`[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 513 Reported in House (RH)]







                                                 Union Calendar No. 113
109th CONGRESS
  1st Session
                                H. R. 513

                          [Report No. 109-181]

  To amend the Federal Election Campaign Act of 1971 to clarify when 
organizations described in section 527 of the Internal Revenue Code of 
  1986 must register as political committees, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 2005

 Mr. Shays (for himself and Mr. Meehan) introduced the following bill; 
      which was referred to the Committee on House Administration

                             July 22, 2005

   Additional sponsors: Mr. Castle, Mr. Bass, Mr. Boyd, Mr. Lewis of 
                 Georgia, Mr. Simmons, and Mr. Oberstar
  Deleted sponsors: Mr. Bishop of New York (added February 17, 2005; 
deleted April 13, 2005), Mr. McNulty (added April 6, 2005; deleted May 
 3, 2005), Mr. Becerra (added April 6, 2005; deleted April 28, 2005), 
        and Ms. Lee (added April 27, 2005; deleted May 5, 2005)

                             July 22, 2005

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           February 2, 2005]

_______________________________________________________________________

                                 A BILL


 
  To amend the Federal Election Campaign Act of 1971 to clarify when 
organizations described in section 527 of the Internal Revenue Code of 
  1986 must register as political committees, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``527 Reform Act of 2005''.

SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.

    (a) Definition of Political Committee.--Section 301(4) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 431(4)) is amended--
            (1) by striking the period at the end of subparagraph (C) 
        and inserting ``; or''; and
            (2) by adding at the end the following:
            ``(D) any applicable 527 organization.''.
    (b) Definition of Applicable 527 Organization.--Section 301 of such 
Act (2 U.S.C. 431) is amended by adding at the end the following new 
paragraph:
    ``(27) Applicable 527 organization.--
            ``(A) In general.--For purposes of paragraph (4)(D), the 
        term `applicable 527 organization' means a committee, club, 
        association, or group of persons that--
                    ``(i) has given notice to the Secretary of the 
                Treasury under section 527(i) of the Internal Revenue 
                Code of 1986 that it is to be treated as an 
                organization described in section 527 of such Code; and
                    ``(ii) is not described in subparagraph (B).
            ``(B) Excepted organizations.--A committee, club, 
        association, or other group of persons described in this 
        subparagraph is--
                    ``(i) an organization described in section 
                527(i)(5) of the Internal Revenue Code of 1986;
                    ``(ii) an organization which is a committee, club, 
                association or other group of persons that is 
                organized, operated, and makes disbursements 
                exclusively for paying expenses described in the last 
                sentence of section 527(e)(2) of the Internal Revenue 
                Code of 1986 or expenses of a newsletter fund described 
                in section 527(g) of such Code;
                    ``(iii) an organization which is a committee, club, 
                association, or other group that consists solely of 
                candidates for State or local office, individuals 
                holding State or local office, or any combination of 
                either, but only if the organization refers only to one 
                or more non-Federal candidates or applicable State or 
                local issues in all of its voter drive activities and 
                does not refer to a Federal candidate or a political 
                party in any of its voter drive activities; or
                    ``(iv) an organization described in subparagraph 
                (C).
            ``(C) Applicable organization.--For purposes of 
        subparagraph (B)(iv), an organization described in this 
        subparagraph is a committee, club, association, or other group 
        of persons whose election or nomination activities relate 
        exclusively to--
                    ``(i) elections where no candidate for Federal 
                office appears on the ballot; or
                    ``(ii) one or more of the following purposes:
                            ``(I) Influencing the selection, 
                        nomination, election, or appointment of one or 
                        more candidates to non-Federal offices.
                            ``(II) Influencing one or more applicable 
                        State or local issues.
                            ``(III) Influencing the selection, 
                        appointment, nomination, or confirmation of one 
                        or more individuals to non-elected offices.
            ``(D) Exclusivity test.--A committee, club, association, or 
        other group of persons shall not be treated as meeting the 
        exclusivity requirement of subparagraph (C) if it makes 
        disbursements aggregating more than $1,000 for any of the 
        following:
                    ``(i) A public communication that promotes, 
                supports, attacks, or opposes a clearly identified 
