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v..ww.wileyre• n.com 

December 23.2014 

BY HAND DELIVERY AND E-:\tAIL 

(LEGALREQUESTPROGRAM@FEC.GOV) 

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

Weintraub. MatthewS. Petersen. Caroline C. Hunter. and Steven T. Walther 

Federal Election Commission 

c/o Ms. Shawn Woodhead Werth. Secretary 

999 E Street. NW 

Washington. DC 20463 

Re: Request for Consideration of Legal Questions bv the Commission 

Dear Commissioners: 

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

Commission consideration of a determination by the Reports Analysis Division 

(''RAO") that the Committee take certain action with respect to contributions it 

received for the 2014 general election. 1 

This matter is appropriate for Commission consideration because, as discussed 

below. RAD's determination- specifically. that the Committee must refund 100% 

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

contrary to the Commission· s regulations.~ 

The Commission has long permitted authorized committees to make disbursements 

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

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

1 RAD notified counsel for the Committee by telephone on December 5. 2014. of RAD's 

determination. as well as the legal analysis by the Oftice of General Counsel ("OGC") supporting 

RAD's determination. See Fed. Election Comm·n. Policy Statement Regarding a Program for 

Requesting Consideration of Legal Questions by the Commission. 78 Fed. Reg. 63203 (Oct. 23, 

2013). 

: .See Policy Statement Regarding a Program for Requesting Consideration of Legal Questions by 

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

review process ... shall be limited to questions of law on material issues. when ... the request to 

take corrective action is contrary to or otherwise inconsistent with prior Commission maners dealing 

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

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

set ronh in the Commission·s regulatory approach to this issue. this maner is "novel. complex. or 

pertains to an unsettled question of Ia\\ ... See id. 
Federal Election Commission 

December 23. 2014 

Page 2 

"exp1icit[1y r provide 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 received less the sum ofgeneral election disbursements made." 11 

C.F.R. § 109.2(e)(2) (emphasis added). The Committee abided by this regulatory 

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

general election. deducted those amounts from general election contributions. and 

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

The Commission should instruct RAD that no further action is required and to 

accept the Committee's termination tiling. 

FACTS 

Cantor for Congress is the principal campaign committee of former Representative 

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

Committee had accepted $1.817.375 in contributions designated for the 2014 

general election. The Committee established separate records for all contributions 

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

""at all times equal to or in excess of the sum of general election contributions 

received less the sum of general election disbursements made." At no point did the 

Committee use any contributions designated for the general election for any 

expenses related to the primary election. 

After the primary. Representative Cantor was not a candidate in the general 

election. Accordingly. the Committee began winding down and making 

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

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

written redesignations 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 

$1.723.825. 

Next. the Committee identified the following limited number of disbursements 

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

( 1) $116.090 for commissions paid to commercial fundraisers specifically for 

general election contributions: and 
Federal Election Commission 

December 23. 2014 

Page 3 

(2) $113.846.75 in administrative expenses that were retained by joint fundraising 

committees - and never in the Committee· s possession -to collect general election 

contributions on behalf of the Committee. 

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

made" from its remaining $1.723.825 "sum of general election contributions 

received" to determine that it must refund net general election contributions of 

$1.493.888.25. The Committee then prm:essed those refunds.' 

The Committee reported all of these transactions on its July and October 2014 

quarterly repons. 

On October 1. 2014. the Committee received a Request for Additional Information 

("RFAI") from Mr. Bradley Matheson ofRAD regarding the Committee's July 

quarterly report ... The RFAI stated. in relevant part: 

While it is permissible 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 between primary and general election contributions. 

(11 CFR § 102.9(cll This general election amount must be 

maintained in the committee's account. 

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

contribution 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: 

Any subsequent repon(s) filed with the Commission must disclose 

the refund or redesignation of any general election contribution. 

The exact amounts refunded to contributors depended on whether their general election 

contribution~ were subject to the above-described commissions or joint fundraising committee 

expenses. If the) were. then each refunded contribution was reduced by the amount of the 

commission or expense paid for that contribution. All other general election contributions were 

refunded with no deduction for general election expenses. 

~ The RF AI is available at http: docqucrdcc.gov pdf 738 14330061738 14330061738.pdf. 
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 will be taken into 

consideration. 

The Committee provided the following timely response on October 15. 2014: 

··cantor for Congress has refunded and/or redesignated all contributions received 

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

within 60 days ofthe Primary election (by August 9. 2014).'' 5 

On October 28. 2014. the Committee filed its termination report. 6 On l\ovember 

I 0. 2014. counsel for the Committee participated in a conterence call with Mr. 

Matheson. during which RAD questioned why the Committee did not refund the 

$229,936.75 that the Committee had incurred for general election expenses. In this 

and subsequent calls with Mr. Matheson. the Committee's counsel 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 November 13.2014. the Committee recei\ed another RFAI informing the 

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

previous)~, cited in a letter referencing the 2014 July Quarterly Repon" have been 

resolved. 

