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Rules and Regulations Federal Register Vol. 72, No. 25

Wednesday, February 7, 2007

This section of the FEDERAL REGISTER PART 72—LICENSING For the Nuclear Regulatory Commission. contains regulatory documents having general REQUIREMENTS FOR THE Michael T. Lesar, applicability and legal effect, most of which INDEPENDENT STORAGE OF SPENT Federal Register Liaison Officer. are keyed to and codified in the Code of NUCLEAR FUEL, HIGH-LEVEL Federal Regulations, which is published under [FR Doc. E7–2035 Filed 2–6–07; 8:45 am] 50 titles pursuant to 44 U.S.C. 1510. RADIOACTIVE WASTE AND BILLING CODE 7590–01–P REACTOR-RELATED GREATER THAN The Code of Federal Regulations is sold by CLASS C WASTE the Superintendent of Documents. Prices of new books are listed in the first FEDERAL I 1. The authority citation for 10 CFR FEDERAL ELECTION COMMISSION REGISTER issue of each week. part 72 continues to read as follows: 11 CFR Part 100 Authority: Secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 184, 186, 187, 189, 68 Stat. [Notice 2007–3] NUCLEAR REGULATORY 929, 930, 932, 933, 934, 935, 948, 953, 954, COMMISSION 955, as amended, sec. 234, 83 Stat. 444, as Political Committee Status amended (42 U.S.C. 2071, 2073, 2077, 2092, 10 CFR Part 72 2093, 2095, 2099, 2111, 2201, 2232, 2233, AGENCY: Federal Election Commission. RIN 3150–AH93 2234, 2236, 2237, 2238, 2282); sec. 274, Pub. ACTION: Supplemental Explanation and L. 86–373, 73 Stat. 688, as amended (42 Justification. List of Approved Spent Fuel Storage U.S.C. 2021); sec. 201, as amended, 202, 206, Casks: NUHOMS HD Addition; 88 Stat. 1242, as amended, 1244, 1246 (42 SUMMARY: In November 2004, the Correction U.S.C. 5841, 5842, 5846); Pub. L. 95–601, sec. Federal Election Commission (‘‘FEC’’) 10, 92 Stat. 2951, as amended by Pub. L. 102– adopted new regulations codifying AGENCY: Nuclear Regulatory 486, sec. 7902, 106 Stat. 3123 (42 U.S.C. when an organization’s solicitations Commission. 5851); sec. 102, Pub. L. 91–190, 83 Stat. 853 generate ‘‘contributions’’ under the (42 U.S.C. 4332); secs. 131, 132, 133, 135, ACTION: Correcting amendment. 137, 141, Pub. L. 97–425, 96 Stat. 2229, 2230, Federal Election Campaign Act (‘‘FECA’’ 2232, 2241, sec. 148, Pub. L. 100–203, 101 or ‘‘the Act’’), and consequently, require SUMMARY: This document corrects a Stat. 1330–235 (42 U.S.C. 10151, 10152, that organization, regardless of tax final rule appearing in the Federal 10153, 10155, 10157, 10161, 10168); sec. status, to register as a political Register on December 11, 2006 (71 FR  1704, 112 Stat. 2750 (44 U.S.C. 3504 note); committee with the FEC. Additionally, 71463) to add the NUHOMS HD cask sec. 651(e), Pub. L. 109–58, 119 Stat. 806–810 the Commission substantially revised its system to the list of approved spent fuel (42 U.S.C. 2014, 2021, 2021b, 2111). allocation regulations to require the storage casks. This action is necessary to Section 72.44(g) also issued under secs. costs of voter drives, certain campaign correct an erroneous date. 142(b) and 148(c), (d), Pub. L. 100–203, 101 advertisements, and a political DATES: Effective Date: January 10, 2007. Stat. 1330–232, 1330–236 (42 U.S.C. 10162(b), 10168(c), (d)). Section 72.46 also committee’s general administrative costs FOR FURTHER INFORMATION CONTACT: issued under sec. 189, 68 Stat. 955 (42 U.S.C. be paid for in whole or in substantial Jayne McCausland, telephone 301–415– 2239); sec. 134, Pub. L. 97–425, 96 Stat. 2230 part with funds subject to FECA’s limits, 6219, Office of Federal and State (42 U.S.C. 10154). Section 72.96(d) also prohibitions, and reporting Materials and Environmental issued under sec. 145(g), Pub. L. 100–203, requirements. Pursuant to Shays v. FEC, Management Programs, U.S. Nuclear 101 Stat. 1330–235 (42 U.S.C. 10165(g)). 424 F. Supp. 2d 100 (D.D.C. 2006) Regulatory Commission, Washington, Subpart J also issued under secs. 2(2), 2(15), (‘‘Shays II’’), the Commission is DC 20555–0001. 2(19), 117(a), 141(h), Pub. L. 97–425, 96 Stat. publishing a supplemental Explanation 2202, 2203, 2204, 2222, 2224 (42 U.S.C. and Justification to provide a more SUPPLEMENTARY INFORMATION: On 10101, 10137(a), 10161(h)). Subparts K and L December 11, 2006 (71 FR 71463), are also issued under sec. 133, 98 Stat. 2230 detailed explanation of (a) The basis for Certificate of Compliance 1030 was (42 U.S.C. 10153) and sec. 218(a), 96 Stat. the measures it adopted and (b) the added to the list of approved spent fuel 2252 (42 U.S.C. 10198). reasons it declined to revise the storage casks. The December 11, 2006, regulatory definition of ‘‘political document contained an incorrect I 2. In § 72.214, Certificate of committee’’ to single out organizations Certificate Expiration Date. This Compliance 1030 is corrected by exempt from Federal taxation under document corrects that date. revising the Certificate Expiration date section 527 of the Internal Revenue to read as follows: Code (‘‘527 organizations’’) for List of Subjects in 10 CFR Part 72 increased regulation. This document Administrative practice and § 72.214 List of approved spent fuel also discusses several recently resolved storage casks. procedure, Criminal penalties, administrative matters that provide Manpower training programs, Nuclear * * * * * considerable guidance to all materials, Occupational safety and Certificate Number: 1030. organizations regarding the receipt of health, Penalties, Radiation protection, contributions, making of expenditures, * * * * * Reporting and recordkeeping and political committee status. requirements, Security measures, Spent Certificate Expiration date: January 10, EFFECTIVE DATE: February 7, 2007. fuel, Whistleblowing. 2027. FOR FURTHER INFORMATION CONTACT: Mr. I Accordingly, 10 CFR part 72 is * * * * * J. Duane Pugh Jr., Acting Assistant corrected by making the following Dated at Rockville, Maryland, this 1st day General Counsel, or Ms. Margaret G. correcting amendment. of February 2007. Perl, Attorney, 999 E Street, NW.,

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Washington, DC 20463, (202) 694–1650 2004 Final Rules, 69 FR at 68063–65. tightening the rules governing how or (800) 424–9530. The 2004 Final Rules took effect January political committees fund activity for SUPPLEMENTARY INFORMATION: 1, 2005. Id. at 68056. the purpose of influencing Federal In 2004, an action was brought before elections, the Commission has acted to Explanation and Justification the U.S. District Court of the District of prevent circumvention not by just 527 On November 23, 2004, following an Columbia challenging the Commission’s organizations, but by groups of all extensive rulemaking process, the decision not to revise the regulatory kinds. As further explained, the Commission adopted new regulations to definition of ‘‘political committee.’’ See Commission’s decision not to single out ensure that organizations that Shays II, 424 F. Supp. 2d at 114–17.3 527 organizations is entirely consistent participate in Federal elections conduct Plaintiffs sought a court order directing with the statutory scheme, Supreme their activities in compliance with the Commission to promulgate a rule Court precedent, and Congressional Federal law. This rulemaking generated specifically addressing the political action regarding 527 organizations. an extraordinary amount of public committee status of all 527 Political committee status, whether engagement on the issue of when organizations. Id. at 116. The district articulated in FECA, Supreme Court organizations should have to register court rejected the plaintiffs’ request to interpretations of FECA, or the with and report their activities to the order the Commission to commence a Commission’s regulations, must be FEC. The Commission received and new rulemaking, concluding that applied and enforced by the considered over 100,000 written nothing in FECA, Congress’s most- Commission through a case-by-case comments, including comments from recent amendments in the Bipartisan analysis of a specific organization’s approximately 150 Members of Campaign Reform Act of 2002 conduct. Existing regulations, bolstered Congress, many political party (‘‘BCRA’’),4 or the Supreme Court’s by the adoption of the 2004 Final Rules, organizations, hundreds of non-profit decision in McConnell v. FEC, 540 U.S. leave the Commission with a very organizations, as well as academics, 93 (2003), required the Commission to effective mechanism for addressing trade associations, and labor adopt such rules. Shays II, 424 F. Supp. claims that organizations of any tax organizations. Additionally, the 2d at 108. Case law, the Shays II court status should be registered as political Commission heard testimony from 31 explained, demonstrates ‘‘that a committees under FECA. The witnesses during two days of public statutory mandate is a crucial Commission’s recent enforcement hearings on April 14 and 15, 2004.1 component to a finding that an agency’s experience confirms this conclusion. At the end of this process, the reliance on adjudication [is] arbitrary Parts A and D of this document Commission amended its regulations in and capricious.’’ Id. at 114. The district explain the framework for establishing two significant ways. First, the court found, however, that the political committee status under FECA, Commission adopted a regulation Commission ‘‘failed to present a as interpreted by the Supreme Court. codifying when an organization’s reasoned explanation for its decision’’ Parts B and C explain why reliance on solicitations generate ‘‘contributions’’ not to regulate 527 organizations a group’s tax exempt status under under FECA, and consequently, may specifically by virtue of their status section 527 of the Internal Revenue require an organization to register as a under the Internal Revenue Code, and Code cannot substitute for an analysis of political committee with the FEC. remanded the case to the Commission the group’s conduct. Part E discusses Second, the Commission substantially ‘‘to explain its decision or institute a the new and amended rules the revised its allocation regulations to new rulemaking.’’ Id. at 116–17. Commission adopted in 2004, which require that voter drives and campaign The Commission did not appeal the codified an additional trigger for ads that target Federal elections, as well district court’s ruling. Instead, the political committee status and increased as a substantial portion of a political Commission is issuing this the Federal funding requirements to committee’s administrative costs, be supplemental Explanation and participate in certain election-related paid for with funds subject to Federal Justification to explain its decision not activities. Finally, Part F describes the limits, prohibitions, and reporting to use tax law classifications as a significance of several recently resolved requirements. See Final Rules on substitute for making determinations of enforcement matters that illustrate the Political Committee Status, Definition of political committee status under FECA, sufficiency of the legal basis for the Contribution, and Allocation for as construed by the courts. By adopting Commission’s political committee status Separate Segregated Funds and a new regulation under which any determinations. Nonconnected Committees, 69 FR organization may be required to register as a political committee and by A. FECA Provides a Specific, Conduct- 68056, 68056–63 (Nov. 23, 2004) (‘‘2004 Based Framework for Establishing Final Rules’’); see also 11 CFR 100.57 Political Committee Status and 106.6. The 2004 Final Rules also the purpose of directly or indirectly accepting contributions or making expenditures, or both, for explained the Commission’s decision Since its enactment in 1971, FECA an exempt function.’’ 