FEC Record August 2013 

Contents 

1 Regulations 

7 Litigation 

10 Advisory Opinions 

 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

Commissioners: 

Ellen L. Weintraub, Chair 

Donald F. McGahn II, Vice 

Chairman 

Caroline C. Hunter 

Matthew S. Petersen 

Steven T. Walther 

Staff Director: 

Alec Palmer 

General Counsel: 

Vacant 

The FEC Record is produced 

by the Information Division, 

Office of Communications. 

 Toll free 800-424-9530 

 Local 202-694-1100 

 Email info@fec.gov 

Greg Scott, Director 

Alex Knott, Sr. Writer/Editor 

Dorothy Yeager, Production 

Manager 

Regulations 

Civil Monetary Penalties Adjusted for 

Inflation 

On July 11, 2013, the Commission approved an increase 

in the agency’s civil monetary penalties, as required under the Federal Civil Penalties Inflation Adjustment Act of 

1990. The penalty amounts, many of which were last adjusted in 2009, were published in the Federal Register on 

July 24, and apply to violations that occur after that date. 

The final rules are also available through the Commission’s website at http://sers.nictusa.com/fosers/. 

(Posted 07/24/13; By: Alex Knott)

Resources:

 Draft Rule

 FEC Consideration of Final Rule 

 Federal Register Notice - 78 Fed. Reg. 44419

 Administrative Fines Program

Interpretive Rule on Reporting Ultimate Payees of Political Committee Disbursements

On June 27, 2013, the Commission approved an interpretive rule that clarifies a political committee’s reporting 

requirements for three specific situations in which someone pays an expense on its behalf. In each instance, the 

interpretive rule explains how the committee must report 

the “ultimate payee.” 

Background

The Federal Election Campaign Act (the Act) and FEC 

regulations require political committees to report the full 

name and address of each person to whom they make 

expenditures or other disbursements aggregating more 

than $200 per calendar year (or per election cycle for authorized committees), along with the date, amount and 

purpose of the payment. 2 U.S.C. §434(b)(5) and (6); 11 

CFR 104.3(b)(3)(i) and (vii) and 104.3(b)(4)(i) and (vi); 

see also 11 CFR 104.9(a) and (b). 
On January 31, 2013, the Commission published a draft notice seeking comment on a proposed interpretive rule to clarify these requirements as they apply to the reporting of certain itemized disbursements by committees to vendors. 

Reporting of Ultimate Payees 

The resulting interpretive rule clarifies how a political committee must report disbursements in the following three scenarios: 

 The committee reimburses an individual who used personal funds to pay committee 

expenses aggregating more than $200 to a single vendor; 

 The committee’s payment of its credit card bill includes charges of more than $200 to a 

single vendor; and 

 In the case of an authorized committee, the candidate used personal funds to pay committee expenses aggregating more than $200 to a single vendor without receiving reimbursement.1

Reimbursements to individuals for out of pocket expenses. When an individual who 

is not acting as a vendor advances his or her personal funds (or uses a personal credit 

card) to pay for goods or services on behalf of a political committee, that initial payment 

(sometimes called a staff advance) is considered to be a contribution. 11 CFR 116.5(a) and 

(b). It is also treated as an outstanding debt until reimbursed. 11 CFR 116.5(c); see also 

11 CFR 104.11.2

As clarified in the interpretive rule, a memo entry identifying the ultimate payee is required 

for any reimbursement of expenses (other than travel and subsistence expenses) if the individual’s payments to the vendor on behalf of the committee aggregate more than $200 

in a calendar year (or election cycle for authorized committees). See reporting examples A 

and B.3

1

 The first two scenarios (individual out-of-pocket expenses and credit card payments) are addressed 

in and consistent with the Commission’s Reports Analysis Division (RAD) Review and Referral Procedures for the 2011-2012 Election Cycle (made public at http://www.fec.gov/pdf/

RAD_Procedures.pdf). The third scenario (unreimbursed expenses by candidates on behalf of their 

authorized committees) was not addressed in that document. Although going forward RAD will routinely send Requests for Additional Information (RFAIs) to campaigns that fail to itemize vendor information in those circumstances, this portion of the interpretive rule will be applied prospectively. 

