Wednesday

June 29, 1994

Part V

Federal Election

Commission

11 CFR Part 107 et al.

Presidential Election Campaign Fund and

Federal Financing of Presidential

Nominating Conventions; Rule
3 3 6 0 6 Federal Register / Vol. 59* No. 124 / Wednesday, June 29, 1994 / Rules and Regulations

FEDERAL ELECTION COMMISSION

11 CFR Parts 107,114, and 9008

[Notice 1994-9]

Presidential Election Campaign Fund

and Federal Financing of Presidential

Nominating Conventions

AGENCY: Federal Election Commission. 

ACTION: Final rules; transmittal of 

regulations to Congress.

SUMMARY: The Federal Election 

Commission is revising its regulations 

governing publicly-financed 

Presidential nominating conventions. 

These regulations implement the 

Federal Election Campaign Act of 1971, 

as amended (FECA or the Act), and the 

Presidential Election Campaign Fund 

Act (Fund Act). The revisions update 

the provisions governing the audit and 

repayment process, and address vendor 

discounts, items provided for 

promotional consideration, legal and 

accounting expenses, civil penalties, 

and donations to host committees and 

municipalities. The changes also 

reorganize these rules and make them 

more consistent with the rules 

governing other publicly-financed 

committees.

DATES: Further action, including the 

announcement of an effective date, will 

be taken after these regulations have 

been before Congress for 30 legislative 

days pursuant to 2 U.S.C. 438(d) and 26 

U.S.C. 9009(c). A document announcing 

the effective date will be published in 

the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. 

Susan E. Propper, Assistant Général 

Counsel, 999 E Street NW., Washington, 

DC 20463, (202) 219-3690 or (800) 424- 

9530.

SUPPLEMENTARY INFORMATION: The 

Commission is publishing today the 

final text of revisions to its regulations 

at 11 CFR part 107, section 114.1, and 

part 9008, which concern the public 

financing of Presidential nominating 

conventions. The Commission had 

earlier sought comments on a previous 

attempt to revise the convention 

regulations by publishing a Notice of 

Proposed Rulemaking (1990 NPRM) on 

August 22,1990. See Notice of Proposed 

Rulemaking, 55 FR 34267 (Aug. 22, 

1990). Written comments were received 

from the Republican National 

Committee and the Democratic National 

Committee in response to the 1990 

NPRM. Subsequently, the Commission 

decided to take no further action on that 

rulemaking until after the 1992 

conventions had been held. See

Suspension of Rulemaking, 56 FR 14319 

(April 9,1991).

On August 12,1993, the Commission 

issued a new Notice of Proposed 

Rulemaking (NPRM), thereby initiating 

a new rulemaking and again seeking 

comments on potential revisions to the 

convention regulations. 58 FR 43046 

(Aug. 12,1993). This NPRM differed 

significantly from die 1990 NPRM, as 

the Commission sought to take into 

account additional issues, including 

some derived from the 1988 and 1992 

party conventions, and altered some of 

the proposals contained in the 1990 

NPRM. Comments were received from 

the Republican National Committee, the 

Democratic National Committee, Jan 

Witold Baran, Common Cause, and the 

Internal Revenue Service. In response to 

a written request, a public hearing was 

held on October 27,1993. Two 

witnesses presented testimony on behalf 

of the Republican National Committee, 

and two witnesses presented testimony 

on behalf of the Democratic National 

Committee.

Section 438(d) of title 2, United States 

Code and 26 U.S.C. 9009(c) require that 

any rules or regulations prescribed by 

the Commission to carry out the 

provisions of tides 2 and 26 of the 

United States Code be transmitted to the 

Speaker of the House of Representatives 

and the President of the Senate 30 

legislative days before they are finally 

promulgated. These regulations were 

transmitted to Congress on June 23,

1994.

Explanation and Justification

Part 107—Presidential Nominating

Convention, Registration and Reports

There are no substantive changes in 

this part. However, it has been . 

reorganized so that reporting by 

convention committees is covered in 

§ 107.1, and host Committee reporting is 

addressed in § 107.2.

Part 114—Corporate and Labor

Organization A ctivity

Section 114.1 Definitions

In paragraph 114.1(a)(2)(viii), the 

citations to the convention rules have 

been amended to correspond to the 

proposed reorganization of 11 CFR Part 

9008. -

Part 9008—Federal Financing o f

Presidential Nominating Conventions

The Commission has revised and 

reorganized its rules governing public 

financing of Presidential nominating 

conventions to address several issues 

that have arisen, and to make the 

convention regulations more consistent 

with the rules applying to publiclyfinanced Presidential campaign 

committees. The reorganization of 11 

CFR Part 9008 separates the rules 

concerning convention committees from 

those addressing host committee and 

local government activity. Thus,

Subpart A of Part 9008 covers only 

convention committees and Subpart B 

contains the rules regarding host 

committees and local government 

activity.

Subpart A—Expenditures By N ational

Com m ittees and Convention

Com m ittees

Under the reorganization of Part 9008, 

Subpart A sets forth the rules relating to 

convention committees set up by the 

national party committees to make 

arrangements for the party’s presidential 

nominating convention. Within Subpart 

A, the sequence of §§ 9008.1 through 

9008.12 has been rearranged to follow 

the progression of convention activity 

from registration through use of funds 

and sources of contributions to, finally, 

audits and repayments. New §§ 9008.13 

through 9008.16 have been added to 

follow similar provisions for publiclyfinanced Presidential candidates.

Section 9008.1 Scope

Section 9008.1 continues to explain 

the scope of the convention rules found 

in 11 CFR Part 9008. However, the 

provisions in previous paragraph 

§ 9008.1(b) regarding reporting by host 

committees, government agencies and 

local municipalities have been deleted 

because they duplicate portions of new 

§ 9008.51.

Section 9008.2 Definitions

This section generally follows former 

11 CFR 9008.2.

Section 9008.3 Eligibility for 

Payments; Registration and Reporting

Paragraph 9008.3(a) now sets forth the 

eligibility requirements for receiving 

public financing, which were previously 

located in 11 CFR 9008.8(b). Paragraph 

(a) of § 9008.3 also reflects several 

changes in the agreements convention 

committees must submit as a condition 

of eligibility to receive public funding. 

First, the revised rules eliminate the 

requirement in previous paragraph 

§9Q08.8(b)(4)(iv) that convention 

committees agree to establish a separate 

account for handling private 

contributions. One commenter 

supported the elimination of this 

requirement. If a convention committee 

were to accept private funds, either due 

to a decision not to accept its full 

entitlement of federal funds or due to a

deficiency in the Presidential Election 

Campaign Fund, the new rules provide
Federal Register / Vol. 5 9 , No. 124 / W ed n esd ay, June 29, 1 9 9 4 / Rules and R egulations 33607

the option of either setting up a separate 

account or depositing private 

contributions with payments received 

from the Fund. See, paragraph 

§ 9008.6(a)(3). This approach is 

consistent with the rules governing 

Presidential candidates who accept 

public financing for the general election.

Second, a new provision has also 

been added at paragraph § 9008.3(a)(4) 

requiring convention committees to 

agree to comply with the relevant 

provisions of title 2, United States Code, 

and the Commission’s regulations 

implementing those provisions. This 

new condition parallels the candidate 

agreements for publicly-financed 

primary and general election 

Presidential candidates.

New language in the convention 

agreement provisions in paragraph 

§ 9008.3(a)(4)(v) pertains to the 

production of computerized information 

on magnetic tapes or diskettes under 

new paragraph § 9008.10(h). This new 

language follows similar requirements 

set forth in 11 CFR 9003.1 and 9033.1 

governing candidate agreements.

Language has also been added to 

paragraph (a)(4)(v) of § 9008.3 to 

indicate that the convention committee 

shall agree to provide the Commission, 

upon-request, with copies of contracts 

with its vendors, and documentation 

regarding reductions, discounts, and 

items received in exchange for 

promotional consideration. The 

Commission received a wide range of 

comments on this requirement. One 

witness indicated a preference for 

including in the reports certain 

information on items provided at no 

charge, and supplying contracts during 

the Commission’s audit, instead of 

attaching the contracts to the publiclyfiled reports. Others saw no reason to 

provide or disclose documentation of 

discounts, deductions, and free items 

because, in their view, these are not 

contributions or expenditures and are 

not subject to convention spending 

limits. In contrast, one commenter urged 

the Commission to reverse its policy of 

permitting private in-kind contributions 

to host committees and convention 

committees because public funds were 

meant to replace large contributions 

from corporations, labor unions and 

wealthy individuals, which would, in 

the commenter’s view, otherwise 

undermine the intent of the Federal 

Election Campaign Act and the integrity 

of public financing.

The Commission has concluded that 

its long-standing approach regarding 

vendor contracts is consistent with 

Congressional intent, and should be 

explicitly reflected in the regulations. 

Accordingly, the new language follows

the Commission’s current practice of 

requesting contracts, when necessary , 

during the audit process. The provision 

of vendor contracts helps the 

Commission ensure that corporations 

are following their ordinary course of 

business in their transactions with 

political committees. Under revisions to 

paragraph § 9008.9, however, copies of 

vendor contracts need not be attached to 

convention committees’ reports. Instead, 

paragraph § 9008.9(b) specifies the 

information to be reported by the 

convention committee when 

commercial vendors provide goods or 

services in exchange for promotional 

consideration arrangements.

The new rules at paragraph 

§ 9008.3(a)(4)(v) follow previous 11 CFR 

9008.8(b) by requiring convention 

committees to provide the Commission 

with copies of their contracts with host 

committees and municipalities upon 

request The NPRM had proposed 

requiring convention committees to 

attach copies of these contracts to their 

regular reports.

The comments generally opposed 

additional reporting requirements, 

arguing that host committees do not 

utilize public funds, that the current 

requirement that contracts be made 

available upon request during 

Commission audits is sufficient, and 

that host committees are motivated by 

economic (not political) considerations. 

One commenter suggested that it would 

be onerous to require both the contract 

between the host committee and the 

convention committee, and 

documentation of vendor’s contracts or 

discounts. The final rules in this section 

and section 9008.9 reduce the amount of 

documentation to be provided by 

convention committees with respect tovendor transactions and contracts with 

cities and host committees.

Paragraph § 9008.3(b) sets forth the 

registration and reporting requirements 

for convention committees previously 

found in 11 CFR 9008.12(b). The revised 

rules delete language in previous 

paragraph §90G8.12(b)(l)(ii) which had 

indicated that other committees and 

organizations representing political 

parties in making convention 

arrangements must register and report as 

political committees. This language is 

not necessary because these entities are 

already clearly subject to the registration 

and reporting requirements of the FECA. 

The reporting requirements have also 

been revised to track the reporting dates 

for political committees filing quarterly 

reports under Title 2. See, 11 CFR 104.5.

The NPRM proposed requiring that 

convention committees file their first 

quarterly report following either the 

quarter in which they receive their first

payment from the Fund or when they 

begin receiving funds or making 

disbursements for convention activity, 

whichever is earlier. These committees 

are able to obtain loans and begin 

making convention-related 

disbursements well before they receive 

their first public financing payment. 

However, this activity is not disclosed 

until three months after that payment is 

received. Earlier disclosure was 

suggested to provide a more 

contemporaneous picture of convention 

committee activity and to ease the 

burden of filing a comprehensive first 

report covering as much as a year’s 

disbursements. When this change was 

suggested in the 1990 NPRM, one 

commenter indicated that it already files 

reports for the first quarter after 

beginning to make disbursements for the 

convention, and did not object to the 

earlier filing requirements. However, in 

its response in the current rulemaking, 

the commenter objected to earlier 

reporting where no public funds have 

been transferred to the convention 

committee. In contrast, another 

commenter supported the earlier 

reporting requirement, and suggested à 

threshold of no less than $5,000 to 

trigger the filing requirements. The final rules have been revised to 

follow the previous rules to reduce the 

number of reports that must be filed by 

convention committees.

Section 9008.4 Entitlement to 

Payments from the Fund

Section 9008.4 has been reorganized 

so that paragraphs (a) and (b) 

incorporate the rules previously found 

in § 9008.3 concerning entitlements to 

payments from the Fund. Paragraph (c) 

of § 9008.4 contains the provisions 

concerning the limitation on payments, 

which were previously located at 11 

CFR 9008.5.

Section 9008.5 Adjustment of 

Entitlements

The provisions entitled “Adjustment 

of entitlement” have been moved to 

§ 9008.5 from previous § 9008.4. With 

regard to the income from the 

investment of public funds, previous 

paragraph (b) of § 9008.4 has been 

removed and replaced with new 11 CFR 

9008.12(b)(6). TTie new provision more 

closely follows the approach taken in 

the rules governing Presidential 

candidates who accept public funding. 

See 11 CFR 9007.2(b)(4) and 

9038.2(b)(4).

Section 9008.6 Payment and 

Certification Procedures

Section 9008.6, "Payment and 

certification procedures”, has been
33608 Federal Register / V o l. 5 9 , N o. 1 2 4 / W e d n e s d a y , Ju n e 2 9 , 1 9 9 4 7 R u le s a n d R e g u la tio n s

moved from 11 CFR 9008.8 of the 

previous rules. In addition, paragraph 

(a)(2) has been revised by combining the 

rules for major and minor parties on 

when they may accept private 

contributions for convention expenses, 

and by addressing the possibility of a 

deficiency in the Fund. Unless there is 

a deficiency in the Fund, or the national 

committee does not accept all the public 

financing to which it is entitled, 

contributions cannot be accepted 

because they would cause the 

convention committee to exceed its 

spending limits, unless the committee 

had surplus funds left over. The 

Commission notes that under new 

section 116.5, payments by committee 

staff for convention expenses are treated 

as advances, and therefore as 

contributions, until reimbursed. Thus, 

the question has arisen as to the 

maximum amount a convention 

committee can accept in staff advances 

if it provides reimbursement and 

accepts full public funding. Given that 

the convention committee is 

established, financed, maintained and 

controlled by the national committee, 

and is therefore affiliated with the 

national committee, it shares the 

national committee’s $20,000 

contribution limit. The NPRM sought 

comment on including in the 

convention regulations language to this 

effect.

The witnesses at the hearing agreed 

that convention committees are 

affiliated with the national party 

committees, and believed the existing 

rules and exceptions regarding staff 

advances that apply to political 

committees should control. While one 

thought additional language was 

unnecessary, the other witness 

suggested specifically stating that the 

maximum amount an individual may 

contribute to the convention committee 

per year is $20,000, and that a 

convention committee may accept up to 

$20,000 in staff advances if it provides 

reimbursement and accepts full public 

funding. Further, this witness suggested 

amending proposed paragraph 

§ 9008.12(c) to indicate that the 

convention committee is not obligated 

to repay a staff advance to the U.S. 

