II 

110TH CONGRESS 

1ST SESSION S. 463 

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 SENATE OF THE UNITED STATES 

JANUARY 31, 2007 

Mr. MCCAIN (for himself and Mr. FEINGOLD) introduced the following bill; 

which was read twice and referred to the Committee on Rules and Administration 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘527 Reform Act of 

5 2007’’. 


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1 SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS. 

2 (a) DEFINITION OF POLITICAL COMMITTEE.—Sec3 tion 301(4) of the Federal Election Campaign Act of 1971 

4 (2 U.S.C. 431(4)) is amended— 

5 (1) by striking the period at the end of sub6 paragraph (C) and inserting ‘‘; or’’; and 

7 (2) by adding at the end the following: 

8 ‘‘(D) any applicable 527 organization.’’. 

9 (b) DEFINITION OF APPLICABLE 527 ORGANIZA10 TION.—Section 301 of such Act (2 U.S.C. 431) is amend11 ed by adding at the end the following new paragraph: 

12 ‘‘(27) APPLICABLE 527 ORGANIZATION.— 

13 ‘‘(A) IN GENERAL.—For purposes of paragraph 

14 (4)(D), the term ‘applicable 527 organization’ means 

15 a committee, club, association, or group of persons 

16 that— 

17 ‘‘(i) has given notice to the Secretary of 

18 the Treasury under section 527(i) of the Inter19 nal Revenue Code of 1986 that it is to be treat20 ed as an organization described in section 527 

21 of such Code; and 

22 ‘‘(ii) is not described in subparagraph (B). 

23 ‘‘(B) EXCEPTED ORGANIZATIONS.—A com24 mittee, club, association, or other group of persons 

25 described in this subparagraph is— 


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1 ‘‘(i) an organization described in section 

2 527(i)(5) of the Internal Revenue Code of 

3 1986; 

4 ‘‘(ii) an organization which is a committee, 

5 club, association or other group of persons that 

6 is organized, operated, and makes disburse7 ments exclusively for paying expenses described 

8 in the last sentence of section 527(e)(2) of the 

9 Internal Revenue Code of 1986 or expenses of 

10 a newsletter fund described in section 527(g) of 

11 such Code; 

12 ‘‘(iii) an organization which is a com13 mittee, club, association, or other group that 

14 consists solely of candidates for State or local 

15 office, individuals holding State or local office, 

16 or any combination of either, but only if the or17 ganization refers only to one or more non-Fed18 eral candidates or applicable State or local 

19 issues in all of its voter drive activities and does 

20 not refer to a Federal candidate or a political 

21 party in any of its voter drive activities; or 

22 ‘‘(iv) an organization described in subpara23 graph (C). 

24 ‘‘(C) APPLICABLE ORGANIZATION.—For pur25 poses of subparagraph (B)(iv), an organization deVerDate Aug 31 2005 03:18 Feb 03, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S463.IS S463

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1 scribed in this subparagraph is a committee, club, 

2 association, or other group of persons whose election 

3 or nomination activities relate exclusively to— 

4 ‘‘(i) elections where no candidate for Fed5 eral office appears on the ballot; or 

6 ‘‘(ii) one or more of the following purposes: 

7 ‘‘(I) Influencing the selection, nomina8 tion, election, or appointment of one or 

9 more candidates to non-Federal offices. 

10 ‘‘(II) Influencing one or more applica11 ble State or local issues. 

12 ‘‘(III) Influencing the selection, ap13 pointment, nomination, or confirmation of 

14 one or more individuals to non-elected of15 fices. 

16 ‘‘(D) EXCLUSIVITY TEST.—A committee, club, 

17 association, or other group of persons shall not be 

18 treated as meeting the exclusivity requirement of 

19 subparagraph (C) if it makes disbursements aggre20 gating more than $1,000 for any of the following: 

21 ‘‘(i) A public communication that pro22 motes, supports, attacks, or opposes a clearly 

23 identified candidate for Federal office during 

24 the 1-year period ending on the date of the gen25 eral election for the office sought by the clearly 


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1 identified candidate (or, if a runoff election is 

2 held with respect to such general election, on 

3 the date of the runoff election). 