On December 5. 2014. RAD notified the Committee· s counsel of RAD · s tinal 

determination and OGC's concurrence- which Mr. Matheson read to the 

Committee's counsel over the telephone- that the $229.936.75 in general election 

expenses should have been refunded. 

5 The Committee's response is available at 

http: docquen .fec.gov pdf 703 1-!9782-!9703 l-19782-19703.pdf. 

6 The Committee's termination repon is available at 

http: ·docquer,.fec.gov pdf782 1-!952553782 l-195255378..,.pdf 

The second RFAI is available at hnp: docquer\.ti:c.gov pdf382 1~33006638214330066382.pdf. 
Federal Election Commission 

December 23. 2014 

Page 5 

THE LAW 

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

accept contributions for use in a general election prior to a candidate· s primary 

election. As explained in the Commission's regulations: 

( 1) If the candidate. or his or her authorized committee(s ), receives 

contributions that are designated for use in connection with the 

general election pursuant to 11 CFR 110.1 (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 received for the primary election and contributions 

received for the general election. Acceptable accounting methods 

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

accounts for each election. caucus or com-cntion: or (ii) The 

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

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

contributions made for the general election shall be refunded to the 

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

or 110.2(b)(5). or reattributed in accordance with 11 CFR 

110.1 (k )(3 ). as appropriate. 

11 C.F.R. § 109.2(e). 

In 1986. the Commission began permitting authorized committees to use 

"contributions designated for the general election to make expenditures. prior to the 

primary election. exclusively for the purpose of int1uencing the prospective general 

election ... :· AO 1986-17 (Green) at 4: see also AO 1992-15 (Russo) at n.5. 

However. the Commission noted that. regardless of "whether or not [a] 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 allo\\able contribution to [the committee] with respect to the primary 

election." Jd. 

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

apply when an authorized committee uses general election contributions for general 

election expenses. Important!). the Commission altered the approach suggested by 

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

December 23. 2014 

Page 6 

have been required to maintain additional funds -to cover those it disbursed for 

general election expenses to effect the full general election contribution refunds 

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

obligation. stating: 

Regardless of the f accounting l method used .... an authorized 

committee's records must demonstrate that. prior to the primary 

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

excess of the sum l~{general election contributions receil'ed less 

the sum c~(general elecTion disbursement.\ made. 

II C.F.R. ~ 10:2.9(e)(1) (emphasis added). 

The Commission explained that the new regulation ··makes the standard for 

acceptable accounting methods explicil by stating that the committee's records must 

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

times equal to or in excess of the sum of general election contributions received less 

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

Explanation and Justification for Final Rules on Contribution Limitations and 

Prohibitions (hereinafter "2002 E&J"). 67 Fed. Reg. 69928. 69929 (Nov. 19. 2002) 

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

original purpose -which had been aniculated in Advisory Opinion 1992-15 

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

are designed to ensure that candidates in [this J situation do not use general election 

contributions for the primary election ... MUR 6057 (Horn). F&LA at 3. 

DISCUSSION 

A) The Commission's Regulations Permit an Authorized Committee to Make 

General Election Expenditures Prior to the Primary, and Do Not Require 

Refunds of Such Amounts. 

The Commission's 200:2 rulcmaking was a critical change and maturation in the 

agency'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 for 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 of 

general election disbursements made:· ll C.F.R. ~ l 02.9(e)(2) (emphasis added). 
Federal Election Commission 

December 23. 2014 

Page 7 

Thus. the Commission promulgated a rule of general applicability allowing 

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

amount - after general election expenses are subtracted - of the general election 

contributions they received. 

Therefore. an authorized committee can only be required to refund that same net 

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

affim1atively pem1its and contemplates that an authorized committee will spend 

general election contributions on general election expenses. Accordingly, an 

authorized committee need only maintain general election contributions sufficient 

to refund the remaining balance. 

This conclusion is apparent from the specific language ofthe regulation itself, the 

purpose the regulation is meant to serve. and the regulation· s proper fit within the 

Commission· s regulatory framework. First. the regulation· s allov,:ance 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. carve out an exclusion for general election 

refunds. 8 

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

authorized committees .. do not use general election contributions for the primary 

election ... MUR 6057 (Hom). F&LA at 3- is fully satisfied here. It is undisputed 

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

expenses. not for primary election expenses. Therefore. the Committee is tree to 

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

election disbursements made·· as stated in II C.F.R. § 102.9(e)(2). 

Third. the regulation· s affirmative allowance permitting authorized committees to 

maintain only net general election contribution amounts is rendered meaningless if 

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

Had the Commission intended to limit the allowance of II C.F.R. ~ 10.2.9(e)(2) !'.O that it did not 

apply to refunds. it would have said so explicitly in order to overcome the regulation"s plainly stated 

comprehensive application. And it is no excuse to say that the Commission may not have considered 

the regulation·s effect on refund~ when it promulgated this ne\\ regulatory allowance. At the same 

time the Commission was promulgating the regulation at II C.F.R. § I 02.9(e)(2). it was 

simultaneousl~ addressing the general election refund requirement now at subparagraph (e)(3) which 

does not modify to circumscribe the allowance of subparagraph (e)(2). See 2002 E&J. 67 Fed. Reg. 

at 69929. 