Treasury if it has made full 

reimbursement to the staff member and 

has not utilized the private contribution 

(even to the extent of the permissible 

$20,000) to defray convention expenses.

The Commission agrees with this 

commenter’s views, but does not believe 

additional language is needed in the 

regulations. While the Commission has 

reached this conclusion to 

accommodate the practice of staff 

advances, it should be noted that other

private contributions may be received 

only in accordance with paragraph (a) of 

this section.

As noted in the earlier discussion of 

§9008.3, paragraph (a)(3) of 11 CFR

9008.6 offers convention committees the 

choice of setting up a separate account 

for private contributions or depositing 

them in the account used for payments 

from the Fund. This approach parallels 

that provided for publicly-financed 

general election candidates in 11 CFR 

9005.2(c). Thus, convention committees’ 

accounts must be maintained at 

depository institutions insured by the 

Federal Deposit Insurance Corporation. 

The 1979 amendments to the FECA also 

permitted political committees to 

establish campaign depositories at 

institutions insured by the National 

Credit Unión Administration. However, 

the Commission has not made this 

option available to Presidential 

candidates or convention committees 

choosing to receive public funding 

because credit unions do not return 

canceled checks, thus preventing 

committees from providing adequate 

documentation for disbursements drawn 

upon credit union accounts. See, e.g., ll 

CFR 9005.2(c). In the final version of 

paragraph (a)(3), the references to 

accounts insured by the Federal Savings 

and Loan Insurance Corporation have 

been deleted because these accounts are 

now insured by the Federal Deposit 

Insurance Corporation.

Finally , this section continues to 

permit the receipt of federal funds either 

in one lump sum or in a series of 

payments if the convention committee 

so requests.

Section 9008.7 Uses of Funds

With some minor changes for clarity, 

§9008.7, “Use of funds,” follows 

previous 11 CFR 9008.6.

The NPRM sought comments on 

whether a revision to this section is 

warranted to clarify the distinction 

between items which are convention 

expenses and must be defrayed with 

public funds (and count against the 

convention committee’s expenditure 

limit) and expenses which are related to 

ongoing business of the national 

committee and are not properly paid for 

with public funds. Given that the 

convention not only serves as the 

vehicle for nominating the party’s 

Presidential candidate, but is also used 

to conduct ongoing party business, the 

line between convention expenses and 

party expenses can be a fine one. 

However, the Commission has 

encountered instances in which the 

national committee has sought to pay 

for expenses that are clearly conventionrelated, particularly if the convention is

close to the expenditure limit. The 

Commission also wishes to ensure that 

public funds are used solely for running 

the nominating convention, and not for 

expenses related to party business.

The NPRM did not propose creating a 

presumption that expenses are 

convention-related if they are incurred 

by the convention committee or national 

committee around the time of the 

convention or within the convention 

city’s locale (a suggestion which had 

been included in the 1990 NPRM). 

Comments on the 1990 NPRM opposed 

the creation of such a presumption, 

citing situations where they believed it 

could improperly result in the use of 

federal funds for party business.

The NPRM in this rulemaking 

indicated that the Commission had 

decided not to include such a 

presumption in the convention 

regulations. However, additional 

comments were sought oh whether to 

amend the list of permissible 

convention expenses to exclude part or 

all of the salary and travel costs for 

those whose primary role is to conduct 

ongoing party business while at the 

convention. In particular, the 

Commission welcomed comments on 

how to allocate salary and travel costs 

for those who may split their time 

between party business and conventionrelated duties.

Subsequently, two commenters 

repeated their previous views that the 

convention regulations should provide 

assurances that public funds are spent 

on legitimate convention expenses, but 

that ultimately any attempt to spell out 

convention expenses would be both 

subjective and unworkable. Instead, 

they argued that the determination of 

what is considered a convention 

expense should be made on a case-bycase basis. The Commission heard 

testimony that it should not judge how 

committees spent their money, that 

increased regulation could infringe on 

First Amendment freedoms, and that 

convention committees should be 

allowed to allocate employees’ salaries 

and expenses between the convention 

and the national committee on a 

reasonable basis, subject to review 

during the convention committee audit. 

A key criterion would be the amount of 

time spent on each function, and would 

require the committee to prorate the 

amount of time spent on each set of 

responsibilities. In contrast, another 

commenter opposed changing the 

current regulation, arguing that any 

additional formula is unnecessary. The 

comment urged adoption of a 

presumption that the national 

committee staff is working on national
Federal Register / Vol. 5 9, No. 124 / W ednesday, June 29, 1 9 9 4 / Rules and Regulations 33609

committee business and not convention 

business.

The Commission has decided to 

continue its previous approach of listing 

in the rules the types of expenses that 

are convention-related, and thus subject 

to the convention spending limits. 

Adopting a completely case-by-case 

approach to this area would provide no 

guidance to committees trying to 

properly attribute their expenses. 

Accordingly, new § 9008.7 follows 

previous § 9008.6 by setting out the 

general principle that convention 

expenses include all expenses incurred 

by or on behalf of the national party 

committee or the convention committee 

with respect to, and for the purpose of 

conducting, the convention or 

convention-related activity. This 

includes all national committee activity 

in the convention city except for events 

clearly separate from the convention, 

such as fund raising events for the party 

committees, and meetings of the 

national committee unrelated to the 

convention.

New language has also been included 

in paragraph § 9008.7(a)(4)(xii) to reflect 

the Commission’s policy that die 

convention committee may defray the 

costs of gifts or monetary bonuses for 

committee staff and convention officials 

for convention-related services, as long 

as the bonuses or gifts do not exceed 

$150 per individual and $20,000 total. 

Another new provision, paragraph 

§ 9008.7(a)(4)(xiii), clarifies that the 

production costs of a biographical film 

or similar materials about a Presidential 

or Vice Presidential candidate may be 

paid for by the convention committee. 

However, if part or all of the film, or 

similar materials, is previously or 

subsequently aired or otherwise 

distributed by the candidate’s primary 

or general election campaign committee 

or by a party committee, or is used in 

connection with fundraising, the 

campaign committee or party committee 

must pay the convention committee for 

the reasonably allocated costs of the 

films or materials used.

Paragraph (a)(5) of § 9008.7 has been 

modified so that it follows the 

Commission’s past practice of seeking a 

repayment of interest earned on the 

investment of public funds, less any tax 

paid on the interest earned. This change 

is consistent with 11 CFR 9004.5, which 

governs interest earned by publiclyfunded Presidential candidates.

Another issue raised in the NPRM 

concerns the sources of funds used to 

pay civil or criminal penalties pursuant 

to 2 U.S.C. 437g. Both previous 

paragraph § 9008.6(b)(3) and new 

paragraph 9008.7(b)(3) indicate that 

such funds are subject to the

prohibitions of 11 CFR 110.4 and Parts 

114 and 115. Comments were sought as 

to whether these funds should also be 

subject to the contribution limits set 

forth in 11 CFR Part 110. One 

commenter urged the Commission to 

continue to permit convention 

committees to pay civil and criminal 

penalties with funds subject to the 

prohibitions, but not the limitations set 

forth in the Act, and not to treat 

amounts received or expended to pay 

such penalties as contributions or 

expenditures. The commenter pointed 

out that Congressional candidate 

committees and party committees are 

permitted to pay civil and criminal 

penalties with funds that do not meet 

the limitations or prohibitions of FECA, 

while publicly-financed primary and 

general election presidential candidates 

may pay penalties from funds not 

meeting the FECA’s contribution limits. 

Another commenter noted that public 

funds may not be used to pay these 

penalties, and restrictions on private 

funds would deter violators from paying 

their fines, given that fines are levied 

months or years after the convention. A 

third commenter opposed both limiting 

the sources of penalty payments and 

subjecting penalty payments to 

contribution limits, arguing that 

penalties are not paid for the purpose of 

influencing federal elections, and thus, 

are not contributions under FECA.

The Commission views civil and 

criminal penalties as an outgrowth of 

election activities, and therefore 

properly subject to the Act’s 

prohibitions, even if the funds received 

and expended are not contributions or 

expenditures. Consequently, paragraph 

§ 9008.7(b)(3) generally follows the 

previous provision. However, the 

Commission is continuing to consider 

possible changes to the present 

approach in the ongoing rulemaking 

regarding its compliance regulations at 

11 CFR part 111. See Notice of Proposed 

Rulemaking, 58 FR 36764 (July 8,1993).

Section 9008.8 Limitation of 

Expenditures

Section 9008.8 generally follows 

previous § 9008.7 by setting out the 

expenditure limits for convention 

committees and an explanation of the 

categories exempted from application to 

that limit. Former § 9008.7 had also 

included rules pertaining to activities by 

state and local governments and host 

committees. As part of the 

reorganization of Part 9008, the 

substantive provisions governing 

contributions to and expenditures by 

host committees and local governments 

have been moved to new §§9008.52 and 

9008.53. New language in paragraph

§ 9008.8(b)(3) provides some examples 

of the types of candidate expenses that 

may not be paid from the convention 

committee’s public funds, including the 

costs of the candidate’s transportation, 

meals and lodging.

Paragraphs (b)(1) and (b)(2) of 

§ 9008.8 follow previous paragraph 

§ 9008.7(d)(4) by indicating that 

expenditures made by government 

agencies and municipal corporations, or 

by host committees, will not count 

against the convention committee’s 

expenditure limit if the funds are spent 

in accordance with the provisions of 

proposed §§ 9008.52 and 9008.53. 

Consequently, there may be situations 

in which host committees make 

impermissible expenditures which 

count against the convention 

committee’s spending limits. As noted 

below, such situations could also be 

resolved through enforcement actions 

under 2 U.S.C. 437g. In addition, the Commission sought 

comments on revised language in 

paragraph 9008.8(b)(4)(ii) restating the 

current policy that payments made by 

the national committee for legal and 

accounting expenses count against the 

convention spending limits if these 

expenses are incurred in connection 

with the convention or conventionrelated activities. As an alternative, 

comments were welcomed on 

exempting payments by the national 

party committee for legal and 

accounting expenses solely for 

complying with the FECA and the Fund 

Act, provided that such funds are raised 

in accordance with the limits and 

prohibitions of the Act. Under this 

alternative, such amounts would be 

reported, and need not be placed in a 

separate account.

Two commentera and witnesses 

generally urged that convention legal 

and compliance costs should be exempt 

from the spending limits. The reasons 

they advanced included the following: 

similar expenses are exempt for 

publicly-financed presidential 

candidates; such a policy would 

encourage compliance; and it would not 

be appropriate to spend public funds on 

noncompliance legal costs tangentiallyrelated to the convention, such as a slipand-fall case or litigation over vendors’ 

contracts.

In light of the comments and 

testimony , the Commission has decided 

to change the provisions governing legal 

and accounting costs. Accordingly, 

revised paragraph § 9008.8(b)(4) creates 

a narrow exception to the convention 

spending limits for legal and accounting 

costs incurred in complying with the 

FECA and the Fund Act, so long as the 

contributions raised for this purpose
3 3 6 1 0 Federal Register / Vol. 59, N o. 124 / W ednesday, June 29, 1994 / Rules and Regulations

comply with the contribution limits and 

prohibitions. Thus, these contributions 

will be counted against the annual limit 

on contributions to the political 

committees established and maintained 

by the national political party of 

$20,000 per person, and $15,000 per 

multicandidate political committee. 

These contributions and payments must 

be reported by the convention 

committee on separate schedules of 

receipts and disbursements. This rule 

does not, however, prohibit the use of 

public funds to pay compliance 

expenses.

New paragraph (b)(5) has been added 

to section 9008.8 to indicate that the 

costs of complying with the technical 

requirements for submission of 

computerized records are not treated as 

convention committee expenditures, 

and therefore, are not subject to the 

expenditure limits set out in section

9008.8. This was suggested in response 

to the 1990 NPRM, which included 

provisions on computerized information 

in paragraph 9008.10(h). Although die 

comments reflected disagreement as to 

whether or not convention committees 

should be required to comply with the 

computerized magnetic media 

requirements (CMMR), they generally 

favored exempting the costs of 

producing, delivering and explaining 

the computerized information from the 

convention committee’s spending 

limits. Another suggestion was that 

funds raised to pay the costs involved 

should not be considered contributions, 

and should not be subject to the 

contribution limits and prohibitions of 

the FECA.

The Commission has concluded that 

the costs of providing computerized 

information are similar to the costs of 

providing legal and accounting services. 

Therefore, the revised rules adopt the 

same approach for funds raised to pay 

CMMR expenses as for funds raised to 

pay legal and accounting costs.

Section 9008.9 Receipt of Goods and 

Services from Commercial Vendors

Section 9008.9 specifies the 

circumstances under which different 

types of businesses may make in-kind 

donations to convention committees. It 

has been substantially revised from 

previous 11 CFR 9008.7(c), and it 

resolves several questions that have 

arisen concerning in-kind donations.

(1) Terminology. This rulemaking 

presented the issue of the different 

terms used in different portions of the 

previous regulations to describe the 

kinds of businesses that may donate 

funds or make in-kind donations. For 

example, “retail businesses” were able 

to provide reductions or discounts to

convention committees. See previous 11 

CFR 9008.7(c)(1). "Local businesses” 

were able to donate promotional items 

of nominal value to convention 

attendees, and to donate funds and inkind contributions to host committees to 

promote the convention city and its 

commerce. See previous 11 CFR 9008.7

(c)(2) and (d)(2). “Local retail 

businesses” were able to donate funds 

to the host committee to be used to 

defray convention expenses. See

previous 11 CFR 9008.7(d)(3). Finally, 

under AO 1988—25, businesses of any 

type were permitted to seek official 

provider status, which would enable 

them to provide certain items at no 

charge, in exchange for being designated 

an official provider, or for other 

promotional consideration.

The NPRM questioned whether a 

basis continues to exist for these 

distinctions. The Commission 

considered whether to require that all 

businesses qualify as "local” to help 

ensure that their goal in offering goods 

and services is commercial rather than 

political. In the alternative, the 

Commission has considered whether 

these Complex distinctions further the 

Commission’s objectives of ensuring 

that corporations do not make 

prohibited contributions to political 

committees. The proposed rules would 

have retained the current distinctions, 

While clarifying the distinction between 

“retail” and “Wholesale” businesses, 

and explaining when businesses qualify 

as “local” businesses under the Office of 

Management and Budget’s Revised

Standards fo r Defining M etropolitan

A reas in the 1990% 55 F R 12154 (March 

30,1990). In Advisory Opinion 1975-1, 

the Commission recognized two 

situations which would not violate 18 

U.S.C. 610 (the predecessor to 2 U.S.C. 