The adequacy of committee responses to RFAIs on this issue will only be judged for those sent after 

the adoption of this interpretive rule.

2

 Travel and subsistence expenses that are unreimbursed, or that are reimbursed within a limited 

period of time, are exempt. 11 CFR 100.79 and 116.5(b).

3

 Note that the reporting examples in this article simply illustrate the reporting of the reimbursement 

on Schedule B and do not account for every possible scenario. In some cases, a corresponding entry 

on Schedules A (Receipts) and/or D (Debts) may be needed. For help with the reporting of specific 

situations, contact your Campaign Finance Analyst.

2 
Reporting Example A (click image to enlarge): 

Reporting Example B (click image to enlarge): 

When the reimbursement is for travel and subsistence advances that exceed $500, a 

memo entry is required for each payment to a specific vendor by that individual on behalf 

of the committee if total payments to that vendor by the political committee (or by the individual on behalf of the committee) aggregate more than $200 in a calendar year (or 

election cycle for an authorized committee). Each memo entry must include the name and 

address of the vendor, as well as the date, amount and purpose of the payment. 11 CFR 

3 
104.3(b)(4)(i) and 104.9. See reporting examples C and D. 

Reporting Example C (click to enlarge): 

Reporting Example D (click to enlarge): 

If the individual used a personal credit card, the memo entry must include the name and 

address of the vendor that provided the goods or services to the political committee 

(rather than the credit card company that processed the payment) and the date, amount 

and purpose of the payment to the vendor. 

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Payments to credit card companies. If a political committee itemizes disbursements to 

credit card companies on Schedule B (Itemized Disbursements), it must include a memo 

entry for any transaction with a single vendor charged on the card that exceeds the $200 

itemization threshold. The memo entry must include the name and address of the vendor 

and the date, amount and purpose of the charge, as shown in reporting examples E and F. 

See 11 CFR 102.9. 

Reporting Example E (click to enlarge): 

Reporting Example F (next page; click to enlarge): 

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Unreimbursed disbursements by candidates. Authorized committees must disclose 

disbursements from personal funds made by candidates on behalf of their committees, just 

as they would disclose any other disbursements that they may make. 2 U.S.C. §434(b)(4), 

(5) and (6)(A); 11 CFR 104.3(b)(4). As explained in the interpretive rule, out of pocket 

spending by candidates, as agents of their authorized committees, requires memo entry 

itemization of the ultimate payee if the aggregate amount of payments to a vendor exceeds $200 for the election cycle. Each memo entry must include the name and address of 

the vendor to which payment was made and the date, amount and purpose of the payment. See reporting examples G and H. 

Reporting Example G (click to enlarge): 

Reporting Example H (click to enlarge): 

6 
Litigation 

The Commission’s Notice of Interpretive Rule was published in the Federal Register on July 

8, 2013, at 78 Fed. Reg. 40625. It is available through the Commission’s website at http://

sers.nictusa.com/fosers/. 

(Posted 7/9/2013; By: Dorothy Yeager)

Resources:

 FEC Regulations

 FEC Consideration of Interpretive Rule 

 FEC Interpretive Rules

 Reports Analysis Division Home Page

 Record Article: Draft Interpretive Rule

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Free Speech v. FEC

On June 25, 2013, the U.S. Court of Appeals for the Tenth Circuit affirmed the district 

court’s dismissal of a challenge to FEC rules and policies brought by Free Speech, an 

unincorporated nonprofit. Free Speech challenged the constitutionality of the Commission’s regulation, 11 CFR 100.22(b), defining “expressly advocating,” the Commission’s 

process for determining whether an organization qualifies as a “political committee,” 

including the Commission’s application of the “major purpose” test, and the Commission’s standard for determining what constitutes a “solicitation” for contributions. 
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La Botz v. FEC

On July 1, 2013, former U.S. Senate candidate Dan La Botz filed suit against the FEC in 

the U.S. District Court for the District of Columbia, challenging the Commission’s dismissal of his administrative complaint. 

Background 

The challenge arises from a previous suit filed in the same court in July 2011. (La Botz 

v. FEC, 11-1247RC.) In that case, Mr. La Botz alleged that the Commission wrongfully 

dismissed the administrative complaint that he filed against the Ohio News Organization 

and its member newspapers (“ONO”). The administrative complaint alleged that the 

ONO failed to use pre-established and objective standards when inviting participants to 

a series of televised debates from which Mr. La Botz was excluded, and as a result, the 

costs of the debates constituted prohibited, in-kind corporate contributions to the participating campaigns. The Commission dismissed the administrative complaint in 2011, 

finding no reason to believe that ONO violated the Federal Election Campaign Act (the 

Act) or Commission regulations because ONO’s criteria for participation in the debate 

were pre-established and objective. On September 5, 2012, the district court concluded 

that the Commission’s dismissal of the administrative complaint was not supported by 

substantial evidence and was contrary to law, and remanded the matter to the agency. 

On May 24, 2013, the Commission exercised its prosecutorial discretion and again dismissed the administrative complaint. It concluded that there was insufficient evidence 

to provide reason to believe that the ONO failed to use pre-established objective criteria 

in selecting debate participants and that further pursuit of the matter would not be an 

efficient use of the agency’s limited resources. 

Litigation 

Mr. La Botz’s current complaint alleges that the Commission erred as a matter of law in 

dismissing the remanded action. According to the court complaint, the Commission’s 

findings contradict the district court’s holdings, the Act and the Commission’s regulations. Mr. La Botz seeks a declaration from the court that the Commission's dismissal of 

his administrative complaint was arbitrary and capricious, contrary to law, and an 

abuse of discretion. The complaint also asks that the case be remanded back to the 

Commission with an order to conform to the court’s declaration within 30 days. 

(Posted 07/24/13; By: Zainab Smith)

The Court of Appeals held that the U.S. District Court for the District of Wyoming had correctly resolved each of Free Speech’s constitutional challenges and adopted the District 

Court’s opinion in its entirety. See Record Summary of District Court Opinion in Free 

Speech v. FEC. 

(Posted 7/1/2013; By: Myles Martin)

Resources:

 Free Speech v. FEC Litigation Page

 Tenth Circuit Court of Appeals Decision
Resources:

 La Botz v. FEC Litigation Page

Garcia for Congress v. FEC

On June 24, 2013, Garcia for Congress and its treasurer, Swati Patel, filed suit against 

the Commission in the US District Court for the Northern District of Texas challenging a 

$15,220 administrative fine stemming from its failure to file required 48-hour notices of 

campaign contributions. The Garcia campaign and its treasurer ask the court to set 

aside or modify the penalty, and request a jury trial. 

Background 

The plaintiffs are Garcia for Congress, the authorized campaign committee of Domingo 

A. Garcia, a candidate in the 2012 primary election for the 33rd Congressional District 

of Texas, and Swati Patel, the Garcia campaign committee’s treasurer. 

On February 8, 2013, the Commission notified the plaintiffs that it found reason to believe the campaign violated the Act by failing to file 48-hour notices for contributions of 

$1,000 or more received less than 20 days, but more than 48 hours before the primary 

election. 2 U.S.C. §434(a). Based on the schedule of penalties at 11 CFR 111.44, the 

Commission assessed an administrative fine of $15,220 against the Garcia campaign 

and its treasurer. 

Garcia for Congress challenged the Commission’s finding in a letter received by the 

agency’s Office of Administrative Review on March 1, 2013. After considering the committee’s written response, the Reviewing Officer recommended no changes to the Commission’s preliminary determination and assessment of an administrative fine of 

$15,220 against the Garcia campaign and Ms. Patel. On March 11, 2013, a copy of this 

recommendation was sent to the plaintiffs. 

On May 20, 2013, the Commission adopted the recommendation and made a final determination that Garcia for Congress and its treasurer violated the Act and imposed the 

civil penalty of $15,220. 

Litigation 

Garcia for Congress has filed suit to challenge the Commission’s decision. Among other 

things, the plaintiffs argue that the Commission “ignored that the FECA contains a safe 

harbor provision,” and that the fine assessed was “grossly disproportionate to what 

Plaintiffs failed to timely disclose.” 

(Posted 07/3/2013; By: Alex Knott)

Resources:

 Administrative Fines Program

 FEC Form 6 (48-Hour Notice of Contributions/Loans Received) Instructions [PDF] 

9 
Advisory Opinions 

AO 2013-03 Potential Candidate May Consult for Nonprofit 

A potential federal candidate may serve as a paid consultant to a nonprofit corporation 

even if she decides to become a candidate. The consulting fees she receives would not 

be considered prohibited contributions to the campaign. 

Background 

Erin Bilbray-Kohn is considering a run for the U.S. House of Representatives. In anticipation of her potential candidacy, Ms. Bilbray-Kohn resigned her Executive Director 

position with Emerge Nevada and became a paid consultant. Emerge Nevada is a nonprofit Nevada corporation that helps elect Democratic women to state and local offices. 

As a consultant, Ms. Bilbray-Kohn will organize and conduct trainings for Emerge Nevada, and will provide fundraising advice to the program’s candidates. She will not 

solicit, direct, or receive any donations for the candidates or for Emerge Nevada itself, 

and she will not have authority to spend Emerge Nevada’s funds or otherwise to exercise any control over the organization. Ms. Bilbray-Kohn’s compensation of $5,500 per 

month represents half of her former salary plus an additional $500 per month to 

account for some of the extra costs that she will bear as a consultant (such as payroll 

taxes and business expenses). 

Analysis 

The Federal Election Campaign Act (the Act) and Commission regulations prohibit federal candidates and officeholders from raising or spending funds in connection with a 

federal election “unless the funds are subject to the limitations, prohibitions, and 

reporting requirements” of the Act. 2 U.S.C. §441i(e)(1)(A); 11 CFR 300.61. Such persons are also prohibited from raising or spending funds in connection with a nonfederal 

election unless the funds are raised within the Act’s contribution limits and source 

restrictions. 2 U.S.C. §441i(e)(1)(B); 11 CFR 300.62. 

The Commission found that the Act would not prohibit Ms. Bilbray-Kohn from consulting 

for Emerge Nevada if she becomes a federal candidate. As a consultant, Ms. BilbrayKohn’s duties will be limited to organizing Emerge Nevada’s training program, conducting candidate training sessions, and providing advice to individual candidates. She will 

not solicit or receive funds for the candidates or for Emerge Nevada, and she will not 

direct or control any of the candidates’ or organization’s spending of nonfederal funds. 

In addition, the program’s candidates would not be acting as Ms. Bilbray-Kohn’s agents 

when they subsequently raise funds for their own nonfederal campaigns. Therefore, Ms. 

Bilbray-Kohn can serve as a paid consultant to Emerge Nevada after she becomes a 

federal candidate. 

The Commission also concluded that Emerge Nevada’s payments of consulting fees to 

Ms. Bilbray-Kohn would not be prohibited corporate contributions. Commission regulations state that payments of “compensation” to a candidate are contributions unless the 

compensation satisfies three requirements. 11 CFR 113.1(g)(6). The Commission 

determined that Ms. Bilbray-Kohn’s consulting fees would satisfy these requirements. First, the payments would result from Ms. Bilbray-Kohn’s “bona fide employment” as a consultant and would be genuinely independent of her candidacy. 11 CFR 

10 
113.1(g)(6)(iii)(A). The Commission found that Emerge Nevada retained Ms. Bilbray-Kohn 

as a consultant based in part on her past experience with the organization and on her expertise with Nevada politics, not on her candidacy for Federal office. 

Second, her compensation also will be “exclusively in consideration of [her] services” as a 

consultant since she will perform a subset of the duties she previously performed as Executive Director, and she will be compensated only for those reduced duties, not for any 

activities she undertakes as a federal candidate. 11 CFR 113.1(g)(6)(B). 

Finally, Ms. Bilbray-Kohn’s compensation will not exceed the amount that would be paid to 

any other similarly qualified person for the same work over the same period of time, since 

the amount of her compensation is no more than the organization is paying any other 

training consultant with Ms. Bilbray-Kohn’s level of knowledge and experience. 11 CFR 

113.1(g)(6)(C). Therefore, the payment of the consulting fees would not be prohibited 

contributions to the campaign. 

(Posted 7/3/13; By: Zainab Smith)

Resources:

 Commission Discussion of AO 2013-03

 Advisory Opinion 2013-03 [PDF] 

11