26 U.S.C. 527(e)(1). The has placed strict limits and source not to re-define the terms ‘‘political ‘‘exempt function’’ of 527 organizations is the committee’’ in 11 CFR 100.5 and ‘‘function of influencing or attempting to influence prohibitions on the contributions ‘‘expenditure’’ in 11 CFR 100.110 the selection, nomination, election, or appointment received by organizations that are of any individual to any Federal, State, or local defined as political committees. Under through 100.154, including the public office or office in a political organization,’’ Commission’s decision not to establish or the election or selection of presidential or vice the Act, an organization’s conduct has a separate political committee definition presidential electors. 26 U.S.C. 527(e)(2). Virtually always been the basis for determining all political committees that register with the singling out 527 organizations.2 See whether it is required to register and Commission under FECA are also tax exempt under abide by the Act’s requirements as a section 527 of the Internal Revenue Code, including 1 The comments and transcripts of the public political party committees, authorized campaign political committee. Likewise, since its hearing are available at http://www.fec.gov/law/ committees of candidates, separate segregated enactment in 1971, the determination of RulemakingArchive.shmtl under ‘‘Political funds, and nonconnected committees. See 11 CFR political committee status has taken Committee Status (2004)’’. 1005. place on a case-by-case basis. FECA 2 Under the Internal Revenue Code, a 527 3 Documents related to this litigation are available organization is ‘‘a party, committee, association, at http://www.fec.gov/law/litigation_CAA_Alpha. defines a ‘‘political committee’’ as ‘‘any fund, or other organization (whether or not shtml#shays_04. committee, club, association, or other incorporated) organized and operated primarily for 4 Pub. L. 107–155, 116 Stat. 81 (Mar. 7, 2002). group of persons which receives

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contributions aggregating in excess of and advocacy of a political result.’’ See, express advocacy limitation to the $1,000 during a calendar year or which e.g., Buckley, 424 U.S. at 79; FEC v. regulation of ‘‘electioneering makes expenditures aggregating in Massachusetts Citizens for Life, Inc., 479 communications,’’ it also did not alter excess of $1,000 during a calendar U.S. 238, 262 (1986) (‘‘MCFL’’). that limitation as to expenditures on year.’’ See 2 U.S.C. 431(4)(A). FECA Neither BCRA, McConnell, nor any communications made independently of further defines the terms ‘‘contribution’’ other legislative, regulatory, or judicial a candidate. Absent future and ‘‘expenditure,’’ limiting these terms action has eliminated (1) The Supreme Congressional action altering the to those receipts and disbursements Court’s express advocacy requirement definition of ‘‘expenditure,’’ the made ‘‘for the purpose of influencing for expenditures on communications Supreme Court’s limitation of any election for Federal office.’’ 2 U.S.C. made independently of a candidate or expenditures, on communications made 431(8) and (9). Commission regulations (2) the Court’s major purpose test. In its independently of a candidate, to first promulgated in 1975 essentially 2003 McConnell decision, the Supreme ‘‘express advocacy’’ continues to apply. repeat FECA’s definition of ‘‘political Court implicitly endorsed the major Therefore, determining political committee.’’ 11 CFR 100.5(a).5 purpose framework to uphold BCRA’s committee status under FECA, as Congress has not materially amended regulation of political party activity modified by the Supreme Court, the definition of ‘‘political committee’’ against vagueness concerns. See requires an analysis of both an since the enactment of section 431(4)(A) McConnell, 540 U.S. at 170 n.64 (‘‘This organization’s specific conduct— in 1971, nor has Congress at any time is particularly the case here, since whether it received $1,000 in since required the Commission to adopt actions taken by political parties are contributions or made $1,000 in or amend its regulations in this area. presumed to be in connection with expenditures—as well as its overall Indeed, in 2002, when Congress made election campaigns. See Buckley, 424 conduct—whether its major purpose is sweeping changes in campaign finance U.S. at 79, 96 S. Ct. 612 (noting that a Federal campaign activity (i.e., the law pursuant to BCRA, it left the general requirement that political nomination or election of a Federal definition of ‘‘political committee’’ committees disclose their expenditures candidate). Neither FECA, its undisturbed and political committee raised no vagueness problems because subsequent amendments, nor any status to be determined on a case-by- the term ‘political committee’ ‘need judicial decision interpreting either, has case basis. only encompass organizations that are substituted tax status as an acceptable To address constitutional concerns under the control of a candidate or the proxy for this conduct-based raised when FECA was adopted, the major purpose of which is the determination. Supreme Court added two additional nomination or election of a candidate The Commission has promulgated requirements that affect the statutory ***’)’’). regulations defining in detail what definition of political committee. First, McConnell also addressed the Buckley constitutes a ‘‘contribution’’ and an the Supreme Court held, when applied expenditure framework, finding, ‘‘the ‘‘expenditure.’’ See 11 CFR 100.51 to to communications made independently express advocacy limitation, in both the 100.94 and 100.110 to 100.155. Many of a candidate or a candidate’s expenditure and disclosure contexts, administrative actions, including the committee, the term ‘‘expenditure’’ was the product of statutory recently resolved actions against several includes only ‘‘expenditures for interpretation rather than a 527 organizations that are described in communications that in express terms constitutional command.’’ McConnell, Part F below, include substantial advocate the election or defeat of a 540 U.S. at 191–92. However, the Court investigations and case-by-case analyses clearly identified candidate for federal made it clear that FECA continued to and determinations of whether a group’s office.’’ Buckley v. Valeo, 424 U.S. 1, 44, contain the express advocacy limitation fundraising generated ‘‘contributions’’ 80 (1976).6 Second, the Supreme Court as to expenditures on communications and whether payments for its mandated that an additional hurdle was made independently of a candidate, communications made independently of necessary to avoid Constitutional because Congress, in enacting BCRA, a candidate constituted ‘‘expenditures,’’ vagueness concerns; only organizations modified the limitation only insofar as as alternative prerequisites to a whose ‘‘major purpose’’ is the it applied to ‘‘electioneering determination that a group is a political nomination or election of a Federal communications.’’ The Court found: committee, prior to any consideration of the group’s major purpose. Additional candidate can be considered ‘‘political Since our decision in Buckley, Congress’ committees’’ under the Act. Id. at 79. regulations defining ‘‘contribution’’ and power to prohibit corporations and unions ‘‘expenditure’’ would not obviate the The court deemed this necessary to from using funds in their treasuries to avoid the regulation of activity finance advertisements expressly advocating need for a case-by-case investigation ‘‘encompassing both issue discussion the election or defeat of candidates has been and determination in a Commission firmly embedded in our law * * * Section enforcement proceeding. Neither would 5 See H.R. Doc. No. 97–293, at 7–8 and 29–30 203 of BCRA amends [2 U.S.C. 441b(b)(2)] to a regulation defining ‘‘major purpose’’ (1975) addressing 11 CFR 100.14 (1976), which was extend this rule, which previously applied that singled out 527 organizations, as recodified as 11 CFR 100.5 in 1980. See 45 FR only to express advocacy, to all the Shays II plaintiffs seek, obviate the 15080 (Mar. 7, 1980). ‘electioneering communications’ covered by need for case-by-case investigations and 6 The Supreme Court applies a different analysis the definition of that term in [2 U.S.C. determinations in the Commission’s to coordinated expenditures. See Buckley, 424 U.S. 434(f)(3)]. at 46–47 (‘‘They argue that expenditures controlled enforcement process regarding the by or coordinated with the candidate and his McConnell, 540 U.S. at 203–04. organization’s major purpose. campaign might well have virtually the same value Congress did not amend the definition to the candidate as a contribution and would pose of expenditure in BCRA, and in fact, B. Section 527 Tax Status Does Not similar dangers of abuse. yet such controlled or specified that ‘‘electioneering Determine Whether an Organization Is a coordinated expenditures are treated as Political Committee Under FECA contributions rather than expenditures under the communications’’ are not expenditures Act.’’). Cf. AO 2006–20 Unity ’08 (finding monies under the Act. 2 U.S.C. 434(f)(1) and (2) 527 organizations are so named for spent on ballot access through petition drives by an (treating electioneering communications section 527 of the Internal Revenue organization supporting only two candidates, both yet to be selected, one for the office of President of as ‘‘disbursements’’). Accordingly, Code, a section that exempts certain the United States and one for the office of Vice while BCRA, as interpreted by activities from taxation. An President, are expenditures). McConnell, did not extend Buckley’s organization’s election of section 527