8 
Federal Election 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 would 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 would nullify the effect of the regulation which. by its clear terms. permits 

authorized wmmittees to maintain net general election contribution amounts. As 

with a statute. familiar rules of interpretation instruct that a regulation should be 

construed in a marmer that giws it full effect and does not render it mere 

surplusage. See Astoria red. Scn·ings & Loan Ass 'n ,._So/imino. 501 U.S. 104, 112 

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

rendering supertluous 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 allov.-ance are comprehensive and contain no exclusions. The 

fundamental purpose served by the regulation is ~:onsistent \Vith this allowance. 

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

allowance· s effect. 

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

Plain Significance. 

Nonetheless. 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 1986-17 (Green) and 1992-15 (Russo) for the 

proposition that full refunds- including the portions of general election 

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

authorized committee does not participate in a general election.4 Their reliance on 

these advisory opinions is critically misplaced: these authorities pre-date the 2002 

promulgation of 11 C.F.R. § 102.9(e)(2). As just explained. the Commission 

clarified and altered the requirements of those advisory opinions to permit an 

authorized committee to maintain only net general election contributions. 

" RAD and OGC emphasize the Commission's statement in Advisory Opinion 1986-17 (Green) that 

the requester must make a "full refund" of general election contributions should the candidate lose 

the primary. The Commission notably did not repeat that language in Advisory Opinion 1992-15 

(Russo). but simply stated that a committee must "make refunds of general election contributions" 

after a primary loss. 
Federal Election Commission 

December 23. 2014 

Page 9 

RAD and OGC attempt to downplay the significance of this development. Mr. 

Matheson explained over the phone that the Commission's promulgation of 11 

C. F .R. s 1 02. 9( e )(2) did not affect Advisory Opinions I 986-17 (Green) and 1992-

IS (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(e)(2)'s new accounting method included a major 

substantive change to the amount of general election funds that an authorized 

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

Commission's own word- that an authorized committee did not have to maintain 

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

could be under no 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. § l02.9(e)(2). 11 

) 

Second. the RAD and OGC characterization of 11 C.F.R. § 109.2(e)(2) as an 

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

election contributions is specious. If that were the Commission's intent. it would 

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

the general election contributions. But that is not what the regulation says. and the 

Commission should be wary of a proffered interpretation that conflicts with the 

regulation's plain meaning and can be justified only as "prophylaxis-upon1

° Funhermore. providing greater \\eight to these advisory opinions than to the regulation invens the 

order of the weight of the authorities. A regulation validly promulgated by the Commission must 

take precedence over the Commission ·s advisor) opinions. See 52 U .S.C. ~ 30 I 08(b) (a "rule of law 

which is not stated in this Act or in chapter 95 or chapter 96 of title 26 may be initially proposed by 

the Commission only as a rule or regulation pursuant to procedures established in section [30 Ill] of 

this title ... and not as an advisor) opinion l. In addition. advisory opinions are intended to be used 

only defensivcl) a~ shields against liability for panies who rely on them. and not as authorities to be 

used offensively by the Commission against regulated panies. See id. § 30108(c). This is even more 

so when analyzing an advisory opinion against a permissive allowance contained in a subsequently 

issued regulation. 
Federal Election Commission 

December 23.2014 

Page 10 

prophylaxis·· incompatible with campaign finance regulation. See AfcCutcheon v. 

FEC. 571 U.S._ (2014). slip op. at 33. 11 

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

C.F.R. § I09.2(e)(2) is MUR 6057 (llom). which confirms the regulation's 

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

there. 11 C.F.R. ~ 109.2(e)(2) is '"designed 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 election expenses with general 

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

contributions is operating entirely consistent with this purpose. In addition, the 

Commission in MCR 6057 (Hom) restated the rule that .. should the candidate not 

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

all general election contributions.'' ld. That statement merely repeats the 

uncontroversial requirement at 1I C.F.R. § 1 02.9( e)(3) and § Il0.1 (b)(3)(i)(C) that 

every 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 11 C.F.R. s 109.2(e)(2) and its specific allowance 

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

amount of its general election contributions. 

But aside from these statements. the MUR \vas 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 

otherwise be. Accordingly. the MUR otfers no authority on that point. 

CONCLUSION 

The plain language of 11 C.F.R. ~ 102.9(e)(2) permits an authorized committee to 

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

other purposes. That is what the Committee did. Therefore. the Commission 

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

11 The Commission·s restrictions at what are now II C.F.R. ~ 109.2 (e)( I) and (3) alread} 

prohibited the use of general election funds for primary expenses and predated the 2002 rulemaking. 

but were previously numbered as subsections (e)( I) and (2 ). See AO 19Q2-15 (Ru~so) at 2 (""These 

regulations are designed to ensure that candidates ... do not use general election contributions for 

the primary election ... ). 
Federal Election Commission 

December 23. 2014 

Page 11 

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

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

Sincerely. 

Caleb P. Burns 

Eric Wang