Presidential Election Campaign Fund and Federal Financing of Presidential Nominating Conventions; Rule FEDERAL ELECTION COMMISSION

summary: The Federal Election Commission is revising its regulations

governing publicly-financed Presidential nominating conventions. These

regulations implement the Federal Election Campaign Act of 1971, as

amended (FECA or the Act), and the Presidential Election Campaign Fund

Act (Fund Act). The revisions update the provisions governing the audit

and repayment process, and address vendor discounts, items provided for

promotional consideration, legal and accounting expenses, civil

penalties, and donations to host committees and municipalities. The

changes also reorganize these rules and make them more consistent with

the rules governing other publicly-financed committees.

dates: Further action, including the announcement of an effective date,

will be taken after these regulations have been before Congress for 30

legislative days pursuant to 2 U.S.C. 438(d) and 26 U.S.C. 9009(c). A

document announcing the effective date will be published in the Federal

Register.

for further information contact: Ms. Susan E. Propper, Assistant

General Counsel, 999 E Street NW., Washington, DC 20463, (202) 219-3690

or (800) 424-9530.

supplementary information: The Commission is publishing today the final

text of revisions to its regulations at 11 CFR part 107, section 114.1,

and part 9008, which concern the public financing of Presidential

nominating conventions. The Commission had earlier sought comments on a

previous attempt to revise the convention regulations by publishing a

Notice of Proposed Rulemaking (1990 NPRM) on August 22, 1990. See

Notice of Proposed Rulemaking, 55 FR 34267 (Aug. 22, 1990). Written

comments were received from the Republican National Committee and the

Democratic National Committee in response to the 1990 NPRM.

Subsequently, the Commission decided to take no further action on that

rulemaking until after the 1992 conventions had been held. See

Suspension of Rulemaking, 56 FR 14319 (April 9, 1991).

On August 12, 1993, the Commission issued a new Notice of Proposed

Rulemaking (NPRM), thereby initiating a new rulemaking and again

seeking comments on potential revisions to the convention regulations.

58 FR 43046 (Aug. 12, 1993). This NPRM differed significantly from the

1990 NPRM, as the Commission sought to take into account additional

issues, including some derived from the 1988 and 1992 party

conventions, and altered some of the proposals contained in the 1990

NPRM. Comments were received from the Republican National Committee,

the Democratic National Committee, Jan Witold Baran, Common Cause, and

the Internal Revenue Service. In response to a written request, a

public hearing was held on October 27, 1993. Two witnesses presented

testimony on behalf of the Republican National Committee, and two

witnesses presented testimony on behalf of the Democratic National

Committee.

Section 438(d) of title 2, United States Code and 26 U.S.C. 9009(c)

require that any rules or regulations prescribed by the Commission to

carry out the provisions of titles 2 and 26 of the United States Code

be transmitted to the Speaker of the House of Representatives and the

President of the Senate 30 legislative days before they are finally

promulgated. These regulations were transmitted to Congress on June 23,

1994.

Explanation and Justification

Part 107--Presidential Nominating Convention, Registration and Reports

There are no substantive changes in this part. However, it has been

reorganized so that reporting by convention committees is covered in

Sec. 107.1, and host committee reporting is addressed in Sec. 107.2.

Part 114--Corporate and Labor Organization Activity

Section 114.1 Definitions

In paragraph 114.1(a)(2)(viii), the citations to the convention

rules have been amended to correspond to the proposed reorganization of

11 CFR Part 9008.

Part 9008--Federal Financing of Presidential Nominating Conventions

The Commission has revised and reorganized its rules governing

public financing of Presidential nominating conventions to address

several issues that have arisen, and to make the convention regulations

more consistent with the rules applying to publicly-financed

Presidential campaign committees. The reorganization of 11 CFR Part

9008 separates the rules concerning convention committees from those

addressing host committee and local government activity. Thus, Subpart

A of Part 9008 covers only convention committees and Subpart B contains

the rules regarding host committees and local government activity.

Subpart A--Expenditures By National Committees and Convention

Committees

Under the reorganization of Part 9008, Subpart A sets forth the

rules relating to convention committees set up by the national party

committees to make arrangements for the party's presidential nominating

convention. Within Subpart A, the sequence of Secs. 9008.1 through

9008.12 has been rearranged to follow the progression of convention

activity from registration through use of funds and sources of

contributions to, finally, audits and repayments. New Secs. 9008.13

through 9008.16 have been added to follow similar provisions for

publicly-financed Presidential candidates.

Section 9008.1 Scope

Section 9008.1 continues to explain the scope of the convention

rules found in 11 CFR Part 9008. However, the provisions in previous

paragraph Sec. 9008.1(b) regarding reporting by host committees,

government agencies and local municipalities have been deleted because

they duplicate portions of new Sec. 9008.51.

Section 9008.2 Definitions

This section generally follows former 11 CFR 9008.2.

Section 9008.3 Eligibility for Payments; Registration and Reporting

Paragraph 9008.3(a) now sets forth the eligibility requirements for

receiving public financing, which were previously located in 11 CFR

9008.8(b). Paragraph (a) of Sec. 9008.3 also reflects several changes

in the agreements convention committees must submit as a condition of

eligibility to receive public funding. First, the revised rules

eliminate the requirement in previous paragraph Sec. 9008.8(b)(4)(iv)

that convention committees agree to establish a separate account for

handling private contributions. One commenter supported the elimination

of this requirement. If a convention committee were to accept private

funds, either due to a decision not to accept its full entitlement of

federal funds or due to a deficiency in the Presidential Election

Campaign Fund, the new rules provide the option of either setting up a

separate account or depositing private contributions with payments

received from the Fund. See, paragraph Sec. 9008.6(a)(3). This approach

is consistent with the rules governing Presidential candidates who

accept public financing for the general election.

Second, a new provision has also been added at paragraph

Sec. 9008.3(a)(4) requiring convention committees to agree to comply

with the relevant provisions of title 2, United States Code, and the

Commission's regulations implementing those provisions. This new

condition parallels the candidate agreements for publicly-financed

primary and general election Presidential candidates.

New language in the convention agreement provisions in paragraph

Sec. 9008.3(a)(4)(v) pertains to the production of computerized

information on magnetic tapes or diskettes under new paragraph

Sec. 9008.10(h). This new language follows similar requirements set

forth in 11 CFR 9003.1 and 9033.1 governing candidate agreements.

Language has also been added to paragraph (a)(4)(v) of Sec. 9008.3

to indicate that the convention committee shall agree to provide the

Commission, upon request, with copies of contracts with its vendors,

and documentation regarding reductions, discounts, and items received

in exchange for promotional consideration. The Commission received a

wide range of comments on this requirement. One witness indicated a

preference for including in the reports certain information on items

provided at no charge, and supplying contracts during the Commission's

audit, instead of attaching the contracts to the publicly-filed

reports. Others saw no reason to provide or disclose documentation of

discounts, deductions, and free items because, in their view, these are

not contributions or expenditures and are not subject to convention

spending limits. In contrast, one commenter urged the Commission to

reverse its policy of permitting private in-kind contributions to host

committees and convention committees because public funds were meant to

replace large contributions from corporations, labor unions and wealthy

individuals, which would, in the commenter's view, otherwise undermine

the intent of the Federal Election Campaign Act and the integrity of

public financing.

The Commission has concluded that its long-standing approach

regarding vendor contracts is consistent with Congressional intent, and

should be explicitly reflected in the regulations. Accordingly, the new

language follows the Commission's current practice of requesting

contracts, when necessary, during the audit process. The provision of

vendor contracts helps the Commission ensure that corporations are

following their ordinary course of business in their transactions with

political committees. Under revisions to paragraph Sec. 9008.9,

however, copies of vendor contracts need not be attached to convention

committees' reports. Instead, paragraph Sec. 9008.9(b) specifies the

information to be reported by the convention committee when commercial

vendors provide goods or services in exchange for promotional

consideration arrangements.

The new rules at paragraph Sec. 9008.3(a)(4)(v) follow previous 11

CFR 9008.8(b) by requiring convention committees to provide the

Commission with copies of their contracts with host committees and

municipalities upon request. The NPRM had proposed requiring convention

committees to attach copies of these contracts to their regular

reports.

The comments generally opposed additional reporting requirements,

arguing that host committees do not utilize public funds, that the

current requirement that contracts be made available upon request

during Commission audits is sufficient, and that host committees are

motivated by economic (not political) considerations. One commenter

suggested that it would be onerous to require both the contract between

the host committee and the convention committee, and documentation of

vendor's contracts or discounts. The final rules in this section and

section 9008.9 reduce the amount of documentation to be provided by

convention committees with respect to vendor transactions and contracts

with cities and host committees.

Paragraph Sec. 9008.3(b) sets forth the registration and reporting

requirements for convention committees previously found in 11 CFR

9008.12(b). The revised rules delete language in previous paragraph

Sec. 9008.12(b)(1)(ii) which had indicated that other committees and

organizations representing political parties in making convention

arrangements must register and report as political committees. This

language is not necessary because these entities are already clearly

subject to the registration and reporting requirements of the FECA. The

reporting requirements have also been revised to track the reporting

dates for political committees filing quarterly reports under Title 2.

See, 11 CFR 104.5.

The NPRM proposed requiring that convention committees file their

first quarterly report following either the quarter in which they

receive their first payment from the Fund or when they begin receiving

funds or making disbursements for convention activity, whichever is

earlier. These committees are able to obtain loans and begin making

convention-related disbursements well before they receive their first

public financing payment. However, this activity is not disclosed until

three months after that payment is received. Earlier disclosure was

suggested to provide a more contemporaneous picture of convention

committee activity and to ease the burden of filing a comprehensive

first report covering as much as a year's disbursements. When this

change was suggested in the 1990 NPRM, one commenter indicated that it

already files reports for the first quarter after beginning to make

disbursements for the convention, and did not object to the earlier

filing requirements. However, in its response in the current

rulemaking, the commenter objected to earlier reporting where no public

funds have been transferred to the convention committee. In contrast,

another commenter supported the earlier reporting requirement, and

suggested a threshold of no less than $5,000 to trigger the filing

requirements.

The final rules have been revised to follow the previous rules to

reduce the number of reports that must be filed by convention

committees.

Section 9008.4 Entitlement to Payments from the Fund

Section 9008.4 has been reorganized so that paragraphs (a) and (b)

incorporate the rules previously found in Sec. 9008.3 concerning

entitlements to payments from the Fund. Paragraph (c) of Sec. 9008.4

contains the provisions concerning the limitation on payments, which

were previously located at 11 CFR 9008.5.

Section 9008.5 Adjustment of Entitlements

The provisions entitled ``Adjustment of entitlement'' have been

moved to Sec. 9008.5 from previous Sec. 9008.4. With regard to the

income from the investment of public funds, previous paragraph (b) of

Sec. 9008.4 has been removed and replaced with new 11 CFR

9008.12(b)(6). The new provision more closely follows the approach

taken in the rules governing Presidential candidates who accept public

funding. See 11 CFR 9007.2(b)(4) and 9038.2(b)(4).

Section 9008.6 Payment and Certification Procedures

Section 9008.6, ``Payment and certification procedures'', has been

moved from 11 CFR 9008.8 of the previous rules. In addition, paragraph

(a)(2) has been revised by combining the rules for major and minor

parties on when they may accept private contributions for convention

expenses, and by addressing the possibility of a deficiency in the

Fund. Unless there is a deficiency in the Fund, or the national

committee does not accept all the public financing to which it is

entitled, contributions cannot be accepted because they would cause the

convention committee to exceed its spending limits, unless the

committee had surplus funds left over. The Commission notes that under

new section 116.5, payments by committee staff for convention expenses

are treated as advances, and therefore as contributions, until

reimbursed. Thus, the question has arisen as to the maximum amount a

convention committee can accept in staff advances if it provides

reimbursement and accepts full public funding. Given that the

convention committee is established, financed, maintained and

controlled by the national committee, and is therefore affiliated with

the national committee, it shares the national committee's $20,000

contribution limit. The NPRM sought comment on including in the

convention regulations language to this effect.

The witnesses at the hearing agreed that convention committees are

affiliated with the national party committees, and believed the

existing rules and exceptions regarding staff advances that apply to

political committees should control. While one thought additional

language was unnecessary, the other witness suggested specifically

stating that the maximum amount an individual may contribute to the

convention committee per year is $20,000, and that a convention

committee may accept up to $20,000 in staff advances if it provides

reimbursement and accepts full public funding. Further, this witness

suggested amending proposed paragraph Sec. 9008.12(c) to indicate that

the convention committee is not obligated to repay a staff advance to

the U.S. Treasury if it has made full reimbursement to the staff member

and has not utilized the private contribution (even to the extent of

the permissible $20,000) to defray convention expenses.

The Commission agrees with this commenter's views, but does not

believe additional language is needed in the regulations. While the

Commission has reached this conclusion to accommodate the practice of

staff advances, it should be noted that other private contributions may

be received only in accordance with paragraph (a) of this section.

As noted in the earlier discussion of Sec. 9008.3, paragraph (a)(3)

of 11 CFR 9008.6 offers convention committees the choice of setting up

a separate account for private contributions or depositing them in the

account used for payments from the Fund. This approach parallels that

provided for publicly-financed general election candidates in 11 CFR

9005.2(c). Thus, convention committees' accounts must be maintained at

depository institutions insured by the Federal Deposit Insurance

Corporation. The 1979 amendments to the FECA also permitted political

committees to establish campaign depositories at institutions insured

by the National Credit Union Administration. However, the Commission

has not made this option available to Presidential candidates or

convention committees choosing to receive public funding because credit

unions do not return canceled checks, thus preventing committees from

providing adequate documentation for disbursements drawn upon credit

union accounts. See, e.g., 11 CFR 9005.2(c). In the final version of

paragraph (a)(3), the references to accounts insured by the Federal

Savings and Loan Insurance Corporation have been deleted because these

accounts are now insured by the Federal Deposit Insurance Corporation.

Finally, this section continues to permit the receipt of federal

funds either in one lump sum or in a series of payments if the

convention committee so requests.

Section 9008.7 Uses of Funds

With some minor changes for clarity, Sec. 9008.7, ``Use of funds,''

follows previous 11 CFR 9008.6.

The NPRM sought comments on whether a revision to this section is

warranted to clarify the distinction between items which are convention

expenses and must be defrayed with public funds (and count against the

convention committee's expenditure limit) and expenses which are

related to ongoing business of the national committee and are not

properly paid for with public funds. Given that the convention not only

serves as the vehicle for nominating the party's Presidential

candidate, but is also used to conduct ongoing party business, the line

between convention expenses and party expenses can be a fine one.

However, the Commission has encountered instances in which the national

committee has sought to pay for expenses that are clearly convention-

related, particularly if the convention is close to the expenditure

limit. The Commission also wishes to ensure that public funds are used

solely for running the nominating convention, and not for expenses

related to party business.

The NPRM did not propose creating a presumption that expenses are

convention-related if they are incurred by the convention committee or

national committee around the time of the convention or within the

convention city's locale (a suggestion which had been included in the

1990 NPRM). Comments on the 1990 NPRM opposed the creation of such a

presumption, citing situations where they believed it could improperly

result in the use of federal funds for party business.

The NPRM in this rulemaking indicated that the Commission had

decided not to include such a presumption in the convention

regulations. However, additional comments were sought on whether to

amend the list of permissible convention expenses to exclude part or

all of the salary and travel costs for those whose primary role is to

conduct ongoing party business while at the convention. In particular,

the Commission welcomed comments on how to allocate salary and travel

costs for those who may split their time between party business and

convention-related duties.

Subsequently, two commenters repeated their previous views that the

convention regulations should provide assurances that public funds are

spent on legitimate convention expenses, but that ultimately any

attempt to spell out convention expenses would be both subjective and

unworkable. Instead, they argued that the determination of what is

considered a convention expense should be made on a case-by-case basis.

The Commission heard testimony that it should not judge how committees

spent their money, that increased regulation could infringe on First

Amendment freedoms, and that convention committees should be allowed to

allocate employees' salaries and expenses between the convention and

the national committee on a reasonable basis, subject to review during

the convention committee audit. A key criterion would be the amount of

time spent on each function, and would require the committee to prorate

the amount of time spent on each set of responsibilities. In contrast,

another commenter opposed changing the current regulation, arguing that

any additional formula is unnecessary. The comment urged adoption of a

presumption that the national committee staff is working on national

committee business and not convention business.

The Commission has decided to continue its previous approach of

listing in the rules the types of expenses that are convention-related,

and thus subject to the convention spending limits. Adopting a

completely case-by-case approach to this area would provide no guidance

to committees trying to properly attribute their expenses. Accordingly,

new Sec. 9008.7 follows previous Sec. 9008.6 by setting out the general

principle that convention expenses include all expenses incurred by or

on behalf of the national party committee or the convention committee

with respect to, and for the purpose of conducting, the convention or

convention-related activity. This includes all national committee

activity in the convention city except for events clearly separate from

the convention, such as fund raising events for the party committees,

and meetings of the national committee unrelated to the convention.

New language has also been included in paragraph

Sec. 9008.7(a)(4)(xii) to reflect the Commission's policy that the

convention committee may defray the costs of gifts or monetary bonuses

for committee staff and convention officials for convention-related

services, as long as the bonuses or gifts do not exceed $150 per

individual and $20,000 total. Another new provision, paragraph

Sec. 9008.7(a)(4)(xiii), clarifies that the production costs of a

biographical film or similar materials about a Presidential or Vice

Presidential candidate may be paid for by the convention committee.

However, if part or all of the film, or similar materials, is

previously or subsequently aired or otherwise distributed by the

candidate's primary or general election campaign committee or by a

party committee, or is used in connection with fundraising, the

campaign committee or party committee must pay the convention committee

for the reasonably allocated costs of the films or materials used.

Paragraph (a)(5) of Sec. 9008.7 has been modified so that it

follows the Commission's past practice of seeking a repayment of

interest earned on the investment of public funds, less any tax paid on

the interest earned. This change is consistent with 11 CFR 9004.5,

which governs interest earned by publicly-funded Presidential

candidates.

Another issue raised in the NPRM concerns the sources of funds used

to pay civil or criminal penalties pursuant to 2 U.S.C. 437g. Both

previous paragraph Sec. 9008.6(b)(3) and new paragraph 9008.7(b)(3)

indicate that such funds are subject to the prohibitions of 11 CFR

110.4 and Parts 114 and 115. Comments were sought as to whether these

funds should also be subject to the contribution limits set forth in 11

CFR Part 110. One commenter urged the Commission to continue to permit

convention committees to pay civil and criminal penalties with funds

subject to the prohibitions, but not the limitations set forth in the

Act, and not to treat amounts received or expended to pay such

penalties as contributions or expenditures. The commenter pointed out

that Congressional candidate committees and party committees are

permitted to pay civil and criminal penalties with funds that do not

meet the limitations or prohibitions of FECA, while publicly-financed

primary and general election presidential candidates may pay penalties

from funds not meeting the FECA's contribution limits. Another

commenter noted that public funds may not be used to pay these

penalties, and restrictions on private funds would deter violators from

paying their fines, given that fines are levied months or years after

the convention. A third commenter opposed both limiting the sources of

penalty payments and subjecting penalty payments to contribution

limits, arguing that penalties are not paid for the purpose of

influencing federal elections, and thus, are not contributions under

FECA.

The Commission views civil and criminal penalties as an outgrowth

of election activities, and therefore properly subject to the Act's

prohibitions, even if the funds received and expended are not

contributions or expenditures. Consequently, paragraph

Sec. 9008.7(b)(3) generally follows the previous provision. However,

the Commission is continuing to consider possible changes to the

present approach in the ongoing rulemaking regarding its compliance

regulations at 11 CFR part 111. See Notice of Proposed Rulemaking, 58

FR 36764 (July 8, 1993).

Section 9008.8 Limitation of Expenditures

Section 9008.8 generally follows previous Sec. 9008.7 by setting

out the expenditure limits for convention committees and an explanation

of the categories exempted from application to that limit. Former

Sec. 9008.7 had also included rules pertaining to activities by state

and local governments and host committees. As part of the

reorganization of Part 9008, the substantive provisions governing

contributions to and expenditures by host committees and local

governments have been moved to new Secs. 9008.52 and 9008.53. New

language in paragraph Sec. 9008.8(b)(3) provides some examples of the

types of candidate expenses that may not be paid from the convention

committee's public funds, including the costs of the candidate's

transportation, meals and lodging.

Paragraphs (b)(1) and (b)(2) of Sec. 9008.8 follow previous

paragraph Sec. 9008.7(d)(4) by indicating that expenditures made by

government agencies and municipal corporations, or by host committees,

will not count against the convention committee's expenditure limit if

the funds are spent in accordance with the provisions of proposed

Secs. 9008.52 and 9008.53. Consequently, there may be situations in

which host committees make impermissible expenditures which count

against the convention committee's spending limits. As noted below,

such situations could also be resolved through enforcement actions

under 2 U.S.C. 437g.

In addition, the Commission sought comments on revised language in

paragraph 9008.8(b)(4)(ii) restating the current policy that payments

made by the national committee for legal and accounting expenses count

against the convention spending limits if these expenses are incurred

in connection with the convention or convention-related activities. As

an alternative, comments were welcomed on exempting payments by the

national party committee for legal and accounting expenses solely for

complying with the FECA and the Fund Act, provided that such funds are

raised in accordance with the limits and prohibitions of the Act. Under

this alternative, such amounts would be reported, and need not be

placed in a separate account.

Two commenters and witnesses generally urged that convention legal

and compliance costs should be exempt from the spending limits. The

reasons they advanced included the following: similar expenses are

exempt for publicly-financed presidential candidates; such a policy

would encourage compliance; and it would not be appropriate to spend

public funds on noncompliance legal costs tangentially-related to the

convention, such as a slip-and-fall case or litigation over vendors'

contracts.

In light of the comments and testimony, the Commission has decided

to change the provisions governing legal and accounting costs.

Accordingly, revised paragraph Sec. 9008.8(b)(4) creates a narrow

exception to the convention spending limits for legal and accounting

costs incurred in complying with the FECA and the Fund Act, so long as

the contributions raised for this purpose comply with the contribution

limits and prohibitions. Thus, these contributions will be counted

against the annual limit on contributions to the political committees

established and maintained by the national political party of $20,000

per person, and $15,000 per multicandidate political committee. These

contributions and payments must be reported by the convention committee

on separate schedules of receipts and disbursements. This rule does

not, however, prohibit the use of public funds to pay compliance

expenses.

New paragraph (b)(5) has been added to section 9008.8 to indicate

that the costs of complying with the technical requirements for

submission of computerized records are not treated as convention

committee expenditures, and therefore, are not subject to the

expenditure limits set out in section 9008.8. This was suggested in

response to the 1990 NPRM, which included provisions on computerized

information in paragraph 9008.10(h). Although the comments reflected

disagreement as to whether or not convention committees should be

required to comply with the computerized magnetic media requirements

(CMMR), they generally favored exempting the costs of producing,

delivering and explaining the computerized information from the

convention committee's spending limits. Another suggestion was that

funds raised to pay the costs involved should not be considered

contributions, and should not be subject to the contribution limits and

prohibitions of the FECA.

The Commission has concluded that the costs of providing

computerized information are similar to the costs of providing legal

and accounting services. Therefore, the revised rules adopt the same

approach for funds raised to pay CMMR expenses as for funds raised to

pay legal and accounting costs.

Section 9008.9 Receipt of Goods and Services from Commercial Vendors

Section 9008.9 specifies the circumstances under which different

types of businesses may make in-kind donations to convention

committees. It has been substantially revised from previous 11 CFR

9008.7(c), and it resolves several questions that have arisen

concerning in-kind donations.

(1) Terminology. This rulemaking presented the issue of the

different terms used in different portions of the previous regulations

to describe the kinds of businesses that may donate funds or make in-

kind donations. For example, ``retail businesses'' were able to provide

reductions or discounts to convention committees. See previous 11 CFR

9008.7(c)(1). ``Local businesses'' were able to donate promotional

items of nominal value to convention attendees, and to donate funds and

in-kind contributions to host committees to promote the convention city

and its commerce. See previous 11 CFR 9008.7 (c)(2) and (d)(2). ``Local

retail businesses'' were able to donate funds to the host committee to

be used to defray convention expenses. See previous 11 CFR

9008.7(d)(3). Finally, under AO 1988-25, businesses of any type were

permitted to seek official provider status, which would enable them to

provide certain items at no charge, in exchange for being designated an

official provider, or for other promotional consideration.

The NPRM questioned whether a basis continues to exist for these

distinctions. The Commission considered whether to require that all

businesses qualify as ``local'' to help ensure that their goal in

offering goods and services is commercial rather than political. In the

alternative, the Commission has considered whether these complex

distinctions further the Commission's objectives of ensuring that

corporations do not make prohibited contributions to political

committees. The proposed rules would have retained the current

distinctions, while clarifying the distinction between ``retail'' and

``wholesale'' businesses, and explaining when businesses qualify as

``local'' businesses under the Office of Management and Budget's

Revised Standards for Defining Metropolitan Areas in the 1990's, 55 FR

12154 (March 30, 1990). In Advisory Opinion 1975-1, the Commission

recognized two situations which would not violate 18 U.S.C. 610 (the

predecessor to 2 U.S.C. 441b): volume discounts on goods or services

purchased by the convention committee and donations to a group

organized to promote the convention city. The rationale underlying

these exceptions was that they reflected a commercial, rather than

political, purpose by the business so involved.

The comments on the NPRM reflected no consensus on this issue. Some

favored retaining the approach adopted in the current rules and

Advisory Opinion 1988-25, while taking into account legitimate

commercial interests of franchisees, branches and dealers affiliated

with national corporations.

Some urged the Commission to apply these provisions to all

businesses because the criteria for ``local'' and ``retail'' are

confusing, the distinctions do not further the Commission's objectives,

or because all businesses in a Metropolitan Area benefit from a

successful convention. Others supported the retention of the present

distinction between ``retail,'' ``local,'' and ``other business,'' and

advocated changing the definition of ``local business'' so that it

includes any company doing a sufficient level of business within the

Metropolitan Area, whether or not the company has a physical presence

there. This approach would not provide a workable standard that would

enable either the Commission or businesses to know whether they are

considered ``local.''

The Commission has decided to revise Sec. 9008.9 to do away with

the complex distinctions between businesses that are ``local,''

``retail,'' ``local retail,'' and ``official providers.'' Instead, the

term ``commercial vendor'' is used to define the types of businesses

that may provide goods or services to convention committees at reduced

or discounted rates, or for promotional consideration, or at no charge.

``Commercial vendor'' is defined in 11 CFR 116.1(c) to mean persons

providing goods or services to a candidate or political committee,

whose usual and normal business involves the sale, rental, lease or

provision of those goods or services. Please note that donations of

funds to host committees are covered by new Secs. 9008.52 and 9008.53.

Thus, the revised rules build upon the Commission's decisions in AO

1975-1 and AO 1988-25.

(2) Standard commercial vendor reductions and discounts; goods or

services provided for promotional consideration. A related question

involves the determination that reductions and discounts offered to the

convention committee are in the ordinary course of business, or are

commercially reasonable. Language was proposed during the previous

rulemaking to explain the documentation that must be provided to the

convention committee to demonstrate that a reduction or discount, such

as a volume discount on hotel rooms, is within the vendor's ordinary

course of business. Although concerns were raised that these

documentation requirements were burdensome and impractical, others

urged the Commission to adopt that approach.

The NPRM also focused on the practice of offering free items to the

convention, such as pianos or cars. Proposed language in Sec. 9008.9

sought to incorporate the approach taken in Advisory Opinion 1988-25 by

permitting businesses to provide products and services at no charge if

it is in the ordinary course of that vendor's business to provide

products or services in an equivalent amount and on similar terms, such

as in return for recognition as an ``official provider'' of such

products or services, to non-political groups or events. The Commission

had previously proposed incorporating in the regulations the conclusion

reached in Advisory Opinion 1988-25, and had considered whether the

approach taken in that advisory opinion should be modified to require

that products or services be provided at no less than the vendor's

cost, notwithstanding the fact that the same business provides items at

no charge to non-political clients. Compare AO 1975-1. Comments were

also sought as to whether to establish exemptions for certain types of

official providers, or those that provide products or services of less

than a specified dollar amount. The NPRM also included proposed rules

to ensure that in-kind donations are only made consistently with the

provisions of the Act. Thus, the NPRM would have required that the

vendor provide the committee with a description of what is provided,

the terms of the reduction or discount, and a signed affirmation that

this is in the ordinary course of business. It contemplated that

vendors who do not have established practices of offering such

discounts would be able to offer reductions or discounts that are

consistent with established practices in their trade or industry.

Comments were sought on whether certain types of retail businesses,

such as restaurants, should be excluded from these documentation

requirements. The Commission also requested comments on whether retail

businesses providing less than a certain dollar amount of goods and

services, or providing less than a certain percentage discount should

also be exempt from the documentation requirements, and if so, what the

appropriate amount or percentage would be.

One commenter urged the Commission to completely reverse its policy

of permitting corporations to enter promotional consideration

arrangements in connection with publicly financed conventions. However,

several other commenters opposed modifying the result of AO 9188-25,

arguing that official providers offer discounts to gain publicity and

increased sales for their product, and questioning whether any

instances of abuse existed. Consequently, one witness suggested that

the Commission establish a presumption that local business involvement

in convention activity is motivated by economic interests and not

political involvement. These commenters opposed requiring vendors to

sign affirmations that they are acting in the ordinary course of their

businesses. One argued that affirmations would go far beyond the

Commission's established policy, and would deter vendor involvement

because vendors would be reluctant to sign affirmations that include

terms such as ``established,'' ``promotional,'' or ``commercial

benefit.'' Thus, one comment viewed the proposal as an attempt to

second guess the business judgment of the vendor, and noted that it is

sometimes difficult to value goods or services. Two comments urged the

Commission to issue less burdensome rules, arguing that the additional

documentation requirements are unnecessary because vendors offer

discounts to obtain profitable business, not to influence federal

elections. The witnesses at the hearing stated that the requirement

that the in-kind donation not exceed the value of the commercial

benefit was a subjective, hard to define standard. Instead of providing

an affirmation, they preferred disclosing information on in-kind

donations in their reports, such as the vendor's name, and the nature

and value of the goods or services provided, if this could be done in a

non-burdensome manner.

The final rules regarding items provided for promotional

consideration have been modified in several respects. First, the final

rules indicate that discounts, reductions and free items may be offered

by all commercial vendors, and are not restricted to local or retail

businesses. These transactions must be in the ordinary course of

business. The rules further define ordinary course of business. In

addition, the proposed vendor affirmation requirement has been dropped

from the final rules. Instead, the revised rules require the convention

committee to maintain certain documentation of promotional

consideration arrangements and to disclose in its reports a general

description of the goods or services provided, together with the name

and address of the provider. This disclosure requirement is designed to

be non-burdensome, yet sufficient to facilitate enforcement of the

statutory prohibitions and limits by subjecting promotional

consideration arrangements to public scrutiny.

One comment suggested that proposed paragraph Sec. 9008.9(a)(2) be

clarified to emphasize that ``official provider'' status is not the

only form of promotional consideration since a convention committee may

not want to provide exclusive rights to a particular vendor with

respect to certain categories of goods or services. The Commission

notes that Sec. 9008.9 covers commercial vendors wishing to enter into

a variety of promotional arrangements, and is not narrowly limited to

``official providers.''

The new rules generally continue the current policy of permitting

commercial vendors to provide items of de minimis value, such as maps,

pens, pencils or other similar items included in tote bags for those

attending the convention. See previous 11 CFR 9008.7(c)(2). Finally,

paragraph (d) of revised Sec. 9008.9 specifies that goods and services

received in accordance with this section do not count against the

convention committee's spending limits.

(3) Reporting. Another issue raised during this rulemaking was

whether convention committees should be required to report their

receipt of reductions, discounts, and items provided for promotional

consideration from businesses, including a statement of what was

provided and its value, or whether the contracts themselves should be

placed on the public record. There was little, if any, consensus among

the commenters regarding these proposals. One comment noted that since

issuing AO 1988-25, the Commission has required committees to

demonstrate that donations or discounts were in the ordinary course of

a vendor's business, but believed that it would be extraordinary for

the Commission to require the disclosure of the actual contract or to

require that the contract state that the vendor is following its

ordinary course of business. One witness favored reporting items

received at no charge, but opposed reporting discounts given in the

ordinary course of business, or attaching contracts to reports. The

witness noted that the Commission's long-standing policy has been that

items provided in the ordinary course of business are not

``contributions'' to the committee. Finally, one comment opposed

reporting in-kind donations because in-kind donations frequently take

forms that are difficult to quantify, and the value of donations

fluctuates according to changes in the market.

The final rules in section 9008.9 do not require convention

committees to routinely report the receipt of standard volume

discounts, or reduced rates normally made available to certain types of

customers, although they do require reporting of promotional

consideration arrangements. The rules also continue the previous policy

that items of de minimis value, such as maps, pens, and tote bags, need

not be reported. The new rules also do not require committees to file

copies of vendor contracts with their reports. Instead, the contracts

must be provided upon request during the audit. At any time, the

Commission may seek additional information regarding transactions with

commercial vendors, particularly if questions are raised as to whether

a transaction is in the ordinary course of business, or results in the

making and acceptance of a contribution.

Section 9008.10 Documentation of Disbursements; Net Outstanding

Convention Expenses

Under the previous regulations at 11 CFR 9008.8(b)(4)(v),

committees were required to restate in the convention committee

agreement all the documentation requirements for proving that expenses

are convention-related. The revisions to these rules now follow the

format of the regulations for publicly financed Presidential candidates

by only stating in the convention committee agreement that the

committee agrees to comply with the documentation requirements (see

paragraph Sec. 9008.3(a)(4)(iv)), and setting forth the actual

documentation provisions in a separate section. Thus, Sec. 9008.10 now

contains the substantive rules regarding the production of evidence of

convention expenses.

In addition, Sec. 9008.10 has been redrafted to conform to the

documentation requirements for publicly financed candidates. See, 11

CFR 9003.5 and 9033.11. For example, the term ``particulars'' has been

changed to ``purpose of the disbursement.'' Also, the language in

paragraph Sec. 9008.10(a)(4) regarding documentation of disbursements

has been modified to indicate that pre-established written committee

policies may include daily travel expense policies, but do not include

general per diem policies which cover a longer time period or which

include a broader range of expenses. This change is consistent with the

approach the Commission took in revising the primary and general

election rules for publicly funded candidates. See, 11 CFR

9003.5(b)(1)(iv) and 9033.11(b)(1)(iv). One commenter urged that

convention committees be allowed to provide staff with fixed per diems

in lieu of reimbursing actual expenses. Such an approach would be

acceptable if it is reasonably calculated to cover the individual's

actual expenses for transportation, lodging and meals, but not other

expenses.

The Commission has added three new paragraphs to Sec. 9008.10. New

paragraph (f) clarifies that convention committees must retain records

regarding their disbursements and receipts and present them for

Commission review. The records retained by the committee should also

reflect its compliance with 11 CFR 104.14. Paragraph (g) requires

convention committees to provide a statement of net outstanding

convention expenses no later than 60 days after the last day of the

convention, which should reflect its financial position as of 45 days

after the convention. The statement must also be updated to reflect the

committee's financial position as of nine months after the last day of

the convention. The statement must be filed 30 days thereafter, which

is also the date for the interim repayment of unspent funds under 11

CFR 9008.12(b)(5). This provision parallels the requirements for

publicly financed Presidential candidates. See, 11 CFR 9003.5(d),

9004.9, 9033.11(d) and 9034.5. Such statements are intended to enable

the audit process to be completed more expeditiously.

Finally, new paragraph (h) applies the Computerized Magnetic Media

Requirements (CMMR) to publicly financed convention committees. The

purpose of the CMMR is to establish uniform standards for producing

computerized records maintained by publicly financed committees at the

time of the Commission's audit. Rules applying the CMMR to publicly

financed Presidential candidates became effective on October 3, 1990.

See 55 FR 40377 (Oct. 3, 1990); see also, 57 FR 4453 (Feb. 5, 1992)

(updating the requirements and broadening certain technical standards).

During that rulemaking, the Commission noted its intention to include

parallel requirements in the convention regulations. See Explanation

and Justification, 55 FR 26392 (June 27, 1990). The basic rationale and

explanation offered in the June 27, 1990 Explanation and Justification

applies equally to convention committees. Id. The categories of

computerized records sought from convention committees are fewer,

however, in view of the conventions' narrower focus.

Several comments were opposed to these proposals, due to the

perceived financial costs associated with altering their existing

accounting systems and converting their data to a new format. One urged

that any costs involved should be exempt from spending limits. Given

that the Commission has not encountered problems in the past with

computerized records maintained and used by the national parties'

convention committees, few if any, changes in these systems should be

necessitated under the CMMR. As noted in the previous discussion of

section 9008.8, the costs of complying with the CMMR are not

expenditures by the convention committees, and are not subject to the

national committees' spending limits for the convention.

Section 9008.11 Examinations and Audits

Section 9008.11 now contains the provisions on examinations and

audits which were previously found at 11 CFR 9008.9. Also included is a

new sentence signaling the Commission's intention to follow the same

procedures during audits of convention committees as it now does when

auditing the committees of publicly financed Presidential candidates.

Please note that the December 31st time frame for conducting the audit,

which is specified in this section and 26 U.S.C. 9008.8(g), refers to

the time period in which the Commission will commence the audit.

The Commission has deleted from the convention rules previous

paragraph Sec. 9008.11(e), regarding judicial review of Commission

repayment determinations because judicial review procedures are spelled

out in 26 U.S.C. 9010 and 9011.

Section 9008.12 Repayments

Section 9008.12 includes the bases for Commission repayment

determinations, previously found in 11 CFR 9008.10. The repayment

determination procedures previously set out in 11 CFR 9008.11 have been

replaced by new language indicating the Commission's intention to

follow the same procedures and offer the same opportunities to

convention committees as are provided for publicly financed candidates

during the repayment process. See 11 CFR 9007.2 and 9038.2. If in the

future the Commission makes changes to the repayment rules applicable

to Presidential candidates, corresponding changes would be made for the

convention regulations.

In addition, paragraph Sec. 9008.12(b)(5)(ii) continues the current

requirement that convention committees make an interim repayment of

unspent funds, but changes the time frame to 30 days after the end of

the ninth month after the last day of the convention. A final repayment

of unspent funds must be made no later than 24 months after the end of

the convention, both under previous paragraph Sec. 9008.10(e)(3) and

new paragraph Sec. 9008.12(b)(5)(iii).

One commenter argued that the current requirement of an interim

repayment six months after the convention should be eliminated because

six months is an insufficient amount of time to determine the amount

needed to satisfy remaining bills, claims, and disputes. Instead, the

commenter supported an 18 month or 24 month overall time frame for

making repayments.

As noted above, the final rules extend the time period for the

interim repayment and retain the 24 month deadline for the final

repayment. The provisions in paragraph Sec. 9008.12(b)(5)(ii)

adequately address the commenter's concerns by allowing for the

certification of payments to the convention committee of amounts needed

to defray additional convention expenses, where the convention

committee has already made an interim repayment.

With regard to the income from the investment of public funds, new

11 CFR 9008.12(b)(6) replaces previous paragraph Sec. 9008.4(b). The

new provision more closely follows the approach taken in the rules

governing Presidential candidates who accept public funding. See 11 CFR

9007.2(b)(4) and 9038.2(b)(4).

The NPRM sought comments on how to address situations where a host

committee receives contributions from impermissible sources, such as

nonlocal businesses, which are than used to defray convention expenses

or for other permissible purposes. In some cases, it may be appropriate

to count these amounts against the convention committee's spending

limits, although there may be situations where enforcement actions are

warranted.

Several commenters argued that it would be more effective to handle

these situations through enforcement than by imposing oversight

responsibility and liability on the convention committees, because

convention committees, host committees, and municipalities have

different agendas. Several commenters and witnesses indicated that it

may be appropriate to pursue the convention committee if it acts with

knowledge, consent, or acquiescence in an unlawful act, but it would be

unfair to impose accountability on convention committees when they are

unaware of, or do not consent to, the unlawful actions of a host

committee or city. Two witnesses testified that host committees conduct

fundraising autonomously from the convention committees, although the

two entities have an on-going daily relationship during the convention

planning process.

In response to the concerns raised, the Commission notes that

neither the current nor the revised rules in Sec. 9008.12(b)(7) impose

strict or vicarious liability on convention committees for the actions

taken by cities or host committees. Instead, convention committees are

accountable for the actions of cities or host committees when they

knowingly help or assist or participate in conducting impermissible

activities, including initiating or instigating the activity. Thus, the

rules preserve the Commission's ability to proceed in the manner

appropriate to a particular case, such as through the repayment process

or enforcement.

Section 9008.13 Additional Audits

The Commission's authority to conduct other audits or

investigations of a committee in an appropriate case is set forth in

new Sec. 9008.13. It follows similar provisions for publicly financed

Presidential candidates. See 11 CFR 9007.4 and 9039.3.

Section 9008.14 Petitions for Rehearing; Stays of Repayment

Determinations

This new section governs petitions for rehearing after the

Commission's final repayment determination, and stays of repayment

determinations pending appeal. It indicates that the Commission expects

to follow the same procedures regarding rehearings and stays requested

by convention committees as it uses for publicly funded Presidential

candidates. See 11 CFR 9007.5 and 9038.5.

Section 9008.15 Extensions of Time

Section 9008.15 governs committee requests for extensions of time

under Part 9008. This new provision conforms to the Commission's

established policies concerning extensions of time. See 11 CFR 9007.3

and 9038.4.

Section 9008.16 Stale-Dated Committee Checks

Section 9008.16 has been added to provide procedures for handling

stale-dated committee checks, and is based on similar provisions

applicable to Presidential candidates accepting public funding. See 11

CFR 9007.6 and 9038.6. A minor change from the wording contained in the

NPRM reflects that this provision applies to all stale-dated checks,

not just those made out to creditors or contributors.

Subpart B--Host Committees Representing a Convention City;

Convention Expenditures by Government Agencies and Municipal

Corporations

This subpart has been created to separate the rules governing host

committees, government agencies and local municipalities from the

regulations on publicly financed convention committees. As explained

below, it includes portions of previous Secs. 9008.1, 9008.7, 9008.9

and 9008.12.

Section 9008.50 Scope

This new scope section alerts host committees, government agencies

and municipalities to the registration and reporting requirements, and

generally describes the areas covered by Subpart B. It follows previous

paragraph 9008.1(b) by indicating that the reporting requirements do

not apply to unsuccessful efforts to attract a convention.

Section 9008.51 Registration and Reports

This section contains the registration and reporting requirements

applicable to host committees, which were previously located in 11 CFR

9008.12. It also includes new provisions regarding reporting by

municipal corporations and other government agencies.

(1) Host committee reports. Paragraphs (a) and (b) of Sec. 9008.51

contain the rules governing host committee registration and reporting

found at former 11 CFR 9008.12(a). The NPRM had proposed requiring host

committee to file reports beginning in the first quarter of the

presidential election year, rather than with the post-convention

report. Another proposal would have required host committees to itemize

their receipts and disbursements to the extent required by 11 CFR Part

104. One comment argued against the dual burden of earlier disclosure

deadlines and itemization of receipts, in the absence of a demonstrated

defect in the current regulations. The Commission notes that section

437 of the FECA does not discuss pre-convention reporting by host

committees. Consequently, 11 CFR 9008.51 (a) and (b) now follow the

approach set out in previous Sec. 9008.12(a), except that the deadline

for filing quarterly reports was changed to correspond to the filing

deadline for quarterly reports filed under Title 2.

(2) Reporting by municipalities. New paragraph 9008.51(c) addresses

reporting by municipal corporations and other local government

agencies. This provision implements 2 U.S.C. 437(1) by requiring

reporting by committees or organizations representing ``a State, or a

political subdivision thereof, or any group of persons, in dealing with

officials of a national political party'' on matters relating to a

national nominating convention to be held in that State or political

subdivision. This statutory language can be read to require reporting

by an entity established by a state or local government, other than a

host committee, to receive funds and make disbursements for a

convention in that locality, although in the past these entities have

not had to register and report. Consequently, the Commission considered

specific disclosure requirements for municipalities and other

government agencies providing services and facilities to a national

nominating convention. Expenditures by these entities are largely for

the same purposes as those permitted by the regulations for host

committees. See, Secs. 9008.52 and 9008.53. Advisory Opinions 1982-27

and 1983-29 permit the acceptance of private donations by these

entities to defray convention expenses. See discussion of 11 CFR

9008.53. For these reasons, the Commission believes that reporting by

these entities will serve an important disclosure function.

The opponents of new reporting rules suggested instead that

municipalities file copies of written contracts between the national

committees and the cities they select. In the NPRM, the Commission

indicated that it was considering whether to require municipalities to

file reports which include copies of these contracts. Although this

approach would result in public disclosure of amounts specified in the

contracts, it would fail to publicly disclose the amount actually spent

or the amount raised from private funds. Accordingly, the Commission

also considered alternative reporting provisions in light of the

increased roles municipalities have played in recent conventions. The

reporting proposals included in the NPRM were designed to accomplish

meaningful disclosure with as little burden on municipalities as

possible.

Four comments responded to the issues raised in the NPRM, and the

proposed language in paragraph Sec. 9008.51(c). One commenter endorsed

the suggestion that municipalities be required to report the source of

funds received for hosting the convention. However, three other

comments opposed the reporting provision for various reasons. Some

thought the Commission has misinterpreted the meaning of 2 U.S.C.

437(1) by seeking to apply it to municipalities and government

agencies, instead of continuing to interpret the term ``represent'' a

state, political subdivision or any group of persons to only apply to a

host committee or other organization which deals with officials of a

national party. One argued that this approach would be inconsistent

with, and would undermine, Advisory Opinions 1982-27 and 1983-29. Some

believed that the Commission has not demonstrated a change of

circumstances to merit changing its policy, and that cities already

make various kinds of reports regarding receipts and expenditures of

their funds. Another concern was that disclosure would be costly and

deter municipalities from hosting conventions. The commenters and

witnesses indicated that municipalities host political conventions to

showcase their cities, hoping to attract other events of economic

benefit, such as the Olympics or the Super Bowl.

The Commission has concluded that changes in the way convention

financing operates, which have occurred since AOs 1982-27 and 1983-29

were issued, have made it necessary to add new reporting provisions to

ensure adequate public disclosure in the future. The new rules at

paragraph Sec. 9008.51(c) reflect a permissible interpretation of the

statutory wording. In formulating new reporting requirements, the

Commission has sought to ensure that adequate public disclosure is

accomplished without imposing unduly burdensome requirements on

municipalities and other governmental entities.

Under new paragraph Sec. 9008.51(c), municipal corporations and

government agencies must file a statement with the Commission listing

general categories of convention-related facilities and services it

provided to the convention, the total cost of providing such facilities

and services, the total amount of general revenues and the total amount

of private funds donated to a separate account to pay for these

activities. The new rules also include a list of broad categories of

expenses, to assist municipalities in providing the general information

needed.

Section 9008.52 Receipts and Disbursements of Host Committees

The description of host committees has been moved from previous 11

CFR 9008.7(d)(1) to new paragraph Sec. 9008.52(a). One commenter

opposed the creation and use of host committees because they receive

funds from sources that public funds were meant to replace, but favored

earlier reporting by host committees.

Paragraph (b) of new Sec. 9008.52 recognizes that host committees

may accept goods and services from commercial vendors at reduced or

discounted rates, as well as items provided in exchange for official

provider status, subject to the requirements of Sec. 9008.9, including

reporting. One commenter argued that there should be a presumption that

local businesses are motivated by commercial, not political gain;

therefore, they should be exempt from additional documentation

requirements when making these types of donations to host committees or

municipalities. The elimination of the vendor affirmations, which is

discussed above, addresses this concern.

Paragraph (c) of this section, and a cross-reference in new

Sec. 9008.53, indicate that both host committees and government

agencies and municipalities may accept monetary and in-kind donations

from local businesses and other local organizations and individuals to

defray a variety of expenses for promoting the convention city and

paying for convention-related facilities and services. Section

9008.52(c) is based on previous 11 CFR 9008.7 (b) and (d)(3). Please

note that the revised rules do not permit host committees or

municipalities to pay salaries of those working for the convention

committee or the national party, or to pay the convention committee's

or the national party's overhead and administrative expenses related to

the convention.

The term ``local'' is also explained in paragraph (c) of this

section. Revised language has also been included to clarify that banks

do not qualify as local businesses under this section.

Section 9008.53 Receipts and Disbursements of Government Agencies and

Municipal Corporations

New Sec. 9008.53 sets forth rules on special municipal funds

established by municipal corporations and government agencies for the

purposes enumerated in 11 CFR 9008.52 relating to the promotion of the

convention city and paying certain convention expenses. Section 9008.53

parallels Sec. 9008.52 with regard to transactions with commercial

vendors and the definition of local businesses that may make monetary

or in-kind donations for certain purposes.

The Commission sought comment on proposed language in paragraph

(a)(2) intended to incorporate the conclusions reached in Advisory

Opinions 1982-27 and 1983-29. Under these advisory opinions, convention

cities were permitted to establish a municipal fund to receive

donations and make disbursements in connection with a nominating

convention, provided certain conditions were met. First, the fund must

have been created to attract conventions and other events to the

locality on a broad scale, and cannot have been established for the

sole purpose of providing services and facilities to the nominating

convention. Second, donations to the fund must be unrestricted and may

not be designated for any particular use, including the nominating

convention. One question was whether the creation of such a fund must

be necessitated by a prohibition under local law against the use of

general tax revenue for these purposes. Concerns were raised that this

would be inconsistent with Advisory Opinion 1983-29. Consequently, the

Commission has not included a requirement restricting the creation of

such municipal funds to situations where local law prohibits using tax

revenues for convention purposes.

New paragraph Sec. 9008.53(b) also clarifies that banks do not

qualify as local businesses under this section. All bank loans must

meet the requirements of 11 CFR 100.7(b)(11). The revised rules also

remove the previous requirements that only retail businesses can donate

funds.

Finally, the revised rules no longer include the requirement that

the amount of the donation be proportionate to the commercial return

reasonably expected during the life of the convention. In response to

questions raised in the NPRM, one comment objected to applying this

criterion to donations from businesses, particularly if the commercial

return is measured only during the life of the convention. Accordingly,

the new rules recognize that local businesses and organizations that

donate to municipal funds are motivated by commercial and civic

reasons, rather than election-influencing purposes.

Section 9008.54 Examinations and Audits

New Sec. 9008.54 sets out the basic rule regarding Commission

audits of host committees, which was previously set forth at 11 CFR

9008.9. Consistent with the rules applicable to convention committees,

Sec. 9008.54 includes a sentence indicating the Commission's intention

to follow the same procedures during audits of host committees that it

uses when auditing committees of publicly-financed Presidential

candidates. In the case of host committees, however, the Commission

does not make any repayment calculations because host committees do not

receive public funds. Please note that the December 31st time frame for

conducting the audit refers to the time period in which the Commission

will commence the audit.

Additional Issues

The NPRM indicated that questions had been raised as to whether

Title VI of the Civil Rights Act of 1964 is applicable to the selection

of delegates to the federally funded national nominating conventions.

Under Title VI, ``[n]o person in the United States shall, on the ground

of race, color, or national origin, be excluded from participation in,

be denied the benefits of, or be subjected to discrimination under any

program or activity receiving federal financial assistance.'' 42 U.S.C.

2000d. The U.S. District Court for the District of Columbia ordered the

Commission to promulgate rules under Title VI governing the selection

and allocation of delegates to the federally-funded nominating

conventions. Freedom Republicans Inc. v. Federal Election Commission,

788 F. Supp. 600, 601 (D.D.C. 1992). However, on appeal the D.C.

Circuit vacated the district court's decision on jurisdictional

grounds. Freedom Republicans Inc. v. Federal Election Commission, No.

92-5214, slip op. at 2, 15 (D.C. Cir. Jan. 18, 1994). While awaiting

the decision of the Court of Appeals, the Commission welcomed public

comments on what impact, if any, Title VI may have on federally-funded

national nominating conventions. One of the witnesses stated that it

was inappropriate to comment because this particular rulemaking does

not address the issue. Another witness indicated that his party would

meet any foreseeable delegate selection standard the Commission might

adopt, and therefore had no opinion on the issue. In view of the D.C.

Circuit decision, the Commission has decided not to issue regulations

under Title VI regarding delegate selection at this time.

Certification of No Effect Pursuant to 5 U.S.C. 605(b) [Regulatory

Flexibility Act]

The attached final rules will not, if promulgated, have a

significant economic impact on a substantial number of small entities.

The basis for this certification is that few, if any, small entities

will be affected by these rules.

List of Subjects

11 CFR Part 107

Political committees and parties, Reporting requirements.

11 CFR Part 114

Business and industry, Elections.

11 CFR Part 9008

Campaign funds, Political committees and parties, Reporting

requirements.

For the reasons set out in the preamble, Subchapters A and E,

Chapter I of Title 11 of the Code of Federal Regulations are amended as

follows:

1. 11 CFR Part 107 is revised to read as follows:

PART 107--PRESIDENTIAL NOMINATING CONVENTION, REGISTRATION AND

REPORTS

Sec.

107.1 Registration and Reports by Political Parties.

107.2 Registration and Reports by Host Committees, and Committees,

Organizations or Other Groups Representing a State, City or Other

Local Government Agency.

Authority: 2 U.S.C. 437, 438(a)(8).

Sec. 107.1 Registration and reports by political parties.

Each convention committee established under 11 CFR 9008.3(a)(2) by

a national committee of a political party and each committee or other

organization, including a national committee, which represents a

political party in making arrangements for that party's convention held

to nominate a presidential or vice presidential candidate shall

register and report in accordance with 11 CFR 9008.3(b).

Sec. 107.2 Registration and reports by host committees, and

committees, organizations or other groups representing a state, city or

other local government agency.

Each host committee, and each committee or other organization or

group of persons which represents a State, municipality, local

government agency or other political subdivision in dealing with

officials of a national political party with respect to matters

involving a presidential nominating convention, shall register and

report in accordance with 11 CFR 9008.51.

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

2. The authority citation for Part 114 continues to read as

follows:

Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 437d(a)(8),

438(a)(8), and 441b.

3. Section 114.1 is amended by revising paragraph (a)(2)(viii) to

read as follows:

Sec. 114.1 Definitions.

(a) * * *

(2) * * *

(viii) Activity permitted under 11 CFR 9008.9, 9008.52 and 9008.53

with respect to a presidential nominating convention;

* * * * *

4. 11 CFR Part 9008 is revised to read as follows:

PART 9008--FEDERAL FINANCING OF PRESIDENTIAL NOMINATING CONVENTIONS

Subpart A--Expenditures by National Committees and Convention

Committees

Sec.

9008.1 Scope.

9008.2 Definitions.

9008.3 Eligibility for payments; registration and reporting.

9008.4 Entitlement to payments from the fund.

9008.5 Adjustment of entitlement.

9008.6 Payment and certification procedures.

9008.7 Use or funds.

9008.8 Limitation of expenditures.

9008.9 Receipt of goods and services from commercial vendors.

9008.10 Documentation of disbursements; net outstanding convention

expenses.

9008.11 Examinations and audits.

9008.12 Repayments.

9008.13 Additional audits.

9008.14 Petitions for rehearing: Stays of repayment determinations.

9008.15 Extensions of time.

9008.16 Stale-dated committee checks.

Subpart B--Host Committees Representing a Convention City; Convention

Expenditures by Government Agencies and Municipal Corporations

Sec.

9008.50 Scope.

9008.51 Registration and reports.

9008.52 Receipts and disbursements of host committees.

9008.53 Receipts and disbursements of government agencies and

municipal corporations.

9008.54 Examinations and audits.

Authority: 2 U.S.C. 437, 438(a)(8); 26 U.S.C. 9008, 9009(b).

Subpart A--Expenditures by National Committees and Convention

Committees

Sec. 9008.1 Scope.

(a) This Part interprets 2 U.S.C. 437 and 26 U.S.C. 9008. Under 26

U.S.C. 9008(b), the national committees of both major and minor parties

are entitled to public funds to defray expenses incurred with respect

to a Presidential Nominating convention. Under 26 U.S.C. 9008(d),

expenditures with regard to such a convention by a national committee

receiving public funds are limited to $4,000,000, as adjusted by the

Consumer Price Index. New parties are not entitled to receive any

public funds to defray convention expenses.

(b) Under 2 U.S.C. 437, each committee or organization which

represents a national party in making arrangements for that party's

presidential nominating convention is required to file disclosure

reports. This reporting obligation extends to all such committees or

organizations, regardless of whether or not public funds are used or

available to defray convention expenses.

Sec. 9008.2 Definitions.

(a) Commission means the Federal Election Commission, 999 E Street,

NW., Washington, DC 20463.

(b) Fund means the Presidential Election Campaign Fund established

by 26 U.S.C. 9006(a).

(c) Major party means, with respect to any presidential election, a

political party whose candidate for the office of President in the

preceding presidential election received, as the candidate of such

party, 25 percent or more of the total number of popular votes received

by all candidates for such office.

(d) Minor party means, with respect to any presidential election, a

political party whose candidate for the office of President in the

preceding presidential election received, as the candidate of such

party, 5 percent or more, but less than 25 percent, of the total number

of popular votes received by all candidates for such office.

(e) National committee means the organization which, by virtue of

the by-laws of the political party, is responsible for the day to day

operation of that party at the national level.

(f) New party means, with respect to any presidential election, a

political party which is neither a major party nor a minor party.

(g) Nominating convention means a convention, caucus or other

meeting which is held by a political party at the national level and

which chooses the presidential nominee of the party through selection

by delegates to that convention or through other similar means.

(h) Secretary means the Secretary of the Treasury of the United

States.

Sec. 9008.3 Eligibility for payments; registration and reporting.

(a) Eligibility requirements. (1) To qualify for entitlement under

11 CFR 9008.4 and 9008.5, the national committee of a major or minor

political party shall establish a convention committee pursuant to

paragraph (a)(2) of this section and shall file an application

statement pursuant to paragraph (a)(3) of this section. The convention

committee, in conjunction with the national committee, shall file an

agreement to comply with the conditions set forth at paragraph (a)(4)

of this section.

(2) The national committee shall establish a convention committee

which shall be responsible for conducting the day to day arrangements

and operations of that party's presidential nominating convention. The

convention committee shall register with the Commission as a political

committee pursuant to 11 CFR Part 102. The convention committee shall

receive all public funds to which the national committee is entitled

under 11 CFR 9008.4 and 9008.5 and all private contributions made for

the purpose of defraying convention expenses. All expenditures on

behalf of the national committee for convention expenses shall be made

by the convention committee.

(3) The national committee shall file with the Commission an

application statement. Any changes in the information provided in the

application statement must be reported to the Commission within 10 days

following the change. The application statement shall include:

(i) The name and address of the national committee;

(ii) The name and address of the convention committee and of the

officers of that committee;

(iii) The name of the city where the convention is to be held and

the approximate dates;

(iv) The name, address, and position of the convention committee

officers designated by the national committee to sign requests for

payments; and

(v) The name and address of the depository of the convention

committee.

(4) The convention committee shall, by letter to the Commission,

agree to the conditions set forth in paragraph (a)(4) (i) through

(viii) of this section. This agreement shall also be binding upon the

national committee.

(i) The convention committee shall agree to comply with the

applicable expenditure limitation set forth at 11 CFR 9008.8.

(ii) The convention committee shall agree to file convention

reports as required under 2 U.S.C. 437 and 11 CFR 9008.3(b).

(iii) The convention committee shall agree to establish one or more

accounts into which all public funds received under 11 CFR 9008.4 and

9008.5 must be deposited and from which all expenditures for convention

expenses must be made. Such account(s) shall contain only public funds

except as provided in 11 CFR 9008.6(a)(3).

(iv) The convention committee shall agree to keep and furnish to

the Commission all documentation of convention disbursements made by

the committee as required under 11 CFR 9008.10. The convention

committee has the burden of proving that disbursements by the

convention committee were for purposes of defraying convention expenses

as set forth at 11 CFR 9008.7(a)(4).

(v) The convention committee shall agree to furnish to the

Commission any books, records (including bank records for all

accounts), a copy of any contract which the national committee enters

into with a host committee or convention city or vendor, a copy of

documentation provided by commercial vendors in accordance with 11 CFR

9008.9(b), and any other information that the Commission may request.

If the convention committee maintains or uses computerized information

containing any of the categories of data listed in 11 CFR 9008.10(h)(1)

(i) through (iv), the convention committee will provide computerized

magnetic media, such as magnetic tapes or magnetic diskettes,

containing the computerized information at the times specified in 11

CFR 9008.10(h)(2) that meet the requirements of 11 CFR 102.9 and

9008.10 (a) and (b). Upon request, documentation explaining the

computer system's software capabilities shall be provided, and such

personnel as are necessary to explain the operation of the computer

system's software and the computerized information prepared or

maintained by the convention committee shall also be made available.

(vi) The convention committee shall agree to permit an audit and

examination pursuant to 26 U.S.C. 9008(g) and 11 CFR 9008.11 of all

convention expenses; to facilitate such audit by making available

office space, records, and such personnel as is necessary to the

conduct of the audit and examination; and to pay any amounts required

to be paid under 26 U.S.C. 9008(h) and 11 CFR 9008.12.

(vii) The convention committee shall agree to comply with the

applicable requirements of 2 U.S.C. 431 et seq., 26 U.S.C. 9008, and

the Commission's regulations at 11 CFR Parts 100-116 and 9008.

(viii) The convention committee shall pay any civil penalties

included in a conciliation agreement or imposed under 2 U.S.C. 437g.

(5) The application statement and agreement may be filed at any

time after June 1 of the calendar year preceding the year in which a

Presidential nominating convention of the political party is held, but

no later than the first day of the convention.

(b) Registration and reports by political parties.

(1) Registration. (i) Each convention committee established by a

national committee under paragraph (a)(2) of this section shall

register with the Commission on FEC Form 1 as a political committee

pursuant to 11 CFR Part 102 and shall file reports with the Commission

as required at paragraph (b)(2) of this section. Each report filed by

the committee shall contain the information required by 11 CFR Part

104.

(ii) A State party committee or a subordinate committee of a State

party committee which only assists delegates and alternates to the

convention from that State with travel expenses and arrangements, or

which sponsors caucuses, receptions, and similar activities at the

convention site, need not register or report under this section.

(2) Quarterly and post convention reports; content and time of

filing. Each committee required to register under paragraph (b)(1) of

this section shall file reports as follows:

(i) The first quarterly report shall be filed on FEC Form 4 no

later than 15 days following the end of the calendar quarter in which

the committee either receives payment under 11 CFR 9008.6, or for

parties which do not accept public funds, no later than 15 days after

the calendar quarter in which the committee receives contributions or

makes expenditures to defray convention expenses. The committee shall

continue to file reports on a quarterly basis no later than the 15th

day following the close of each calendar quarter, except that the

report for the final calendar quarter of the year shall be filed on

January 31 of the following calendar year. Quarterly reports shall be

completed as of the close of the quarter and shall continue to be filed

until the committee ceases activity in connection with that party's

presidential nominating convention.

(ii) Any quarterly report due within 20 days before or after the

convention shall be suspended and the committee shall in lieu of such

quarterly report file a post convention report. The post convention

report shall be filed on the earlier of: 60 days following the last day

the convention is officially in session; or 20 days prior to the

presidential general election. The post convention report shall be

complete as of 15 days prior to the date on which the report must be

filed.

(c) Cessation of activity. A convention committee which has

received payments under 11 CFR 9008.6 shall cease activity no later

than 24 months after the convention, unless the committee has been

granted an extension of time. The Commission may grant any extension of

time it deems appropriate upon request of the committee at least 30

days prior to the close of the 24 month period.

Sec. 9008.4 Entitlement to payments from the fund.

(a) Major parties. Subject to the provisions of this Part, the

national committee of a major party shall be entitled to receive

payments under 11 CFR 9008.6 with respect to any presidential

nominating convention, in amounts which, in the aggregate, shall not

exceed $4 million, as adjusted by the Consumer Price Index under 11 CFR

9008.5(a).

(b) Minor parties. Subject to the provisions of this Part, the

national committee of a minor party shall be entitled to payments under

11 CFR 9008.6 with respect to any presidential nominating convention in

amounts which, in the aggregate, shall not exceed an amount which bears

the same ratio to the amount which the national committee of a major

party is entitled to receive under 11 CFR 9008.5 as the number of

popular votes received in the preceding presidential election by that

minor party's presidential candidate bears to the average number of

popular votes received in the preceding presidential election by all of

the major party presidential candidates.

(c) Limitation on payments. Payments to the national committee of a

major party or a minor party under 11 CFR 9008.6 from the account

designated for such committee shall be limited to the amounts in such

account at the time of payment.

Sec. 9008.5 Adjustment of entitlement.

(a) The entitlements established by 11 CFR 9008.4 shall be adjusted

on the basis of the Consumer Price Index pursuant to the provisions of

2 U.S.C. 441a(c).

(b) The entitlements established by 11 CFR 9008.4 shall be adjusted

so as not to exceed the difference between the expenditure limitations

of 11 CFR 9008.8(a) and the amount of private contributions received

under 11 CFR 9008.6(a) by the national committee of a political party.

Except as provided in 11 CFR 9008.12(b)(7), in calculating these

adjustments, amounts expended by Government agencies and municipal

corporations in accordance with 11 CFR 9008.53; in-kind donations by

businesses to the national committee or convention committee in

accordance with 11 CFR 9008.9; expenditures by host committees in

accordance with 11 CFR 9008.52; expenditures to participate in or

attend the convention under 11 CFR 9008.8(b)(2); and legal and

accounting services rendered in accordance with 11 CFR 9008.8(b)(4)

will not be considered private contributions or expenditures counting

against the limitation.

Sec. 9008.6 Payment and certification procedures.

(a) Optional payments; private contributions. (1) The national

committee of a major or minor party may elect to receive all, part, or

none of the amounts to which it is entitled under 11 CFR 9008.4 and

9008.5.

(2) If a national committee of a major or minor party elects to

receive part of the amounts to which it is entitled under 11 CFR 9008.4

and 9008.5, or if the Secretary determines there is a deficiency in the

Fund under 26 U.S.C. 9008(b)(4), the national committee may receive and

use private contributions, so long as the sum of the contributions

which are used to defray convention expenses and the amount of

entitlements elected to be received does not exceed the total

expenditure limitation under 11 CFR 9008.8.

(3) All private contributions received by the national committee to

defray convention expenses shall be subject to all reporting

requirements, limitations and prohibitions of Title 2, United States

Code. The convention committee may establish a separate account for

private contributions or may deposit such contributions with payments

received from the Fund pursuant to paragraph (d) of this section. The

account(s) shall be maintained at a State bank, federally chartered

depository institution or other depository institution, the deposits or

accounts of which are insured by the Federal Deposit Insurance

Corporation.

(b) Increase in certified amount. If the application statement is

filed before it is possible to determine the cost of living increase

for the year preceding the convention, that amount determined by the

increase shall be paid to the national committee promptly after the

increase has been determined.

(c) Availability of payments. The national committee of a major or

minor party may receive payments under this section beginning on July 1

of the calendar year immediately preceding the calendar year in which a

Presidential nominating convention of the political party involved is

held.

(d) Certification of payment. After a national committee has

properly submitted its application statement and agreement as required

under 11 CFR 9008.3(a) (3) and (4), and upon receipt of a written

request, payment of the committee's entitlement will be certified by

the Commission to the Secretary of the Treasury.

Sec. 9008.7 Use of funds.

(a) Permissible uses. Any payment made under 11 CFR 9008.6 shall be

used only for the following purposes:

(1) Such payment may be used to defray convention expenses

(including the payment of deposits) incurred by or on behalf of the

national committee receiving such payments; or

(2) Such payment may be used to repay the principal and interest,

at a commercially reasonable rate, on loans the proceeds of which were

used to defray convention expenses; or

(3) Such payment may be used to restore funds (including advances

from the national committee to the convention committee), other than

contributions to the committee for the purpose of defraying convention

expenses, where such funds were used to defray convention expenses.

(4) ``Convention expenses'' include all expenses incurred by or on

behalf of a political party's national committee or convention

committee with respect to and for the purpose of conducting a

presidential nominating convention or convention-related activities.

Such expenses include, but are not limited to:

(i) Expenses for preparing, maintaining, and dismantling the

physical site of the convention, including rental of the hall,

platforms and seating, decorations, telephones, security, convention

hall utilities, and other related costs;

(ii) Salaries and expenses of convention committee employees,

volunteers and similar personnel, whose responsibilities involve

planning, management or otherwise conducting the convention;

(iii) Salary or portion of the salary of any national committee

employee for any period of time during which, as a major

responsibility, that employee performs services related to the

convention;

(iv) Expenses of national committee employees, volunteers or other

similar personnel if those expenses were incurred in the performance of

services for the convention in addition to the services normally

rendered to the national committee by such personnel;

(v) Expenses for conducting meetings of or related to committees

dealing with the conduct and operation of the convention, such as

rules, credentials, platform, site, contests, call, arrangements and

permanent organization committees, including printing materials and

rental costs for meeting space.

(vi) Expenses incurred in securing a convention city and facility;

(vii) Expenses incurred in providing a transportation system in the

convention city for use by delegates and other persons attending or

otherwise connected with the convention;

(viii) Expenses for entertainment activities which are part of the

official convention activity sponsored by the national committee,

including but not limited to dinners, concerts, and receptions; except

that expenses for the following activities are excluded:

(A) Entertainment activities sponsored by or on behalf of

candidates for nomination to the office of President or Vice President,

or State delegations;

(B) Entertainment activities sponsored by the national committee if

the purpose of the activity is primarily for national committee

business, such as fund-raising events, or selection of new national

committee officers;

(C) Entertainment activities sponsored by persons other than the

national committee; and

(D) Entertainment activities prohibited by law;

(ix) Expenses for printing convention programs, a journal of

proceedings, agendas, tickets, badges, passes, and other similar

publications;

(x) Administrative and office expenses for conducting the

convention, including stationery, office supplies, office machines, and

telephone charges; but excluded from these expenses are the cost of any

services supplied by the national committee at its headquarters or

principal office if such services are incidental to the convention and

not utilized primarily for the convention;

(xi) Payment of the principal and interest, at a commercially

reasonable rate, on loans the proceeds of which were used to defray

convention expenses;

(xii) Expenses for gifts or monetary bonuses for national committee

or convention committee employees, volunteers and convention officials

in recognition for convention-related activities or services, provided

that the gifts and bonuses do not exceed $150 total per individual, and

the total for all gifts and bonuses does not exceed $20,000; and

(xiii) Expenses for producing biographical films, or similar

materials, for use at the convention, about candidates for nomination

or election to the office of President or Vice President, but any other

political committee(s) that use part or all of the biographical films

or materials shall pay the convention committee for the reasonably

allocated cost of the biographical films or materials used.

(5) Any investment of public funds or any other use of public funds

to generate income is permissible only if the income so generated is

used to defray convention expenses. Such income, less any tax paid on

it, shall be repaid to the United States Treasury as provided under 11

CFR 9008.12(b)(6).

(b) Prohibited uses. (1) No part of any payment made under 11 CFR

9008.6 shall be used to defray the expenses of any candidate, delegate,

or alternate delegate who is participating in any presidential

nominating convention except that the expenses of a person

participating in the convention as official personnel of the national

party may be defrayed with public funds even though that person is

simultaneously participating as a delegate or candidate to the

convention. This Part shall not prohibit candidates, delegates or

alternate delegates who are participating in a presidential nominating

convention from attending official party convention activities

including but not limited to dinners, concerts and receptions, where

such activities are paid for with public funds.

(2) Public funds shall not be used to defray any expense the

incurring or payment of which violates any law of the United States or

any law of the State in which such expense is incurred or paid, or any

regulation prescribed under federal or State laws.

(3) Public funds shall not be used to pay civil or criminal

penalties required or agreed to be paid pursuant to 2 U.S.C. 437g. Any

amounts received or expended by the national committee or convention

committee of a political party to pay such penalties shall not be

considered contributions or expenditures, except that such amounts

shall be reported in accordance with 11 CFR Part 104 and shall be

subject to the prohibitions of 11 CFR 110.4 and Parts 114 and 115.

Sec. 9008.8 Limitation of expenditures.

(a) National party limitations. (1) Major parties. Except as

provided by paragraph (a)(3) of this section, the national committee of

a major party may not incur convention expenses with respect to a

Presidential nominating convention which, in the aggregate, exceed the

amount to which such committee is entitled under 11 CFR 9008.4 and

9008.5.

(2) Minor parties. Except as provided by paragraph (a)(3) of this

section, the national committee of a minor party may not incur

convention expenses with respect to a Presidential nominating

convention which, in the aggregate, exceed the amount to which the

national committee of a major party is entitled under 11 CFR 9008.4 and

9008.5.

(3) Authorization to exceed limitation. The Commission may

authorize the national committee of a major party or minor party to

make expenditures for convention expenses, which expenditures exceed

the limitation established by paragraph (a) (1) or (2) of this section.

This authorization shall be based upon a determination by the

Commission that, due to extraordinary and unforeseen circumstances, the

expenditures are necessary to assure the effective operation of the

Presidential nominating convention by the committee. Examples of

``extraordinary and unforeseen circumstances'' include, but are not

limited to, a natural disaster or a catastrophic occurrence at the

convention site. In no case, however, will such authorization entitle a

national committee to receive public funds greater than the entitlement

specified under 11 CFR 9008.4 and 9008.5. All private contributions

received to defray expenditures under this paragraph shall be subject

to all reporting requirements, limitations (except for limitations

imposed by paragraphs (a)(1) and (2) of this section) and prohibitions

of the Federal Election Campaign Act (2 U.S.C. 431 et seq.).

(b) Payments not subject to limit. (1) Host committee expenditures.

Expenditures made by the host committee shall not be considered

expenditures by the national committee and shall not count against the

expenditure limitations of this section provided the funds are spent in

accordance with 11 CFR 9008.52.

(2) Expenditures by government agencies and municipal corporations.

Expenditures made by government agencies and municipal corporations

shall not be considered expenditures by the national committee and

shall not count against the expenditure limitations of this section if

the funds are spent in accordance with the requirements of 11 CFR

9008.53.

(3) Expenditures to participate in or attend convention.

Expenditures made by presidential candidates from campaign accounts, by

delegates, or by any other individual from his or her personal funds

for the purpose of attending or participating in the convention or

convention related activities, including, but not limited to the costs

of transportation, lodging and meals, or by State or local committees

of a political party on behalf of such delegates or individuals shall

not be considered expenditures made by or on behalf of the national

party, and shall therefore not be subject to the overall expenditure

limitations of this section.

(4) Legal and accounting services. (i) The payment of compensation

to an individual by his or her regular employer for legal and

accounting services rendered to or on behalf of the national committee

shall not be considered an expenditure and shall not count against the

expenditure limitations of this section.

(ii) The payment by the national committee of compensation to any

individual for legal and accounting services rendered to or on behalf

of the national committee in connection with the presidential

nominating convention or convention-related activities shall not be

considered an expenditure and shall not count against the expenditure

limitations of this section provided that:

(A) The legal and accounting services relate solely to compliance

with the Federal Election Campaign Act (2 U.S.C. 431, et seq.) and the

Presidential Election Campaign Fund Act (26 U.S.C. Chapter 95); and

(B) The contributions raised to pay for the legal and accounting

services comply with the limitations and prohibitions of 11 CFR Parts

110, 114 and 115. These contributions, when aggregated with other

contributions from the same contributor to the political committees

established and maintained by the national political party, shall not

exceed $20,000 per person, and $15,000 per multicandidate political

committee in any calendar year.

(iii) The convention committee shall report contributions received

to pay for legal and accounting services on a separate Schedule A, and

shall report payments for legal and accounting services on a separate

Schedule B, attached to its reports.

(5) Computerized information. Payments to defray the costs of

producing, delivering and explaining the computerized information and

materials provided pursuant to 11 CFR 9008.10(h), and explaining the

operation of the computer system's software, shall not be considered

expenditures and shall not count against the expenditure limitations of

this section, provided that the contributions raised to pay these

expenses comply with the limitations and prohibitions of 11 CFR Parts

110, 114 and 115.

Sec. 9008.9 Receipt of goods and services from commercial vendors.

Commercial vendors may sell, lease, rent or provide their goods or

services to the national committee with respect to a presidential

nominating convention at reduced or discounted rates, or at no charge,

provided that the requirements of either paragraph (a), paragraph (b),

or paragraph (c) of this section are met. For purposes of this section,

commercial vendor shall have the same meaning as provided in 11 CFR

116.1(c).

(a) Standard reductions or discounts. A commercial vendor may

provide reductions or discounts in the ordinary course of business. A

reduction or discount shall be considered in the ordinary course of

business if the commercial vendor has an established practice of

providing the same reductions or discounts for the same amount of its

goods or services to non-political clients, or if the reduction or

discount is consistent with established practice in the commercial

vendor's trade or industry. Examples of reductions or discounts made in

the ordinary course of business include standard volume discounts and

reduced rates for corporate, governmental or preferred customers.

Reductions or discounts provided under paragraph (a) of this section

need not be reported.

(b) Items provided for promotional consideration.

(1) A commercial vendor may provide goods or services in exchange

for promotional consideration provided that doing so is in the ordinary

course of business.

(2) The provision of goods or services shall be considered in the

ordinary course of business under this paragraph:

(i) If the commercial vendor has an established practice of

providing goods or services on a similar scale and on similar terms to

non-political clients, or

(ii) If the terms and conditions under which the goods or services

are provided are consistent with established practice in the commercial

vendor's trade or industry in similar circumstances.

(3) In all cases, the value of the goods or services provided shall

not exceed the commercial benefit reasonably expected to be derived

from the unique promotional opportunity presented by the national

nominating convention.

(4) The convention committee shall maintain documentation showing:

the goods or services provided; the date(s) on which the goods or

services were provided, the terms and conditions of the arrangement;

and what promotional consideration was provided. In addition, the

convention committee shall disclose in its report covering the period

the goods or services are received, in a memo entry, a description of

the goods or services provided for promotional consideration, the name

and address of the commercial vendor, and the dates on which the goods

or services were provided (e.g., ``Generic Motor Co., Detroit,

Michigan--ten automobiles for use 7/15-7/20, received on 7/14'', or

``Workers Inc., New York, New York--five temporary secretarial

assistants for use 8/1-8/30, received on 8/1'').

(c) Items of de minimis value. Commercial vendors (including banks)

may sell at nominal cost, or provide at no charge, items of de minimis

value, such as samples, discount coupons, maps, pens, pencils, or other

items included in tote bags for those attending the convention. The

items of de minimis value may be distributed by or with the help of

persons employed by the commercial vendor, or employed by or

volunteering for the national party or a host committee. The value of

the items of de minimis value provided under this paragraph need not be

reported.

(d) Expenditure Limits. The value of goods or services provided

pursuant to this section will not count toward the national party's

expenditure limitation under 11 CFR 9008.8(a).

Sec. 9008.10 Documentation of disbursements; net outstanding

convention expenses.

The convention committee must include as part of the evidence of

convention expenses the following documentation:

(a) For disbursements in excess of $200 to a payee, either:

(1) A receipted bill from the payee that states the purpose of the

disbursement; or

(2) If such a receipted bill is not available, the following

documents;

(i) A canceled check negotiated by the payee; plus

(ii) One of the following documents generated by the payee--a bill,

invoice, voucher or contemporaneous memorandum that states the purpose

of the disbursement;

(iii) Where the documents specified at paragraph (a)(2)(ii) of this

section are not available, a voucher or contemporaneous memorandum from

the committee that states the purpose of the disbursement;

(3) If neither a receipted bill nor the supporting documentation

specified in paragraph (a)(2) (ii) or (iii) of this section is

available, a canceled check negotiated by the payee that states the

purpose of the disbursement.

(4) Where the supporting documentation required above is not

available, the committee may present a canceled check and collateral

evidence to document the convention expense. Such collateral evidence

may include but is not limited to:

(i) Evidence demonstrating that the disbursement is part of an

identifiable program or project which is otherwise sufficiently

documented, such as a disbursement which is one of a number of

documented disbursements relating to the operation of a committee

office;

(ii) Evidence that the disbursement is covered by a preestablished

written committee policy, such as a daily travel expense policy.

(b) For all other disbursements:

(1) If from the petty cash fund, a record that states the full name

and mailing address of the payee and the amount, date and purpose of

the disbursement; or

(2) A canceled check which has been negotiated by the payee and

states the identification of the payee, and the amount and date of the

disbursement.

(c) For purposes of this section, ``payee'' means the person who

provides the goods or services to the committee in return for the

disbursement, except that an individual will be considered a payee

under this section if he or she receives $2,000 or less advanced for

travel and/or subsistence and if he or she is the recipient of the

goods or services purchased.

(d) For purposes of this section, the term ``purpose'' means the

full name and mailing address of the payee, the date and amount of the

disbursement, and a brief description of the goods or services

purchased.

(e) Upon the request of the Commission the convention committee

shall supply an explanation of the connection between the disbursement

and the convention.

(f) The committee shall retain records with respect to each

disbursement and receipt, including bank records, vouchers, worksheets,

receipts, bills and accounts, journals, ledgers, fundraising

solicitation material, accounting systems documentation, and any

related material documenting campaign receipts and disbursements, for a

period of three years pursuant to 11 CFR 102.9(c), and shall present

these records to the Commission on request.

(g) Net outstanding convention expenses. A convention committee

that is eligible to receive payments under 11 CFR 9008.3 shall file, no

later than sixty days after the last day of the convention, a statement

of that committee's net outstanding convention expenses. The convention

committee shall file a revised statement of net outstanding convention

expenses which shall reflect the financial position of the convention

committee as of the end of the ninth month following the last day of

the convention. The revised statement shall be filed no later than 30

calendar days after the end of the ninth month following the last day

of the convention, and shall be accompanied by the interim repayment,

if required under 11 CFR 9008.12(b)(5)(ii). The committee's net

outstanding convention expenses under this section equal the difference

between paragraphs (g) (1) and (2) of this section:

(1) The total of:

(i) All outstanding obligations for convention expenses as of 45

days after the last day of the convention; plus

(ii) An estimate of the amount of convention expenses that will be

incurred after the 45th day and before the end of the ninth month

following the last day of the convention; plus

(iii) An estimate of necessary winding down costs; less

(2) The total of:

(i) Cash on hand as of 45 days after the last day of the

convention, including: all receipts dated on or before that date;

currency; balances on deposit in banks, savings and loan institutions,

and other depository institutions; traveler's checks; certificates of

deposit; treasury bills; and any other committee investments valued at

fair market value;

(ii) The fair market value of capital assets and other assets on

hand; and

(iii) Amounts owed to the committee in the form of credits, refunds

of deposits, returns, receivables, or rebates of convention expenses;

or a commercially reasonable amount based on the collectibility of

those credits, returns, receivables or rebates.

(3) The amount submitted as the total of outstanding convention

obligations under paragraph (g)(1) of this section shall not include

any accounts payable for non-convention expenses nor any amounts

determined or anticipated to be required as a repayment under 11 CFR

9008.12 or any amounts paid to secure a surety bond under 11 CFR

9008.14(c).

(4) Capital assets. For purposes of this section, the term

``capital asset'' means any property used in the operation of the

convention whose purchase price exceeded $2000 when acquired by the

committee. Property that must be valued as capital assets under this

section includes, but is not limited to, office equipment, furniture,

vehicles and fixtures acquired for use in the operation of the

convention, but does not include property defined as ``other assets''

under 11 CFR 9008.10(g)(5). A list of all capital assets shall be

maintained by the committee, which shall include a brief description of

each capital asset, the purchase price, the date it was acquired, the

method of disposition and the amount received in disposition. The fair

market value of capital assets may be considered to be the total

original cost of such items when acquired less 40%, to account for

depreciation. If the committee wishes to claim a higher depreciation

percentage for an item, it must list that capital asset on the

statement separately and demonstrate, through documentation, the fair

market value of each such asset.

(5) Other assets. The term ``other assets'' means any property

acquired by the committee for use in raising funds or as collateral for

loans. ``Other assets'' must be included on the committee's statement

of net outstanding convention expenses if the aggregate value of such

assets exceeds $5000. The value of ``other assets'' shall be determined

by the fair market value of each item as of 45 days after the last day

of the convention, unless the item is acquired after this date, in

which case the item shall be valued on the date it is acquired. A list

of other assets shall be maintained by the committee, which shall

include a brief description of each such asset, the fair market value

of each asset, the method of disposition and the amount received in

disposition.

(6) Collectibility of accounts receivable. If the committee

determines that an account receivable of $500 or more, including any

credit, refund, return or rebate, is not collectible in whole or in

part, the committee shall demonstrate through documentation that the

determination was commercially reasonable. The documentation shall

include records showing the original amount of the account receivable,

copies of correspondence and memoranda of communications with the

debtor showing attempts to collect the amount due, and an explanation

of how the lesser amount or full write-off was determined.

(7) Winding down costs. The term ``winding down costs'' means:

(i) Costs associated with the termination of the convention such as

complying with the post-convention requirements of the Act and other

necessary administrative costs associated with winding down the

convention, including office space rental, staff salaries and office

supplies; and

(ii) Costs incurred by the convention committee prior to 45 days

after the last day of the convention for which written arrangements or

commitment was made on or before that date.

(8) Review of convention committee statement. The Commission will

review the statement filed by each convention committee under this

section. The Commission may request further information with respect to

statements filed pursuant to 11 CFR 9008.10 during the audit of that

committee under 11 CFR 9008.11.

(h) Production of computer information. (1) Categories of

computerized information to be provided. If the convention committee

maintains or uses computerized information containing any of the

categories of data listed in paragraphs (h)(1)(i) through (h)(1)(iv) of

this section, the committee shall provide computerized magnetic media,

such as magnetic tapes or magnetic diskettes, containing the

computerized information at the times specified in paragraph (h)(2) of

this section:

(i) Information required by law to be maintained regarding the

committee's receipts or disbursements;

(ii) Records used to reconcile bank statements;

(iii) Records relating to the acquisition, use and disposition of

capital assets; and

(iv) Any other information that may be used during the Commission's

audit to review the committee's receipts, disbursements, loans, debts,

obligations, or bank reconciliations.

(2) Time for Production. If the committee maintains or uses

computerized information containing any of the data listed in paragraph

(h)(1) of this section, the Commission generally will request such

information prior to commencement of audit fieldwork. Such request will

be made in writing. The committee shall produce the computerized

information no later than 15 calendar days after service of such

request. During or after audit fieldwork, the Commission may request

additional or updated computerized information which expands the

coverage dates of computerized information previously provided. During

or after audit fieldwork, the Commission may also request additional

computerized information which was created by or becomes available to

the committee that is of assistance in the Commission's audit. The

committee shall produce the additional or updated computerized

information no later than 15 calendar days after service of the

Commission's request.

(3) Organization of computerized information and technical

specifications. The computerized magnetic media shall be prepared and

delivered at the committee's expense and shall conform to the technical

specifications, including file requirements, described in the Federal

Election Commission's Computerized Magnetic Media Requirements for

Title 26 Candidates/Committees Receiving Federal Funding. The data

contained in the computerized magnetic media provided to the Commission

shall be organized in the order specified by the Computerized Magnetic

Media Requirements.

(4) Additional materials and assistance. Upon request, the

committee shall produce documentation explaining the computer system's

software capabilities, such as user guides, technical manuals, formats,

layouts and other materials for processing and analyzing the

information request. Upon request, the committee shall also make

available such personnel as are necessary to explain the operation of

the computer system's software and the computerized information

prepared or maintained by the committee.

Sec. 9008.11 Examinations and audits.

The Commission shall conduct an examination and audit of the

convention committee no later than December 31 of the calendar year of

the convention and may at any time conduct other examinations and

audits as it deems necessary. The Commission will follow the same

procedures during the audit, and will afford the committee the same

right to respond, as are provided for audits of publicly funded

candidates under 11 CFR 9007.1 and 9038.1.

Sec. 9008.12 Repayments.

(a) General.

(1) A national committee that has received payments from the Fund

under 11 CFR Part 9008 shall pay the United States Treasury any amounts

which the Commission determines to be repayable under this section. In

making repayment determinations under this section, the Commission may

utilize information obtained from audits and examinations conducted

pursuant to 11 CFR 9008.11 or otherwise obtained by the Commission in

carrying out its responsibilities under this subchapter.

(2) The Commission will notify the committee of any repayment

determinations made under this section as soon as possible, but not

later than 3 years after the last day of the Presidential nominating

convention. The Commission's issuance of an interim audit report to the

committee will constitute notification for purposes of the three year

period.

(3) Once the committee receives notice of the Commission's final

repayment determination under this section, the committee should give

preference to the repayment over all other outstanding obligations of

the committee, except for any federal taxes owed by the committee.

(b) Bases for repayment. The Commission may determine that the

national committee of a political party that has received payments from

the Fund must repay the United States Treasury under any of the

circumstances described below.

(1) Excess payments. If the Commission determines that any portion

of the payments to the national committee or convention committee under

11 CFR 9008.6(b) was in excess of the aggregate payments to which the

national committee was entitled under 11 CFR 9008.4 and 9008.5, it

shall so notify the national committee, and the national committee

shall pay to the Secretary an amount equal to such portion.

(2) Excessive expenditures. If the Commission determines that the

national committee or convention committee incurred convention expenses

in excess of the limitations under 11 CFR 9008.8(a), it shall notify

the national committee of the amount of such excessive expenditures,

and the national committee shall pay to the Secretary an amount equal

to the amount specified.

(3) Excessive contributions. If the Commission determines that the

national committee accepted contributions to defray convention expenses

which, when added to the amount of payments received, exceeds the

expenditure limitation of such party, it shall notify the national

committee of the amount of the contributions so accepted, and the

national committee shall pay to the Secretary an amount equal to the

amount specified.

(4) Improper usage or documentation. If the Commission determines

that any amount of any payment to the national committee or convention

committee under 11 CFR 9008.6(b) was used for any purposes other than

the purposes authorized at 11 CFR 9008.7 or was not documented in

accordance with 11 CFR 9008.10, it shall notify the national committee

of the amount improperly used or documented and the national committee

shall pay to the Secretary an amount equal to the amount specified.

(5) Unspent funds. (i) If any portion of the payment under 11 CFR

9008.4 remains unspent after all convention expenses have been paid,

that portion shall be returned to the Secretary of the Treasury.

(ii) The national committee or convention committee shall make an

interim repayment of unspent funds based on the financial position of

the committee as of the end of the ninth month following the last day

of the convention, allowing for a reasonable amount as determined by

the Commission to be withheld for unanticipated contingencies. The

interim repayment shall be made no later than 30 calendar days after

the end of the ninth month following the last day of the convention.

If, after written request by the national committee or convention

committee, the Commission determines, upon review of evidence presented

by either committee, that amounts previously refunded are needed to

defray convention expenses, the Commission shall certify such amount

for payment.

(iii) All unspent funds shall be repaid to the U.S. Treasury no

later than 24 months after the last day of the convention, unless the

national committee has been granted an extension of time. The

Commission may grant any extension of time it deems appropriate upon

request of the national committee.

(6) Income on investments of payments from the Fund. If the

Commission determines that the national committee or the convention

committee received any income as a result of investment or other use of

payments from the Fund pursuant to 11 CFR 9008.7(a)(5), it shall so

notify the committee and the committee shall pay to the United States

Treasury an amount equal to the amount determined to be income, less

any Federal, State or local taxes on such income.

(7) The Commission may seek repayment, or may initiate an

enforcement action, if the convention committee knowingly helps,

assists or participates in the making of a convention expenditure by

the host committee, government agency or municipal corporation which is

not in accordance with 11 CFR 9008.52 or 9008.53, or the acceptance of

a contribution by the host committee or government agency or municipal

corporation from an impermissible source, such as a nonlocal business.

(c) Repayment determination procedures. The Commission will follow

the same repayment determination procedures, and the committee has the

same rights and obligations as are provided for repayment

determinations involving publicly funded candidates under 11 CFR 9007.2

(c) through (h).

Sec. 9008.13 Additional audits.

In accordance with 11 CFR 104.16(c), the Commission, pursuant to 11

CFR 111.10, may upon affirmative vote of four members conduct an audit

and field investigation of any committee in any case in which the

Commission finds reason to believe that a violation of a statute or

regulation over which the Commission has jurisdiction has occurred or

is about to occur.

Sec. 9008.14 Petitions for rehearing: stays of repayment

determinations.

Petitions for rehearing following the Commission's final repayment

determination and requests for stays of repayment determinations will

be governed by the procedures set forth at 11 CFR 9007.5 and 9038.5.

The Commission will afford convention committees the same rights as are

provided to publicly funded candidates under 11 CFR 9007.5 and 9038.5.

Sec. 9008.15 Extensions of time.

(a) It is the policy of the Commission that extensions of time

under 11 CFR Part 9008 will not be routinely granted.

(b) Whenever a committee has a right or is required to take action

within a period of time prescribed by 11 CFR Part 9008 or by notice

given thereunder, the committee may apply in writing to the Commission

for an extension of time in which to exercise such right or take such

action. The committee shall demonstrate in the application for

extension that good cause exists for its request.

(c) An application for extension of time shall be made at least 7

calendar days prior to the expiration of the time period for which the

extension is sought. The Commission may, upon a showing of good cause,

grant an extension of time to a committee that has applied for such

extension in a timely manner. The length of time of any extension

granted hereunder shall be decided by the Commission and may be less

than the amount of time sought by the committee in its application.

(d) If a committee fails to seek an extension of time, exercise a

right or take a required action prior to the expiration of a time

period prescribed by 11 CFR Part 9008, the Commission may, on the

committee's showing of excusable neglect:

(1) Permit such committee to exercise its right(s), or take such

required action(s) after the expiration of the prescribed time period;

and

(2) Take into consideration any information obtained in connection

with the exercise of any such right or taking of any such action before

making decisions or determinations under 11 CFR Part 9008.

Sec. 9008.16 Stale-dated committee checks.

If the committee has checks outstanding that have not been cashed,

the committee shall notify the Commission. The committee shall inform

the Commission of its efforts to locate the payees, if such efforts

have been necessary, and its efforts to encourage the payees to cash

the outstanding checks. The committee shall also submit a check for the

total amount of such outstanding checks, payable to the United States

Treasury.

Subpart B--Host Committees Representing a Convention City;

Convention Expenditures by Government Agencies and Municipal

Corporations

Sec. 9008.50 Scope.

Subpart B governs registration and reporting by host committees

representing convention cities and by government agencies and

municipalities. Unsuccessful efforts to attract a convention need not

be reported by any city, committee or other organization. Subpart B

also describes permissible sources of funds and other permissible

donations to host committees, government agencies and municipal

corporations. In addition, Subpart B describes permissible expenditures

by government agencies, municipal corporations and host committees to

defray convention expenses and to promote the convention city and its

commerce.

Sec. 9008.51 Registration and reports.

(a) Registration by host committees. (1) Each committee, including

a host committee, other organization or group of persons which

represents a State, municipality, local government agency or other

political subdivision in dealing with officials of a national political

party with respect to matters involving a presidential nominating

convention shall register with the Commission on the Convention

Registration Form within 10 days of the date on which such party

chooses the convention city. The following information shall be

required of the registrant: the name and address; the name and address

of its officers; and a list of the activities which the registering

entity plans to undertake in connection with the convention.

(2) Any such committee, organization or group which is unsuccessful

in its efforts to attract the convention to a city need not register

under this section.

(b) Post-convention and quarterly reports by host committees;

content and time of filing. (1) Each committee, organization or group

required to register under this section shall file a post convention

report with the Commission on FEC Form 4. The report shall be filed on

the earlier of: 60 days following the last day the convention is

officially in session; or 20 days prior to the presidential general

election. This report shall disclose all receipts and disbursements,

including in-kind contributions, made with respect to a presidential

nominating convention.

(2) If such committee, organization or group has receipts or makes

disbursements after the completion date of the post convention report,

it shall begin to file quarterly reports no later than 15 days after

the end of the following calendar quarter. This report shall disclose

all transactions completed as of the close of that calendar quarter.

Quarterly reports shall be filed thereafter until the committee,

organization or group ceases all activity which must be reported under

this section.

(3) Such committee, organization or group shall file a final report

with the Commission not later than 10 days after it ceases activity

which must be reported under this section, unless such status is

reflected in either the post convention report or a quarterly report.

(c) Registration and post-convention statements by municipalities

and local government agencies. Each organization or group of persons

which represents a State, municipality, local government agency or

other political subdivision in dealing with officials of a national

political party with respect to matters involving a presidential

nominating convention shall file, by letter, a statement with the

Commission reporting the total amount spent to provide facilities and

services for the convention under 11 CFR 9008.53(c), a list of the

categories of facilities and services the municipality or government

agency provided for the convention, the total amount spent for each

category of facilities and services provided, the total amount defrayed

from general revenues, and the total amount of all private donations

received to defray these expenses. This statement shall be filed on the

earlier of: 60 days following the last day the convention is officially

in session; or 20 days prior to the presidential general election.

Categories of facilities and services may include construction,

security, communications, transportation, utilities, clean up, meeting

rooms and accommodations.

Sec. 9008.52 Receipts and disbursements of host committees.

(a) Definition of host committee. A host committee includes any

local organization, such as a local civic association, business league,

chamber of commerce, real estate board, board of trade, or convention

bureau: Which is not organized for profit; whose net earnings do not

inure to the benefit of any private shareholder or individual; and

whose principal objective is the encouragement of commerce in the

convention city, as well as the projection of a favorable image of the

city to convention attendees. A host committee must register in

accordance with 11 CFR 9008.51.

(b) Receipt of goods or services from commercial vendors. Host

committees may accept goods or services from commercial vendors under

the same terms and conditions (including reporting requirements) set

forth at 11 CFR 9008.9 for convention committees.

(c) Receipt of donations from local businesses and organizations.

(1) Local businesses (excluding banks), local labor organizations, and

other local organizations or individuals may donate funds or make in-

kind donations to a host committee to be used for the following

purposes:

(i) To defray those expenses incurred for the purpose of promoting

the suitability of the city as a convention site;

(ii) To defray those expenses incurred for welcoming the convention

attendees to the city, such as expenses for information booths,

receptions, and tours;

(iii) To defray those expenses incurred in facilitating commerce,

such as providing the convention and attendees with shopping and

entertainment guides and distributing the samples and promotional

material specified in 11 CFR 9008.9(c);

(iv) To defray the administrative expenses incurred by the host

committee, such as salaries, rent, travel, and liability insurance;

(v) To provide the national committee use of an auditorium or

convention center and to provide construction and convention related

services for that location such as: construction of podiums; press

tables; false floors, camera platforms; additional seating; lighting,

electrical, air conditioning and loudspeaker systems; offices; office

equipment; and decorations;

(vi) To defray the costs of various local transportation services,

including the provision of buses and automobiles;

(vii) To defray the costs of law enforcement services necessary to

assure orderly conventions;

(viii) To defray the cost of using convention bureau personnel to

provide central housing and reservation services;

(ix) To provide hotel rooms at no charge or a reduced rate on the

basis of the number of rooms actually booked for the convention;

(x) To provide accommodations and hospitality for committees of the

parties responsible for choosing the sites of the conventions; and

(xi) To provide other similar convention-related facilities and

services.

(2) For purposes of this section, any business (including a branch

of a national or regional chain, a franchise, or a licensed dealer) or

labor organization or other organization with offices or facilities

located within the Metropolitan Area (MA) of the convention city shall

be considered local. There shall be a rebuttable presumption that any

such entity located outside the MA is not local. This presumption may

be rebutted by a showing that the volume of business or activity in an

area lying outside the MA would be directly affected by the presence of

the convention.

Sec. 9008.53 Receipts and disbursements of government agencies and

municipal corporations.

(a) Receipt of goods and services provided by commercial vendors.

Government agencies and municipal corporations may accept goods or

services from commercial vendors for convention uses under the same

terms and conditions (except reporting requirements) set forth at 11

CFR 9008.9 for convention committees.

(b) Receipt of donations to a separate fund or account.

(1) Local businesses (excluding banks), local labor organizations,

and other local organizations or individuals may donate funds or make

in-kind donations to a separate fund or account of a government agency

or municipality to pay for expenses listed in 11 CFR 9008.52(c),

provided that:

(i) The fund or account is not restricted to use in connection with

any particular convention; and

(ii) Donations to the fund or account are unrestricted and are not

solicited or designated for use in connection with any particular

convention, event or activity.

(2) For purposes of this section, any business (including a branch

of a national or regional chain, a franchise, or a licensed dealer) or

labor organization or other organization with offices or facilities

located within the Metropolitan Area (MA) of the convention city shall

be considered local. There shall be a rebuttable presumption that any

such entity located outside the MA is not local. This presumption may

be rebutted by a showing that the volume of business of activity in an

area lying outside the MA would be directly affected by the presence of

the convention.

Sec. 9008.54 Examinations and audits.

The Commission shall conduct an examination and audit of each host

committee registered under 11 CFR 9008.51. The Commission will follow

the same procedures during the audit, and will afford the committee the

same right to respond, as are provided for audits of publicly funded

candidates under 11 CFR 9007.1 and 9038.1, except that the Commission

will not make any repayment calculations under this section.

Dated: June 23, 1994.

Trevor Potter,

Chairman.

[FR Doc. 94-15710 Filed 6-28-94; 8:45 am]

BILLING CODE 6715-01-M