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tax status is not sufficient evidence in influence the appointment of judicial context of a grant of exemption, which itself that the organization satisfies and executive branch officials. A is viewed as a form of subsidy to the FECA and the Supreme Court’s forthcoming tax law article states: organization, a lower level of scrutiny is contribution, expenditure, and major Once section 527 is placed in proper applied than when the government purpose requirements. As stated by a context, it becomes clear that the tax law is regulates or prohibits outright certain commenter, ‘‘All that 527 status means not a very good mechanism for differentiating types of speech. See, e.g., Regan v. is that the organization is exempt from between election-focused and ideological Taxation With Representation, 461 U.S. federal income tax to the extent it groups. Because of its unique policies and 540, 549–50 (1983) (upholding spends political income on political idiosyncrasies, the tax law has an limitation on lobbying by 501(c)(3) activities * * * All federal political exceptionally broad definition of ‘‘political organizations); Christian Echoes Nat’l committees registered with the FEC are organization,’’ one that has the potential to Ministry, Inc. v. United States, 470 F.2d 527 organizations. So are the capture ideological as well as partisan organizations. Furthermore, section 527 849, 857 (10th Cir. 1972) (upholding Republican National Committee and the should not be understood to convey any real 501(c)(3) ban on campaign Democratic National Committee. So are tax benefits to organizations that self- intervention). As one commenter noted: John Kerry for President, Inc. and Bush- identify. Accordingly, the reformers’ mission The Internal Revenue Code (IRC) and its Cheney ’04, Inc. So is every candidate’s to use section 527 as a campaign finance accompanying regulations offer several campaign committee right down to instrument is misguided. different tests for what constitutes political school board and dogcatcher.’’ Thus, Gregg D. Polsky, A Tax Lawyer’s activity for tax-exempt organizations virtually all political committees are 527 Perspective on Section 527 (including 527 organizations), but all of these tests boil down to a vague ‘‘facts and organizations. It does not necessarily Organizations, 28 Cardozo L. Rev. follow that all 527 organizations are or circumstances’’ standard. While (forthcoming Feb. 2007). should be registered as political constitutionally adequate * * * for the The IRS has specifically determined enforcement of tax laws, the inherent committees. that exempt function activity can The IRS’s requirements for an uncertainty created by such a contextual, include disbursements for Federal subjective standard renders it wholly organization to be entitled to the tax electoral activity that does not inadequate to the task of providing a exemption under section 527 are based predictable standard for those required to on a different and broader set of criteria constitute express advocacy. IRS Revenue Ruling 2004–6 states (at 4): comply with [F]ederal election law * * * than the Commission’s determination of FECA regulates core political speech and ‘‘[w]hen an advocacy communication political committee status. See note 2 imposes criminal penalties for violations. above. Section 527 exempts political explicitly advocates the election or Thus, FECA is especially intolerant of vague organizations from tax on ‘‘exempt defeat of an individual to public office, standards. As the court explained in Buckley: function’’ income, where the Internal the expenditure clearly is for an exempt ‘‘Due process requires that a criminal statute Revenue Code would impose tax on function under [section] 527(e)(2). provide adequate notice to a person of ordinary intelligence that his contemplated such activity when conducted by other However, when an advocacy communication relating to a public conduct is illegal, for ‘no man shall be held non-profit organizations, such as groups criminally responsible for conduct which he organized under section 501(c)(4) (social policy issue does not explicitly advocate the election or defeat of a candidate, all could not reasonably understand to be welfare organizations), 501(c)(5) (labor proscribed.’ When First Amendment rights organizations), and 501(c)(6) (business the facts and circumstances need to be are involved, an even ‘greater degree of leagues). See 26 U.S.C. 527(c)(1) and considered to determine whether the specificity’ is required.’’ (f)(1). Accordingly, the definition of expenditure is for an exempt function under [section] 527(e)(2).’’ Rev. Rul. 04– As stated by a commenter, ‘‘While IRC ‘‘exempt function’’ is central to the political organizations and FECA reach of section 527. ‘‘Exempt function’’ 6, 2004–1 C.B. 328. Accordingly, the IRS structure presumes section 527 political committees seem to have some is defined as the ‘‘function of similarities, [section] 527 ‘exempt influencing or attempting to influence organizations will engage in non- express advocacy activities. Indeed, function’ activity is much broader than the selection, nomination, election, or the activity that defines FECA political appointment of any individual to any organizations could easily qualify for 527 status without ever making committees. Consequently, IRS Federal, State, or local public office or regulations provide no guidance for FEC office in a political organization, or the expenditures for express advocacy. However, as discussed above, that rulemaking.’’ In fact, neither FECA, as election of Presidential or Vice- amended, nor any judicial decision Presidential electors.’’ 26 U.S.C. activity is outside of the Commission’s regulatory scope under Buckley’s interpreting it, has substituted tax status 527(e)(2). for the conduct-based determination By definition, 527 organizations may express advocacy limitation for expenditures on communications made required for political committee status. engage in a host of State, local, and non- As discussed further below in Part F, independently of a candidate. See electoral activity well outside the the Commission’s enforcement Buckley, 424 U.S. at 44; see also 2 Commission’s jurisdiction. As noted by experience illustrates the inadequacy of U.S.C. 431(8) and (9) (defining several commenters, the broad range of tax classification as a measure of contribution and expenditure as ‘‘for the groups availing themselves of the 527 political committee status. The purpose of influencing any election for exemption include, but are not limited Commission recently completed six Federal office’’). to the following: All Federal, State, and matters, including five organizations The IRS ‘‘facts and circumstances’’ local candidate campaign committees that were alleged to have failed to test, if applied to FECA, clearly would and party entities; Federal, State, and register as political committees.7 The local political action committees; violate the Supreme Court’s caucuses and associations of State or Constitutional parameters, established 7 See Press Release, Federal Election Commission, local public officials; newsletter funds in Buckley, and reiterated in MCFL and FEC Collects $630,000 in Civil Penalties from Three operated by Federal, State, and local McConnell, that campaign finance rules 527 Organizations (Dec. 13, 2006), available at public officials; funds set up to pay must avoid vagueness. See Buckley, 424 http://www.fec.gov/press/press2006/ 20061213murs.html; Press Release, Federal Election ordinary business expenses of a public U.S. at 40–41; MCFL, 479 U.S. at 248– Commission, Freedom Inc. Pays $45,000 Penalty for officeholder; political party officer 49; McConnell, 540 U.S. at 103. Because Failing to Register as Political Committee (Dec. 20, committees; and groups seeking to the tax code definitions arise in the 2006), available at http://www.fec.gov/press/

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Commission reached conciliation C. Congress Has Consistently Affirmed exclusively involved in State and local agreements with five of these the Existing Statutory Framework and elections from having to report with the organizations—four 527 organizations Specifically Refused To Require All 527 IRS. See 26 U.S.C. 527(i)(5)(C), (j)(5)(C); and one 501(c)(4) organization—in Organizations To Register as Political Income Tax Notification and Return which the organizations did not contest Committees Requirements—Political Committees the Commission’s determination that While Congress has repeatedly Act, Public Law 107–276, 116 Stat. 1929 they had violated FECA by failing to enacted legislation governing 527 (2002). Those 527 organizations that register as political committees. See organizations, it has specifically rejected were involved in Federal elections, but Matters Under Review (‘‘MURs’’) 5511 every effort, including those by some of that did not qualify as ‘‘political and 5525 (Swiftboat Veterans and POWs the Shays II plaintiffs,8 to classify committees’’ under FECA, continued to for Truth (‘‘Swiftboat Vets’’)); 5753 organizations as political committees have to report their activities to the IRS. (League of Conservation Voters 527 and based on section 527 status. In refusing See Public Law 107–276. This legislation was passed only a few 527 II (‘‘League of Conservation to enact such legislation, Congress fully months after BCRA, which, as discussed Voters’’)); 5754 (MoveOn.org Voter recognized that some 527 organizations not registered with the Commission below, did not change the requirements Fund); 5492 (Freedom, Inc.). In the sixth for political committee status of 527 matter, the Commission determined that were, and would continue to be, involved with Federal elections. organizations. As stated by a a 527 organization was not a political Nevertheless, in each instance in which commenter, ‘‘Congress explicitly committee under the statutory Congress regulated 527 organizations, recognized the differences in intent and requirements, and dismissed the matter. whether through amendments to the scope between the Internal Revenue See MUR 5751 (The Leadership Forum). Internal Revenue Code or FECA, it (a) Code and the Federal Election The Commission has demonstrated Chose not to address the political Campaign Act when it drafted two through the finding of political committee status of these organizations, separate statutes to address the committee status for a 501(c)(4) (b) left the reporting obligations in the respective subjects; if Congress had organization and the dismissal of a hands of the IRS, and (c) did not direct intended the two bodies of law to be complaint against a 527 organization, the Commission to adopt revised congruous, Congress would have passed that tax status did not establish whether regulations. congruous provisions at the outset.’’ If, an organization was required to register as some commenters suggested, all 527 1. Congress Amended the Internal with the FEC. Rather, the Commission’s organizations not exclusively involved Revenue Code To Create a Reporting in State and local elections are required findings were based on a detailed Scheme for 527 Organizations That are by FECA to register as political examination of each organization’s Not Political Committees Under FECA contributions, expenditures, and major committees, then the 2002 amendments purpose, as required by FECA and the In 2000, Congress passed a bill to 26 U.S.C. 527 would have meant that requiring section 527 organizations that Supreme Court. no 527 organizations would continue to are not required to register as political report to the IRS. Such an interpretation Courts have cautioned the committees under FECA to register and of the two statutes would effectively Commission against assuming ‘‘the report their financial activity with the nullify the statutory requirement to compatibility of the IRS’s enforcement IRS. See 26 U.S.C. 527(i)(6), (j)(5)(A); report to the IRS. * * * and FECA’s requirements.’’ See Public Law 106–230 (2000). Congress These two provisions were passed, as Shays v. FEC, 337 F. Supp. 2d 28, 128 ordered the IRS to disclose this noted by a commenter, ‘‘[a]gainst a (D.D.C. 2004) (‘‘Shays I’’). The information publicly on a searchable widely publicized backdrop of news Commission is instead obligated to database within 48 hours of receipt, reports concerning non-federal [section] perform a detailed review of differences requirements matching the FEC’s 527 groups,’’ yet, ‘‘Congress required in tax and campaign finance law disclosure obligations. See 26 U.S.C. these organizations * * * to register provisions rather than adopting the 527(k); 2 U.S.C. 434(a)(11)(B) and 438a.9 and report with the IRS * * * Congress former as a proxy for the latter. Id. The At the same time, Congress considered, was well aware that [section] 527 U.S. District Court recently reminded but rejected, alternative bills that would organizations that were not political the Commission: ‘‘It is the FEC, not the have explicitly required the committees could affect Federal as well IRS, that is charged with enforcing Commission to regulate all 527 as other elections.’’ The legislative organizations. See, e.g., H.R. 3688, 106th FECA.’’ Shays I, 337 F. Supp. 2d at 126. history of the 2000 amendment confirms Cong. (2000); S. 2582, 106th Cong. the commenter’s assessment: The detailed comparison of the Internal (2000); see also H.R. Rep. No. 106–702 Revenue Code and FECA provisions (2000). The alternative House bill was These enhanced disclosure and reporting rules are intended to make no changes to the required by Shays I demonstrates that co-sponsored by two of the Shays II the ‘‘exempt function’’ standard of present-law substantive rules regarding the plaintiffs. Additionally, Congress took extent to which tax-exempt organizations are section 527 is not co-extensive with the no other action to otherwise alter the permitted to engage in political activities. ‘‘expenditure’’ and ‘‘contribution’’ statutory framework for determining Thus, the Committee bill is not intended to definitions that trigger political political committee status. alter the involvement of such organizations committee status. Therefore, the use of In 2002, Congress modified the in the political process, but rather it is the Internal Revenue Code classification section 527 reporting requirements to intended to shed sunlight on these activities to interpret and implement FECA is exempt organizations that were so that the general public can be informed as to the types and extent of activities in which inappropriate. such organizations engage. 8 In Shays II, the case filed by Representatives Shays and Meehan was consolidated with a similar H.R. Rep. No. 106–702, at 14 (2000). case filed by Bush-Cheney ’04 challenging the Senator Lieberman, a principal author of press2006/20061220mur.html; Press Release, Commission’s 2004 rulemaking. See Shays II, 424 the legislation, stated, ‘‘nor does [the Federal Election Commission, FEC Completes F. Supp. 2d at 104–05. Action on Two Enforcement Cases (Dec. 22, 2006), 9 See IRS Political Organization Disclosure bill] force any group that does not available at http://www.fec.gov/press/press2006/ database, available at http://forms.irs.gov/ currently have to comply with FECA or 20061222mur.html. politicalOrgsSearch/search/basicSearch.jsp. disclose information about itself to do

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either of those things.’’ See Statement of candidate for State or local office).’’ See solicitation for funds, not to mention any real Sen. Lieberman, 146 Cong. Rec. S5996 2 U.S.C. 441i(d)(2) (emphasis added). or perceived ‘‘quid pro quo.’’ (June 28, 2000). Representative Archer This provision explicitly confirms See Statement of Sen. Snowe, 148 Cong. stated, ‘‘[T]his bill does nothing but Congress’s intent to retain separate Rec. S2136 (Mar. 20, 2002). Senator require disclosure. It does not change regimes for those 527 organizations that Wellstone noted that 527 and 501(c)(4) anything as to how much money can be must register with the Commission as groups ‘‘already play a major role in our given or how it can be used, any of political committees and those 527 elections’’ and acknowledged that soft those other substantive things in the organizations that are not required to money would shift from political parties law.’’ See Statement of Rep. Archer, 146 register as political committees. to these organizations. See Statement of Cong. Rec. H5285 (June 27, 2000). Furthermore, if Congress had believed Sen. Wellstone, 147 Cong. Rec. S2846– A rule hinging on section 527 tax that all 527 organizations (other than 47 (Mar. 26, 2001). Senator Breaux status could frustrate this separate those operating at the State level) were stated that 501(c)(4) and 527 reporting scheme created by Congress in political committees, this BCRA organizations would continue to be able the 2000 and 2002 amendments to prohibition would be superfluous. to raise unrestricted money to be used section 527. It could also have the effect BCRA also included a limited in Federal elections. See Statement of of reducing disclosure. If a rule singled exception from the prohibition on Sen. Breaux, 147 Cong. Rec. S2885–86 out 527 organizations, those entities corporations making electioneering (Mar. 26, 2001). Senator McConnell, could then either shift the same communications for 527 organizations who led the opposition to the passage of election-related conduct to a related BCRA, was clear on this point as well: section 501(c)(4) organization that (and 501(c)(4) organizations), as long as ‘‘this bill will greatly weaken the parties shares common management, or they were funded exclusively from and shift those resources to outside perhaps even reorganize as a section individual contributions. See 2 U.S.C. groups that will continue to engage in 501(c)(4) organization in order to avoid 441b(c)(2). This exception was altered issue advocacy, as they have a a rule that singled out 527 by the Wellstone amendment to BCRA, organizations.10 Several commenters codified at 2 U.S.C. 441b(c)(6), which constitutional right to do, with predicted that 527 organizations would strictly limited the scope of the unlimited and undisclosed soft money.’’ do so. Because section 501(c)(4) of the exception. Although the exception was See Statement of Sen. McConnell, 148 Internal Revenue Code requires almost amended, this provision illustrates Cong. Rec. S2160 (Mar. 20, 2002). As no disclosure of receipts and Congress’s knowledge that 527 stated in a comment from a Governor disbursements, migration of political organizations were raising funds outside who is also a former Member of conduct to section 501(c)(4) groups FECA’s individual contribution limits Congress: would reduce the amount of and source prohibitions to produce That perceived evil, the direct personal information disclosed to the public.11 communications that referenced Federal involvement of [F]ederal and party officials candidates. And BCRA makes two in the raising of ‘‘soft money’’ funds, is not 2. BCRA Amended FECA and explicit determinations: electioneering present with respect to donations made to Addressed Federal Activity of 527 communications are not themselves non-profit organizations—whether organized Organizations Without Requiring ‘‘expenditures’’ (even when conducted under section 527 or under section 501(c) of Political Committee Registration by 527 organizations) and such the Internal Revenue Code—acting communications may not be paid for independently from any [F]ederal In BCRA, Congress directly addressed officeholder, candidate or political party. the Federal activity of unregistered 527 with corporate or labor union funds Congress did not choose, in BCRA, to impose organizations, but again, declined to during specific pre-election periods. limits on those desiring to provide financial take any other action to regulate 527 Had Congress determined that such support to such non-profit organizations. organizations as political committees or communications constituted Congress was well aware of the existence and otherwise alter the existing political expenditures that required registration activities of non-political committee 527 committee framework. BCRA prohibits as a political committee, the reporting organizations and yet the BCRA did not elect national, State and local political parties requirements and funding restrictions to address such organizations other than to from soliciting for, or donating to ‘‘an for the electioneering communications impose a prohibition on [F]ederal organization described in section 527 of provisions would have been duplicative officeholders actively participating in the solicitation of funds for such groups. [the Internal Revenue] Code (other than and meaningless. Yet, Congress chose to a political committee, a State, district, or leave in place its decisions in 2000 and Based on this history of Congressional local committee of a political party, or 2002 that some 527 organizations action regarding section 527 and the the authorized campaign committee of a should report their activities to the IRS, enactment of BCRA, the Commission rather than register with the FEC. concludes that changing the regulatory 10 As commenters noted, a 501(c)(4) organization BCRA’s legislative history further definition of ‘‘political committee’’ to may engage in the same political campaign rely explicitly upon section 527 tax activities as a 527 organization, as long as these confirms Congress’s recognition that 527 activiteis do not constitute the 501(c)(4) organizations (as well as 501(c)(4) status would not be consistent with the organization’s ‘‘primary purpose’’ as determined by organizations) could engage in some Commission’s statutory authority. The the IRS. Federal campaign activity and yet not Commission reaches this conclusion 11 Only 501(c)(4) organizations with $25,000 or regarding the scope of its regulatory more in annual gross receipts must file annual tax have to register as political committees. returns with the IRS. See 26 U.S.C. 6012(a)(6); In defending BCRA’s approach to 527 authority because Congress previously Judith Kindell & John Francis Reilly, Election Year organizations, Senator Snowe stated: considered and rejected bills that would Issues: IRS Exempt Organizations Continuing have changed the political committee Professional Education Text at 444, 470–71 (2002), [S]ome of our opponents have said that we status of 527 organizations. See FDA v. available at http://www.irs.gov/charities/ are simply opening the floodgates in allowing Brown & Williamson Tobacco Corp., 529 nonprofits/article/0,,id=155031,00.html (last visited soft money to now be channeled through Jan. 31, 2007). The required annual return (Form these independent groups for electioneering U.S. 120, 143 (2000) (‘‘[A] specific 990) includes a line for total amount of ‘‘direct and purposes. To that, I would say that this bill policy embodied in a later federal indirect political expenditures’’ without requiring statute should control our construction any further breakdown of the expenditure amount. would prohibit members from directing See IRS Form 990 Line 81a. Individual donors need money to these groups to affect elections, so of the [earlier] statute, even though it not be disclosed by 501(c)(4) organizations. that would cut out an entire avenue of ha[s] not been expressly amended.’’

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(quoting United States v. Estate of political committees were recently The Supreme Court has made it clear Romani, 523 U.S. 517, 530–31 (1998))). considered in Congress. See, e.g., H.R. that an organization can satisfy the Furthermore, when Congress revises a 513, 109th Cong. (2006); S. 2828, 108th major purpose doctrine through statute, its decision to leave certain Cong. (2004). The introduction and sufficiently extensive spending on sections unamended constitutes at least consideration of these bills, including Federal campaign activity. See MCFL, acceptance, if not explicit endorsement, one supported by two of the Shays II 479 U.S. at 262 (explaining that a of the preexisting construction and plaintiffs, demonstrates Congress’s and section 501(c)(4) organization could application of the unamended terms. these plaintiffs’ recognition that become a political committee required See Cook County, Illinois v. United Congress has not acted in this area. As to register with the Commission if its States ex rel. Chandler, 538 U.S. 119, with all past Congressional attempts to ‘‘independent spending become[s] so 132 (2003); Cottage Sav. Ass’n v. regulate all 527s as political committees, extensive that the organization’s major Comm’r, 499 U.S. 554, 561–62 (1991); Congress did not adopt these bills, or purpose may be regarded as campaign Asarco Inc. v. Kadish, 490 U.S. 605, 632 any other bills altering the political activity’’). (1989). committee framework. While the An analysis of public statements can During the 2004 rulemaking, the Commission is authorized to regulate in also be instructive in determining an Commission received a comment signed order to give substance to otherwise organization’s purpose. See, e.g., FEC v. by 138 Members of the House of ambiguous provisions, ‘‘[a] regulation, Malenick, 310 F. Supp. 2d 230, 234–36 Representatives, and a similar comment however, may not serve to amend a (D.D.C. 2004) (court found organization signed by 19 Senators. Both comments statute, or to add to the statue something evidenced its major purpose through its stated, ‘‘the proposed rules before the which is not there.’’ See Iglesias v. own materials which stated the Commission would expand the reach of United States, 848 F.2d 362, 366 (2d Cir. organization’s main goal of supporting BCRA’s limitations to independent 1988) (citations omitted). the election of the Republican Party organizations in a manner wholly Thus, Congressional action regarding candidates for Federal office and unsupported by BCRA or the record of 527 organizations provides no basis for through efforts to get prospective donors our deliberations on the new law.’’ The the Commission to revise FECA and the to consider supporting Federal comment submitted by the House Supreme Court’s requirements for candidates); FEC v. GOPAC, Inc., 917 F. Members further stated: political committee status by creating a Supp. 851, 859 (D.D.C. 1996) More generally, the rulemaking is separate political committee definition (‘‘organization’s [major] purpose may be concerned with new restrictions on ‘‘527’’ singling out 527 organizations. Rather, evidenced by its public statements of its organizations, primarily through the the Commission’s decision to reject purpose or by other means’’); Advisory adoption of new definitions of an proposed rules based on section 527 tax Opinion 2006–20 (Unity 08) ‘‘expenditure.’’ Congress, of course, did not status is consistent with all past (organization evidenced its major amend in BCRA the definition of Congressional action addressing 527 purpose through organizational ‘‘expenditure’’ or, for that matter, the organizations. statements of purpose on Web site). definition of ‘‘political committee.’’ Because such statements may not be Moreover, while BCRA reflects Congress’ full D. Applying the Major Purpose Doctrine, inherently conclusive, the Commission awareness of the nature and activities of a Judicial Construct Established Thirty must evaluate the statements of the ‘‘527s,’’ it did not consider comprehensive Years Ago, Requires a Case-by-Case organization in a fact-intensive inquiry restrictions on these organizations like those Analysis of an Organization’s Conduct in the proposed rules. There has been giving due weight to the form and absolutely no case made to Congress, or The Shays II court expressed concern nature of the statements, as well as the record established by the Commission, to that, in the absence of a regulation speaker’s position within the support any notion that tax-exempt regarding the major purpose doctrine, organization. organizations and other independent groups the Commission was not providing clear The Federal courts’ interpretation of threaten the legitimacy of our government guidance to groups as to when they when criticizing its policies. We believe the constitutionally mandated major instead that more, not less, political activity must register as a political committee. purpose doctrine requires the by ordinary citizens and the associations they See Shays II, 424 F. Supp. 2d at 115. Commission to conduct investigations form is needed in our country.12 Applying the major purpose doctrine, into the conduct of specific In upholding BCRA, the Supreme however, requires the flexibility of a organizations that may reach well case-by-case analysis of an Court was also well aware that BCRA’s beyond publicly available organization’s conduct that is new provisions would not reach all advertisements. See, e.g., Malenick, 310 incompatible with a one-size-fits-all interest group Federal political activity. F. Supp. 2d at 234–36 (examining rule. The McConnell Court observed that, organizations’ materials distributed to The Supreme Court has held that, to unlike political parties, ‘‘[i]nterest prospective donors). The Commission avoid the regulation of activity groups, however, remain free to raise may need to examine statements by the ‘‘encompassing both issue discussion soft money to fund voter registration, organization that characterize its and advocacy of a political result’’ only [get-out-the-vote] activities, mailings, activities and purposes. The organizations whose major purpose is and broadcast advertising (other than Commission may also need to evaluate Federal campaign activity can be electioneering communications).’’ the organization’s spending on Federal considered political committees under campaign activity, as well as any other McConnell, 540 U.S. at 187–88. the Act. See, e.g., Buckley, 424 U.S. at Finally, at least two new bills spending by the organization. In 79; MCFL, 479 U.S. at 262. Thus, the requiring 527 organizations to register as addition, the Commission may need to major purpose test serves as an examine the organization’s fundraising 12 The Commission also received a comment additional hurdle to establishing appeals. signed by 14 members of the Congressional political committee status. Not only Because Buckley and MCFL make Hispanic Caucus who opposed the proposed must the organization have raised or clear that the major purpose doctrine changes to the regulations based on possible spent $1,000 in contributions or requires a fact-intensive analysis of a adverse effects on grassroots voter mobilization efforts. This comment is available at http:// expenditures, but it must additionally group’s campaign activities compared to www.fec.gov/pdf/nprm/political_comm_status/ have the major purpose of engaging in its activities unrelated to campaigns, mailed/57.pdf. Federal campaign activity. any rule must permit the Commission

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the flexibility to apply the doctrine to a influencing selection of individuals to 1. The Commission Adopted a New particular organization’s conduct. After non-elective office). Even if the Regulation That Requires Organizations considering these precedents and the Commission had simply adopted a rule To Register as Political Committees rulemaking record, the Commission in 2004 that listed the factors Based on Their Solicitations concluded that none of the competing considered in determining an proposed rules would have accorded the organization’s major purpose, the rule While Supreme Court precedent Commission the flexibility needed to would still have had to be enforced places strict parameters on the breadth apply the major purpose doctrine through investigations of the specific of the definition of expenditure, appropriately. Therefore, the statements, solicitations, and other Supreme Court precedent provides Commission decided not to adopt any of conduct by particular organizations. greater deference to contribution the proposed amendments to section Furthermore, any list of factors restrictions. See FEC v. Beaumont, 539 100.5.13 developed by the Commission would U.S. 146, 161 (U.S. 2003) (upholding the However, even if the Commission not likely be exhaustive in any event, as constitutionality of FECA’s corporate were to adopt a regulation encapsulating evidenced by the multitude of fact contribution prohibition as applied to a the judicially created major purpose patterns at issue in the Commission’s non-profit advocacy corporation and doctrine, that regulation could only enforcement matters considering the noting: ‘‘Going back to Buckley, serve to limit, rather than to define or political committee status of various restrictions on political contributions expand, the number or type of entities (‘‘Political Committee Status have been treated as merely ‘marginal’ organizations regarded as political Matters’’). See, e.g., MURs 5511 and speech restrictions subject to relatively committees. The major purpose doctrine 5525 (Swiftboat Vets); 5753 (League of complaisant review under the First did not supplant the statutory Conservation Voters); 5754 (MoveOn.org Amendment, because contributions lie ‘‘contribution’’ and ‘‘expenditure’’ Voter Fund); 5492 (Freedom, Inc.); 5751 closer to the edges than to the core of triggers for political committee status, (Leadership Forum). political expression.’’) (citations rather it operates to limit the reach of omitted). Other judicial precedent the statute in certain circumstances. E. The 2004 Final Rules Clarify and specifically permits a broader Moreover, any perceived Strengthen the Political Committee interpretation of when an organization shortcomings with the enforcement Determination Consistent With the has solicited contributions. In FEC v. process identified by the Shays II court FECA and Supreme Court Framework Survival Educ. Fund, Inc., 65 F.3d 285 would not be remedied by a change in (2d Cir. 1995) (‘‘SEF’’), the appellate To best ensure that organizations that the regulatory definition of ‘‘political court held that a mailer solicited participate in Federal elections use committee.’’ 14 Any revised rule adopted ‘‘contributions’’ under FECA when it funds compliant with the Act’s by the Commission would still have to left ‘‘ no doubt that the funds restrictions, the Commission decided in be interpreted and applied through the contributed would be used to advocate the 2004 rulemaking to adopt two broad very same statutory enforcement President Reagan’s defeat at the polls, anti-circumvention measures. The first procedures as currently exist. In fact, all not simply to criticize his policies expands the regulatory definition of of the rules proposed in 2004 would during the election year.’’ Id. at 295. The ‘‘contribution’’ to capture funds have required that factual Commission’s new rule at 11 CFR solicited for the specific purpose of determinations be made through the 100.57 codifies the SEF analysis. supporting or opposing the election of a enforcement process. See, e.g., proposed Section 100.57(a) states that if a Federal candidate. See 11 CFR 100.57. 11 CFR 100.5(a)(2)(iv), Notice of solicitation ‘‘indicates that any portion An organization that receives more than Proposed Rulemaking on Political of the funds received will be used to $1,000 of such funds is required to Committee Status, 69 FR 11736, 11748, support or oppose the election of a register as a political committee. The 11757 (Mar. 11, 2004) (exemptions clearly identified Federal candidate,’’ second rule places limits on the non- limited to 527 organizations that are then all money received in response to Federal funds a registered political formed ‘‘solely for the purpose of’’ that solicitation must be treated as a committee may use to engage in certain supporting a non-Federal candidate or ‘‘contribution’’ under FECA. See 2004 activity, such as voter drives and Final Rules, 69 FR at 68057–58. 13 Many prominent 527 organizations in 2004 campaign advertisements, which has a were registered political committees with Federal clear Federal component. See 11 CFR When an organization receives $1,000 and non-Federal accounts. A new rule addressing 106.6. The combined effect of these two or more in contributions, including major purpose would not have required these those that are defined under new organizations to change their structures. The more rules significantly curbs the raising and relevant questions for these organizations was spending of non-Federal funds in section 100.57(a), the organization will whether particular expenses could lawfully be paid connection with Federal elections, in a meet the statutory definition of a with non-Federal funds from a non-Federal manner wholly consistent with the ‘‘political committee.’’ An organization account, which was sometimes a connected 527 that triggers political committee status organization not registered with the Commission, existing political committee framework. and whether non-Federal funds could be raised The effect of these changes on 527 through the receipt of such through solicitations that referred to clearly organizations has already been contributions is required to register the identified Federal candidates. New section 100.57 remarked. See Paul Kane, ‘‘Liberal 527s committee with the Commission, report and revised section 106.6, as discussed below in Find Shortfall,’’ Roll Call (Sept. 25, all receipts and disbursements, and Part E, address these questions. abide by the contribution limitations 14 As described in Part F, below, the Commission 2006) (‘‘a change in FEC regulations has resolved several enforcement matters that curtailed a huge chunk of 527 money and source prohibitions. involve 527 organizations alleged to have because, after the 2004 elections, the Thus, section 100.57 codifies a clear, unlawfully failed to register as political committees. The Commission further notes that it has concluded commission issued a ruling that said all practical, and effective means of action on the vast majority of the 2004-cycle cases get-out-the-vote efforts in Congressional determining whether an entity, on its docket and posted record enforcement figures races had to be financed with at least 50 regardless of tax status, is participating in 2006. See Press Release, Federal Election percent federal donations, those in activity designed to influence Federal Commission, FEC Posts Record Year, Collecting $6.2 Million in Civil Penalties, available at http:// contributions that are limited to $5000 elections, and, therefore, may be www.fec.gov/press/press2006/ per year to political action required to register as a political 20061228summary.htmlprocess. committees’’). committee.

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In addition, the new regulation regulations, a registered political non-Federal funds based on the time contains a prophylactic measure at committee that participates in both and space devoted to each Federal section 100.57(b) to prevent Federal and non-Federal elections is candidate as compared to the total space circumvention of the solicitation rule by permitted to maintain both Federal and devoted to all candidates. See 11 CFR registered political committees non-Federal accounts, containing funds 106.6(c); 2004 Final Rules, 69 FR at operating both Federal and non-Federal that comply, respectively, with Federal 68061–63; 11 CFR 106.6(f). Notably, the accounts under the Commission’s and State restrictions. See 11 CFR Commission’s new allocation and allocation rules. Section 100.57(b) 102.5(a). contribution regulations are the subject requires that at least 50%, and as much Because many activities that an of pending litigation, where the as 100%, of the funds received in organization may undertake will have Commission is charged not with being response to a solicitation satisfying the both a Federal and non-Federal too lenient, but being too restrictive. See requirements of section 100.57(a) be component (such as a voter drive where EMILY’s List v. FEC (Civil No. 05–0049 treated as FECA contributions, both the Federal candidate and the non- (CKK)) (D.D.C. summary judgment regardless of references to other Federal candidate are appearing on the briefing completed July 18, 2005).15 intended uses for the funds received. ballot), previous Commission An additional change to the See 11 CFR 100.57(b)(1) and (2); 2004 regulations had permitted the regulation will also significantly shift Final Rules, 69 FR at 68058–59. committee to develop an allocation political committees towards a greater Therefore, section 100.57(b) prevents a percentage based on a ratio of Federal use of Federal funds. The new political committee from adding expenditure to Federal and non-Federal regulations require an organization to references to non-Federal candidates or disbursements. This allocation pay at least 50% of its administrative political parties to its solicitation percentage would govern how payments costs with funds from the Federal materials in order to claim that most or for all activity of the organization would account. This regulatory adjustment will all of the funds received are for non- be split between the two accounts. curtail longstanding complaints that the Federal purposes, and therefore, not Several commenters claimed that Commission’s allocation regulations ‘‘contributions’’ under FECA. The some registered political committees have permitted non-Federal funds to regulation has the additional advantage were relying on these former allocation substantially subsidize the overhead of prohibiting registered political rules to pay for Federal campaign ads and day-to-day operations of the committees from raising donations not and voter turnout efforts that could organization’s Federal activity. subject to the limitations from influence the 2004 Federal elections The revisions to section 106.6 prevent individual contributors or from almost entirely with non-Federal funds. registered political committees from prohibited sources using solicitation BCRA’s Congressional sponsors, fully funding campaign advertisements materials that focus on influencing the including two of the Shays II plaintiffs, and voter drives primarily designed to election of Federal candidates. argued that the previous allocation benefit Federal candidates with non- Moreover, the costs of these requirements ‘‘allow[ed] for absurd Federal funds simply by making a solicitations must be paid for with a results’’ and that ‘‘[t]he Commission passing reference to a non-Federal corresponding proportion of Federal must revise its allocation rules to candidate. funds. For example, if 100% of the require a significant minimum hard F. Since the 2004 Rulemaking, the funds received from a solicitation would money share for spending on voter Commission’s Enforcement Actions be treated as contributions under mobilization in a federal election year.’’ Demonstrate the Application and section 100.57(b)(1), then 100% of the Several campaign finance reform Sufficiency of the FECA Political costs of that solicitation must be paid groups, including counsel to two of the Committee Framework, and Provide with Federal funds. See 11 CFR Shays II amici, urged the Commission to Considerable Guidance Addressing 100.57(b); 11 CFR 106.1(a)(1); 11 CFR curb these perceived abuses. At the When Groups Must Register as Political 106.6(d)(1); 11 CFR 106.7(d)(4). time, they stated it was ‘‘essential for In sum, section 100.57 codifies a the Commission to take this action as Committees broad method of establishing political part of the [2004] rulemaking process.’’ The Commission has applied FECA’s committee status with strong anti- The 2004 Final Rules directly resolve definition of ‘‘political committee,’’ circumvention protections, providing these concerns by establishing strict together with the major purpose clear guidance to the regulated new Federal funding requirements for doctrine, in the recent resolution of a community that any organization, registered political committees, as well number of administrative enforcement regardless of tax status, may be required as for entities that conduct activity Matters involving 527 organizations and to register as a political committee based through both registered Federal other groups. See MURs 5511 and 5525 on its solicitations. accounts and unregistered non-Federal (Swiftboat Vets); 5753 (League of accounts. The new rules require these Conservation Voters); 5754 (MoveOn.org 2. The Commission Adopted Anti- groups to: (a) Use a minimum of 50% Voter Fund); 5751 (The Leadership Circumvention Measures Requiring That Federal funds to pay for get-out-the-vote Forum); 5492 (Freedom, Inc.).16 In each Campaign Ads and Voter Turn Out drives that do not mention a specific of these Political Committee Status Efforts be Paid for With at Least 50% candidate, as well as public Matters, the Commission conducted a Federal Funds and as Much as 100% communications that refer to a political thorough investigation of all aspects of Federal Funds party without referring to any specific the organization’s statements and The 2004 Final Rules also include a candidates, and administrative costs; (b) activities to determine first if the comprehensive overhaul of the use 100% Federal funds to pay for organization exceeded the $1,000 Commission’s allocation regulations, public communications or voter drives which govern how corporate and labor that refer to one or more Federal 15 Material related to this litigation can be found organization PACs and nonconnected candidates, but no non-Federal at http://www.fec.gov/law/ committees split the costs of Federal candidates; and (c) for public litigation_related.shtml#emilyslist_dc. 16 Documents related to these and other and non-Federal activities such as communications or voter drives that Commission MURs cited in this Explanation and campaign ads and voter turnout efforts. refer to both Federal and non-Federal Justification are available at http://eqs.nictusa.com/ See 11 CFR 106.6. Under Commission candidates, use a ratio of Federal and eqs/searcheqs.

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statutory and regulatory threshold for 1. The Expenditure Path to Political express advocacy, then the statutory expenditures or contributions in 2 Committee Status threshold of expenditures was met. U.S.C. 431(4)(A) and 11 CFR 100.5(a), The Commission determined that and then whether the organization’s In the Swiftboat Vets and League of Swiftboat Vets met the threshold for major purpose was Federal campaign Conservation Voters Matters, the ‘‘expenditures’’ because it spent over activity. The settlements in the Political Commission analyzed whether the $1,000 for fundraising communications Committee Status Matters are significant organizations’ advertising, voter drives that ‘‘expressly advocated’’ the election because they are the first major cases and other communications ‘‘expressly or defeat of a clearly identified Federal candidate under 11 CFR 100.22(a). In after the Supreme Court’s decision in advocated’’ the election or defeat of a addition, Swiftboat Vets spent over McConnell to consider the reach of the clearly identified Federal candidate $1,000 for television advertisements, definition of ‘‘express advocacy’’ when under the two definitions of that term in 17 The Commission direct mailings and a newspaper evaluating an organization’s 11 CFR 100.22. applied a test for express advocacy that advertisement that contained express disbursements for communications is not only limited to the so-called advocacy under 11 CFR 100.22(b).20 made independently of a candidate to ‘‘magic words’’ such as ‘‘vote for’’ or The Commission also determined that determine if the expenditure threshold ‘‘vote against,’’18 but also includes two League of Conservation Voter 527 has been met. They are also significant communications containing an organizations met the expenditure because they demonstrate that an threshold because they spent more than ‘‘electoral portion’’ that is organization may satisfy the political $1,000 on door-to-door canvassing and ‘‘unmistakable, unambiguous, and committee status threshold based on telephone banks where the scripts and suggestive of only one meaning’’ and how the organization raises funds, and talking points for canvassers and callers about which ‘‘reasonable minds could that the Commission examines expressly advocated the defeat of a not differ as to whether it encourages fundraising appeals based on the plain Federal candidate under 11 CFR actions to elect or defeat’’ a candidate meaning of the solicitation, not the 100.22(a). In addition, the League of when taken as a whole and with limited presence or absence of specific words or Conservation Voters 527s spent more reference to external events, such as the phrases. Finally, the Political than $1,000 for a mailer expressly proximity to the election.19 The advocating a Federal candidate’s Committee Status Matters illustrate well Commission was able to apply the the Commission’s application of the election under both definitions in 11 alternative test set forth in 11 CFR CFR 100.22(a) and (b).21 major purpose doctrine to the conduct 100.22(b) free of constitutional doubt 2. The Contribution Path to Political of particular organizations. based on McConnell’s statement that a Committee Status As discussed in detail below, in these ‘‘magic words’’ test was not and other matters, the Commission constitutionally required, as certain With regard to the $1,000 threshold provides guidance to organizations Federal courts had previously held. for ‘‘contributions,’’ the Commission about both the expenditure and the Express advocacy also includes examined fundraising appeals from each contribution paths to political exhortations ‘‘to campaign for, or organization in the Swiftboat Vets, committee status under FECA, as well contribute to, a clearly identified League of Conservation Voters and as the major purpose doctrine. Any candidate.’’ FEC v. Christian Coalition, MoveOn.org Voter Fund matters and organization can look to the public files 52 F. Supp. 2d 45, 62 (D.D.C. 1999) determined that if any of the solicitations clearly indicated that the for the Political Committee Status (explaining why Buckley, 424 U.S. at 44 funds received would be used to Matters and other closed enforcement n.52, included the word ‘‘support,’’ in support or defeat a Federal candidate, addition to ‘‘vote for’’ or ‘‘elect,’’ in its matters, as well as advisory opinions then the funds received were given ‘‘for and filings in civil enforcement cases, list of examples of express advocacy the purpose of influencing’’ a Federal for guidance as to how the Commission communication). Thus, if the election and therefore constituted has applied the statutory definition of organization spent more than $1,000 on ‘‘contributions’’ under FECA. See SEF. ‘‘political committee’’ together with the a communication meeting either test for The Commission examined the entirety major purpose doctrine. The public of the solicitations and did not limit its documents available regarding the 527 17 In these Matters, the Commission used its analysis to the presence or absence of settlements in particular provide more enforcement process to develop the factual record of what advertisements the organizations ran, when any particular words or phrases. If any than mere clarification of legal and where they ran, and how much they cost, and solicitations meeting the test set forth in principle; they provide numerous to reach the legal conclusions of whether the SEF resulted in more than $1,000 examples of actual fundraising regulatory standards were satisfied. Thus, even received by the organization, then the when the Commission codifies a legal standard in statutory threshold for contributions solicitations, advertisements, and other its regulations, the enforcement process is the communications that will trigger vehicle for determining how that legal standard was met. political committee status. These should be applied in a particular case. Swiftboat Vets received more than documents should guide organizations 18 Under 11 CFR 100.22(a), a communication $1,000 in response to several e-mail and contains express advocacy when it uses phrases in the future as they formulate plans Internet fundraising appeals and a direct such as ‘‘vote for the President,’’ ‘‘re-elect your mail solicitation clearly indicating that and evaluate their own conduct so they Congressman,’’ or ‘‘Smith for Congress,’’ or uses the funds received would be used to the may determine whether they must campaign slogans or words that in context have no other reasonable meaning than to urge the election defeat of a Federal candidate, which register and report with the Commission or defeat of one or more clearly identified meant these funds were ‘‘contributions’’ as political committees. To the extent candidates, such as posters, bumper stickers, or under FECA.22 Similarly, the League of uncertainty existed, these 527 advertisements that say, ‘‘Nixon’s the One,’’ ‘‘Carter settlements reduce any claim of ’76,’’ ‘‘Reagan/Bush,’’ or ‘‘Mondale!’’. 19 11 CFR 100.22(b). The Commission also 20 See MUR 5511 Conciliation Agreement, at uncertainty because concrete factual recently resolved another administrative action paragraphs 23–28. examples of the Commission’s political based on a determination that a 501(c)(4) 21 See MUR 5753 Conciliation Agreement, at 8– committee status analysis are now part organization’s communications satisfied the 9. ‘‘express advocacy’’ definition in section 100.22(b). 22 See MUR 5511 Conciliation Agreement, at of the public record. See MUR 5634 (Sierra Club, Inc.). paragraphs 18–21.

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Conservation Voters 527s each received active operations after the November Inc. (‘‘CFG’’), for failing to register and more than $1,000 in response to mailed 2004 election.25 report as a political committee in solicitations, telephone calls, and The League of Conservation Voters violation of FECA. See FEC v. Club for personal meetings with contributors 527s’ major purpose was campaign Growth, Inc., Civ. No. 05–1851 (RMU) where the organizations clearly activity as demonstrated through: (1) (D.D.C. Compl. pending).28 The indicated that the funds received would Statements made in the organizations’ Commission’s complaint against CFG be used to defeat a Federal candidate, solicitations; (2) statements in provides further guidance to which also meant these funds were organizational planning documents, organizations regarding the ‘‘contributions’’ under FECA.23 Finally, such as a ‘‘National Electoral Strategic prerequisites of political committee MoveOn.org Voter Fund received more Plan 2004’’; (3) public statements status. than $1,000 in response to specific endorsing Federal candidates; and (4) The complaint shows that CFG made fundraising e-mail messages that clearly statements in letters from the expenditures for candidate research, indicated the funds received would be organizations’ President describing the polling, and advertising, including used to defeat a Presidential candidate, organizations’ activities. The advertising that expressly advocates the which constituted ‘‘contributions’’ organizations’ budget also evidenced its election or defeat of clearly identified under FECA.24 major purpose of campaign activity candidates. (Compl. at 10–11). because 50–75% of the political budget Additionally, CFG made solicitations 3. Application of the Major Purpose for the organizations was intended for indicating that funds provided would be Doctrine the Presidential election.26 used to support or oppose specific After determining that each MoveOn.org Voter Fund’s major candidates, which means the funds organization in the Swiftboat Vets, purpose was campaign activity as received were contributions under League of Conservation Voters, and evidenced by statements regarding its FECA. (Id., at 8–9). Finally, the MoveOn.org Voter Fund matters had objectives in e-mail solicitations. complaint reflects an extensive met the threshold for contributions or MoveOn.org Voter Fund’s activities also examination of the organization, expenditures in FECA and Commission demonstrated its major purpose of resulting in a determination that the regulations, the Commission then campaign activity. MoveOn.org Voter major purpose of the organization was investigated whether each Fund spent over 68% of its total 2004 to influence Federal elections (id., at organization’s major purpose was disbursements on television advertising 12), including evidence such as: CFG’s Federal campaign activity. The opposing a Federal candidate in statement of purpose in the registration Commission examined each Presidential battleground states; the statement submitted to the Internal organization’s fundraising solicitations, only other disbursements from Revenue Service (id., at 6); other public the sources of its contributions, and the MoveOn.org Voter Fund in 2004 were statements indicating CFG’S purpose is amounts received. The Commission for fundraising, administrative influencing Federal elections (id., at 6– considered public statements as well as expenses, and grants to other political 7); CFG’s use of solicitations that make internal documents about an organizations. MoveOn.org Voter Fund clear that contributions will be used to organization’s mission. Each spent nothing on State or local support or oppose the election of organization’s full range of campaign elections. Lastly, MoveOn.org Voter specific Federal candidates (id., at 8–9); activities was evaluated, including Fund has effectively ceased active other spending by CFG for public whether the organization engaged in any operations after the November 2004 communications mentioning Federal activities that were not campaign election.27 candidates (id., at 10–11); and the related. 527 organizations are not the only absence of any spending by CFG on Recently resolved matters reflect the groups whose major purpose is Federal State or local races (id., at 10). comprehensive analysis required to campaign activity. The Commission Just as findings of violations inform determine an organization’s major recently conciliated a MUR with a organizations as to what kinds of purpose. Swiftboat Vets’ major purpose 501(c)(4) organization, Freedom Inc., activities will compel registration as a was campaign activity, as evidenced by: which had failed to register and report Federal political committee, a (1) Statements made to prospective as a political committee despite Commission finding that there has been donors detailing the organization’s conducting Federal campaign activity no violation clarifies those activities goals; (2) public statements on the during the 2004 election cycle. See that will not. For example, in MUR 5751 organization’s Web site; (3) statements MUR 5492. Freedom Inc. made more (the Leadership Forum), the in a letter from the organization’s than $1,000 in expenditures for Commission made a threshold finding Chairman thanking a large contributor; communications that expressly that there was a basis for investigating (4) statements by a member of the advocated a Federal candidate’s election (i.e., the Commission found ‘‘Reason to organization’s Steering Committee on a under section 100.22(a), and it conceded Believe’’) whether the Leadership news program; and (5) statements in that its major purpose was campaign Forum had failed to register as a various fundraising solicitations. The activity. political committee based on its 2004 election activity. The subsequent organization’s activities also evidenced 4. Other FEC Actions its major purpose as over 91% of its investigation revealed that the In addition to the Political Committee reported disbursements were spent on Leadership Forum’s only public Status Matters discussed above, the advertisements directed to Presidential communications reprinted Commission filed suit against another battleground States and direct mail governmental voter information, 527 organization, the Club for Growth, attacking or expressly advocating the without any mention of Federal or non- defeat of a Presidential candidate, and Federal candidates or political parties. 25 See MUR 5511 Conciliation Agreement, at the organization has effectively ceased Following the investigation, the paragraphs 31–36. Commission closed the matter because 26 See MUR 5753 Conciliation Agreement, at 9– 23 See MUR 5753 Conciliation Agreement, at 5– 10. it found no evidence that the Leadership 7. 27 See MUR 5754 Conciliation Agreement, at 8, 24 See MUR 5754 Conciliation Agreement, at 5– and Factual & Legal Analysis, at 11–13 (Aug. 9, 28 Complaint available at http://www.fec.gov/law/ 8. 2006). litigation/club_for_growth_complaint.pdf.

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Forum had crossed the $1,000 threshold Conclusion purpose doctrine, and solicitations through expenditures or contributions. By adopting a new regulation by resulting in contributions. In addition, Consequently, the Commission did not which an organization may be required any group unclear about the application undertake a major purpose analysis for to register as a political committee based of FECA to its prospective activities may the Leadership Forum. on its solicitations, and by tightening request an advisory opinion from the All of these cases taken together the rules governing how registered Commission. See 2 U.S.C. 437f; 11 CFR illustrate (1) The Commission’s political committees fund solicitations, part 112. commitment to enforcing FECA’s voter drives and campaign Dated: February 1, 2007. requirements for political committee advertisements, the 2004 Final Rules Robert D. Lenhard, status as well as (2) the need for an bolstered FECA against circumvention Chairman, Federal Election Commission. examination of an organization’s not just by one kind of organization, but [FR Doc. E7–1936 Filed 2–6–07; 8:45 am] activities under the major purpose by groups of all kinds. As discussed BILLING CODE 6715–01–P doctrine, regardless of a particular above, the Commission’s decision not to organization’s tax status. establish a political committee 5. The Advisory Opinion Process definition singling out 527 organizations is informed by the statutory scheme, FARM CREDIT ADMINISTRATION Any entity that remains unclear about Supreme Court precedent, and the application of FECA to its Congressional action regarding 527 12 CFR Parts 611, 612, 613, 614, and prospective activities may request an organizations. Accordingly, the 615 advisory opinion from the Commission. Commission will continue to utilize the See 2 U.S.C. 437f; 11 CFR part 112. political committee framework provided RIN 3052–AC15 Through advisory opinions, the by Congress in FECA, as modified by Commission can further explain the the Supreme Court. Organization; Standards of Conduct application of the law and provide Pursuant to FECA and Supreme Court and Referral of Known or Suspected guidance to an organization about how precedent, the Commission will Criminal Violations; Eligibility and the Commission would apply the major continue to determine political Scope of Financing; Loan Policies and purpose doctrine to its proposed committee status based on whether an Operations; Funding and Fiscal activities, and whether the organization organization (1) Received contributions Affairs, Loan Policies and Operations, must register as a political committee.29 or made expenditures in excess of and Funding Operations; Regulatory Under FECA, the Commission is $1,000 during a calendar year, and (2) Burden; Effective Date required to provide an advisory opinion whether that organization’s major within 60 days of receiving a complete purpose was campaign activity. See 2 AGENCY: Farm Credit Administration. written request and, in some instances, U.S.C. 431(4)(A); Buckley, 424 U.S. at ACTION: Notice of effective date. within 20 days. See 2 U.S.C. 437f(a); 11 79; MCFL, 479 U.S. at 262. When CFR 112.4(a) and (b). Moreover, the analyzing a group’s contributions, the SUMMARY: The Farm Credit Commission’s legal analysis and Commission will consider whether any Administration (FCA) published a final conclusions in an advisory opinion may of an organization’s solicitations rule under parts 611, 612, 613, 614, and be relied upon not only by the generated contributions because the 615 on November 8, 2006 (71 FR 65383). requestor, but also by any person whose solicitations indicated that any portion This final rule reduces regulatory activity ‘‘is indistinguishable in all its of the funds received would be used to burden on the Farm Credit System by material aspects’’ from the activity in support or oppose the election of a repealing or revising regulations and the advisory opinion. See 2 U.S.C. clearly identified Federal candidate. See correcting outdated and erroneous 437f(c); 11 CFR 112.5(a)(2). The 11 CFR 100.57. Additionally, the regulations. In accordance with 12 Commission has considered the major Commission will analyze whether U.S.C. 2252, the effective date of the purpose doctrine in prior advisory expenditures for any of an final rule is 30 days from the date of opinions when assessing whether an organization’s communications made publication in the Federal Register organization is a political committee.30 independently of a candidate during which either or both Houses of The advisory opinion process is an constituted express advocacy either Congress are in session. Based on the effective means by which the under 11 CFR 100.22(a), or the broader records of the sessions of Congress, the Commission clarifies the law because it definition at 11 CFR 100.22(b). effective date of the regulations is allows an entity to ask the Commission As evidenced by the Commission’s February 1, 2007. for specific advice about the factual recent enforcement actions, together EFFECTIVE DATES: The regulation situation with which the entity is with guidance provided through amending 12 CFR parts 611, 612, 613, concerned, often in advance of the publicly available advisory opinions 614, and 615, published on November 8, entity engaging in the contemplated and filings in civil enforcement cases, 2006 (71 FR 65383) is effective February activities. this framework provides the 1, 2007. Commission with a very effective FOR FURTHER INFORMATION CONTACT: 29 See McConnell, 540 U.S. at 170 n.64 (holding mechanism for regulating organizations portions of BCRA were not unconstitutionally that should be registered as political Jacqueline R. Melvin, Associate Policy vague, in part because ‘‘should plaintiffs feel that committees under FECA, regardless of Analyst, Office of Policy and Analysis, they need further guidance, they are able to seek that organization’s tax status. The Farm Credit Administration, McLean, advisory opinions for clarification * * * and VA 22102–5090, (703) 883–4498, TTY thereby ‘remove any doubt there may be as to the Commission’s new and amended rules, meaning of the law’’’ (internal citation omitted)). together with this Supplemental (703) 883–4434; or Howard I. Rubin, 30 See Advisory Opinions 2006–20 (Unity 08); Explanation and Justification, as well as Senior Counsel, Office of General 2005–16 (Fired Up); 1996–13 (Townhouse the Commission’s recent enforcement Counsel, Farm Credit Administration, Associates); 1996–3 (Breeden-Schmidt Foundation); actions, places the regulated community McLean, VA 22102–5090, (703) 883– 1995–11 (Hawthorn Group); 1994–25 (Libertarian 4020, TTY (703) 883–4020. National Committee) and 1988–22 (San Joaquin on notice of the state of the law Valley Republican Associates). regarding expenditures, the major (12 U.S.C. 2252(a)(9) and (10))

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