to prevent the FEC from applying its EC rules to CCL’s proposed ad, concluding 

that the Senate’s vote on the legislation referenced in 

the ad had rendered the issue moot. CCL contended 

that its situation fit within the “capable of repetition, 

yet evading review” exception to the mootness doctrine. The court disagreed, noting that CCL’s claims 

were closely tied to the facts surrounding the spring 

2006 ad, circumstances that were unlikely to recur 

and would not necessarily evade review even if they 

did recur. The court further granted defense motions 

for dismissal of CCL’s claims about possible other 

ads because they were not ripe for review and were 

too speculative. CCL admittedly had no firm plans to 

create or distribute any future ads besides the spring 

2006 ad. The Constitution requires an actual “case 

or controversy” for the court to decide, so a party’s 

grievance cannot be solely hypothetical. 

Wisconsin Right to Life v. FEC

In contrast to the district court’s decision in the 

CCL case, another three-judge panel of the U.S. District Court for the District of Columbia granted Wisconsin Right to Life’s (WRTL) motions for summary 

judgment, finding the EC provisions unconstitutional 

“as applied” to certain broadcast ads WRTL intended 

to run before the 2004 general elections. 

WRTL originally filed suit in district court on July 

28, 2004, asking the court to find the prohibition on 

the use of corporate funds to pay for ECs unconstitutional as applied to what it calls “grassroots lobbying” 

communications planned for the period before the 

2004 elections. After the district court both denied 

WRTL’s motion for a preliminary injunction and dismissed WRTL’s complaint, WRTL appealed to the 

Supreme Court. On January 23, 2006, the Supreme 

Court vacated the judgment and remanded to the 

district court to reconsider the merits of WRTL’s “as 

applied” challenge. 

WRTL’s proposed efforts during 2004 involved 

paying for broadcast advertisements that would air 

before the primary and general elections. According to WRTL, the ads would constitute bona fide 

grassroots lobbying because they express an opinion 

on pending Senate legislative activity, urge listeners to contact their Senators, and do not refer to any 

political party or support or attack any candidate. 

WRTL argued that the ads were not the “functional 

equivalent of express advocacy;” thus, there was no 

constitutional justification for the prohibition on corporate payments for these ads or for requiring the ads 

to be paid for through WRTL’s political action committee. WRTL asserted that, in this instance, the EC 

financing restrictions unconstitutionally burdened its 

First Amendment rights of free speech, free association and petitioning the government.

After denying WRTL’s requests for a temporary restraining order and preliminary injunction, in separate 

opinions issued on September 13, 2006 and December 21, 2006, the three-judge district court granted 

WRTL’s motion for summary judgment regarding 

the proposed 2004 television ads, holding in each 

instance that it is unconstitutional to apply the Act’s 

electioneering communication provisions to WRTL’s 

proposed ads. 
20

Every Presidential election since 1976 has been financed, in part, with public funds. Public funds are 

provided through two programs: (1) grants given 

to party conventions and candidates running in the 

general election; and (2) matching funds given to 

candidates running in the party primaries. The FEC 

administers the public funding program by determining which candidates and committees qualify to receive the funds and in what amounts. The Secretary 

of the Treasury makes the payments. Committees 

receiving public funds must limit their spending and 

keep detailed records of their financial activities. After 

the elections, the FEC audits each publicly funded 

committee. If an audit reveals a committee has exceeded the spending limits or used public funds for 

impermissible purposes, the committee must repay 

the excessive or impermissible funds to the U.S. 

Treasury.

By the end of 2006, the Commission had completed many of the required Presidential audits from 

the 2004 election. As a result of audit findings, committees had reimbursed $334,109.59 to the U.S. Treasury.

Committee repayments are not returned to the 

Presidential Election Campaign Fund, but are simply 

deposited into the general treasury. That fact, combined with declining tax checkoff receipts and larger 

payments to eligible committees, has led to temporary funding shortfalls in recent election cycles and 

appears likely to do so again in 2008. 

The potential shortfall and other factors have led 

some 2008 Presidential candidates to announce 

that they will opt out of the public funding program 

not only during the primary campaign—which has 

become an increasingly common practice—but also 

in the general election. If that occurs, the 2008 election would be the first since 1976 in which both major 

party nominees chose not to accept the general election grant.

Chapter Four

Presidential Public 

Funding