                candidate for Federal office during the 1-year period 
                ending on the date of the general election for the 
                office sought by the clearly identified candidate (or, 
                if a runoff election is held with respect to such 
                general election, on the date of the runoff election).
                    ``(ii) Any voter drive activity during a calendar 
                year, except that no disbursements for any voter drive 
                activity shall be taken into account under this 
                subparagraph if the committee, club, association, or 
                other group of persons during such calendar year--
                            ``(I) makes disbursements for voter drive 
                        activities with respect to elections in only 1 
                        State and complies with all applicable election 
                        laws of that State, including laws related to 
                        registration and reporting requirements and 
                        contribution limitations;
                            ``(II) refers to one or more non-Federal 
                        candidates or applicable State or local issues 
                        in all of its voter drive activities and does 
                        not refer to any Federal candidate or any 
                        political party in any of its voter drive 
                        activities;
                            ``(III) does not have a candidate for 
                        Federal office, an individual who holds any 
                        Federal office, a national political party, or 
                        an agent of any of the foregoing, control or 
                        materially participate in the direction of the 
                        organization, solicit contributions to the 
                        organization (other than funds which are 
                        described under clauses (i) and (ii) of section 
                        323(e)(1)(B)), or direct disbursements, in 
                        whole or in part, by the organization; and
                            ``(IV) makes no contributions to Federal 
                        candidates.
            ``(E) Certain references to federal candidates not taken 
        into account.--For purposes of subparagraphs (B)(iii) and 
        (D)(ii)(II), a voter drive activity shall not be treated as 
        referring to a clearly identified Federal candidate if the only 
        reference to the candidate in the activity is--
                    ``(i) a reference in connection with an election 
                for a non-Federal office in which such Federal 
                candidate is also a candidate for such non-Federal 
                office; or
                    ``(ii) a reference to the fact that the candidate 
                has endorsed a non-Federal candidate or has taken a 
                position on an applicable State or local issue, 
                including a reference that constitutes the endorsement 
                or position itself.
            ``(F) Certain references to political parties not taken 
        into account.--For purposes of subparagraphs (B)(iii) and 
        (D)(ii)(II), a voter drive activity shall not be treated as 
        referring to a political party if the only reference to the 
        party in the activity is--
                    ``(i) a reference for the purpose of identifying a 
                non-Federal candidate;
                    ``(ii) a reference for the purpose of identifying 
                the entity making the public communication or carrying 
                out the voter drive activity; or
                    ``(iii) a reference in a manner or context that 
                does not reflect support for or opposition to a Federal 
                candidate or candidates and does reflect support for or 
                opposition to a State or local candidate or candidates 
                or an applicable State or local issue.
            ``(G) Applicable state or local issue.--For purposes of 
        this paragraph, the term `applicable State or local issue' 
        means any State or local ballot initiative, State or local 
        referendum, State or local constitutional amendment, State or 
        local bond issue, or other State or local ballot issue.''.
    (c) Definition of Voter Drive Activity.--Section 301 of such Act (2 
U.S.C. 431), as amended by subsection (b), is further amended by adding 
at the end the following new paragraph:
    ``(28) Voter drive activity.--The term `voter drive activity' means 
any of the following activities conducted in connection with an 
election in which a candidate for Federal office appears on the ballot 
(regardless of whether a candidate for State or local office also 
appears on the ballot):
            ``(A) Voter registration activity.
            ``(B) Voter identification.
            ``(C) Get-out-the-vote activity.
            ``(D) Generic campaign activity.
            ``(E) Any public communication related to activities 
        described in subparagraphs (A) through (D).
Such term shall not include any activity described in subparagraph (A) 
or (B) of section 316(b)(2).''.
    (d) Regulations.--The Federal Election Commission shall promulgate 
regulations to implement this section not later than 60 days after the 
date of enactment of this Act.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date which is 60 days after the date of enactment of this 
Act.

SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-
              FEDERAL ACTIVITIES.

    (a) In General.--Title III of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the 
following:

``SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING 
              TO FEDERAL AND NON-FEDERAL ACTIVITIES.

    ``(a) In General.--In the case of any disbursements by any 
political committee that is a separate segregated fund or nonconnected 
committee for which allocation rules are provided under subsection 
(b)--
            ``(1) the disbursements shall be allocated between Federal 
        and non-Federal accounts in accordance with this section and 
        regulations prescribed by the Commission; and
            ``(2) in the case of disbursements allocated to non-Federal 
        accounts, may be paid only from a qualified non-Federal 
        account.
    ``(b) Costs to Be Allocated and Allocation Rules.--
            ``(1) In general.--Disbursements by any separate segregated 
        fund or nonconnected committee, other than an organization 
        described in section 323(b)(1), for any of the following 
        categories of activity shall be allocated as follows:
                    ``(A) 100 percent of the expenses for public 
                communications or voter drive activities that refer to 
                one or more clearly identified Federal candidates, but 
                do not refer to any clearly identified non-Federal 
                candidates, shall be paid with funds from a Federal 
                account, without regard to whether the communication 
                refers to a political party.
                    ``(B) At least 50 percent, or a greater percentage 
                if the Commission so determines by regulation, of the 
                expenses for public communications and voter drive 
                activities that refer to one or more clearly identified 
                candidates for Federal office and one or more clearly 
                identified non-Federal candidates shall be paid with 
                funds from a Federal account, without regard to whether 
                the communication refers to a political party.
                    ``(C) At least 50 percent, or a greater percentage 
                if the Commission so determines by regulation, of the 
                expenses for public communications or voter drive 
                activities that refer to a political party, but do not 
                refer to any clearly identified Federal or non-Federal 
                candidate, shall be paid with funds from a Federal 
                account, except that this paragraph shall not apply to 
                communications or activities that relate exclusively to 
                elections where no candidate for Federal office appears 
                on the ballot.
                    ``(D) At least 50 percent, or a greater percentage 
                if the Commission so determines by regulation, of the 
                expenses for public communications or voter drive 
                activities that refer to a political party and refer to 
                one or more clearly identified non-Federal candidates, 
                but do not refer to any clearly identified Federal 
                candidates, shall be paid with funds from a Federal 
                account, except that this paragraph shall not apply to 
                communications or activities that relate exclusively to 
                elections where no candidate for Federal office appears 
                on the ballot.
                    ``(E) Unless otherwise determined by the Commission 
                in its regulations, at least 50 percent of any 
                administrative expenses, including rent, utilities, 
                office supplies, and salaries not attributable to a 
                clearly identified candidate, shall be paid with funds 
                from a Federal account, except that for a separate 
                segregated fund such expenses may be paid instead by 
                its connected organization.
                    ``(F) At least 50 percent, or a greater percentage 
                if the Commission so determines by regulation, of the 
                direct costs of a fundraising program or event, 
                including disbursements for solicitation of funds and 
                for planning and administration of actual fundraising 
                events, where Federal and non-Federal funds are 
                collected through such program or event shall be paid 
                with funds from a Federal account, except that for a 
                separate segregated fund such costs may be paid instead 
                by its connected organization. This paragraph shall not 
                apply to any fundraising solicitations or any other 
                activity that constitutes a public communication.
            ``(2) Certain references to federal candidates not taken 
        into account.--For purposes of paragraph (1), a public 
        communication or voter drive activity shall not be treated as 
        referring to a clearly identified Federal candidate if the only 
        reference to the candidate in the communication or activity 
        is--
                    ``(A) a reference in connection with an election 
                for a non-Federal office in which such Federal 
                candidate is also a candidate for such non-Federal 
                office; or
                    ``(B) a reference to the fact that the candidate 
                has endorsed a non-Federal candidate or has taken a 
                position on an applicable State or local issue (as 
                defined in section 301(27)(G)), including a reference 
                that constitutes the endorsement or position itself.
            ``(3) Certain references to political parties not taken 
        into account.--For purposes of paragraph (1), a public 
        communication or voter drive activity shall not be treated as 
        referring to a political party if the only reference to the 
        party in the communication or activity is--
                    ``(A) a reference for the purpose of identifying a 
                non-Federal candidate;
                    ``(B) a reference for the purpose of identifying 
                the entity making the public communication or carrying 
                out the voter drive activity; or
                    ``(C) a reference in a manner or context that does 
                not reflect support for or opposition to a Federal 
                candidate or candidates and does reflect support for or 
                opposition to a State or local candidate or candidates 
                or an applicable State or local issue.
    ``(c) Qualified Non-Federal Account.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified non-Federal account' means an account which consists 
        solely of amounts--
                    ``(A) that, subject to the limitations of 
                paragraphs (2) and (3), are raised by the separate 
                segregated fund or nonconnected committee only from 
                individuals, and
                    ``(B) with respect to which all requirements of 
                Federal, State, or local law (including any law 
                relating to contribution limits) are met.
            ``(2) Limitation on individual donations.--
                    ``(A) In general.--A separate segregated fund or 
                nonconnected committee may not accept more than $25,000 
                in funds for its qualified non-Federal account from any 
                one individual in any calendar year.
                    ``(B) Affiliation.--For purposes of this paragraph, 
                all qualified non-Federal accounts of separate 
                segregated funds or nonconnected committees which are 
                directly or indirectly established, financed, 
                maintained, or controlled by the same person or persons 
                shall be treated as one account.
            ``(3) Fundraising limitation.--
                    ``(A) In general.--No donation to a qualified non-
                Federal account may be solicited, received, directed, 
                transferred, or spent by or in the name of any person 
                described in subsection (a) or (e) of section 323.
                    ``(B) Funds not treated as subject to act.--Except 
                as provided in subsection (a)(2) and this subsection, 
                any funds raised for a qualified non-Federal account in 
                accordance with the requirements of this section shall 
                not be considered funds subject to the limitations, 
                prohibitions, and reporting requirements of this Act 
                for any purpose (including for purposes of subsection 
                (a) or (e) of section 323 or subsection (d)(1) of this 
                section).
    ``(d) Definitions.--
            ``(1) Federal account.--The term `Federal account' means an 
        account which consists solely of contributions subject to the 
        limitations, prohibitions, and reporting requirements of this 
        Act. Nothing in this section or in section 323(b)(2)(B)(iii) 
        shall be construed to infer that a limit other than the limit 
        under section 315(a)(1)(C) applies to contributions to the 
        account.
            ``(2) Nonconnected committee.--The term `nonconnected 
        committee' shall not include a political committee of a 
        political party.
            ``(3) Voter drive activity.--The term `voter drive 
        activity' has the meaning given such term in section 
        301(28).''.
    (b) Reporting Requirements.--Section 304(e) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 434(e)) is amended--
            (1) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5); and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Receipts and disbursements from qualified non-federal 
        accounts.--In addition to any other reporting requirement 
        applicable under this Act, a political committee to which 
        section 325(a) applies shall report all receipts and 
        disbursements from a qualified non-Federal account (as defined 
        in section 325(c)).''.
    (c) Regulations.--The Federal Election Commission shall promulgate 
regulations to implement the amendments made by this section not later 
than 180 days after the date of enactment of this Act.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date which is 180 days after the date of enactment of 
this Act.