441b): volume discounts on goods or 

* services purchased by thé convention 

committee and donations to a group 

organized to promote the convention 

city. The rationale underlying these 

exceptions was that they reflected a 

commercial, rather than political, 

purpose by the business so involved.

Tne comments on the NPRM reflected 

no consensus on this issue. Some 

favored retaining the approach adopted 

in the current rules and Advisory 

Opinion 1988-25, while taking into 

account legitimate commercial interests 

of franchisees, branches and dealers 

affiliated with national corporations.

Some urged the Commission to apply 

these provisions to all businesses 

because the criteria for “local” and 

“retail” are confusing, the distinctions 

do not further the Commission’s 

objectives, or because all businesses in 

a Metropolitan Area benefit from a

successful convention. Others 

supported the retention of the present 

distinction between ‘‘retail,” “local,” 

and “other business,” and advocated 

changing the definition of “local 

business” so that it includes any 

company doing a sufficient level of 

business within the Metropolitan Area, 

whether or not the company has a 

physical presence there. This approach 

would not provide a workable standard 

that would enable either the 

Commission or businesses to know 

whether they are considered “local.”

The Commission has decided to 

revise § 9008.9 to do away with the 

complex distinctions between 

businesses that are “local,” "retail,” 

“local retail,” and "official providers.” 

Instead, the term “commercial vendor” 

is used to define the types of businesses 

that may provide goods or services to 

convention committees at reduced or 

discounted rates, or for promotional 

consideration, or at no charge. 

“Commercial vendor” is defined in 11 

CFR 116.1(c) to mean persons providing 

goods or services to a candidate or 

political committee, whose usual and 

normal business involves the sale, 

•rental, lease or provision of those goods 

or services. Please note that donations of 

funds to host committees are covered by 

new §§ 9008.52 and 9008.53. Thus, the 

revised rules build upon the 

Commission’s decisions in AO 1975-1 

and AO 1988-25.

(2) Standard com m ercial vendor

reductions and discounts; goods or

services provided fo r prom otional

consideration. A related question 

involves the determination that 

reductions and discounts offered to the 

convention committee are in the 

ordinary course of business, or are 

commercially reasonable. Language was 

proposed during the previous 

rulemaking to explain the 

documentation that must he provided to 

the convention committee to 

demonstrate that a reduction or 

discount, such as a volume discount on 

hotel rooms, is within the vendor’s 

ordinary course of business. Although 

concerns were raised that these 

documentation requirements were 

burdensome and impractical, others 

urged the Commission to adopt that 

approach.

The NPRM also focused on the 

practice of offering free items to the 

convention, such as pianos or cars. 

Proposed language in § 9008.9 sought to 

incorporate the approach taken in 

Advisory Opinion 1988-25 by 

permitting businesses to provide 

products and services at no charge if it 

is in the ordinary course of that vendor’s 

business to provide products or services
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 33611

in an equivalent amount and on similar 

terms, such as in return for recognition 

as an “official provider” of such 

products or services, to non-political 

groups or events. The Commission had 

previously proposed incorporating in 

the regulations the conclusion reached 

in Advisory Opinion 1988-25, and had 

considered whether the approach taken 

in that advisory opinion should be 

modified to require that products or 

services be provided at no less than the 

vendor’s cost, notwithstanding the fact 

that the same business provides items at 

no charge to non-political clients. 

Compare AO 1975-1. Comments were 

also sought as to whether to establish 

exemptions for certain types of official 

providers, or those that provide 

products or services of less than a 

specified dollar amount. The NPRM also 

included proposed rules to ensure that 

in-kind donations are only made 

consistently with the provisions of the 

Act. Thus, the NPRM would have 

required that the vendor provide the 

committee with a description of what is 

provided, the terms of the reduction or 

discount, and a signed affirmation that 

this is in the ordinary course of 

business. It contemplated that vendors 

who do not have established practices of 

offering such discounts would be able to 

offer reductions or discounts that are 

consistent with established practices in 

their trade or industry. Comments were 

sought on whether certain types of retail 

businesses, such as restaurants, should 

be excluded from these documentation 

requirements. The Commission also 

requested comments on whether retail 

businesses providing less than a certain 

dollar amount of goods and services, or 

providing less than a certain percentage 

discount should also be exempt from 

the documentation requirements, and if 

so, what the appropriate amount or 

percentage would be.

One commenter urged the 

Commission to completely reverse its 

policy of permitting corporations to 

enter promotional consideration 

arrangements in connection with 

publicly financed conventions.

However, several other commenters 

opposed modifying the result of AO 

9188-25, arguing that official providers 

offer discounts to gain publicity and 

increased sales for their product, and 

questioning whether any instances of 

abuse existed. Consequently, one 

witness suggested that the Commission 

establish a presumption that local 

business involvement in convention 

activity is motivated by economic 

interests and not political involvement. 

These commenters opposed requiring 

vendors to sign affirmations that they

are acting in the ordinary course of their 

businesses. One argued that affirmations 

would go far beyond the Commission’s 

established policy, and would deter 

vendor involvement because vendors 

would be reluctant to sign affirmations 

that include terms such as 

“established,” “promotional,” or 

“commercial benefit.” Thus, one 

comment viewed the proposal as an 

attempt to second guess the business 

judgment of the vendor, and noted that 

it is sometimes difficult to value goods 

or services. Two comments urged the 

Commission to issue less burdensome 

rules, arguing that the additional 

documentation requirements are 

unnecessary because vendors offer 

discounts to obtain profitable business, 

not to influence federal elections. The 

witnesses at the hearing stated that the 

requirement that the in-kind donation 

not exceed the value of the commercial 

benefit was a subjective, hard to define 

standard. Instead of providing an 

affirmation, they preferred disclosing 

information on in-kind donations in 

their reports, such as the vendor’s name, 

and the nature and value of the goods 

or services provided, if this could be 

done in a non-burdensome manner.

The final rules regarding items 

provided for promotional consideration 

have been modified in several respects. 

First, the final rules indicate that 

discounts, reductions and free items 

may be offered by all commercial 

vendors, and are not restricted to local 

or retail businesses. These transactions 

must be in the ordinary course of 

business. The rales further define 

ordinary course of business. In addition, 

the proposed vendor affirmation 

requirement has been dropped from the 

final rales. Instead, the revised rales 

require the convention committee to 

maintain certain documentation of 

promotional consideration arrangements 

and to disclose in its reports a general f 

description of the goods or services 

provided, together with the name and 

address of the provider. This disclosure 

requirement is designed to be nonburdensome, yet sufficient to facilitate 

enforcement of the statutory 

prohibitions and limits by subjecting 

promotional consideration arrangements 

to public scrutiny.

One comment suggested that 

proposed paragraph § 9008.9(a)(2) be 

clarified to emphasize that “official 

provider” status is not the only form of 

promotional consideration since a 

convention committee may not want to 

provide exclusive rights to a particular 

vendor with respect to certain categories 

of goods or services. The Commission 

notes that § 9008.9 covers commercial 

vendors wishing to enter into a variety

of promotional arrangements, and is not 

narrowly limited to “official providers.”

The new rales generally continue the 

current policy of permitting commercial 

vendors to provide items of de m inim is

value, such as maps, pens, pencils or 

other similar items included in tote bags 

for those attending the convention. See

previous 11 CFR 9008.7(c)(2). Finally, 

paragraph (d) of revised § 9008.9 

specifies that goods and services 

received in accordance with this section 

do not count against the convention 

committee’s spending limits. (3) Reporting. Anotner issue raised 

during this rulemaking was whether 

convention committees should be 

required to report their receipt of 

reductions, discounts, and items 

provided for promotional consideration 

from businesses, including a statement 

of what was provided and its value, or 

whether the contracts themselves 

should be placed on the public record. 

There was little, if any, consensus 

among the commenters regarding these 

proposals. One comment noted that 

since issuing AO 1988-25, the 

Commission has required committees to 

demonstrate that donations or discounts 

were in the ordinary course of a 

vendor’s business, but believed that it 

would be extraordinary for the 

Commission to require the disclosure of 

the actual contract or to require that the 

contract state that the vendor is 

following its ordinary course of 

business. One witness favored reporting 

items received at no charge, but 

opposed reporting discounts given in 

the ordinary course of business, or 

attaching contracts to reports. The 

witness noted that the Commission’s 

long-standing policy has been that items 

provided in the ordinary course of 

business are not “contributions” to the 

committee. Finally, one comment 

opposed reporting in-kind donations 

because in-kind donations frequently 

take forms that are difficult to quantify, 

and the value of donations fluctuates 

according to changes in the market.

The final rales in section 9008.9 do 

not require convention committees to 

routinely report the receipt of standard 

volume discounts, or reduced rates 

normally made available to certain types 

of customers, although they do require 

reporting of promotional consideration 

arrangements. The rales also continue 

the previous policy that items of de

m inim is value, such as maps, pens, and 

tote bags, need not be reported. The new 

rules also do not require committees to 

file copies of vendor contracts with their 

reports. Instead, the contracts must be 

provided upon request during the audit. 

At any time, the Commission may seek 

additional information regarding
3 3 6 1 2 Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations

transactions with commerciai vendors, 

particularly if questions are raised as to 

whether a transaction is in the ordinary 

course of business, or results in the 

making and acceptance of a 

contribution.

Section 9008.10 Documentation of 

Disbursements; Net Outstanding 

Convention Expenses

Under the previous regulations at 11 

CFR 9008.8(b)(4)(v), committees were 

required to restate in the convention 

committee agreement all the 

documentation requirements for proving 

that expenses are convention-related. 

The revisions to these rules now follow 

the format of the regulations for publicly 

financed Presidential candidates by 

only stating in the convention 

committee agreement that the 

committee agrees to comply with the 

documentation requirements (see

paragraph §9008.3(a)(4)(iv)), and setting 

forth the actual documentation 

provisions in a separate section. Thus,

§ 9008.10 now contains the substantive 

rules regarding the production of 

evidence of convention expenses.

In addition, § 9008.10 has been 

redrafted to conform to the 

documentation requirements for 

publicly financed candidates. See, 11 

CFR 9003.5 and 9033.11. For example, 

the term “particulars” has been changed 

to “purpose of the disbursement.” Also, 

the language in paragraph 

§ 9008.10(a)(4) regarding documentation 

of disbursements has been modified to 

indicate that pre-established written 

committee policies may include daily 

travel expense policies, but do not 

include general per diem policies which 

cover a longer time period or which 

include a broader range of expenses. 

This change is consistent with the 

approach the Commission took in 

revising the primary and general 

election rules for publicly funded 

candidates. See, l l CFR 9003.5(b)(l)(iv) 

and 9033.11(b)(l)(iv). One commenter 

urged that convention committees be 

allowed to provide staff with fixed per 

diems in lieu of reimbursing actual 

expenses. Such an approach would be 

acceptable if it is reasonably calculated 

to cover the individual's actual 

expenses for transportation, lodging and 

meals, but not other expenses.

The Commission has added three new 

paragraphs to § 9008.10. New paragraph

(f) clarifies that convention committees 

must retain records regarding their 

disbursements and receipts and present 

them for Commission review. The 

records retained by the committee 

should also reflect its compliance with 

11 CFR 104.14. Paragraph (g) requires 

convention committees to provide a

statement of net outstanding convention 

expenses no later than 60 days after the 

last day of the convention, which 

should reflect its financial position as of 

45 days after the convention. The 

statement must also be updated to 

reflect the committee’s financial 

position as of nine months after the last 

day of the convention. The statement 

must be filed 30 days thereafter, which 

is also the date for die interim 

repayment of unspent funds under 11 

CFR 9008.12(b)(5). This provision 

parallels the requirements for publicly 

financed Presidential candidates. See,

11 CFR 9003.5(d), 9004.9,9033.11(d) 

and 9034.5. Such statements are 

intended to enable the audit process to 

be completed more expeditiously.

Finally, new paragraph (h) applies the 

Computerized Magnetic Media 

Requirements (CMMR) to publicly 

financed convention committees. The 

purpose of the CMMR is to establish 

uniform standards for producing 

computerized records maintained by 

publicly financed committees at the 

time of the Commission’s audit. Rules 

applying the CMMR to publicly 

financed Presidential candidates 

became effective on October 3,1990.

See 55 FR 40377 (Oct. 3,1990); see also,

57 FR 4453 (Feb. 5,1992) (updating the 

requirements and broadening certain 

technical standards). During that 

rulemaking, the Commission noted its 

intention to include parallel 

requirements in the convention 

regulations. See Explanation and 

Justification, 55 FR 26392 (June 27, 

1990). The basic rationale and 

explanation offered in the June 27,1990 

Explanation and Justification applies 

equally to convention committees. Id.

The categories of computerized records 

sought from convention committees are 

fewer, however, in view of the 

conventions’ narrower focus.

Several comments were opposed to 

these proposals, due to the perceived 

financial costs associated with altering 

their existing accounting systems and 

converting their data to a new format. 

One urged that any costs involved 

should be exempt from spending limits. 

Given that the Commission has not 

encountered problems in the past with 

computerized records maintained and 

used by the national parties’ convention 

committees, few if any, changes in these 

systems should be necessitated under 

the CMMR. As noted in the previous 

discussion of section 9008.8, the costs of 

complying with the CMMR are not 

expenditures by the convention 

committees, and are not subject to the 

national committees’ spending limits for 

the convention.

Section 9008.11 Examinations and 

Audits

Section 9008.11 now contains the 

provisions on examinations and audits 

which were previously found at 11 CFR

9008.9. Also included is a new sentence 

signaling the Commission’s intention to 

follow the same procedures during 

audits of convention committees as it 

now does when auditing the committees 

of publicly financed Presidential 

candidates. Please note that the 

December 31st time frame for 

conducting the audit, which is specified 

in this section and 26 U.S.C. 9008.8(g), 

refers to the time period in which the 

Commission will commence the audit.

The Commission has deleted from the 

convention rules previous paragraph 

§ 9008.11(e), regarding judicial review 

of Commission repayment 

determinations because judicial review 

procedures are spelled out in 26 U.S.C. 

9010 and 9011.

Section 9008.12 Repayments

Section 9008.12 includes the bases for 

Commission repayment determinations, 

previously found in 11 CFR 9008.10. 

The repayment determination 

procedures previously set out in 11 CFR

9008.11 have been replaced by new 

language indicating the Commission’s 

intention to follow the same procedures 

and offer the same opportunities to 

convention committees as are provided 

for publicly financed candidates during 

the repayment process. See 11 CFR

9007.2 and 9038.2. If in the future the 

Commission makes changes to the 

repayment rules applicable to 

Presidential candidates, corresponding 

changes would be made for the 

convention regulations. In addition, paragraph 

§ 9008.12(b}(5)(ii) continues the current 

requirement that convention committees 

make an interim repayment of unspent 

funds, but changes the time frame to 30 

days after the end of the ninth month 

after the last day of the convention. A 

final repayment of unspent funds must 

be made no later than 24 months after 

the end of the convention, both under 

previous paragraph § 9008.10(e)(3) and 

new paragraph § 9008.12(b) (5 )(iii).

One commenter argued that the 

current requirement of an interim 

repayment six months after the 

convention should be eliminated 

because six months is an insufficient 

amount of time to determine the amount 

needed to satisfy remaining bills, 

claims, and disputes. Instead, the 

commenter supported an 18 month or 

24 month overall time frame for making 

repayments,

As noted above, the final rules extend 

the time period for the interim
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 33613

repayment and retain the 24 month 

deadline for the final repayment The 

provisions in paragraph 

§ 9008.12(b){5){ii) adequately address 

the commenier’s concerns by allowing 

for the certification of payments to the 

convention committee of amounts 

needed to defray additional convention 

expenses, where the convention 

committee has already made an interim 

repayment.

With regard to the income from the 

investment of public funds, new 1 1 CFR 

9008.12(b)(6) replaces previous 

paragraph § 9008.4(b). The new 

provision more closely follows the 

approach taken in the rules governing 

Presidential candidates who accept 

public funding. See 11 CFR 9007.2(b)(4) 

and 9038.2(b)(4).

The NPRM sought comments on how 

to address situations where a host 

committee receives contributions from 

impermissible sources, such as nonlocal 

businesses, which are than used to 

defray convention expenses or fen: other 

permissible purposes. In some cases, it 

may be appropriate to count these 

amounts against the convention 

committee’s spending limits, although 

there may be situations where 

enforcement actions are warranted.

Several commenters argued that it 

would be more effective to handle these 

situations through enforcement than by 

imposing oversight responsibility and 

liability on the convention committees, 

because convention committees, host 

committees, and municipalities have 

different agendas. Several commenters 

and witnesses indicated that it may be 

appropriate to pursue the convention 

committee if it acts with knowledge, 

consent, or acquiescence in an unlawful 

act, but it would be unfair to impose 

accountability on convention 

committees when they are unaware of, 

or do not consent to, the unlawful 

actions of a host committee or city. Two 

witnesses testified that host committees 

conduct fundraising autonomously from 

the convention committees, although 

the two entities have an on-going daily 

relationship during the convention 

planning process.

In response to the concerns raised, the 

Commission notes that neither the 

current nor the revised rules in 

§ 9008.12(b)(7) impose strict or 

vicarious liability on convention 

committees for the actions taken by 

cities or host committees. Instead, 

convention committees are accountable 

for the actions of cities or host 

committees when they knowingly help 

or assist or participate in conducting 

impermissible activities, including 

initiating or instigating die activity.

Thus, the rules preserve the

Commission’s ability to proceed in the 

manner appropriate to a particular case, 

such as through the repayment process 

or enforcement.

Section 9008.13 Additional Audits

1116 Commission’s authority to 

conduct other audits or investigations of 

a committee in an appropriate case is set 

forth in new § 9008.13. It follows sim ilar 

provisions for publicly financed 

Presidential candidates. See 11 CFR 

9007.4 and 9039,3.

Section 9008.14 Petitions for 

Rehearing; Stays of Repayment 

Determinations

This new section governs petitions for 

rehearing after the Commission’s final 

repayment determination, and stays of 

repayment determinations pending 

appeal. It indicates that the Commission 

expects to follow the same procedures 

regarding rehearings and stays requested 

by convention committees as it uses for 

publicly funded Presidential candidates. 

See 11 CFR 9007.5 and 9038.5.

Section 9008.15 Extensions of Time

Section 9008.15 governs committee 

requests for extensions of time under 

Part 9008. This new provision conforms 

to the Commission’s established policies 

concerning extensions of time. See 11 

CFR 9007.3 and 9038.4.

Section 9008.16 Stale-Dated 

Committee Checks

Section 9008.16 has been added to 

provide procedures for handling staledated committee checks, and is based 

on similar provisions applicable to 

Presidential candidates accepting public 

funding. See 11 CFR 9007.6 and 9038.6. 

A minor change from the wording 

contained in the NPRM reflects that this 

provision applies to all stale-dated 

checks, not just those made out to 

creditors or contributors.

Subpart 6 —Host Committees 

Representing a Convention City; 

Convention Expenditures by 

Government Agencies and Municipal 

Corporations

This subpart has been created to 

separate the rules governing host 

committees, government agencies and 

local municipalities from the 

regulations on publicly financed 

convention committees. As explained 

below, it includes portions of previous 

§§9008.1, 9008.7, 9008.9 and 9008.12.

Section 9008.50 Scope

This new scope section alerts host 

committees, government agencies and 

municipalities to the registration and 

reporting requirements, and generally

describes the areas covered by Subpart 

B. It follows previous paragraph 

9008.1(b) by indicating that the 

reporting requirements do not apply to 

unsuccessful efforts to attract a 

convention.

Section 9008.51 Registration and 

Reports

This section contains the registration 

and reporting requirements applicable 

to host committees, which were 

previously located in 11 CFR 9008.12. It 

also includes new provisions regarding 

reporting by municipal corporations and 

other government agencies.

( 1) H ost com m ittee reports.

Paragraphs (a) and (b) of § 9008.51 

contain the rules governing host 

committee registration and reporting 

found at former 11 CFR 9008.12(a). The 

NPRM had proposed requiring host 

committee to file reports beginning in 

the first quarter of the presidential 

election year, rather than with the postconvention report. Another proposal 

would have required host committees to 

itemize their receipts and disbursements 

to the extent required by 11 CFR Part 

104. One comment argued against the 

dual burden of earlier disclosure 

deadlines and itemization of receipts, in 

the absence of a demonstrated defect in 

the current régulations. Hie 

Commission notes that section 437 of 

the FEGA does not discuss preconvention reporting by host 

committees. Consequently, 11 CFR

9008.51 (a) and (h) now follow the 

approach set out in previous 

§ 9008.12(a), except that the deadline for 

filing quarterly reports was changed to 

correspond to the filing deadline for 

quarterly reports filed under Title 2. (2) Reporting by m unicipalities. New 

paragraph 9008.51(c) addresses 

reporting by municipal corporations and 

other local government agencies. This 

provision implements 2 U.S.C. 437(1) by 

requiring reporting by committees or 

organizations representing “a State, or a 

political subdivision thereof, or any 

group of persons, in dealing with 

officials of a national political party” on 

matters relating to a national 

nominating convention to be held in 

that State or political subdivision. This 

statutory language can be reed to require 

reporting by an entity established by a 

state or local government, other than a 

host committee, to receive funds and 

make disbursements for a convention in 

that locality, although in the past these 

entities have not had to register and 

report. Consequently; die Commission 

considered specific disclosure 

requirements for municipalities and 

other government agencies providing 

services and facilities to a national
33614 Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations

nominating convention. Expenditures 

by these entities are largely for the same 

purposes as those permitted by the 

regulations for host committees. See,

§§ 9008.52 and 9008.53. Advisory 

Opinions 1982-27 and 1983-29 permit 

the acceptance of private donations by 

these entities to defray convention 

expenses. See discussion of 11 CFR 

9008.53. For these reasons, the 

Commission believes that reporting by 

these entities will serve an important 

disclosure function.

The opponents of new reporting rules 

suggested instead that municipalities 

file copies of written contracts between 

the national committees and the cities 

they select. In the NPRM, the 

Commission indicated that it was 

considering whether to require 

municipalities to file reports which 

include copiés of these contracts. 

Although this approach would result in 

public disclosure of amounts specified 

in the contracts, it would fail to publicly 

disclose the amount actually spent or 

the amount raised from private funds. 

Accordingly, the Commission also 

considered alternative reporting 

provisions in light of the increased roles 

municipalities have played in recent 

conventions. The reporting proposals 

included in the NPRM were designed to 

accomplish meaningful disclosure with 

as little burden on municipalities as 

possible. Four comments responded to the 

issues raised in the NPRM, and the 

proposed language in paragraph 

§ 9008.51(c). One commenter endorsed 

the suggestion that municipalities be 

required to report the source of funds 

received for hosting the convention. 

However, three other comments 

opposed the reporting provision for 

various reasons. Some thought the 

Commission has misinterpreted the 

meaning of 2 U.S.C. 437(1) by seeking 

to apply it to municipalities and 

government agencies, instead of 

continuing to interpret the term 

“represent” a state, political subdivision 

or any group of persons to only apply 

to a host committee or other 

organization which deals with officials 

of a national party. One argued that this 

approach would be inconsistent with, 

and would undermine, Advisory 

Opinions 1982-27 and 1983-29. Some 

believed that the Commission has not 

demonstrated a change of circumstances 

to merit changing its policy, and that 

cities already make various kinds of 

reports regarding receipts and 

expenditures of their funds. Another 

concern was that disclosure would be 

costly and deter municipalities from 

hosting conventions. The commentera 

and witnesses indicated that

municipalities host political 

conventions to showcase their cities, 

hoping to attract other events of 

economic benefit, such as the Olympics 

or the Super Bowl.

The Commission has concluded that 

changes in the way convention 

financing operates, which have occurred 

since AOs 1982-27 and 1983-29 were 

issued, have made it necessary to add 

new reporting provisions to ensure 

adequate public disclosure in the future. 

The new rules at paragraph § 9008.51(c) 

reflect a permissible interpretation of 

the statutory wording. In formulating 

new reporting requirements, the 

Commission has sought to ensure that 

adequate public disclosure is 

accomplished without imposing unduly 

burdensome requirements on 

municipalities and other governmental 

entities.

Under new paragraph § 9008.51(c), 

municipal corporations and government 

agencies must file a statement with the 

Commission listing general categories of 

convention-related facilities and 

services it provided to the convention, 

the total cost of providing such facilities 

and services, the total amount of general 

revenues and the total amount of private 

funds donated to a separate account to 

pay for these activities. The new rules 

also include a list of broad categories of 

expenses, to assist municipalities in 

providing the general information 

needed.

Section 9008.52 . Receipts and 

Disbursements of Host Committees

The description of host committees 

has been moved from previous 11 CFR 

9008.7(d)(1) to new paragraph 

§.9008.52(a). One commenter opposed 

the citation and use of host committees 

because they receive funds from sources 

that public funds were meant to replace, 

but favored earlier reporting by host 

committees.

Paragraph (b) of new § 9008.52 

recognizes that host committees may 

accept goods and services from 

commercial vendors at reduced or 

discounted rates, as well as items 

provided in exchange for official 

provider status, subject to the 

requirements of § 9008.9, including 

reporting. One commenter argued that 

there should be a presumption that local 

businesses are motivated by 

commercial, not political gain; 

therefore, they should be exempt from 

additional documentation requirements 

when making these types of donations 

to host committees or municipalities. 

The elimination of the vendor 

affirmations, which is discussed above, 

addresses this concern.

Paragraph (c) of this section, and a 

cross-reference in new § 9008.53, 

indicate that both host committees and 

government agencies and municipalities 

may accept monetary and in-kind 

donations from local businesses and 

other local organizations and 

individuals to defray a variety of 

expenses for promoting the convention 

city and paying for convention-related 

facilities and services. Section 

9008.52(c) is based on previous 11 CFR

9008.7 (b) and (d)(3). Please note that 

the revised rules do not permit host 

committees or municipalities to pay 

salaries of those working for the 

convention committee or the national 

party, or to pay the convention 

committee’s or the national party’s 

overhead and administrative expenses 

related to the convention.

The term “local” is also explained in 

paragraph (c) of this section. Revised 

language has also been included to 

clarify that banks do not qualify as local 

businesses undei this section.

Section 9008.53 Receipts and 

Disbursements of Government Agencies 

and Municipal Corporations

New § 9008.53 sets forth rules on 

special municipal funds established by 

municipal corporations and government 

agencies for the purposes enumerated in 

11 CFR 9008.52 relating to the 

promotion of the convention city and 

paying certain convention expenses. 

Section 9008.53 parallels § 9008.52 with 

regard to transactions with commercial 

vendors and the definition of local 

businesses that may make monetary or 

in-kind donations for certain purposes.

The Commission sought comment on 

proposed language in paragraph (a)(2) 

intended to incorporate the conclusions 

reached in Advisory Opinions 1982-27 

and 1983-29. Under these advisory 

opinions, convention cities were 

permitted to establish a municipal fund 

to receive donations and make 

disbursements in connection with a 

nominating convention, provided 

certain conditions were met. First, the 

fund must have been created to attract 

conventions and other events to the 

locality on a broad scale, and cannot 

have been established for the sole 

purpose of providing services and 

facilities to the nominating convention. 

Second, donations to the fund must be 

unrestricted and may not be designated 

for any particular use, including the 

nominating convention. One question 

was whether the creation of such a fund 

must be necessitated by a prohibition 

under local law against the use of 

general tax revenue for these purposes. 

Concerns were raised that this would be 

inconsistent with Advisory Opinion
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 33615

1983-29. Consequently, the 

Commission has not included a 

requirement restricting the creation of 

such municipal funds to situations 

where local law prohibits using tax 

revenues for convention purposes.

New paragraph § 9008.53(b) also 

clarifies that banks do not qualify as 

local businesses under this section. All 

bank loans must meet the requirements 

of 11 CFR 100.7(b)(ll). The revised 

rules also remove the previous 

requirements that only retail businesses 

can donate funds.

Finally, the revised rules no longer 

include the requirement that the amount 

of the donation be proportionate to the 

commercial return reasonably expected 

during the life of the convention. In 

response to questions raised in the 

NPRM, one comment objected to 

applying this criterion to donations 

from businesses, particularly if the 

commercial return is measured only 

during ths life of the convention. 

Accordingly, the new rules recognize 

that local businesses and organizations 

that donate to municipal funds are 

motivated by commercial and civic 

reasons, rather than election-influencing 

purposes.

Section 9008.54 Examinations and 

Audits

New § 9008.54 sets out the basic rule 

regarding Commission audits of host 

committees, which was previously set 

forth at 11 CFR 9008.9. Consistent with 

the rules applicable to convention 

committees, § 9008.54 includes a 

sentence indicating the Commission’s 

intention to follow the same procedures 

during audits of host committees that it 

uses when auditing committees of 

publicly-financed Presidential 

candidates. In the case of host 

committees, however, the Commission 

does not make any repayment 

calculations because host committees do 

not receive public funds. Please note 

that the December 31st time frame for 

conducting the audit refers to the time 

period in which the Commission will 

commence the audit.

Additional Issues

The NPRM indicated that questions 

had been raised as to whether Title VI 

cf the Civil Rights Act of 1964 is 

applicable to the selection of delegates 

to the federally funded national 

nominating conventions. Under Title VI, 

“[n]o person in the United States shall, 

on the ground of race, color, or national 

origin, be excluded from participation 

in, be denied the benefits of, or be 

subjected to discrimination under any 

program or activity receiving federal 

financial assistance.” 42 U.S.C. 2000d.

The U.S. District Court for the District 

of Columbia ordered the Commission to 

promulgate rules under Title VI 

governing the selection and allocation of 

delegates to thé federally-funded 

nominating conventions. Freedom

Republicans InC. v. Federal Election

Commission, 788 F. Supp. 600, 601 

(D.D.C. 1992). However, on appeal the 

D.C. Circuit vacated the district court’s 

decision on jurisdictional grounds. 

Freedom R epublicans Inc. v. Federal

Election Com m ission, No. 92-5214, slip 

op. at 2,15 (D.C. Cir. Jan. 18,1994). 

While awaiting the decision of the Court 

of Appeals, the Commission welcomed 

public comments on what impact, if 

any, Title VI may have on federallyfunded national nominating 

conventions. One of the witnesses stated 

that it was inappropriate to comment 

because thisparticular rulemaking does 

not address tira issue. Another witness 

indicated that his party would meet any 

foreseeable delegate selection standard 

the Commission might adopt, and 

therefore had no opinion on tira issue.

In view of the D.C. Circuit decision, the 

Commission has decided not to issue 

regulations under Title VI regarding 

delegate selection at this time.

Certification of No Effect Pursuant to 5 

U.S.C 605(b) {Regulatory Flexibility 

Act]

The attached final rules will not, if 

promulgated, have a significant 

economic impact on a substantial 

number of small entities. The basis for 

this certification is that few, if any, 

small entities will be affected by these 

rules.

List of Subjects 

11 CFR Part 107

Political committees and parties, 

Reporting requirements.

11 CFR Part 114

Business and industry. Elections.

11 CFR Part 9008

Campaign funds, Political committees 

and parties, Reporting requirements.

For the reasons set out in the 

preamble, SubebapteTS A and E, Chapter 

I of Title 11 of the Code of Federal 

Regulations are amended as follows:

1.11 CFR Part 107 is revised to read 

as follows:

PART 107—PRESIDENTIAL

NOMINATING CONVENTION,

REGISTRATION AND REPORTS

Sec.

107.1 Registration and Reports by Political 

Parties.

107.2 Registration and Reports by Host 

% Committees, and Committees,

Organizations or Other Groups 

Representing a State, City or Other Local 

Government Agency.

Authority: 2 U.S.C. 437, 438(a)(8).

§ 107.1 Registration and reports by

political parties.

Each convention committee 

established under 11 CFR 9008.3(a)(2) 

by a national committee of a political 

party and each committee or other 

organization, including a national 

committee, which represents a political 

party in making arrangements for that 

party’s convention held to nominate a 

presidential or vice presidential 

candidate shall register and report in 

accordance with 11 CFR 9008.3(b).

§ 107.2 Registration and reports by host

com m ittees, and com m ittees, organizations

o r other groups representing a state, city or

other local governm ent agency.

Each host committee, and each 

committee or other organization or 

group of persons which represents a 

State,.municipality, local gdVernment 

agency or other political subdivision in 

dealing with officials of a national 

political party with respect to matters 

involving a presidential nominating 

convention, shall register and report in 

accordance with 11 CFR 9008.51.

PART 114—CORPORATE AND LABOR

ORGANIZATION ACTIVITY

2. The authority citation for Part 114 

continues to read as follows:

Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 

432, 437d(a)(8), 438(aX8), and 44lb.

3. Section 114.1 is amended by 

revising paragraph (a)(2)(viii) to read as 

follows:

§ 114.1 D efinitions.

(a)* * *

(2) * * *

(viii) Activity permitted under 11 CFR

9008.9, 9008.52 and 9008.53 with 

respect to a presidential nominating 

convention;

* * * * * .

4,11 CFR Part 9008 is revised to read 

as follows:
33816 Federal Register / Vol, 5 9, No. 1 24 / W ednesday, June 29, 1994 / Rules and Regulations

PART 9008—FEDERAL FINANCING OF 

PRESIDENTIAL NOMINATING 

CONVENTIONS

Subpart A— Expenditures by National

Com m ittees and Convention Com m ittees

Sec.

9008.1 Scope.

9008.2 Definitions.

9008.3 Eligibility for payments; registration 

and reporting.

9008.4 Entitlement to payments from the 

fund.

9008-5 Adjustment of entitlement.

9008.6 Payment and certification 

procedures.

9008.7 Use or funds.

9008.8 Limitation of expenditures.

9008.9 Receipt of goods and services from 

commercial vendors.

9008.10 Documentation of disbursements; 

net outstanding convention expenses.

9008.11 Examinations and audits.

9008.12 Repayments.

9008.13 Additional audits.

9008.14 Petitions for rehearing: Stays of 

repayment determinations.

9008.15 Extensions of time.

9008.16 Stale-dated committee checks.

Subpart B—H ost Com m ittees Representing

a Convention City; Convention

Expenditures by Governm ent Agencies and

M unicipal Corporations

Sec. v

9008.50 Scope.

9008.51 Registration and reports.

9008.52 Receipts and disbursements of host 

committees.

9008.53 Receipts and disbursements of 

government agencies and municipal 

corporations.

9008.54 Examinations and audits. 

Authority: 2 U.S.C. 437, 438(a)(8); 26

U.S.C. 9008, 9009(b).

Subpart A—Expenditures by National 

Committees and Convention 

Committees

§ 9008.1 Scope.

(a) This Part interprets 2 U.S.C. 437 

and 26 U.S.C. 9008. Ünder 26 U.S.C. 

9008(b), the national committees of both 

major and minor parties are entitled to 

public funds to defray expenses 

incurred with respect to a Presidential 

Nominating convention. Under 26 

U.S.C. 9008(d), expenditures with 

regard to such a convention by a 

national committee receiving public 

funds are limited to $4,000,000, as 

adjusted by the Consumer Price Index. 

New parties are not entitled to receive 

any public funds to defray convention

$>) Under 2 U.S.C. 437, each 

committee or organization which 

represents a national party in making 

arrangements for that party’s 

presidential nominating convention is 

required to file disclosure reports. This 

reporting obligation extends to all such

committees or organizations, regardless 

of whether or not public funds are used 

or available to defray convention 

expenses.

§9008.2 Definitions.

(a) Com m ission means the Federal 

Election Commission, 999 E Street,

NW., Washington, DC 20463.

(b) Fund means the Presidential 

Election Campaign Fund established by 

26 U.S.C. 9006(a).

(c) M ajor party means, with respect to 

any presidential election, a political 

party whose candidate for the office of 

President in the preceding presidential 

election received, as the candidate of 

such party, 25 percent or more of the 

total number of popular votes received 

by all candidates for such office.

(d) M inor party m eans, with respect to 

any presidential election, a political 

party whose candidate for the office of 

President in the preceding presidential 

election received, as the candidate of 

such party, 5 percent or more, but less 

than 25 percent, of the total number of 

popular votes received by all candidates 

for such office.

(e) N ational cotnm ittee means the 

organization which, by virtue of the bylaws of the political party, is responsible 

for the day to day operation of that party 

at the national level.

(f) New party means, with respect to 

any presidential election, a political 

party which is neither a major party nor 

a minor party.

(g) Nominating convention means a 

convention, caucus or other meeting 

which is held by a political party at the 

national level and which chooses the 

presidential nominee of the party 

through selection by delegates to that 

convention or through other similar 

means.

(h) Secretary means the Secretary of 

the Treasury of the United States.

§ 9008.3 Eligibility for paym ents;

registration and reporting.

(a) Eligibility requirem ents. (1) To 

qualify for entitlement under 11 CFR 

9008.4 and 9008.5, the national 

committee of a major or minor political 

party shall establish a convention 

committee pursuant tb paragraph (a)(2) 

of this section and shall file an 

application statement pursuant to 

paragraph (a)(3) of this section. The 

convention committee, in conjunction 

with the national committee, shall file 

an agreement to comply with the 

conditions set forth at paragraph (a)(4) 

of this section. ;

(2) The national committee shall 

establish a convention committee which 

shall be responsible for conducting the 

day to day arrangemènts and operations

of that party’s presidential nominating 

convention. The convention committee 

shall register with the Commission as a 

political committee pursuant to 11 CFR 

Part 102. The convention committee 

shall receive all public funds to which 

the national committee is entitled under 

11 CFR 9008.4 and 9008.5 and all 

private contributions made for the 

purpose of defraying convention 

expenses. All expenditures on behalf of 

the national committee for convention 

expenses shall be made by the 

convention committee.

(3) The national committee shall file 

with the Commission an application 

statement. Any changes in the 

information provided in the application 

statement must be reported to the. 

Commission within 10 days following 

the change. The application statement 

shall include:

(i) The name and address of the 

national committee;

(ii) The name and address of the 

convention committee and of the 

officers of that committee;

(iii) The name of the city where the 

convention is to be held and the 

approximate dates;

(iv) The name, address, and position 

of the convention committee officers 

designated by the national committee to 

sign requests for payments; and

(v) The name and address of the 

depository of the convention committee.

(4) The convention committee shall, 

by letter to the Commission, agree to the 

conditions set forth in paragraph (a)(4)

(i) through (viii) of this section. This 

agreement shall also be binding upon 

the national committee.

(i) The convention committee shall 

agree to comply with the applicable 

expenditure limitation set forth at 11 

CFR 9008.8.

(ii) The convention committee shall 

agree to file convention reports as 

required under 2 U.S.C. 437 and 11 CFR 

9008.3(b).

(iii) The convention committee shall 

agree to establish one or more accounts 

into which all public funds received 

under 11 CFR 9008.4 and 9008.5 must 

be deposited and from which all 

expenditures for convention expenses 

must be made. Such account(s) shall 

contain only public funds except as 

provided in 11 CFR 9008.6(a)(3).

(iv) The convention committee shall 

agree to keep and furnish to the 

Commission all documentation of 

convention disbursements made by the 

committee as required under 11 CFR

9008.10. The convention committee has 

the burden of proving that 

disbursements by the convention 

committee were for purposes of
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 3 3 6 1 7

defraying convention expenses as set 

forth at 11 CFR 9008.7(a)(4).

(v) The convention committee shall 

agree to furnish to the Commission any 

books, records (including bank records 

for all accounts), a copy of any contract 

which the national committee enters 

into with a host committee or 

convention city or vendor, a copy of 

documentation provided by commercial 

vendors in accordance with 11 CFR 

9008.9(b), and any other information 

that the Commission may request. If the 

convention committee maintains or uses 

computerized information containing 

any of the categories of data listed in 11 

CFR 9008.10(h)(1) (i) through (iv), the 

convention committee will provide 

computerized magnetic media, such as 

magnetic tapes or magnetic diskettes, 

containing the computerized 

information at the times specified in 11 

CFR 9008.10(h)(2) that meet the 

requirements of 11 CFR 102.9 and 

9008.10 (a) and (b). Upon request, 

documentation explaining the computer 

system’s software capabilities shall be 

provided, and such personnel as are 

necessary to explain the operation of the 

computer system’s software and the 

computerized information prepared or 

maintained by the convention 

committee shall also be made available.

(vi) The convention committee shall 

agree to permit an audit and 

examination pursuant to 26 U.S.C. 

9008(g) and 11 CFR 9008.11 of all 

convention expenses; to facilitate such 

audit by making available office space, 

records, and such personnel as is 

necessary to the conduct of the audit 

and examination; and to pay any 

amounts required to be paid under 26 

U.S.C. 9008(h) and 11 CFR 9008.12.

(vii) The convention committee shall 

agree to comply with the applicablé 

requirements of 2 U.S.C. 431 et seq., 26 

U.S.C. 9008, and the Commission’s 

regulations at 11 CFR Parts 100-116 and 

9008.

(viii) The convention committee shall 

pay any civil penalties included in a 

conciliation agreement or imposed 

under 2 U.S.C. 437g.

(5) The application statement and 

agreement may be filed at any time after 

June 1 of the calendar year preceding 

the year in which a Presidential 

nominating convention of the political 

party is held, but no later than the first 

day of the convention.

(b) Registration and reports by

political parties. ; : - v

(1) Registration, (i) Each convention 

committee established by a national 

committee under paragraph (a)(2) of this 

section shall register with thé 

Commission on FEC Form 1 as a 

political committee pursuant to 11 CFR

Part 102 and shall file reports with the 

Commission as required at paragraph

(b)(2) of this section. Each report filed 

by the committee shall contain the 

information required by 11 CFR Part 

104.

(ii) A State party committee or a 

subordinate committee of a State party 

committee which only assists delegates 

and alternates to the convention from 

that State with travel expenses and 

arrangements, or which sponsors 

caucuses, receptions, and similar 

activities at the convention site, need 

not register or report under this section.

(2) Quarterly and post convention

reports; content and tim e o f filings Each 

committee required to register under 

paragraph (b)(1) of this section shall file 

reports as follows:.

(i) The first quarterly report shall be 

filed on FEC Form 4 no later than 15 

days following the end of the calendar 

quarter in which the committee either 

receives payment under 11 CFR 9008.6, 

or for parties which do not accept 

public funds, no later than 15 days after 

the calendar quarter in which the 

committee receives contributions or 

makes expenditures to defray 

convention expenses. The committee 

shall continue to file reports on a 

quarterly basis no later than the 15th 

day following the close of each calendar 

quarter, except that the report for the 

final calendar quarter of the year shall 

be filed on January 31 of the following 

calendar year. Quarterly reports shall be 

completed as of the close of the quarter 

and shall continue to be filed until the 

committee ceases activity in connection 

with that party’s presidential 

nominating convention.

(ii) Any quarterly report due within 

20 days before or after the convention 

shall be suspended and the committee 

shall in lieu of such quarterly report file 

a post convention report. The post 

convention report shall be filed on the 

earlier of: 60 days following the last day 

the convention is officially in session; or 

20 days prior to the presidential general 

election. The post convention report 

shall be complete as of 15 days prior to 

the date on which the report must be 

filed.

(c) Cessation o f activity. A convention 

committee which has received 

payments under 11 CFR 9008.6 shall 

cease activity no later than 24 months 

after the convention, unless the 

committee has been granted an 

extension of time. The Commission may 

grant any extension of time it deems 

appropriate upon request of the 

committee at least 30 days prior to the 

close of the 24 month period.

§ 9008.4 Entitlem ent to paym ents from the

fund.

(a) M ajor parties. Subject to the 

provisions of this Part, the national 

committee of a major party shall be 

entitled to receive payments under 11 

CFR 9008.6 with respect to any 

presidential nominating convention, in 

amounts which, in the aggregate, shall 

not exceed $4 million, as adjusted by 

the Consumer Price Index under 11 CFR 

9008.5(a).

(b) M inor parties. Subject to the 

provisions of this Part, the national 

committee of a minor party shall be 

entitled to payments under 11 CFR

9008.6 with respect to any presidential 

nominating convention in amounts 

which, in tiie aggregate, shall not,exceed 

an amount which bears the same ratio 

to the amount which the national 

committee of a major party is entitled to 

receive under 11 CFR 9008.5 as the 

number of popular votes received in the 

preceding presidential election by that 

minor party’s presidential candidate 

bears to the average number of popular 

votes received in the preceding 

presidential election by all of the major 

party presidential candidates.

(c) Lim itation on paym ents. Payments 

to the national committee of a major 

party or a minor party under 11 CFR

9008.6 from the account designated for 

such committee shall be limited to the 

amounts in such account at the time of 

payment.

§ 9008.5 Adjustm ent of entitlem ent

(a) The entitlements established by 11 

CFR 9008.4 shall be adjusted on the 

basis of the Consumer Price Index 

pursuant to the provisions of 2 U.S.C. 

441a(c).

(b) The entitlements established by 11 

CFR 9008.4 shall be adjusted so as not 

to exceed the difference between the 

expenditure limitations of 11 CFR 

9008.8(a) and the amount of private 

contributions received under 11 CFR 

9008.6(a) by the national committee of 

a political party. Except as provided in

. 11 CFR 9008.12(b)(7), in calculating 

these adjustments, amounts expended 

by Government agencies and municipal 

corporations in accordance with 11 CFR 

9008.53; in-kind donations by 

businesses to the national committee or 

convention committee in accordance 

with 11 CFR 9008.9; expenditures by 

host committees in accordance with 11 

CFR 9008.52; expenditures to 

participate in or attend the convention 

under 11 CFR 9008.8(b)(2); and legal 

and accounting services rendered in 

accordance with 11 CFR 9008.8(b)(4) 

will not be considered private 

contributions or expenditures counting 

against the limitation.
3 3 6 1 8 Federal Register J- Vol. 59» N o. 124 / W ednesday, June 29, 1994 / R u le s a n d R e g u la tio n s

§ 9008.6 Paym ent and certification

procedures.

(a) O ptional paym ents; private

contributions. (1) The national 

committee of a major or minor party 

may elect to receive all, part, or none of 

the amounts to which it is entitled 

under 1 1 CFR 9008.4 and 9008.5.

(2) If a national committee of a major 

or minor party elects to receive part of 

the amounts to which it is entitled 

under 11 CFR 9008.4 and 9008.5, or if 

the Secretary determines there is a 

deficiency in the Fund under 26 U.S.C. 

9008(b)(4), the national committee may 

receive and use private contributions, so 

long as the sum of the contributions 

which are used to defray convention 

expenses.and the amount of 

entitlements elected to be received does 

not exceed the total expenditure 

limitation under 11 ÇFR 9008.8.

(3) All private contributions received 

by the national committee to defray 

convention expenses shall be subject to 

all reporting requirements, limitations 

and prohibitions of Title 2, United 

States Code. The convention committee 

may establish a separate account for 

private contributions or may deposit 

such contributions with payments 

received from the Fund pursuant to 

paragraph (d) of this section. The 

account(s) shall be maintained at a State 

bank, federally chartered depository 

institution or other depository 

institution, the deposits or accounts of 

which are insured by the Federal 

Deposit Insurance Corporation.

(d ) Increase in certified amount. If the 

application statement is filed before it is 

possible to determine the cost of living 

increase for the year preceding the 

convention, that amount determined by 

the increase shall be paid to the national 

committee promptly after the increase 

has been determined.

(c) A vailability o f paym ents. The 

national committee of a major or minor 

party may receive payments under this 

section beginning on July 1 of the 

calendar year immediately preceding 

the calendar year in which a 

Presidential nominating convention of 

the political party involved is held.

((0 C ertification o f paym ent. After a 

national committee has properly 

submitted its application statement and 

agreement as required under 11 CFR 

9008.3(a) (3) and (4), and upon receipt 

of a written request, payment of the 

committee’s entitlement will be certified 

by the Commission to the Secretary of 

the Treasury.

§ 9008.7 Use of binds.

(a) Perm issible uses. Any payment 

made under 11 CFR 9008.6 shall be 

used only for the following purposes:

(1) Such payment may be used to 

defray convention expenses (including 

the payment of deposits) incurred by or 

on behalf of the national committee 

receiving such payments; or

(2) Such payment may be used to 

repay the principal and interest, at a 

commercially reasonable rate, on loans 

the proceeds of which were used to 

defray convention expenses; or

(3) Such payment may be used to 

restore funds (including advances from 

the national committee to the 

convention committeè), other than 

contributions to the committee for the 

purpose of defraying convention 

expenses, where such funds were used 

to defray convention expenses.

(4) “Convention expenses“ include all 

expenses incurred by or on behalf of a 

political party’s national committee or 

convention committee with respect to 

and for the purpose of conducting a 

presidential nominating convention or 

convention-related activities. Such 

expenses include, but are not limited to:

(i) Expenses for preparing, 

maintaining, and dismantling the 

physical site of the Convention, 

including rental of the hall, platforms 

and seating, decorations, telephones, 

security, convention hall utilities, and 

other related costs;

(ii) Salaries and expenses of 

convention committee employees, 

volunteers and similar personnel, whose 

responsibilities involve planning, 

management or otherwise conducting 

the convention;

(iii) Salary or portion of the salary of 

any national committee employee for 

any period of time during which, as a 

major responsibility, that employee 

performs services related to the 

convention;

(iv) Expenses of national committee 

employees, volunteers or other similar 

personnel if those expenses were 

incurred in the performance of services 

for the convention in addition to the 

services normally rendered to the 

national committee by such personnel;

(v) Expenses for conducting meetings 

of or related to committees dealing with 

the conduct and operation of the 

convention, such as rules, credentials, 

platform, site, contests, call, 

arrangements and permanent 

organization committees, including 

printing materials and rental costs for 

meeting space.

(vi) Expenses incurred in securing a 

’ convention city and facility;

(vii) Expenses incurred in providing a 

transportation system in the convention 

city for use by delegates and other 

persons attending or otherwise 

connected with the convention;

(viii) Expenses for entertainment 

activities which are part of the official 

convention activity sponsored by the 

national committee, including but not 

limited to dinners, concerts, and 

receptions; except that expenses for the 

following activities are excluded:

(A) Entertainment activities 

sponsored by or on behalf of candidates 

for nomination to the office of President 

or Vice President, or State delegations;

(B) Entertainment activities sponsored 

by the national committee if the purpose 

of the activity is primarily for national 

committee business, such as fundraising events, or selection of new 

national committee officers;

(C) Entertainment activities sponsored 

by persons other than the national 

committee; and

(D) Entertainment activities 

prohibited by law;

(ix) Expenses for printing convention 

programs, a journal of proceedings, 

agendas, tickets, badges, passes, and 

other similar publications;

(x) Administrative and office 

expenses for conducting the convention, 

including stationery, office supplies, 

office machines, and telephone charges; 

but excluded from these expenses are 

the cost of any services supplied by the 

national committee at its headquarters 

or principal office if such services are 

incidental to the convention and not 

utilized primarily for the convention;

(xi) Payment of the principal and 

interest» at a commercially reasonable 

rate, on loans the proceeds of which 

were used to defray convention 

expenses;

(xii) Expenses for gifts or monetary 

bonuses for national committee or 

convention committee employees, 

volunteers and convention officials in 

recognition for convention-related 

activities or services, provided that the 

gifts and bonuses do not exceed $150 

total per individual, and the total for all 

gifts and bonuses does not exceed 

$20,000; and

(xiii) Expenses for producing 

biographical films, or similar materials, 

for use at the convention, about 

candidates for nomination or election to 

the office of President or Vice President, 

but any other political committee(s) that 

use part or all of the biographical films 

or materials shall pay the convention 

committee for the reasonably allocated 

cost of the biographical films or 

materials used.

(5) Any investment of public funds or 

any other use of public funds to 

generate income is permissible only if 

the income so generated is used to 

defray convention expenses. Such 

income, less any tax paid on it, shall be
Federal Register / Vol. 59, No. 124 / W ednesday, June 29, 1994 / Rules and Regulations 33619

repaid to the United States Treasury as 

provided under 11 CFR 9008.12(b)(6).

(b) Prohibited uses. (1) No part of any 

payment made under 11 CFR 9008.6 

shall be used to defray the expenses of 

any candidate, delegate, or alternate 

delegate who is participating in any 

presidential nominating convention 

except that the expenses of a person 

participating in the convention as 

official personnel of the national party 

may be defrayed with public funds even 

though that person is simultaneously 

participating as a delegate or candidate 

to the convention. This Part shall not 

prohibit candidates, delegates or 

alternate delegates who are participating 

in a presidential nominating convention 

from attending official party convention 

activities including but not limited to 

dinners, concerts and receptions, where 

such activities are paid for with public 

funds,

(2) Public funds shall not be used to 

defray any expense the incurring or 

payment of which violates any law of 

the United States or any law of the State 

in which such expense is incurred or 

paid, or any regulation prescribed under 

federal or State laws.

(3) Public funds shall not be used to 

pay civil or criminal penalties required 

or agreed to be paid pursuant to 2 U.S.C. 

437g. Any amounts received or 

expended by the national committee or 

convention committee of a political 

party to pay such penalties shall not be 

considered contributions or 

expenditures, except that such amounts 

shall be reported in accordance with 11 

CFR Part 104 and shall be subject to the 

prohibitions of 11 CFR 110.4 and Parts 

114 and 115.

§ 9008.8 Lim itation of expenditures.

(à) N ational party lim itations. (1) 

Major parties. Except as provided by 

paragraph (a)(3) of mis section, the 

national committee of a major party may 

not incur convention expenses with 

respect to a Presidential nominating 

convention which, in the aggregate, 

exceed the amount to which such 

committee is entitled under 11 CFR 

9008.4 and 9008.5.

(2) Minor parties. Except as provided 

by paragraph (a)(3) of this section, the 

national committee of a minor party 

may not incur convention expenses 

with respect to a Presidential 

nominating convention which, in the 

aggregate, exceed the amount to which 

the national committee of a major party 

is entitled under 11 CFR 9008.4 and 

9008.5.

(3) Authorization to ex ceed lim itation.

The Commission may authorize the 

national committee of a major party or 

minor party to make expenditures for

convention expenses, which 

expenditures exceed the limitation 

established by paragraph (a) (1) or (2) of 

this section. This authorization shall be 

based upon a determination by the 

Commission that, due to extraordinary 

and unforeseen circumstances, the 

expenditures are necessary to assure the 

effectivé operation of the Presidential 

nominating convention by the 

committee. Examples of “extraordinary 

and unforeseen circumstances” include, 

but are not limited to, a natural disaster 

or a catastrophic occurrence at the 

convention site, In no case, however, 

will SUch authorization entitle a 

national committee to receive public 

funds greater than the entitlement 

specified under 11 CFR 9008.4 and 

9008.5. All private contributions 

received to defray expenditures under 

this paragraph shall be subject to all 

reporting requirements, limitations 

(except for limitations imposed by 

paragraphs (a)(1) and (2) of tins section) 

and prohibitions of the Federal Election 

Campaign Act (2 U.S.C. 431 et seq.).

(b) Paym ents not subject to lim it. (1) 

Host com m ittee expenditures.

Expenditures made by the host 

committee shall not be considered 

expenditures by the national committee 

and shall not count against the 

expenditure limitations of this section 

provided the funds are spent in 

accordance with 11 CFR 9008.52.

(2) Expenditures by governm ent

agencies and m unicipal corporations.

Expenditures made by government 

agencies and municipal corporations 

shall not be considered expenditures by 

the national committee and shall not 

count against the expenditure 

limitations of this section if the funds 

are spent in accordance with the 

requirements of 11 CFR 9008.53.

(3) Expenditures to participate in or

attend convention. Expenditures made 

by presidential candidates from 

campaign accounts, by delegates, or by 

any other individual from his or her 

personal funds for the purpose of 

attending or participating in the 

convention or convention related 

activities, including, but not limited to 

the costs of transportation, lodging and 

meals, or by State or local committees 

of a political party on behalf of such 

delegates or individuals shall not be 

considered expenditures made by or on 

behalf of the national party , and shall 

therefore not be subject to the overall 

expenditure limitations of this section/

(4) Legal and accounting services, (i) 

The payment of compensation to an 

individual by his or her règular 

employer for legal and accounting 

services rendered to or on behalf of the 

national committee shall not be

considered an expenditure and shall not 

count against the expenditure 

limitations of this section.

(ii) The payment by the national 

committee of compensation to any 

individual for legal and accounting 

services rendered to or on behalf of the 

national committee in connection with 

the presidential nominating convention 

or convention-related activities shall not 

be considered an expenditure and shall 

not count against the expenditure 

limitations of this section provided that:

(A) The legal and accounting sendees 

relate solely to compliance with the 

Federal Election Campaign Act (2 U.$.C. 

431, et seq.) and the Presidential 

Election Campaign Fund Act (26 U.S.C. 

Chapter 95); and

(B) The contributions raised to pay for 

the legal and accounting services 

comply with the limitations and 

prohibitions of 11 CFR Parts 110,114 

and 115. These contributions, when 

aggregated with other contributions 

from the same contributor to the 

political committees established and 

maintained by the national political 

party, shall not exceed $20,000 per 

person, and $15,000 per multicandidate 

political committee in any calendar 

year.

(iii) The convention committee shall 

report contributions received to pay for 

legal and accounting services on a 

separate Schedule A, and shall report 

payments for legal and accounting 

services on a separate Schedule B, 

attached to its reports.

(5) Com puterized inform ation.

Payments to defray the costs of 

producing, delivering and explaining 

the computerized information and 

materials provided pursuant to 11 CFR 

9008.10(h), and explaining the 

operation of the computer system’s 

software, shall not be considered 

expenditures and shall not count against 

the expenditure limitations of this 

section, provided that the contributions 

raised to pay these expenses comply 

with the limitations and prohibitions of 

11 CFR Parts 110,114 and 115.

§ 9008.9 Receipt o f goods and services

from com m ercial vendors.

Commercial vendors may sell, lease, 

rent or provide their goods or services 

to the national committee with respect 

to a presidential nominating convention 

at reduced or discounted rates, or at no 

charge, provided that the requirements 

of either paragraph (a), paragraph (b), or 

paragraph (c) of this section are met. For 

purposes of this section, com m ercial

vendor shall have the same meaning as 

provided in 11 CFR 116.1(c).

(a) Standard reductions or discounts.

A commercial vendor may provide
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reductions or discounts in the ordinary 

course of business. A reduction or 

discount shall be considered in the 

ordinary course of business if the 

commercial vendor has an established 

practice of providing the same 

reductions or discounts for the same 

amount of its goods or services to nonpolitical clients, or if the reduction or 

discount is consistent with established 

practice in the commercial vendor’s 

trade or industry. Examples of 

reductions or discounts made in the 

ordinary course of business include 

standard volume discounts and reduced 

rates for corporate, governmental or 

preferred customers. Reductions or 

discounts provided Under paragraph (a) 

of this section need not be reported. (b) Item s provided fo r prom otional

consideration.

(1) A commercial vendor may provide 

goods or services in exchange for 

promotional consideration provided 

that doing so is in the ordinary course 

of business.

(2) The provision of goods or services 

shall be considered in the ordinary 

course of business under this paragraph: (i) If the commercial vendor has an 

established practice of providing goods 

or services on a similar scale and on 

similar terms to non-political clients, or (ii) If the terms ana conditions under 

which the goods or services are 

provided are consistent with established 

practice in the commercial vendor’s 

trade or industry in similar 

circumstances.

(3) In all cases, the value of the goods 

or services provided shall not exceed 

the commercial benefit reasonably 

expected to be derived from the unique 

promotional opportunity presented by 

the national nominating convention.

(4) The convention committee shall 

maintain documentation showing: the 

goods or services provided; the date(s) 

on which the goods or services were 

provided, the terms and conditions of 

the arrangement; and what promotional 

consideration was provided. In 

addition, the convention committee 

shall disclose in its report covering the 

period the goods or services are 

received, in a memo entry, a description 

of the goods or services provided for 

promotional consideration, the name 

and address of the commercial vendor, 

and the dates on which the goods or 

services were provided (e.g., “Generic 

Motor Co., Detroit, Michigan—ten 

automobiles for use 7/15—7/20, received 

on 7/14’’, or “Workers Inc., New York, 

New York—five temporary secretarial 

assistants for use 8/1-8/30, received on 

8/ 1”).

(c) Item s o f d e m inim is value.

Commercial vendors (including banks)

may sell at nominal cost, or provide at 

no charge, items of de m inim is value, 

such as samples, discount coupons, 

maps, pens, pencils, or other items 

included in tote bags for those attending 

the convention. The items of de m inim is

value may be distributed by or with the 

help of persons employed by the 

commercial vendor, or employed by or 

volunteering for the national party or a 

host committee. The value of the items 

of de m inim is value provided under this 

paragraph need not be reported.

(d) Expenditure Limits. The value of 

goods c m- services provided pursuant to 

this section will not count toward the 

national party’s expenditure limitation 

under 11 CFR 9008.8(a).

§ 9008.10 Docum entation o f

disbursem ents; net outstanding convention

expenses.

The convention committee must 

include as part of the evidence of 

convention expenses the following 

documentation:

(a) For disbursements in excess of 

$200 to a payee, either: (1) A receipted bill from the payee 

that states the purpose of the 

disbursement; or

(2) If such a receipted bill is not 

available, the following documents; (i) A canceled check negotiated by the 

payee; plus (ii) One of the following documents 

generated by the payee—a bill, invoice, 

voucher or contemporaneous 

memorandum that states the purpose of 

the disbursement;

(iii) Where the documents specified at 

paragraph (a)(2)(ii) of this section are 

not available, a voucher or 

contemporaneous memorandum from 

the committee that states the purpose of 

the disbursement;

(3) If neither a receipted bill nor the 

supporting documentation specified in 

paragraph (a)(2) (ii) or (iii) of this 

section is available, a canceled check 

negotiated by the payee that states the 

purpose of the disbursement.

(4) Where the supporting 

documentation required above is not 

available, the committee may present a 

canceled check and collateral evidence 

to document the convention expense. 

Such collateral evidence may include 

but is not limited to:

(i) Evidence demonstrating that the 

disbursement is part of an identifiable 

program or project which is otherwise 

sufficiently documented, such as a 

disbursement which is one of a number 

of documented disbursements relating 

to the operation of a committee office;

(ii) Evidence that the disbursement is 

covered by a preestablished written 

committee policy, such as a daily travel 

expense policy.

(b) For all other disbursements:

(1) If from the petty cash fund, a 

record that states the full name and 

mailing address of the payee and the 

amount, date and purpose of the 

disbursement; or

(2) A canceled check whiqh has been 

negotiated by the payee and states the 

identification of the payee, and the 

amount and date of the disbursement.

(c) For purposes of this section, 

“payee” means the person who provides 

the goods or services to the committee 

in return for the disbursement, except 

that an individual will be considered a 

payee under this section if he or she 

receives $2,000 or less advanced for 

travel and/or subsistence and if he or 

she is the recipient of the goods or 

services purchased.

(d) For purposes of this section, the 

term “purpose” means the full name 

and mailing address of the payee, the 

date and amount of the disbursement, 

and a brief description of the goods or 

services purchased.

(e) Upon the request of the 

Commission the convention committee 

shall supply an explanation of the 

connectiqn between the disbursement 

and the convention.

(f) The committee shall retain records 

with respect to each disbursement, and 

receipt, including bank records, 

vouchers, worksheets, receipts, bills and 

accounts, journals, ledgers, fundraising 

solicitation material, accounting 

systems documentation, and any related 

material documenting campaign 

receipts and disbursements, for a period 

of three years pursuant to 11 CFR 

102.9(c), and shall present these records 

to the Commission on request.

(g) Net outstanding convention

expenses. A convention committee that 

is eligible to receive payments under 11 

CFR 9008.3 shall file, no later than sixty 

days after the last day of the convention, 

a statement of that committee’s net 

outstanding convention expenses. The 

convention committee shall file a 

revised statement of net outstanding 

convention expenses which shall reflect 

the financial position of the convention 

committee as of the end of the ninth 

month following the last day of the 

convention. The revised statement shall 

be filed no later than 30 calendar days 

after the end of the ninth month 

following the last day of the convention, 

and shall be accompanied by the 

interim repayment, if required under 11 

CFR 9008.12(b)(5)(ii). The committee’s 

net outstanding convention expenses 

under this section equal the difference 

between paragraphs (g) (1) and (2) of 

this section:

(1) The total of:
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 33621

(1) All outstanding obligations for 

convention expenses as of 45 days after 

the last day of the convention; plus

(ii) An estimate of the amount of 

convention expenses dial will be 

incurred after the 45th day and before 

the end of the ninth month following 

the last day of the convention; plus

(iii) An estimate of necessary winding 

down costs; less

(2) The total of:

(i) Cash on hand as of 45 days after 

the last day of the convention, 

including: all receipts dated on or before 

that date; currency; balances on deposit 

in banks, savings and loan institutions, 

and other depository institutions; 

traveler’s checks; certifícales of deposit; 

treasury bills; and any other committee 

investments valued at fair market value;

(ii) The fair market value of capital 

assets and other assets on hand; and

(iii) Amounts owed to the committee 

in the form of credits, refunds of 

deposits, returns, receivables, or rebates 

of convention expenses; or a 

commercially reasonable amount based 

on the collectibility of those credits, 

returns, receivables or rebates.

(3) The amount submitted as the total 

of outstanding convention obligations 

under paragraph (g)(1) of this section 

shall not include any accounts payable 

for non-convention expenses nor any 

amounts determined or anticipated to be 

required as a repayment under 11 CFR 

9008.12 or any amounts paid to secure

a surety bond under 11 CFR 9008.14(c).

(4) Capital assets. For purposes of this 

section, the term “capital asset” means 

any property used in the operation of 

the convention whose purchase price 

exceeded $2000 when acquired by the 

committee. Property that must be valued 

as capital assets under this section 

includes, but is not limited to, office 

equipment, furniture, vehicles and 

fixtures acquired for use in the 

operation of the convention, but does 

not include property defined as “other 

assets” under 11 CFR 9008.10(g)(5). A 

list of all capital assets shall be 

maintained by the committee, which 

shall include a brief description of each 

capital asset, the purchase price, the 

date it was acquired, the method of 

disposition and the amount received in 

disposition. The fair market value of 

capital assets may be considered to be 

the total original cost of such items 

when acquired less 40%, to account for 

depreciation. If the committee wishes to 

claim a higher depreciation percentage 

for an item, it must list that capital asset 

on the statement separately and 

demonstrate, through documentation, 

the fair market value of each such asset.

(5) Other assets. The term "other 

assets” means any property acquired by

the committee for use in raising funds 

or as collateral for loans. “Other assets” 

must be included cm the committee’s 

statement of net outstanding convention 

expenses if the aggregate value of such 

assets exceeds $5000. The value of 

“other assets” shall be determined by 

the fair market value of each item as of 

45 days after the last day of the 

convention, unless the item is acquired 

after this date, in which case the item 

shall be valued on the date it is 

acquired. A list of other assets shall be 

maintained by the committee, which 

shall include a brief description of each 

such asset, the fair market value of each 

asset, the method of disposition and the 

amount received in disposition.

(6) C ollectibility o f accounts

receivable. If the committee determines 

that an account receivable of $500 or 

more, including any credit, refund, 

return or rebate, is not oollectible in 

whole or in part, the committee shall 

demonstrate through documentation 

that the determination was 

commercially reasonable. The 

documentation shall include records 

showing the original amount of the 

account receivable, copies of 

correspondence and memoranda of 

communications with the debtor 

showing attempts to collect the amount 

due, and an explanation of how the 

lesser amount or full write-off was 

determined.

(7) W inding down costs. The term 

“winding down costs” means:

(i) Costs associated with the 

termination of the convention such as 

complying with the post-convention 

requirements of the Act and other 

necessary administrative costs 

associated with winding down the 

convention, including office space 

rental, staff salaries and office supplies; 

and

(ii) Costs incurred by the convention 

committee prior to 45 days after the last 

day of the convention for which written 

arrangements or commitment was made 

on or before that date.

(8) Review o f convention com m ittee

statement. The Commission will review 

the statement filed by each convention 

committee under this section. Hie 

Commission may request further 

information with respect to statements 

filed pursuant to 11 CFR 9008.10 during 

the audit of that committee under 11 

CFR9008.il.

(h) Production o f com puter

inform ation. (1) Categories o f

com puterized inform ation to be

provided. If the convention committee 

maintains or uses computerized' 

information containing any of the 

categories of data listed in paragraphs

(h)(l)(i) through (h)(lHiv) of this

section, the committee shall provide 

computerized magnetic media, such as 

magnetic tapes or magnetic diskettes, 

containing the computerized 

information at the times specified in 

paragraph (h)(2) of this section:

(1) Information required by law to be 

maintained regarding the committee’s 

receipts or disbursements; (ii) Records used to reconcile bank 

statements;

(iii) Records relating to the 

acquisition, use and disposition of ' 

capital assets; and (iv) Any other information that may 

be used during the Commission’s audit 

to review the committee’s receipts, 

disbursements, loans, debts, obligations, 

or bank reconciliations.

(2) Time fo r Production. If the 

committee maintains or uses 

computerized information containing 

any of the data listed in paragraph (h)(1) 

of this section, the Commission 

generally will request such information 

prior to commencement of audit 

fieldwork. Such request will be made in 

writing. The committee shall produce 

the computerized information no later 

than 15 calendar days after service of 

such request. During or after audit 

fieldwork, the Commission may request 

additional or updated computerized 

information which expands the 

coverage dates of computerized 

information previously provided.

During or after audit fieldwork, the 

Commission may also request additional 

computerized information which was 

created by or becomes available to the 

committee that is of assistance in the 

Commission’s audit. The committee 

shall produce the additional or updated 

computerized information no later than 

15 calendar days after service of the 

Commission's request.

(3) Organization o f com puterized

inform ation an d technical

specifications. The computerized 

magnetic media shall be prepared and 

«delivered at the committee’s expense 

and shall conform to the technical 

specifications, including file 

requirements, described in the Federal 

Election Commission’s Computerized 

Magnetic Media Requirements for Title 

26 Candidates/Committees Receiving 

Federal Funding. The data contained in 

the computerized magnetic media 

provided to the Commission shall be 

organized in the order specified by the 

Computerized Magnetic Media 

Requirements.

(4) A dditional m aterials and

assistance. Upon request, the committee 

shall produce documentation explaining 

the computer system’s software 

capabilities, such as user guides, 

technical manuals, formats, layouts and
3 3 6 2 2 Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations

other materials for processing and 

analyzing the information request. Upon 

request, the committee shall also make 

available such personnel as are 

necessary to explain the operation of the 

computer system’s software and the 

computerized information prepared or 

maintained by the committee,

§ 9008.11 Exam inations and audits.

The Commission shall conduct an 

examination and audit of the 

convention committee ho later than 

December 31 of the calendar year of the 

convention and may at any time 

conduct other examinations and audits 

as it deems necessary. The Commission 

will follow the same procedures during 

the audit, and will afford the committee 

the same right to respond, as are 

provided for audits of publicly funded 

candidates under 11 CFR 9007.1 and 

9038.1.

§9008.12 Repaym ents.

(a) General.

(1) A national committee that has 

received payments from the Fund under 

11 CFR Part 9008 shall pay the United 

States Treasury any amounts which the 

Commission determines to be repayable 

under this section. In making repayment 

determinations under this section, the 

Commission may utilize information 

obtained from audits and examinations 

conducted pursuant to 11 CFR 9008.11 

or otherwise obtained by the 

Commission in carrying out its 

responsibilities under this subchapter.

(2) The Commission will notify the 

committee of any repayment 

determinations made under this section 

as soon as possible, but not later than 3 

years after the last day of the 

Presidential nominating convention. 

The Commission’s issuance of an 

interim audit report to the committee 

will constitute notification for purposes 

of the three year period.

(3) Once the committee receives 

notice of the Commission’s final 

repayment determination under this 

section, the committee should give 

preference to the repayment over all 

other outstanding obligations of the 

committee, except for any federal taxes 

owed by the committee.

(b) Bases fo r repayment. The 

Commission may determine that the 

national committee of a political party 

that has received payments from the 

Fund must repay the United States 

Treasury under any of the 

circumstances described below.

(1) Excess payments. If the 

Commission determines that any 

portion of the payments to the national 

committee or convention committee 

under 11 CFR 9008.6(b) was in excess

of the aggregate payments to which the 

national committee was entitled under 

11 CFR 9008.4 and 9008.5, it shall so 

notify the national committee, and the 

national committee shall pay to the 

Secretary an amount equal to such 

portion. (2) Excessive expenditures. If the 

Commission determines that the 

national committee or convention 

committee incurred convention 

expenses in excess of the limitations 

under 11 CFR 9008.8(a), it shall notify 

the national committee of the amount of 

such excessive expenditures, and the 

national committee shall pay to the 

Secretary an amount equal to the 

amount specified.

(3) Excessive contributions. If the 

Commission determines that the 

national committee accepted 

contributions to defray convention 

expenses which, when added to the 

amount of payments received, exceeds 

the expenditure limitation of such party, 

it shall notify the national committee of 

the amount of the contributions so 

accepted, and the national committee 

shall pay to the Secretary an amount 

equal to the amount specified.

(4) Im proper usage or docum entation.

If the Commission determines that any 

amount of any payment to the national 

committee or convention committee 

under 11 CFR 9008.6(b) was used for 

any purposes other than the purposes 

authorized at 11 CFR 9008.7 or was not 

documented in accordance with 11 CFR 

9008.10, it shall notify the national 

committee of the amount improperly 

used or documented and the national 

committee shall pay to the Secretary an 

amount equal to the amount specified.

(5) Unspent funds, (i) If any portion 

of the payment under 11 CFR 9008.4 

remains unspent after all convention 

expenses have been paid, that portion 

shall be returned to the Secretary of the 

Treasury. (ii) Tne national committee or 

convention committee shall make an 

interim repayment of unspent funds 

based on the financial position of the 

committee as of the end of the ninth 

month following the last day of the 

convention, allowing for a reasonable 

amount as determined by the 

Commission to be withheld for 

unanticipated contingencies. The 

interim repayment shall be made no 

later than 30 calendar days after the end 

of the ninth month following the last 

day of the convention. If, after written 

request by the national committee or 

convention committee, the Commission 

determines, upon review of evidence 

presented by either committee, that 

amounts previously refunded are 

needed to defray convention expenses,

the Commission shall certify such 

amount for payment.

(iii) All unspent funds shall be repaid 

to the U.S. Treasury no later than 24 

months after the last day of the 

convention, unless the national 

committee has been granted an 

extension of time. The Commission may 

grant any extension of time it deems 

appropriate upon request of the national 

committee.

(6) Incom e on investm ents o f

paym ents from the Fund. If the 

Commission determines that the 

national committee or the convention 

committee received any income as a 

result of investment or other use of 

payments from the Fund pursuant to 11 

CFR 9008.7(a)(5), it shall so notify the 

committee and the committee shall pay 

to the United States Treasury an amount 

equal to the amount determined to be 

income, less any Federal, State or local 

taxes on such income.

(7) The Commission may seek 

repayment, or may initiate an 

enforcement action, if the convention 

committee knowingly helps, assists or 

participates in the making of a 

convention expenditure by the host 

committee, government agency or 

municipal corporation which is not in 

accordance with 11 CFR 9008.52 or 

9008.53, or the acceptance of a 

contribution by the host committee or 

government agency or municipal 

corporation from an impermissible 

source, such as a nonlocal business.

(c) Repaym ent determ ination

procedures. The Commission will 

follow the same repayment 

determination procedures, and the 

committee has the same rights and 

obligations as are provided for 

repayment determinations involving 

publicly funded candidates under 11 

CFR 9007.2 (c) through (h).

§ 9008.13 Additional audits.

In accordance with 11 CFR 104.16(c), 

the Commission, pursuant to 11 CFR

111.10, may upon affirmative vote of 

four members conduct an audit and 

field investigation of any committee in 

any case in which the Commission finds 

reason to believe that a violation of a 

statute or regulation over which the 

Commission has jurisdiction has 

occurred or is about to occur.

§ 9008.14 Petitions for rehearing: stays of

repaym ent determ inations.

Petitions for rehearing following the 

Commission’s final repayment 

determination and requests for stays of 

repayment determinations will be 

governed by the procedures set forth at 

11 CFR 9007.5 and 9038.5. The 

Commission will afford convention
Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations 33623

committees the same rights as are 

provided to publicly funded candidates 

under 11 CFR 9007.5 and 9038.5.

§9008.15 Extensions o f tim e.

(a) It is the policy of the Commission 

that extensions of time under 11 CFR 

Part 9008 will not be routinely granted.

(b) Whenever a committee has a right 

or is required to take action within a 

period of time prescribed by 11 CFR 

Part 9008 or by notice given thereunder, 

the committee may apply in writing to 

the Commission for an extension of time 

in which to exercise such right or take 

such action. The committee shall 

demonstrate in the application for 

extension that good cause exists for its 

request.

(c) An application for extension of 

time shall be made at least 7 calendar 

days prior to the expiration of the time 

period for which the extension is 

sought. The Commission may, upon a 

showing of good cause, grant an 

extension of time to a committee that 

has applied for such extension in a 

timely manner. The length of time of 

any extension granted hereunder shall 

be decided by the Commission and may 

be less than die amount of time sought 

by the committee in its application.

(d) If a committee fails to seek an 

extension of time, exercise a right or 

take a required action prior to the 

expiration of a time period prescribed 

by 11 CFR Part 9008, the Commission 

may, on the committee’s showing of 

excusable neglect:

(1) Permit such committee to exercise 

its right(s), or take such required 

action(s) after the expiration of the 

prescribed time period; and

(2) Take into consideration any 

information obtained in connection 

with the exercise of any such right or 

taking of any such action before making 

decisions or determinations under 11 

CFR Part 9008.

§9008.16 Stale-dated com m ittee checks.

If the committee has checks 

outstanding that have not been cashed, 

the committee shall notify the 

Commission. The committee shall 

inform the Commission of its efforts to 

locate the payees, if such efforts have 

been necessary, and its efforts to 

encourage the payees to cash the 

outstanding checks. The committee 

shall also submit a check for the total 

amount of such outstanding checks, 

payable to the United States Treasury.

Subpart B—Host Committees 

Representing a Convention City; 

Convention Expenditures by 

Government Agencies and Municipal 

Corporations

§9008.50 Scope.

Subpart B governs registration and 

reporting by host committees 

representing convention cities and by 

government agencies and 

municipalities. Unsuccessful efforts to 

attract a convention need not be 

reported by any city, committee or other 

organization Subpart B also describes 

permissible sources of funds and other, 

permissible donations to host 

committees, government agencies and 

municipal corporations. In addition, 

Subpart B describes permissible 

expenditures by government agencies, 

municipal corporations and host 

committees to defray convention 

expenses and to promote the convention 

city and its commerce.

§ 9008.51 Registration and reports.

(a) Registration by host com m ittees.

(1) Each committee, including a host 

committee, other organization or group 

of persons which represents a State, 

municipality, local government agency 

or other political subdivision in dealing 

with officials of a national political 

party with respect to matters involving 

a presidential nominating convention 

shall register with the Commission on 

the Convention Registration Form 

within 10 days of the date cm which 

such party chooses the convention city. 

The following information shall be 

required of the registrant: the name and 

-address; the name and address of its 

officers; and a list of the activities which 

the registering entity plans to undertake 

in connection with the convention.

(2) Any such committee, organization 

or group which is unsuccessful in its 

efforts to attract the convention to a city 

need not register under this section. (b) Post-convention and quarterly

reports by host com m ittees; content and

tim e o f filing. (1) Each committee, 

organization or group required to 

register under this section shall file a 

post convention report with the 

Commission on FEC Form 4. The report 

shall be filed on the earlier of: 60 days 

following the last day the convention is 

officially in session; or 20 days prior to 

the presidential general election. This 

report shall disclose all receipts and 

disbursements, including in-kind 

contributions, made with respect to a 

presidential nominating convention.

(2) If such committee, organization or 

group has receipts or makes 

disbursements after the completion date 

of the post convention report, it shall

begin to file quarterly reports no later 

than 15 days after the end of the 

following calendar quarter. This report 

shall disclose all transactions completed 

as of the close of that calendar quarter. 

Quarterly reports shall be filed 

thereafter until the committee, 

organization or group ceases all activity 

which must be reported under this 

section.

(3) Such committee, organization or 

group shall file a final report with the 

Commission not later than 10 days after 

it ceases activity which must be 

reported under this section, unless such 

status is reflected in either the post 

convention report or a quarterly report.

(c) Registration and post-convention

statem ents by m unicipalities and local

government agencies. Each organization 

or group of persons which represents a 

State, municipality, local government 

agency or other political subdivision in 

dealing with officials of a national 

political party with respect to matters 

involving a presidential nominating 

convention shall file, by letter, a 

statement with the Commission 

reporting the total amount spent to 

provide facilities and services for the 

convention under 11 CFR 9008.53(c), a 

list of the categories of facilities and 

services the municipality or government 

agency provided for the convention, the 

total amount spent for each category of 

facilities and services provided, the total 

amount defrayed from general revenues, 

and the total amount of all private 

donations received to defray these 

expenses. This statement shall be filed 

on the earlier of: 60 days following the 

last day the convention is officially in 

session; or 20 days prior to the 

presidential general election. Categories 

of facilities and services may include 

construction, security, communications, 

transportation, utilities, clean up, 

meeting rooms and accommodations.

§ 9008.52 Receipts and disbursem ents of

host com m ittees.

(a) D efinition o f host com m ittee. A 

host committee includes any local 

organization, such as a local civic 

association, business league, chamber of 

commerce, real estate board, board of 

trade, or convention bureau: Which is 

not organized for profit; whose net 

earnings do not inure to the benefit of 

any private shareholder or individual; 

and whose principal objective is the 

encouragement of commerce in the 

convention city, as well as the 

projection of a favorable image of the 

city to convention attendees. A host 

committee must register in accordance 

with 11 CFR 9008.51.

(b) R eceipt o f goods or services from

com m ercial vendors. Host committees
3 3 6 2 4 Federal Register / Vol. 59, No. 124 / Wednesday, June 29, 1994 / Rules and Regulations

may accept goods or services from 

commercial vendors under the same 

terms and conditions (including 

reporting requirements) set forth at 11 

CFR 9008.9 for convention committees.

(c) R eceipt o f donations from local

businesses and organizations. (1) Local 

businesses (excluding banks), local 

labor organizations, and other local 

organizations or individuals may donate 

funds o^make in-kind donations to a 

host committee to be used for the 

following purposes:

(i) To defray those expenses incurred 

for the purpose of promoting the 

suitability of the city as a convention 

site;

(ii) To defray those expenses incurred 

for welcoming the convention attendees 

to the city, such as expenses for 

information booths, receptions, and 

tours;

(iii) To defray those expenses 

incurred in facilitating commerce, such 

as providing the convention and 

attendees with shopping and 

entertainment guides and distributing 

the samples and promotional material 

specified in 11 CFR 9008.9(c);

(iv) To defray the administrative 

expenses incurred by the host 

committee, such as salaries, rent, travel, 

and liability insurance;

(v) To provide the national committee 

use of an auditorium or convention 

center and to provide construction and 

convention related services for that 

location such as: construction of 

podiums; press tables; false floors, 

camera platforms; additional seating; 

lighting, electrical, air conditioning and 

loudspeaker systems; offices; office 

equipment; and decorations;

(vi) To defray the costs of various 

local transportation services, including 

the provision of buses and automobiles;

(vii) To defray the costs of law 

enforcement services necessary to 

assure orderly conventions;

(viii) To defray tfie cost of using 

convention bureau personnel to provide 

central housing and reservation 

services;.

(ix) To provide hotel rooms^at no 

charge or a reduced rate on the basis of 

the number of rooms actually booked for 

the convention;

(x) To provide accommodations and 

hospitality for committees of the parties 

responsible for choosing the sites of the 

conventions; and

(xi) To provide other similar 

convention-related facilities and 

services.

(2) For purposes of this section, any 

business (including a branch of a 

national or regional chain, a franchise, 

or a licensed dealer) or labor 

organization or other organization with 

offices or facilities located within the 

Metropolitan Area (MA) of the 

convention city shall be considered 

local. There shall be a rebuttable 

presumption that any such entity 

located outside the MA is not local. This 

presumption may be rebutted by a 

showing that the volume of business or 

activity in an area lying outside the MA 

would be directly affected by the 

presence of the convention.

§ 9008.53 Receipts and disbursem ents of

governm ent agencies and m unicipal

corporations.

(a) R eceipt o f goods and services

provided by com m ercial vendors.

Government agencies and municipal 

corporations may accept goods or 

services from commercial vendors for 

convention uses under the same terms 

and conditions (except reporting 

requirements) set forth at 11 CFR 9008.9 

for convention committees.

(b) R eceipt o f donations to a separate

fund or account.

(1) Local businesses (excluding 

banks), local labor organizations, and 

other local organizations or individuals 

may donate funds or make in-kind

donations to a separate fund or account 

of a government agency or municipality 

to pay for expenses listed in 11 CFR 

9008.52(c), provided that:

(1) The fund or account is not 

restricted to use in connection with any 

particular convention; and

(ii) Donations to the fund or account 

are unrestricted and are not solicited or 

designated for use in connection with 

any particular convention, event or 

activity.

(2) For purposes of this section, any 

business (including a branch of a 

national or regional chain, a franchise, 

or a licensed dealer) or labor 

organization or other organization with 

offices or facilities located within the 

Metropolitan Area (MA) of the 

convention city shall be considered 

local. There shall be a rebuttable 

presumption that any such entity 

located outside the MA is not local. This 

presumption may be rebutted by a 

showing that the volume of business of 

activity in an area lying outside the MA 

would be directly affected by the 

presence of the convention.

§ 9008.54 Exam inations and audits.

The Commission shall conduct an 

examination and audit of each host 

committee registered under 11 CFR 

9008.51. The Commission will follow 

the same procedures during the audit, 

and will afford the committee the same 

right to respond, as are provided for 

audits of publicly funded candidates 

under 11 CFR 9007.1 and 9038.1, except 

that the Commission will not make any 

repayment calculations under this 

section.

Dated: June 23,1994.

Trevor Potter,

Chairman.

[FR Doc. 94-15710 Filed 6-28-94; 8:45 am] 

BILUNG CODE 6715-01-M