25378 Federal Register / Vol 45, No. 74 / Tuesday, April 15, 1980 / Rules and Regulations

FEDERAL ELECTION COMMISSION

11 CFR Chapter I

[N o tice 1980-14]

Presidential Election Campaign Fund;

Presidential Primary Matching Fund

AGENCY: Federal Election Commission.

ACTION: Transmittal of Regulations to 

Congress.

s u m m a r y : FEC regulations governing 

the administration of the Presidential 

Primary Matching Payment Account 

provided for in Chapter 96 of Title 26, 

United States Code have been revised. 

The revised regulations at 11 CFR 

Chapter I have been transmitted to 

Congress pursuant to 26 U.S.C. 9039(c). 

Under the following revisions, the 

Commission may suspend matching 

fund payments to a candidate who 

knowingly, willfully and substantially 

exceeds expenditure limitations, and 

that candidate would be prohibited from 

receiving any further payments. Current 

regulations provide that the Commission 

may suspend matching fund payments 

to a candidate who knowingly and 

willfully exceeds expenditure 

limitations, but payments to that 

candidate would be resumed if he or she 

repaid an amount equal to the excessive 

expenditure and paid or agreed to pay 

any civil or criminal penalties resulting 

from the violation.

e f f e c t iv e d a t e : Further action, 

including the announcement of an 

effective date, will be taken by the 

Commission after these regulations have 

been before Congress 30 legislative days 

in accordance with 26 U.S.C. 9039(c).

FOR FURTHER INFORMATION CONTACT:

Patricia Ann Fiori, Assistant General 

Counsel, 1325 K Street NW.,

Washington, D.C. 20510 (202) 523-4143.

SUPPLEMENTARY INFORMATION: The 

Commission on November 5,1979, 

published a Notice of Proposed 

Rulemaking (44 FR 5594). No comments 

were received on the proposed 

regulations. •

Explanation and Justification o f R evised

Régulations Governing Suspension o f

Payments From the Presidential

Primary Matching Fund

Under the proposed revisions to the 

Presidential Primary Matching Fund 

regulations, the Commission may

suspend payments to a candidate who, 

after certification for matching funds, 

knowingly, willfully and substantially 

exceeds the expenditure limitations at 

11 CFR 9035. A candidate whose 

payments are suspended will, under the 

proposed revisions, be ineligible to 

receive any further payments.

Regulations promulgated on May 7, 

1979, provide that the Commission may 

suspend matching payments to a 

candidate who knowingly and willfully 

exceeds expenditure limitations after 

certification for public funds (11 CFR 

9033.9).1 However, such a candidate may 

re-establish eligibility by repaying an 

amount equal to the excessive 

expenditure and by paying or agreeing 

to pay any civil or criminal penalties 

resulting from the violation of the 

limitation. Under the proposed revisions, 

the Commission may suspend payments 

to a candidate only if he or she 

knowingly, willfully and substantially

exceeds expenditure limitations. In 

addition, under the proposed revisions, 

a candidate will not be permitted to reestablish eligibility after payments have 

been suspended for exceeding 

expenditure limitations.

Statutory provisions at 26 USC 

9033(b)(1) state that in order to receive 

matching funds, a candidate must certify 

to the Commission that the candidate 

and his or her authorized committees 

“will not incur qualified campaign 

expenses in excess of the limitations of 

such expenses under [26 USC] section 

9035.” A candidate who exceeds the 

expediture limitations of 26 USC 9035 

after certifying that he or she will not 

exceed those limitations violates a basic 

condition of eligibility for matching 

funds and that candidate’s eligibility for 

continued receipt of payments is thereby 

terminated. Such a result is consistent 

with the statutory provisions 

establishing the public financing system 

for presidential primary candidates, as 

well as with the legislative history of 

those provisions.

The statutory provisions governing 

entitlement to matching funds expressly 

provide that a candidate must establish 

his or her eligibility for those funds by 

meeting certain conditions. Hie 

conditions are set forth at 26 USC 9033, 

which provides that in order to be 

eligible for payments, a candidate must 

make certain agreements and

‘ Current regulations at 11 CFR 9033.3 also

provide that a candidate is ineligible for matching

funds if he or she has knowingly, willfully and

substantially exceeded the expenditure limitations

prior to certification.

certifications. Further, it is clear that the 

statute empowers the Commission to 

determine whether a candidate has 

established eligibility by meeting the 

specific conditions, and a candidate 

who does not meet those conditions is 

ineligible to receive matching funds.