4 ‘‘(ii) Any voter drive activity during a cal5 endar year, except that no disbursements for 

6 any voter drive activity shall be taken into ac7 count under this subparagraph if the com8 mittee, club, association, or other group of per9 sons during such calendar year— 

10 ‘‘(I) makes disbursements for voter 

11 drive activities with respect to elections in 

12 only 1 State and complies with all applica13 ble election laws of that State, including 

14 laws related to registration and reporting 

15 requirements and contribution limitations; 

16 ‘‘(II) refers to one or more non-Fed17 eral candidates or applicable State or local 

18 issues in all of its voter drive activities and 

19 does not refer to any Federal candidate or 

20 any political party in any of its voter drive 

21 activities; 

22 ‘‘(III) does not have a candidate for 

23 Federal office, an individual who holds any 

24 Federal office, a national political party, or 

25 an agent of any of the foregoing, control or 


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1 materially participate in the direction of 

2 the organization, solicit contributions to 

3 the organization (other than funds which 

4 are described under clauses (i) and (ii) of 

5 section 323(e)(1)(B)), or direct disburse6 ments, in whole or in part, by the organi7 zation; and 

8 ‘‘(IV) makes no contributions to Fed9 eral candidates. 

10 ‘‘(E) CERTAIN REFERENCES TO FEDERAL CAN11 DIDATES NOT TAKEN INTO ACCOUNT.—For purposes 

12 of subparagraphs (B)(iii) and (D)(ii)(II), a voter 

13 drive activity shall not be treated as referring to a 

14 clearly identified Federal candidate if the only ref15 erence to the candidate in the activity is— 

16 ‘‘(i) a reference in connection with an elec17 tion for a non-Federal office in which such Fed18 eral candidate is also a candidate for such non19 Federal office; or 

20 ‘‘(ii) a reference to the fact that the can21 didate has endorsed a non-Federal candidate or 

22 has taken a position on an applicable State or 

23 local issue, including a reference that con24 stitutes the endorsement or position itself. 


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1 ‘‘(F) CERTAIN REFERENCES TO POLITICAL

2 PARTIES NOT TAKEN INTO ACCOUNT.—For purposes 

3 of subparagraphs (B)(iii) and (D)(ii)(II), a voter 

4 drive activity shall not be treated as referring to a 

5 political party if the only reference to the party in 

6 the activity is— 

7 ‘‘(i) a reference for the purpose of identi8 fying a non-Federal candidate; 

9 ‘‘(ii) a reference for the purpose of identi10 fying the entity making the public communica11 tion or carrying out the voter drive activity; or 

12 ‘‘(iii) a reference in a manner or context 

13 that does not reflect support for or opposition 

14 to a Federal candidate or candidates and does 

15 reflect support for or opposition to a State or 

16 local candidate or candidates or an applicable 

17 State or local issue. 

18 ‘‘(G) APPLICABLE STATE OR LOCAL ISSUE.— 

19 For purposes of this paragraph, the term ‘applicable 

20 State or local issue’ means any State or local ballot 

21 initiative, State or local referendum, State or local 

22 constitutional amendment, State or local bond issue, 

23 or other State or local ballot issue.’’. 

24 (c) DEFINITION OF VOTER DRIVE ACTIVITY.—Sec25 tion 301 of such Act (2 U.S.C. 431), as amended by subVerDate Aug 31 2005 03:18 Feb 03, 2007 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S463.IS S463

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1 section (b), is further amended by adding at the end the 

2 following new paragraph: 

3 ‘‘(28) VOTER DRIVE ACTIVITY.—The term ‘voter 

4 drive activity’ means any of the following activities con5 ducted in connection with an election in which a candidate 

6 for Federal office appears on the ballot (regardless of 

7 whether a candidate for State or local office also appears 

8 on the ballot): 

9 ‘‘(A) Voter registration activity. 

10 ‘‘(B) Voter identification. 

11 ‘‘(C) Get-out-the-vote activity. 

12 ‘‘(D) Generic campaign activity. 

13 ‘‘(E) Any public communication related to ac14 tivities described in subparagraphs (A) through (D). 

15 Such term shall not include any activity described in sub16 paragraph (A) or (B) of section 316(b)(2).’’. 

17 SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN 

18 FEDERAL AND NON-FEDERAL ACTIVITIES. 

19 (a) IN GENERAL.—Title III of the Federal Election 

20 Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended 

21 by adding at the end the following: 


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1 ‘‘SEC. 325. ALLOCATION AND FUNDING RULES FOR CER2 TAIN EXPENSES RELATING TO FEDERAL AND 

3 NON-FEDERAL ACTIVITIES. 

4 ‘‘(a) IN GENERAL.—In the case of any disbursements 

5 by any political committee that is a separate segregated 

6 fund or nonconnected committee for which allocation rules 

7 are provided under subsection (b)— 

8 ‘‘(1) the disbursements shall be allocated be9 tween Federal and non-Federal accounts in accord10 ance with this section and regulations prescribed by 

11 the Commission; and 

12 ‘‘(2) in the case of disbursements allocated to 

13 non-Federal accounts, may be paid only from a 

14 qualified non-Federal account. 

15 ‘‘(b) COSTS TO BE ALLOCATED AND ALLOCATION

16 RULES.— 

17 ‘‘(1) IN GENERAL.—Disbursements by any sep18 arate segregated fund or nonconnected committee, 

19 other than an organization described in section 

20 323(b)(1), for any of the following categories of ac21 tivity shall be allocated as follows: 

22 ‘‘(A) 100 percent of the expenses for public 

23 communications or voter drive activities that 

24 refer to one or more clearly identified Federal 

25 candidates, but do not refer to any clearly iden26 tified non-Federal candidates, shall be paid with 


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1 funds from a Federal account, without regard 

2 to whether the communication refers to a polit3 ical party. 

4 ‘‘(B) At least 50 percent, or a greater per5 centage if the Commission so determines by 

6 regulation, of the expenses for public commu7 nications and voter drive activities that refer to 

8 one or more clearly identified candidates for 

9 Federal office and one or more clearly identified 

10 non-Federal candidates shall be paid with funds 

11 from a Federal account, without regard to 

12 whether the communication refers to a political 

13 party. 

14 ‘‘(C) At least 50 percent, or a greater per15 centage if the Commission so determines by 

16 regulation, of the expenses for public commu17 nications or voter drive activities that refer to 

18 a political party, but do not refer to any clearly 

19 identified Federal or non-Federal candidate, 

20 shall be paid with funds from a Federal ac21 count, except that this paragraph shall not 

22 apply to communications or activities that re23 late exclusively to elections where no candidate 

24 for Federal office appears on the ballot. 


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1 ‘‘(D) At least 50 percent, or a greater per2 centage if the Commission so determines by 

3 regulation, of the expenses for public commu4 nications or voter drive activities that refer to 

5 a political party and refer to one or more clear6 ly identified non-Federal candidates, but do not 

7 refer to any clearly identified Federal can8 didates, shall be paid with funds from a Federal 

9 account, except that this paragraph shall not 

10 apply to communications or activities that re11 late exclusively to elections where no candidate 

12 for Federal office appears on the ballot. 

13 ‘‘(E) Unless otherwise determined by the 

14 Commission in its regulations, at least 50 per15 cent of any administrative expenses, including 

16 rent, utilities, office supplies, and salaries not 

17 attributable to a clearly identified candidate, 

18 shall be paid with funds from a Federal ac19 count, except that for a separate segregated 

20 fund such expenses may be paid instead by its 

21 connected organization. 

22 ‘‘(F) At least 50 percent, or a greater per23 centage if the Commission so determines by 

24 regulation, of the direct costs of a fundraising 

25 program or event, including disbursements for 


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1 solicitation of funds and for planning and ad2 ministration of actual fundraising events, where 

3 Federal and non-Federal funds are collected 

4 through such program or event shall be paid 

5 with funds from a Federal account, except that 

6 for a separate segregated fund such costs may 

7 be paid instead by its connected organization. 

8 This paragraph shall not apply to any fund9 raising solicitations or any other activity that 

10 constitutes a public communication. 

11 ‘‘(2) CERTAIN REFERENCES TO FEDERAL CAN12 DIDATES NOT TAKEN INTO ACCOUNT.—For purposes 

13 of paragraph (1), a public communication or voter 

14 drive activity shall not be treated as referring to a 

15 clearly identified Federal candidate if the only ref16 erence to the candidate in the communication or ac17 tivity is— 

18 ‘‘(A) a reference in connection with an 

19 election for a non-Federal office in which such 

20 Federal candidate is also a candidate for such 

21 non-Federal office; or 

22 ‘‘(B) a reference to the fact that the can23 didate has endorsed a non-Federal candidate or 

24 has taken a position on an applicable State or 

25 local issue (as defined in section 301(27)(G)), 


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1 including a reference that constitutes the en2 dorsement or position itself. 

3 ‘‘(3) CERTAIN REFERENCES TO POLITICAL PAR4 TIES NOT TAKEN INTO ACCOUNT.—For purposes of 

5 paragraph (1), a public communication or voter 

6 drive activity shall not be treated as referring to a 

7 political party if the only reference to the party in 

8 the communication or activity is— 

9 ‘‘(A) a reference for the purpose of identi10 fying a non-Federal candidate; 

11 ‘‘(B) a reference for the purpose of identi12 fying the entity making the public communica13 tion or carrying out the voter drive activity; or 

14 ‘‘(C) a reference in a manner or context 

15 that does not reflect support for or opposition 

16 to a Federal candidate or candidates and does 

17 reflect support for or opposition to a State or 

18 local candidate or candidates or an applicable 

19 State or local issue. 

20 ‘‘(c) QUALIFIED NON-FEDERAL ACCOUNT.— 

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, the term ‘qualified non-Federal account’ means 

23 an account which consists solely of amounts— 

24 ‘‘(A) that, subject to the limitations of 

25 paragraphs (2) and (3), are raised by the sepaVerDate Aug 31 2005 03:18 Feb 03, 2007 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S463.IS S463

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1 rate segregated fund or nonconnected com2 mittee only from individuals, and 

3 ‘‘(B) with respect to which all require4 ments of Federal, State, or local law (including 

5 any law relating to contribution limits) are met. 

6 ‘‘(2) LIMITATION ON INDIVIDUAL DONA7 TIONS.— 

8 ‘‘(A) IN GENERAL.—A separate segregated 

9 fund or nonconnected committee may not ac10 cept more than $25,000 in funds for its quali11 fied non-Federal account from any one indi12 vidual in any calendar year. 

13 ‘‘(B) AFFILIATION.—For purposes of this 

14 paragraph, all qualified non-Federal accounts of 

15 separate segregated funds or nonconnected 

16 committees which are directly or indirectly es17 tablished, financed, maintained, or controlled by 

18 the same person or persons shall be treated as 

19 one account. 

20 ‘‘(3) FUNDRAISING LIMITATION.— 

21 ‘‘(A) IN GENERAL.—No donation to a 

22 qualified non-Federal account may be solicited, 

23 received, directed, transferred, or spent by or in 

24 the name of any person described in subsection 

25 (a) or (e) of section 323. 


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1 ‘‘(B) FUNDS NOT TREATED AS SUBJECT

2 TO ACT.—Except as provided in subsection 

3 (a)(2) and this subsection, any funds raised for 

4 a qualified non-Federal account in accordance 

5 with the requirements of this section shall not 

6 be considered funds subject to the limitations, 

7 prohibitions, and reporting requirements of this 

8 Act for any purpose (including for purposes of 

9 subsection (a) or (e) of section 323 or sub10 section (d)(1) of this section). 

11 ‘‘(d) DEFINITIONS.— 

12 ‘‘(1) FEDERAL ACCOUNT.—The term ‘Federal 

13 account’ means an account which consists solely of 

14 contributions subject to the limitations, prohibitions, 

15 and reporting requirements of this Act. Nothing in 

16 this section or in section 323(b)(2)(B)(iii) shall be 

17 construed to infer that a limit other than the limit 

18 under section 315(a)(1)(C) applies to contributions 

19 to the account. 

20 ‘‘(2) NONCONNECTED COMMITTEE.—The term 

21 ‘nonconnected committee’ shall not include a polit22 ical committee of a political party. 

23 ‘‘(3) VOTER DRIVE ACTIVITY.—The term ‘voter 

24 drive activity’ has the meaning given such term in 

25 section 301(28).’’. 


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1 (b) REPORTING REQUIREMENTS.—Section 304(e) of 

2 such Act (2 U.S.C. 434(e)) is amended— 

3 (1) by redesignating paragraphs (3) and (4) as 

4 paragraphs (4) and (5); and 

5 (2) by inserting after paragraph (2) the fol6 lowing new paragraph: 

7 ‘‘(3) RECEIPTS AND DISBURSEMENTS FROM

8 QUALIFIED NON-FEDERAL ACCOUNTS.—In addition 

9 to any other reporting requirement applicable under 

10 this Act, a political committee to which section 

11 325(a) applies shall report all receipts and disburse12 ments from a qualified non-Federal account (as de13 fined in section 325(c)).’’. 

14 SEC. 4. CONSTRUCTION. 

15 No provision of this Act, or amendment made by this 

16 Act, shall be construed— 

17 (1) as approving, ratifying, or endorsing a regu18 lation promulgated by the Federal Election Commis19 sion; 

20 (2) as establishing, modifying, or otherwise af21 fecting the definition of political organization for 

22 purposes of the Internal Revenue Code of 1986; or 

23 (3) as affecting the determination of whether a 

24 group organized under section 501(c) of the Internal 

25 Revenue Code of 1986 is a political committee under 


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1 section 301(4) of the Federal Election Campaign 

2 Act of 1971. 

3 SEC. 5. JUDICIAL REVIEW. 

4 (a) SPECIAL RULES FOR ACTIONS BROUGHT ON

5 CONSTITUTIONAL GROUNDS.—If any action is brought for 

6 declaratory or injunctive relief to challenge the constitu7 tionality of any provision of this Act or any amendment 

8 made by this Act, the following rules shall apply: 

9 (1) The action shall be filed in the United 

10 States District Court for the District of Columbia 

11 and shall be heard by a 3-judge court convened pur12 suant to section 2284 of title 28, United States 

13 Code. 

14 (2) A copy of the complaint shall be delivered 

15 promptly to the Clerk of the House of Representa16 tives and the Secretary of the Senate. 

17 (3) A final decision in the action shall be re18 viewable only by appeal directly to the Supreme 

19 Court of the United States. Such appeal shall be 

20 taken by the filing of a notice of appeal within 10 

21 days, and the filing of a jurisdictional statement 

22 within 30 days, of the entry of the final decision. 

23 (4) It shall be the duty of the United States 

24 District Court for the District of Columbia and the 

25 Supreme Court of the United States to advance on 


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1 the docket and to expedite to the greatest possible 

2 extent the disposition of the action and appeal. 

3 (b) INTERVENTION BY MEMBERS OF CONGRESS.—In 

4 any action in which the constitutionality of any provision 

5 of this Act or any amendment made by this Act is raised 

6 (including but not limited to an action described in sub7 section (a)), any Member of the House of Representatives 

8 (including a Delegate or Resident Commissioner to Con9 gress) or Senate shall have the right to intervene either 

10 in support of or opposition to the position of a party to 

11 the case regarding the constitutionality of the provision 

12 or amendment. To avoid duplication of efforts and reduce 

13 the burdens placed on the parties to the action, the court 

14 in any such action may make such orders as it considers 

15 necessary, including orders to require intervenors taking 

16 similar positions to file joint papers or to be represented 

17 by a single attorney at oral argument. 

18 (c) CHALLENGE BY MEMBERS OF CONGRESS.—Any 

19 Member of Congress may bring an action, subject to the 

20 special rules described in subsection (a), for declaratory 

21 or injunctive relief to challenge the constitutionality of any 

22 provision of this Act or any amendment made by this Act. 

23 (d) APPLICABILITY.— 

24 (1) INITIAL CLAIMS.—With respect to any ac25 tion initially filed on or before December 31, 2010, 


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1 the provisions of subsection (a) shall apply with re2 spect to each action described in such subsection. 

3 (2) SUBSEQUENT ACTIONS.—With respect to 

4 any action initially filed after December 31, 2010, 

5 the provisions of subsection (a) shall not apply to 

6 any action described in such subsection unless the 

7 person filing such action elects such provisions to 

8 apply to the action. 

9 SEC. 6. EFFECTIVE DATE. 

10 The amendments made by this Act shall take effect 

11 on the date of the enactment of this Act. 

Æ 


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