HOLTZMANVOGELJOSEFIAK PLLC Attrmie^.s at luttv 45 North i lill Dtiw Siiiu- 100

July 20,2012

Jeff S. Jordan OF F Office of General Coimsel r-o JU L Wl Federal Election Commission Oi 999 E Street, NW ro P Washington, DC 20463 SJ *. . ' • •• : .: Re: RR 12L-27 (Michael Williams for Congress) 1 i'o ^ > tn ..... • 0-* Dear Mr. Jordan, r'"" P Nl This letter is submitted by the undersigned counsel on behalf of Michael Williams for Congress in response to correspondence from Mr. Jordan, dated June 22,2012, in the tnatter of RR 12L-27. As we understand the matter, the Reports Analysis Division Referral, to Office of General Counsel (the "Referral") to which we are responding follows the Comniission's vote pn February 6 to approve recommendations made by the Office of General Counsel and the Compliance OfTice in a memorandum dated December 13,2011, regarding a Request for Commission Guidance on the Michael Williams for U.S. Senate Committee (LRA 872). Without knowledge that this February 6 vote had taken place, we submitted a Request For Consideration of Legal Question Pursuant to Notice 201 l-l 1 on February 15,2012. Mr. Holloway provided us with a copy of the December 13,2011, memorandum ahd the Commission's recorded vote of February 6,2012, on February 21,2012. Mr. Holloway asked if we wished to maintain our February IS, 2012, request in light of the materials proyide.d[, and we indicated that we did wish to proceed with our request.

The Referral indicates that "[o]n April 10,2012, the Commission voted tp approve OCG's earlier recommendation in this .matter." We assume this means the Commission considered our request of February 15,2012, and voted on the matter on April 10. Until we received Mr. Jordan's letter dated June 22,2012, and its accompanying materials, we vyere unaware that the Commission had considered the request and were not informed of the result imtil now.

Mr. Jordan's letter of June 22,2012, gives us the opportunity to submit "factual or legal materials that [we] believe are relevant to this matter, including any related documents," prior td Page I of? OGC making a recommendation as to whether there is reason to believe the Committee violate the Act. It appears that, for all practical purposes, this recommendation has already been made. Nevertheless, we appreciate the opportunity to once again explain our position to the Commission.

L Prior Correspondence

All relevant facts and positions are detailed in our correspondence dated July 22,2011, and February 15,2012, both attached. P m P «qr n. Advisory Opinions Are Binding Only On The Requestor and. Others In The Same ^ Factual Situation Nl ^ OGC previously wrote that "[t]he Commission's conclusion [in Advisory Opinion 2009- 1^ 15] appears to be applicable here as well. Nothing in Advisory Opinion 2009-15 suggests that **i its conclusion that contributions designated for the special election did not occur turns on the fact that Mayor White was registered with the Commission as a candidate in the regularly scheduled 2012 Senate election." See Compliance Office and Office of General Counsel Memorandum to the Commission, Request for Commission Guidance on the Michael Williams for U.S, Senate Committee (LRA 872) (Dec. 13,2011) at 5 (emphasis added). To the contrary, Advisory Opinion 2009-15 (Bill White for Texas) was highly fact- specific, and the fact that Mayor White had filed as a 2012 candidate was critical to the Commission's consideration and conclusions. The entire point ofthe Advisory Opinion Request was determine if and how Mayor White could raise funds for the not-yet-declared 2010 special election while disingenuously claiming to be a candidate for election in 2012. The questions presented in Advisory Opinion 2009-15 ask: (1) may Mayor White use undesignated funds accepted by his 2012 committee for a 2010 special election, if one were to be called; and (2) may Mayor White accept "dually" attributed funds and use them for whichever election happened to occiu- next, The Request in Advisory Opinion 2009-15 was premised on Mayor White straddling a line between two elections - the election in which he was actually running (the undeclared 2010 special election), and the election for which he was filed (the 2012 primary election).