(See Committee to Elect Lyndon

LaRouche v. FEC. Fed. Elec. Camp. Fin. 

Guide (CCH) 9091 (D.C.Cir. 1979), cert,

denied, — US — (February 19,1980)(No. 

79-801)).

As a Condition precedent to the 

receipt of federal matching funds, a 

candidate must, under 26 USC 

9033(b)(1), certify that he or she will not 

exceed the expenditure limitations 

applicable to publicly financed 

candidates. While the statute does not 

specifically authorize the suspension of 

payments to a candidate who violates a 

condition of eligibility by exceeding 

expenditure limitations, the 

Commission’s power to suspend is 

implied from its express authority to 

determine initial eligibility. Because 

eligibility is a continuing requirement, 

the power to determine initially whether 

eligibility has been established 

necessarily implies the authority to 

monitor eligibility. Section 9033 

specifically sets forth conditions of 

eligibility. These conditions consist of a 

series of agreements and certifications 

which the candidate must make prior to 

receiving matching funds. Where a 

candidate fails to abide by an 

agreement or certification which relates 

to a requirement central to the Act— 

such as the expenditure limitations— 

that candidate is failing to fulfill the 

basic conditions for eligibility to 

continued receipt of matching payments. 

In such a situation, the Commission has 

the authority to revoke that candidate’s 

eligibility.

Moreover, without the authority to 

suspend payments to a candidate who is 

violating the conditions of eligibility, the 

Commission would be unable to protect 

the integrity of the public financing 

system. Allowing candidates to exceed 

expenditure limitations while continuing 

to receive matching funds undermines 

the equal protection of the public 

financing system. A central concept o f . 

the statutory provisions establishing 

that system is equal treatment of all 

candidates. The candidate who abides 

by expenditure limitations would suffer 

a great disadvantage if another 

candidate were permitted to exceed 

those limitations and still receive public 

funds. To prevent this inequitable result,
Federal Register / Vol. 45, No. 74 / Tuesday, April 15, 1980 / Rules and Regulations 25379

matching fund payments must be 

permanently suspended to any 

candidate who exceeds expenditure 

limitations.

Finally, permanent suspension of 

matching fund payments to a candidate 

who has knowingly, willfully and 

substantially exceeded expenditure 

limitations is consistent with the 

legislative history of the public financing 

system for presidential candidates. The 

legislative history of the matching fund 

system indicates that the primary 

purpose of that legislation was to curb 

“abuses by special interest groups and 

big money . . . in connection with 

campaigns to the office of President".2 

Congress sought to further this purpose 

by “drastically reducing the amounts 

which may be expended by the 

, candidate”.3 It would thus run counter to 

the very purpose of the public financing 

statute to allow candidates who 

knowingly, willfully and substantially 

exceed expenditure limitations to 

subsequently receive public funds. Such 

an outcome would permit a candidate to 

make vast amounts of campaign 

expenditures, and nevertheless receive 

matching payments, thereby defeating 

the basic purpose underlying the 

enactment of public financing.

11 CFR 9033.9 is amended to read as 

follows:

PART 9033—ELIGIBILITY

*****

§ 9033.9 Suspension of payments.

(a) If the Commission has reason to 

believe that a candidate or his or her 

authorized committee(s) has knowingly, 

willfully and substantially failed to 

comply with the disclosure requirements 

of 2 USC 434 and 11 CFR Part 104, or 

that a candidate has knowingly, 

willfully and substantially exceeded the 

expenditure limitations at 11 CFR 9035, 

the Commission may make an initial 

determination to suspend payments to 

that candidate.

(b) The Commission shall notify the 

candidate of its initial determination, 

giving the legal and factual reasons for 

the determination and advising the 

candidate of the evidence upon which 

its initial determination is based. The 

candidate shall be given an opportunity 

within 20 days of the Commission's 

notice to comply with the above cited 

provisions or to submit written legal or 

factual materials to demonstrate that he 

or she is not in violation of those 

provisions.

*H.R. Rep. No. 93-1239,94th Cong., 2nd Sess. 13

(1974).

*S. Rep. No. 93-689,94th Cong., 2nd Sess. 5 (1974).

(c) The Commission shall consider 

any written, legal or factual materials 

submitted by the candidate in making its 

final determination. Such materials may 

be submitted by counsel if the candidate 

so desires.

(d) Suspension of payments to a 

candidate will occur upon a final 

determination to suspend payments by 

the Commission. Such final 

determination shall be accompanied by 

a written statement of reasons for the *

Commission’s action. This statement 

shall explain the reasons underlying the 

Commission’s determination and shall 

summarize the results of any 

investigation upon which the 

determination is based.

(e) (1) a candidate whose payments 

have been suspended for failure to 

comply with reporting requirements may 

become entitled to receive payments if 

he or she subsequently files the required 

reports and pays or agrees to pay any 

civil or criminal penalties resulting from 

failure to comply.

(2) a candidate whose payments are 

suspended for exceeding expenditure 

limitations shall not be entitled to 

receive further matching payments 

under 11 CFR 9034.1.

Dated: April 9,1980. .

Robert O. Tiernan,

Chairman, Federal Election Commission.

|FR Doc. 80-11404 Filed 4-14-80:8:45 am)

BILLING CODE 6715-01-M

FEDERAL RESERVE SYSTEM

12 CFR Part 205

[Reg. E; Docket No. R-0272]

Electronic Fund Transfers; Definitions

and Rules of Construction

Documentation of Transfers

AGENCY: Board of Governors of the 

Federal Reserve System. 

a c t io n : Final rule.

Su m m a r y : The Board is adopting in final 

form amendments to § 205.9 of 

Regulation E (Electronic Fund Transfers) 

to (1) exempt deposits of cash, checks, 

drafts, and similar paper instruments at 

electronic terminals from the 

requirement that the terminal location 

be disclosed on the periodic statement,

(2) provide that institutions may disclose 

the charges for account maintenance or

the charges for electronic fund transfers 

on periodic statements, (3) permit 

financial institutions operating certain 

cash-dispensing terminals to mail a 

terminal receipt on the next business 

day following the day the transfer was 

initiated, until financial institutions

replace those terminals, and (4) delay 

until August 10,1980, the requirements 

that the terminal location and name of 

any third party to or from whom funds 

were transferred be disclosed on the 

periodic statement. These amendments 

are intended to facilitate compliance 

with the requirements of Regulation E, 

while not diminishing the consumer 

protections that it provides. The Board 

is also issuing an analysis of the 

economic impact of the amendments 

adopted at this time.

EFFECTIVE DATE: May 10,1980.

FOR FURTHER INFORMATION CONTACT:

Regarding the regulation: Dolores S. 

Smith, Section Chief, dr Lynne B. Barr, 

Senior Attorney (202-452-2412), Division 

of Consumer and Community Affairs, 

Board of Governors of the Federal 

Reserve System, Washington, D.C.

20551. Regarding the economic impact 

analysis: Frederick J. Schroeder, 

Economist (202-452-2584), Division of 

Research and Statistics, Board of 

Governors of the Federal Reserve 

System, Washington, D.C. 20551. 

SUPPLEMENTARY INFORMATION: (1)

Sections 205.2(g) and205.9(b)(l)(iv)—

Definition o f electronic fund transfer

and disclosure o f terminal location. The 

Board has been asked to reconsider its 

opinion that deposits of cash, checks, 

drafts, or similar paper instruments at 

electronic terminals are encompassed 

by the definition of “electronic fund 

transfer” in § 205.2(g), and that the 

requirements of the Act and regulation 

apply to them. Commenters contended 

that such transfers are not initiated 

electronically and should therefore be 

excluded. Commenters also stated that 

operational problems make it difficult 

and costly to treat deposits at ATMs 

and other terminals as electronic fund 

transfers.

The Board believes that the 

protections provided by the Act, 

particularly error resolution procedures, 

should be given to consumers using this 

type of service. It remains the Board’s 

opinion that deposits at terminals are 

electronic fund transfers within the 

meaning of the Act. This view is 

supported by the Report of the Senate 

Committee on Banking, Housing and 

Urban Affairs (Report No. 95-915) which 

states that “automated teller machine 

transactions, such as cash withdrawals 

or deposits” are encompassed within the 

definition.

Certain specific operational problems 

were raised by the commenters. First, 

concern was expressed that all accounts 

held at a financial institution will be 

subject to the regulatory requirements 

(such as initial disclosures, 

documentation requirements, and error