Arent R>x 

Arent Fox LLP / Washington, DC / New York, NY / Los Angeles. CA 

vUm:\ l ELECTION 

COii;-iiSSION 

SECRETARIAT 

2011 FEB -3 P i»: 1*5 

Craig Engle 

Partner 

202.775.5791 onu-CT 

202.857.6395 FAX 

engle.craig@arentfbx.com 

February 3, 2011 Brett G. Kappel 

Counsel 

BY HAND DELIVERY 202.857.6494 DIRECT 

202.857.6395 FAX 

Shawn Woodhead Werth kappci.brctt@aremfi)x.com 

Secretary Reference Number 

Federal Election Commission O32567.ooooi 

999 E Street, N.W. 

Washington, D.C. 20463 

Re: Request for Early Commission Consideration of Legal Questions Arising in the 

Audit ofRightmarch.com PAC. Inc. 

Dear Commissioners: 

I. Introduction 

On July 20,2010 the Federal Election Commission ("FEC" or "the Commission") established a 

pilot program to allow entities to have legal questions considered by the Commission early in the 

audit process if there is a material dispute on a question of law.^ We hereby request that the 

Commission consider two unique and material questions of law that have arisen during the Audit 

Division's ongoing audit of Rightmarch.com PAC, Inc. 

The Commission voted to undertake an audit ofRightmarch.com PAC, Inc. ("Rightmarch") 

pursuant to 2 U.S.C. § 438(b) on April 8,2010. Rightmarch subsequently provided the Audit 

Division with copies of its bank statements, computerized financial data files and other material 

pursuant to the Audit Division's requests for records. The Audit Division initiated fieldwork on 

October 18,2010. On January 19,2011, the Audit Division concluded the fieldwork with an exit 

conference summarizing its initial audit conclusions. At that time, Rightmarch was informed 

that the Audit Division would recommend that Rightmarch take corrective action regarding the 

reporting of independent expenditures by political committees (2 U.S.C. §§ 434(b)&(g) and 11 

C.F.R. § 104.4) and the continuous reporting of debts (2 U.S.C. § 434(b)(8) and 11 C.F.R. § 

104.11). 

' Federal Election Commission, Policy Statement Establishing a Pilot Program for Requesting Consideration of 

Legal Questions by the Commission, 75 Fed. Reg. 42088 (July 20,2010). 

I 

I 

1050 Connecticut Avenue, NW Ste 400 1675 Broadway 555 West Fifth Street, 48th Roor | 

Washington, DC 20036-5339 New York, NY 10019-5820 Los Angeles, CA 90013-1065 

SMART IN YOUR WORLD * T 202.857.6000 F 202.857.6395 T 212.484.3900 F 212.484.3990 T 213.629.7400 F 213.629.7401 
Shawn Woodhead Werth 

February 3,2011 

Page 2 

Arent Fox 

Before Rightmarch incurs the considerable expense of amending all of its reports for the 2007-

2008 election cycle to comply with the Audit Division's initial recommendations regarding the 

reporting of independent expenditures and debts, Rightmarch requests that the Commission 

determine whether this reporting is, in fact, required. Such a determination now will resolve 

whether expensive corrective reporting (if any) needs to take place later. 

II. Unresolved Questions of Law 

1. A nonconnected committee has a multi-year fundraising contract with a telemarketing firm 

that requires the weekly calculation of the vendor's operating expenses vs. the revenue generated 

while the contract is in force. Any shortfall is called a "contingency fee" and is constantly being 

re-calculated on a weekly basis as new receipts come in to offset prior operating expenses. The 

contract also requires the calculation of any "debt" owed by the political committee to the vendor 

at the termination of the contract. The contract is governed by the laws of Arizona. While it is 

clear that any debt owed at the conclusion of the contract is a reportable debt under the 

Commission's regulations, is an ever-changing weekly contingency fee a "debt" subject to the 

reporting requirement of 11 C.F.R. 104.11 ? 

2. A nonconnected committee has a multi-year fundraising contract with a telemarketing firm to 

make fundraising solicitations to a nationwide audience. The scripts identify one or more federal 

officeholders but do not refer to them as candidates or mention any election. The overwhelming 

majority of the calls (93%) are made in a non-election year. The scripts .are primarily related to 

opposing those ofllce holder's positions on particular issues, such as immigration, to raise money 

for the nonconnected committee. The expenses for these solicitations are being reported as 

operating expenses under the Commission's regulations. Must they also be reported as 

independent expenditures under 2 U.S.C. 431(17)? 

Both of these issues raise material questions of federal law, including novel and complex 

questions regarding the interplay between federal and state law goveming debts incurred by a 

nonconnected political committee 

III. Brief Argument 

Federal law requires a nonconnected political committee to report the nature and amount of 

outstanding debts owed by the committee. 2 U.S.C. § 434(b)(8). Neither the Federal Election 

Campaign Act of 1971 ("FECA" or "the Act"), as amended, 2 U.S.C. §§ 431 through 455, nor 

the Commission's regulations define the term "debt" for purposes of the Act. Instead, "[t]he 

Commission has long held that State law governs whether an alleged debt in fact exits, what the 

amount ofthe debt is and which persons or entities are responsible for paying a debt." Advisory 

Opinion 1989-2 at 2. Seealso Advisory Opinions 1995-7.1988-44.1981-42,1979-1,1975-102 

and Karl Rove & Co. v. Thomburgh. 39 F.3d 1273,1280-81 (5th Cir. 1994)(citing Advisory 
Shawn Woodhead Werth 

February 3,2011 

Page 3 

Arent fox 

Opinion 1989-2 for the proposition that state law supplies the answer to the question of who may 

be liable for campaign committee debts). 

The Commission's pilot program requires that a committee seeking Commission consideration 

of a material question of law that arises during the audit process submit a request within 15 days 

of a determination by the Audit Division if the committee is required to take conective action. 

The Audit Division has informed Rightmarch that any request for Commission consideration 

would have to be submitted by February 8,2010. Given the novelty and complexity ofthe legal 

issues raised by the audit, Rightmarch respectfully requests that the Commission extend the time 

for submitting a complete request for consideration by thirty days until March 10,2011 so that 

Rightmarch may submit evidence and fiilly brief the Commission on the two legal issues raised 

by this audit. Such an extension would be consistent with the Commission's standard practice in 

enforcement cases.^ 

Sincerely, 

Craig Engle MM \ J Brett G. Kappel 

cc: Alex Boniewicz 

Audit Manager 

Audit Division 

^ Federal Election Commission, Guidebook for Complainants and Respondents on the FEC Enforcement Process at 

10 (Dec. 2009).