In light of these considerations, it seems indisputable that Mayor White's filing as a candidate for election in 2012, while actually running for election in 2010, is a material fact for purposes of Advisory Opinion 2009-15. Mr. Williams was never in the same position as Mayor White, and accordingly, had no need tp conduct his affairs in accordance with Mayor White's Advisory Opinion, i.e., by raising undesignated or dually designated funds. As a result^ the

Page 2 of? specific conclusions reached in Advisory Opinion 2009-15 regarding Mayor White's activities do not govern Mr. Williams' activities. Advisory Opinion 2009-15 says so very clearly:

This response constitutes an advisory opinion concemmg the application of the Act and Commission regulations fo the specific transaction or activity set forth in your request. See 2 U.S.C. 437f The Commission emphasizes that, if there; is a change in any of the facts or assumptions presented, and such facts or assimiptions are material to a conclusion presented in this advisory opinioUj then the requester may not rely on that conclusion as support for its proposed activity. Any person invdlved in any specific transaction or activity which is indistinguishable in all its material aspects from the transaction or rs activity with respect to which this advisory opinion is rendered may rely on this advisory ^ffi opinion• • . sj th SJ in. New Rules of La^ May Not Be Proposed or Created In The Enforcement Process P ^ni OGC previously acknowledged that this matter presents "a novel question of law." This ^ being the case, the Commission cannot find a violation of the la^y unless the activity at issue is clearly barred by an existing statutory or regulatdry provisidn. As three Commissioners recently explained, "the Commission, by statute and regulation, is prohibited from establishing new regulatory requirements through this or any enforcement matter." They cited 11 C.F.R. § 112.4(e), which provides, "[a]ny rule of law which is not stated in the Act or in chapters 95 or 96 ofthe Intemal Revenue Code df 1954, or in a regulation duly prescribed by the Comniission, may be initially proposed only as a rule or regulation pursuant to procedures established in 2 USC 438(d) or 26 USC 9009(c) and 9039(c) as applicable." Neither the Act nor Commission regulations prohibit a candidate for federal office frdm raising and spending funds in cdnnection with a special election that is widely anticipated but has not yet been declared.

None of the regulatory provisions cited in the December 13,2011, .memorandum from the Compliance Office and Office of General Counsel are applicable to the situation at hand.

• 11 C.F.R. § 110.1 (b)(3)(i)(C) applies to "[a] contribution designated in writing fdr a particular electidn, but made after that election....(The contributions at issue in this matter vvere not made after the election for which they were designated.) • 11 C.F.R. § 110.1 (b)(5) details the circumstances in which "[t]he treasurer of an authorized political committee may request a writteh redesignatidn of a contribution by the contributor for a different election...." (The matter at hand does not involve any of the situations set forth in (A) through (D) as necessitating a request for written redesignation.)

P.age.3of? • 11 C.F.R. § 110.1(k)(3) pertains to the reattribution of joint cdntributions.

In the same memorandum, the Compliance Office and OGC propose the hew rule of law that is the basis of their recommendation, based on what they believe the^ Commissipn appeared to conclude in Advisory Opinion 2009-15. Specifically:

By permitting the White Committee to "raise money for a special electidn" but requiring it to refund or redesignate contributions designated for that electipn ifthe special election did not occur, it appears that the Commission concluded ihat committees that chose to raise and spend money for special elections that have not yet been scheduled do sd at their own risk. ^ Compliance Office and Oftice of General Counsel Memorandum to the Commission, Request ^ for Commission Guidance on the Michael Williams for U.S. Senate Committee (LRA 872) ^ (Dec. 13,2011) at 5. Advisory Opinion 2009-15 does not include any such language. The sr Commission approved a request in which such refunds would never be necessary because the ^ funds raised would be either undesignated (and usable in the next upcoming election) or ff\ designated for multiple elections (and usable in. whichever election came first).Th e question of ^ what to do with funds designated for an election that never occurs was not presented in a context that required serious consideration.

Advisory Opinion 2009-15 also does not address the issue of spending funds raised, but as we noted previously, it makes no sense - in this context - to allow a committee to raise funds while simultaneously prohibiting the committee frdm spending any funds. At a minimum, a Cdmmittee must spend mdney dn sdlicitatidns and solicitation^related expenses in order to raise any money in the firstplace . No committee could ever refimd every last penny raised for an anticipated election that ultimately is not declared because some portion of those funds raised will necessarily be spent on overhead and compliance.

IV. Several Candidates Raised And Spent Funds In Connection With The Undeclaired 2010 Election

Bill White filed a Statement of Candidacy in December 2008 as a candidate for election in 2012. His campaign filed a termination report, in October 2010. In between, he reported total contributions and disbursements of nearly $7,000,000 each. The committee was largely inactive in 2010, and activity ceased almost entirely following Senator Hutchison's annpuncement on

Page 4 of 7 April 1,2010, that she would not resign her Senate seat. There can be no doubt that these funds were raised and spent in connection mih the anticipated 2010 special election.'

Mayor White annpunced his candidacy for Senator Hutchison's vacated seat in December 2008. See Carolyn Feibel & Bradley Olson, mayor jumps into crowded race for U.S. Senate, Houston Chronicle (Dec. 16,2008) ("Mayor Bill White officially jumped into the increasingly crowded field of candidates vying for a U.S. Senate seat Tuesday, touting his grasp on energy issues and his experience running the nation's fourth largest city. The race to replace Sen. , who is expected to relinquish the seat to run for govempr, is shaping up as a dynamic, unpredictable contest featuring a host of prominent elected officials frdm both <7]» parties, many who have long had their eyes on the post.") available at ^ http://www.chron,com/news/houston-texas/article/Houston-mayor-jumps-'into-crowded.-race-forr ^ U-S-1786991.php.

^ Mayor White's fundraising materials made clear that he was running for election in 2010.. ^ In August 2009, "Houston Mayor Bill White sent out a fund-raising email today attacking a yet- 1^ to-be-named Republican opponent in the yet-to-be-called U.S. Senate special election if incumbent Republican Kay Bailey Hutchison resigns to run for governor." The email read, in part: Texas' next U.S. Senator should be the voice of all Texans, not simply sdmedne whd wdrks fdr the right wing of the right wing. I'm Bill White, Houston's Mayor and former Deputy Secretary of Energy of the under President Clinton. If you are interested in a Democratic candidate with a winning track record who can defeat Gov. Perry's hand-picked appointment for the Senate seat to be vacated by Sen. Hutchison, please read on and visit my website, www.billwhitefortexas.com. R.G. Ratcliffe, Bill White attacks the unknown opponent, Houston Chronicle (Aug. 11,2009) available at http://blog.chron.com/texaspolitics/2009/08^ill-white-attacks-the-unlmown- opponent/.

And Mayor White was not the only candidate actively raising and spending money in connection with the undeclared 2010 special election. As the Austin Chronicle reported on October 30,2009:

' See, e.g.. Senator Hutchison alters resignation plans, but special election could still be held in May, Campaign Diaries (Nov. 13,2009) ("In fact, as 2009 began many believed the special electioh vyould be held by the year's end and politicians from both parties behaved accordingly. Not onjy have many made it clear that they'd seek Hutchison's seat, but some have already mounted full-blown campaigns: Houston's Democratic Mayor Bill White has already raised $6 million for a Senate run!") available at http://campaigndiaries.eom/2009/l 1/13/texas-special-election-could-stiil-be-held-in-may/.

Page 5 of ? With Texas facing its most cdmpetitive U.S. Senate race in a decadej federal campaign finance repdrts are currently favoring the Democratic hopefuls.

In the latest filings, covering the race through Sept. 30, Houston Mayor Bill White leads the ticket in terms of fundraising, spending, and cash on hand. Close behind is fellow Democrat John Sharp, whom White will face in next year's primary. However, Sharp's take is boosted by a $3.1 million loan to his own campaign, and he trails White significantly on individual contributions, with White pulling in almost $4 million to the former state comptroller's $641,084. That said, you still can't read too much into it: Sharp's early campaign strategy was based dh the idea that Sen. Kay Bailey P Hutchison would quit the Senate early to start her primary challenge to Gov. , ^ turning the Nov. 3 constitutional amendment election into a speciail Senate election, a SJ scenario that didn't unfold. For that kind of race, name recognition and a quick cash ^ injection would have been key, so it may be the next reports that define Sharp's SJ fundraising prowess. P iffl Trailing behind both Dems at this early stage are all four big-name Republicans fighting to replace Hutchison as their party's nominee. Former Secretary of State Roger Wil­ liams broke the million-dollar mark on individual contributions and loaned himself another $150,000. Meanwhile, the battle between Railroad Commissioners Michael Williams (no relation to Roger Williams) and Elizabeth Ames Jones continues, with Williams coming out slightly ahead on donations and loans but having already spent most of what he raised. State Sen. Florence Shapiro, R-Plano, brings up the rear on fimdraising among the big-name contenders. Richard Whittaker, Promising Start For Dem Senate Candidates, Austin Chronicle (Oct. 30, 2009) available at http://www.austirichronicle.com/news/2009-10-30/901879/.

V. Conclusion

The recommendation in the December 13 memorandum, and which was apparently accepted by the Commission on February 6,2012, is not warranted under existing law. Rather, it imposes a new rule of law on a committee without any prior notice. No applicable authority or precedent exists on which a reason to believe finding could be based. Under the circumstances, the matter should be dismissed immediately.

Page 6 of? If your procedures allow, we would be interested in meeting with OGC td explain dur pdsitidn pridr td OGC fdrwarding its recdmmendation to the Commission.

Sincerely,

ThpmaJKl. J.Qsefi:a( Michael Bayes Counsel to Michael Williams for U.S^ Senate P Enclosures Nl sr SJ P Nl

Page 7 of? HOLTZMANVOGEL PLLC \trontas/tt I.f/\ir 4:) Noith Hill Diive Suite 100 WaiTcntou.VA 2018.6 p/540-341-8808 fy540-341-8809 July 22,2011 Bradley Matheson Senior Campaign Finance Analyst Nl Reports Analysis Division 2 Federal Election Commission ST 999 E Street, NW ^ Washington, DC 20463 sr ^ Re: Michael Williams For US Senate Commiltee (Currently registered as Michael Ml Williams For Congress Commitiee); 2010 July Quarierly Reporl

Dear Mr. Matheson,

This letter is submitted by the undersigned counsel on behalf of Michael Williams For US Senate Committee/ Michael Williams For Congress Committee (C00457960) in response to your Request For Additional Information (RFAI) dated June 17,2011, regarding the Committee's 2010 July Quarterly Report.

The RFAI states, "Your committee reported receipt of contributions designated for the 2010 Primary and Runoff, elections that did not occur." You assert that "[wjithin 60 days of the announcement on April 1,2010 that this election would not be held, contributions designated for this election had to be refunded to the contributors or redesignated to another election," citing 11 CFR 110.1(b)(3) and Advisory Opinions 2009-15 and 1992-15.

We respectfully submit, based on our understanding of the appropriate regulatory provisions, the Committee has complied with the Commission's redesignation and refund requirements in conjunction with the Committee's 2010 Senate activity.

Michael Williams filed as a US Senate candidate on December 16,2008 for the much anticipated and expected Special Electidn fdr the seat of Texas Senator Kay Bailey Hutchison, who publicly indicated that she would likely resign her Senate seat to nm for Texas Governor in 2010. However, unlike other candidates seeking her seat, including the requestdr in Advisdry Opinion 2009-15, Mr. Williams filed dniy as a candidate for the expected 2010 Senate race. Others, including the requestor in Advisory Opinion 2009-15, filed instead as a.candidate fbr the 2012 Senate election.

Mr. Williams' principle campaign committee solicited and raised funds solely for the 2010 election and did not solicit or raise any contributions for the 2012 election. During this period, Mr. Williams was never a candidate for election in 2012, and accordingly raised no funds for that election. As a result, his 2010 campaign committee began raising contributions that were either specifically designated for the 2010 primary or non-specifically designated for the "next upcoming eiectiori," consisterit with Comniission Regulations arid Commission Advisory Opinions, and properly applied by the campaign to the anticipated 2010 primary. sr ^ The 2010 campaigri also solicited and received designated contributions for a potential 2010 run-off election, since there were multiple candidates and under Texas law a candidate is IJJ required to win a majority of the vote (50% plus 1 and not simply a plurality) in order to win the primary nomination. Consistent with Commission Regulations and Advisory Opinions, these ^ rim-off funds remained segregated from the 2010 primary funds and were not spent. P H The Cdmmittee alsd sdlicited and received contributions designated for the 2010 General Special Electidn, and segregated ihdse funds in the same mariner as the run-off contributidns. During the time befdre the April 1,2010 announcement, the Campaign Committee made expenditures in connection with the anticipated 2010 primary election using only the funds raised for, or properiy applied to, the 2010 primary. No funds raised for the run-off or the General Special Election were spent.

When Senator Hutchison announced on April 1,2010, that she would not resign, meaning there would be no 2010 Special Electidn, Mr. Williams filed a revised Statement of Candidacy indicating that he was now a candidate for the 2012 Senate election. All contributions received from this point on were designated for the Senate primary of 2012 and were reported as such.

. As of April 1,2010 $43,566 remained in the 2010 Cdmmittee accoiint, pf which $32,000 had been designated for the 2010 run-off or general special election. Of that latter total, $23,200 was appropriately redesignated in writing by contributors for the 2Q12 election, An additionai $8,800 was refimded to donors. These transactions were reported on the Committee's July 2010 Quarterly Report. After these redesignations/refimds were: made, a balance of $11,566 remained in. the 2010 primary account. However, on April 1, the Cdmmittee also bad outstanding obligations in the amount df $4,004 that had been incurred during the 2010 primary campaign. This 2010 primary debt was reported on Schedule D ofthe July 2010 Quarterly Report.

In addition, the campaign carried an outstanding loan from the candidate in the amount of $100,000. This loan was incurred in connection with the 2010 primary election. Any funds remaining from the 2010 primary election may therefore be used to satisfy these outstanding obligations incurred in connectidn with that same electidn.

As of June 15,2011, Michael Williams amended his Statement of Candidacy to refiect that he was no longer a candidate for the US Senate in 2012, but rather, is now a 2010 candidate for the US House of Representatives for the newly created 33^** Congressional District m Texas. Mr. Williams' principal eariipaign committee's Statement of Organization was amended accordingly, refiecting the committee's name change to "Michael Williams For Congress."

To summarize, as a candidate for US Senate fdr the 2010 Special Election in Texas^: the LO 2010 Michael Williams Fdr Senate Cdmriiittee raised and spent furids cdnsisterit with P Cdmmission Regulations and Advisory Opinions. As a candidate for the 2012 Senate race, the XJ Michael Williams for Senate Committee appropriately secured redesignations or refunded contributidns remaining in the 2010 account as of the April 1,2010 announcement. These i^jr redesignations and refunds were duly reported by the Committee on its July 2010 Quarterly Report. P Nl H The RFAI indicates that the Committee's response to this RFAI shduld be filed With the Senate Public Records Office. Because the Committeeis now the principal campaign for a US House candidate, this response is beirig filed directly with the Federal Election Cdirimissidn. If ydu have any additional questions or need further clarification, please contact us.

Sincerely-,

Thomas J. Josefiak Michael Bayes Counsel to Michael Williams Fdr US Senate/ Michael Williams For Congress HOLTZMANVOGEL PLLC .\t/nmy.< tit /.//i" 45 North Hill Dnve Suite 100 Wanenton.V.A 20186 p/540-.U.i-SSOS £/5-IO-34l-8S09 February 15,2012

Commission Secretary Federal Election Commission IS P 999 E Street, NW HI Washington, DC 20463 SI Nl Re: Request For Consideration of Legal Question by Commission Pursuani lo SJ Notice 201 I'll SJ p Nl Dear Commission Secretary,

The following request for consideration of a legal question by the Commission is submitted by the undersigned counsel on behalf of Michael Williams For U.S. Senate Committee (the "Committee"),' pursuant to the Commission's Policy Statement designated as Notice 2011- 11.

On February 9,2012, Ms. Nataliya loffe of the Reports Analysis Division contacted Thomas J. Josefiak, and notified him that RAD was not fully satisfied with a written response submitted on behalf of the Committee in connection with a RFAt. For purposes of Notice 2011- 11, we believe this date, February 9, constitutes the triggering notification to the Comniittee of a "determination by the Reports Analysis Division.... that a person or entity remains dbligated to take corrective action to resolve an issue that has arisen duririg the report review ... process." Notice 201 Ul I, Policy Statement Regarding a Program for Requestirig Consideration of Legal Questions by the Commission, 76 Fed. Reg. 45,798 (Aug. 1, 2011). This request is therefore submitted within the required 15-day time frame.

Legal Ouestion Presented

This request relates to the proper disposition df funds raised and spent in connection with an anticipated special election that did not ultimately occur.

Michael Williams For U.S. Senate Comniittee changed its name to Michael Williams For Congress in June.2011. Specifically, when a candidate raises funds for an anticipated special election that subsequently does hot occur^ must all funds raised in connection with that election be refunded or redesignated in writing, or is the candidate permitted td spend some or all of those funds in connectidn with the anticipated, special election?

Factual Background

Michael Williams filed FEC Form 2 (Statement of Candidacy) on December 16,2008, indicating his intention to run for U.S. Senate in Texas iri 2010. Michael Williams For U.S. Senate Committee filed Form 1 at the same date. Mr. Williams filed his Statement of Candidacy Q and authorized a principal canipaign committee specifically as a candidate fbr the anticipated ri 2010 U.S. Senate special election, and not as a candidate for the regularly-scheduled 2012 ^ election. At the time, it was widely rumored that Senator Kay Bailey Hutchison would resign ffi from the Senate to run for Governor. This seat was otherwise not up for election until 2012. ^ (Texas' other U.S. Senate seat is not subject to election until 2014.) Thus, Mr. Williams Q declared his intention to run for a seat that many believed would be vacated and filled in 2010 by tn special election. ri The Committee raised funds in connection with this anticipated 2010 special electioii, pursuant to guidance issued by the Commission. See Advisory Opinion 2009-15 (Bill White Fdr Texas) (authorizing funds to be raised for an anticipated special election). The Committee solicited and received coritributions fdr the 2010 special primary election, 2010 special mn-off election, and 2010 special general election.

We note that the "alternative" designation referenced in Question #2 of Advisdry Opinion 2009-15 was unnecessary for the Committee because Mr. Williams actually declared himself a candidate for election in 2010, as opposed to Mr. White, whose FEC Form 2 indicated that he was a 2012 candidate. Mr. White's campaign committee subsequently received termination approval from the Commissidn on November 12, 2010, which very strongly suggests that Mr. White was never actually a 2012 candidate.

From early December 2009 through March 31,2010, Mr. Williams and the Committee undertook efforts to prepare for a 2010 special election. This included raising and spending funds designated for the 2010 special primary election. On March 31,2010, Senator Hutchison announced that she would not resign her Senate seat. CorresDondencc and Communications With Reports Analysis Division

The Reports Analysis Division sent Requests For Additional Information to the Committee on May 6,2011 ^ and June 17,2011. See attached. Both requests indicated:

Your committee has reported receipt of contributions designated for the 2010 Primaiy and Runoff, electioris that did not occur. Within sixty (60) days of the announcement on April 1,2010 that this election would not be held, contributions designated for this election had to be refunded to the contributors or redesignated to another election. (11 ^ CFR § 110.1(b)(3); Advisory Opinions 2009-15 and 1992-15) P The Committee responded in writing by letter dated July 22, 2011. See attached. ^ Roughly seven months later, on February 9, 2012, Mr. Josefiak was contacted by Ms. lofTe, as Ihn noted on the first page of this letter. Ms. loffe, who was at all times helpful and pleasant, ^ informed us that RAD had conferred with the Office of General Counsel (pursuant to Directive Q 69), and OGC's position is that the language in Question #4 of Advisory Opinion 2009-15 Nl indicates that all contributions designated for a special election that does not occur must be ^ refunded or redesignated in writing. In other words, according to staff, while funds may be raised for an anticipated special election, no funds may actually be spent in connection with such an election until it becomes certain that the election will actually occur. A committee that spends funds "prematurely" does so at its own risk. Ms. loffe acknowledged that neither RAD nor OGC could point to any specific negative authority on this point, but both sections still conclude that the funds at issue must be refunded or redesignated. (We have not received any written materials documenting OGC's position in response to RAD's inquiry. If that position includes any nuances or distinctions that we have omitted, we were not aware of them as of the date of this letter.)

It is our understanding that RAD is prepared, to refer this matter to OGC for enforcement consideration. We informed Ms. loffe dh February 13,2012, that we would be submitting this request to the Commissioners in the cdming days, and that it was our hope that RAD would stay any such referral pending the outcome of this request. On February 14, Ms. loffe indicated via e- mail that RAD would in fact stay their referral in light of this request.

Thus, based on our correspondence and communications with RAD, we believe thait dur communications with Ms. loffe on February 9 and February 10 constitute notification to the Committee of legal guidance prepared by OGC at the request of RAD reconiimending cdrfective action. After conferring with OGC, RAD's view is that the Committee is obligated to refund or redesignate the contributions in question. Accordingly, the legal question at issue is ripe for Commission consideration pursuant to Notice 2011 -11.

The May 6 RFAI was subsequently removed from the public record. Analysis of the Ouestion Presented

As the Commissioners are presumably aware, it is common practice for candidates, (or potential candidates) to spend funds in anticipation of a special election. While the legal question may be novel to the Commission, the actual underlying practice is not. This practice is masked to a large extent because incumbent officeholders have the ability to raise and spend funds with an anticipated special election in mind, while simply attributing that activity ori their FEC reports to their next upcoming, regularly scheduled election. If and when the special is called, they simply file a few amendments and proceed.

^ However, when a non-incumbent engages in the same activity, he or she must choose pne •H! of two options: SI xj- tn (1) declare as a candidate for an election that has not yet been called, and risk ^ Commission inquiries should that election not occur; or Q (2) declare as a candidate for the next regularly scheduled election for that seat, raise funds as set forth in AO 2009-15, and in the event the special election never occurs, simply report your efforts as having been in connection with the next regularly scheduled election.

While the Commission may not have specifically addressed this question in the past, prior matters suggest that anticipatory special election spending has at least been contemplated. For example, the facts set forth in Advisory Opinion 2006-22 (Wallace) included pre-special election spending with no Commission suggestion that this might be impermissible.

There are, in fact, situations addressed in Comriiissidn materials in which a candidate is permitted to raise and spend funds in connection with an election that never occurs. For example, some states do not hold elections if only one candidate qualifies for the ballot. In this scenario, a candidate is still entitled to the per election limit, and may raise and spend funds in connection with this phantom election up until the date that the election would have taken place. See 11 C.F.R. § 110.1(i)(2)-(4); Advisory Opinions 1986-21, 1986-19, 1978-65, 1978-41,1975-09.

Thus, there is precedent for the practice at issue here, although it apparently has never been specifically addressed. On a more practical level, the Commission recognized the urgency of preparing for the special election in Advisory Opinion 2009-15. There, the Commission specifically noted that:

the likelihood ofthe occurrence of a special election is sufficiently real in this situation. Based on statements from Senator Hutchison and her agents. Mayor White is presented with a strong possibility thai Senate Hutchison will resign before the gubernatorial primary pr gubematprial general electipn as well as a certainty that she will resign by the end pf 2010 if she is elected Governor.

Advisory Opinion 2009-15 (White) at 5 (emphasis added).

Mr. Williams was not faced with a scenario in which a special election was mere speculation and the accumulation of funds was simply a matter of pradence. Rather, there was a "sufficiently real" likelihood and a "strong possibility'' that the special election would be conducted in a matter of months, meaning candidates did not have, the luxury of sitting around and waiting until the special election became a certainty. It was in this context that the ^ Committee spent funds that had been properly designated to the special primary election. The (HI Commission should also bear in mind that even though the anticipated special election was not ^ ultimately called, between.mid-2009 and April \, 2010, a special election campaign absolutely ^ occurred as far as several candidates were cpncemed. SI- ^ In light pf the language quoted above from Advisory Opinion. 2009-15, we believe that it in is entirely reasonable to concliide that the Commissipn did npt intend tp prevent individuals whp were only Candidates for the anticipated 2010 special electipn frpm actually spending funds raised for that special election.

Finally, common sense would seem to dictate that if funds may be raised permissibly, they may also be spent permissibly. We are aware of no other set of circumstances, in. which either the Act or Commission regulations permit raising funds while simultaneously prohibiting the spending of any funds at all. The situation at hand is fundamentally different from simultaneously raising primary and general election funds and quarantining the general election funds until such time as it becomes known that the candidate will participate in that general election. (This rule is necessary to effectively enforce the per electipn cpntributipn limits.) In the primary/general situation, the candidate always has the ability to spend primary election funds in connection with the primary election (even ifhe or she is unopposed and state law provides that the primary election need not be held). If the primary/general principle is applied here in the form of OGC's apparent position with regard to anticipated special elections^ the candidate is left in legal limbo and unable-to spend any funds at all - not even special primary election funds raised in connection with a special primary election.

The principle legal citation in the Requests For Additional Information is 11 CFR § 110.1(b)(3). That provision primarily applies to "[a] contribution designated in writing for a particular election, but made after that election..." (emphasis added). The provision details how to dispose of contributions received after an election, that exceed the committee's net debts outstanding, and also notes that funds raised for a general election in which a candidate is not participating must be refunded or redesignated. The regulation does not address anticipated special elections, and is therefore inapplicable under its own terms.

As noted in our July 22,2011 , written response to RAD,, "the Campaign Committee made expenditures in cpnnection with the anticipated 2010 [special] primary election using only the funds raised for, or properly applied tp, the 2010 primary. NP funds raised fpr the mn-^pff or the General Special Election were spent."

Following Senator Hutchison's announcement on. March 31, 2010, that she would not resign her U.S. Senate seat, Mr. Williams filed a revised Statementof Candidacy indicating that ^ he was a candidate for U.S. Senate in 2012. Any funds raised after March 31,2010, were H! designated to the 2012 elections. sr ifh Accordingly, funds raised by the Committee from approximately December 8,2009, ^ through March 31,2010, were designated by donors to one df fhe potential 2010 special Q elections (primary, run-'Off, or general).. A total of $43,566 remaining in the.2010 special Nl election account. Of this total, $32,000 had been initially designated for the 2010 run-pff pr general election. $23,300 of that amount was redesignated in writing to the 2012 election, and the remaining $8,800 was refunded to donors. Thus, all funds designated, to the:20.1O run-off or general election were disposed of via written redesignation or refund.

Following these refunds and redesignatipnSj a total of $11,566 remained in the 20.10 special orimarv election account. $4,004 was owed to vendors. Once the veridpFs were paid, $7,562 remained. This amount was used to repay part of the candidate' s personal loan of $100,000 to the 2010 special primarv election. The balance in the 2010 special primary election account was thereby extinguished.

The Committee was forthcoming about its fundraising and spending intentions when it made clear on FEC Forms 1 and 2 that it was pperating in cpnnectipn with the 2010 special election. At least one other candidate who informed the Commission of his intention to raise funds and run in the 2010 special election appears to have escaped this same scrutiny simply by reporting that all funds raised and spent during the same time period were in connection with the 2012 regular election. This candidate terminated in November 2010, and we think it fair to conclude that he was never actually a candidate for the 2012 election. This is an inequitable result, and if allowed stand, would provide a very clear disincentive to committees that attempt to accurately disclose their finances.

We urge the Commission to clearly state that committees may legitimately incur expenses in connection with a special eiection that does not materialize, and that such expenses do not need to be recouped and refunded dr redesignated, or misleadingly attributed to a .future, regularly-scheduled election where the candidate was not in fact a candidate for such eiectiori.

Conclusion

As a final matter, it is our understanding that the Commission's Policy Statement provides that any Commission consideration of the legal questidh. presented wiU take place either on written tally or in Executive Session^ See 76 Fed. Reg. at 45,799 ("After fhe recomhiendatipn is circulated fpr a Cpmmissioh vote, in the event of an Pbjectipn, the matter shall be autpmatically placed on the next meeting agenda consistent with the Sunshine Actj 5 U.&C. Nl ^ 552b(g), and applicable Commission regulations, 11 CFR part 2."). If we have misinterpreted this language, and Commission consideration following an objection wpujd take place in Open sr Sessipn, please cpnsider this request fpr consideration tp be autpmatically withdrawn. tn ^ Thank you for your assistance, and please feel free to contact us if you have any Q questions or require any additional information. Ni Sincerely,

l^homas J. Josefiak Michael Bayes Counsel to Michael Williams Fdr U.S. Senate Comniittee

cc: Caroline C. Hunter, Chair Ellen L. Weintraub, Vice Chair Nataliya loffe. Authorized Branch Chief, Reports Analysis Division