SEC. 4. CONSTRUCTION.

    No provision of this Act, or amendment made by this Act, shall be 
construed--
            (1) as approving, ratifying, or endorsing a regulation 
        promulgated by the Federal Election Commission;
            (2) as establishing, modifying, or otherwise affecting the 
        definition of political organization for purposes of the 
        Internal Revenue Code of 1986; or
            (3) as affecting the determination of whether a group 
        organized under section 501(c) of the Internal Revenue Code of 
        1986 is a political committee under section 301(4) of the 
        Federal Election Campaign Act of 1971.

SEC. 5. JUDICIAL REVIEW.

    (a) Special Rules for Actions Brought on Constitutional Grounds.--
If any action is brought for declaratory or injunctive relief to 
challenge the constitutionality of any provision of this Act or any 
amendment made by this Act, the following rules shall apply:
            (1) The action shall be filed in the United States District 
        Court for the District of Columbia and shall be heard by a 3-
        judge court convened pursuant to section 2284 of title 28, 
        United States Code.
            (2) A copy of the complaint shall be delivered promptly to 
        the Clerk of the House of Representatives and the Secretary of 
        the Senate.
            (3) A final decision in the action shall be reviewable only 
        by appeal directly to the Supreme Court of the United States. 
        Such appeal shall be taken by the filing of a notice of appeal 
        within 10 days, and the filing of a jurisdictional statement 
        within 30 days, of the entry of the final decision.
            (4) It shall be the duty of the United States District 
        Court for the District of Columbia and the Supreme Court of the 
        United States to advance on the docket and to expedite to the 
        greatest possible extent the disposition of the action and 
        appeal.
    (b) Intervention by Members of Congress.--In any action in which 
the constitutionality of any provision of this Act or any amendment 
made by this Act is raised (including but not limited to an action 
described in subsection (a)), any Member of the House of 
Representatives (including a Delegate or Resident Commissioner to 
Congress) or Senate shall have the right to intervene either in support 
of or opposition to the position of a party to the case regarding the 
constitutionality of the provision or amendment. To avoid duplication 
of efforts and reduce the burdens placed on the parties to the action, 
the court in any such action may make such orders as it considers 
necessary, including orders to require intervenors taking similar 
positions to file joint papers or to be represented by a single 
attorney at oral argument.
    (c) Challenge by Members of Congress.--Any Member of Congress may 
bring an action, subject to the special rules described in subsection 
(a), for declaratory or injunctive relief to challenge the 
constitutionality of any provision of this Act or any amendment made by 
this Act.
    (d) Applicability.--
            (1) Initial claims.--With respect to any action initially 
        filed on or before December 31, 2008, the provisions of 
        subsection (a) shall apply with respect to each action 
        described in such subsection.
            (2) Subsequent actions.--With respect to any action 
        initially filed after December 31, 2008, the provisions of 
        subsection (a) shall not apply to any action described in such 
        subsection unless the person filing such action elects such 
        provisions to apply to the action.
                                                 Union Calendar No. 113

109th CONGRESS

  1st Session

                               H. R. 513

                          [Report No. 109-181]

_______________________________________________________________________

                                 A BILL

  To amend the Federal Election Campaign Act of 1971 to clarify when 
organizations described in section 527 of the Internal Revenue Code of 
  1986 must register as political committees, and for other purposes.

_______________________________________________________________________

                             July 22, 2005

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed`