Federal Election Commission Main Page
December 12, 2003
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2003-35
Mr. Steven G. Murphy
Campaign Manager
Gephardt for President, Inc.
1620 L Street, NW
Suite 600
Washington, DC 20036
Dear Mr. Murphy:
This responds to your letter dated November 5, 2003,
requesting an advisory opinion on behalf of Gephardt for
President, Inc. ("the Committee"), concerning whether the
Federal Election Campaign Act of 1971, as amended
("the Act"), the Presidential Primary Matching Payment
Account Act ("the Matching Payment Act"), and Commission
regulations, permit a candidate in the Presidential primary
elections to withdraw from the Matching Payment Act's public
funding program after the Federal Election Commission has
certified to the United States Treasury that the candidate
is eligible to receive matching funds under that program,
but prior to the payment date for such funds.
Background
Gephardt for President, Inc., is Congressman Richard A.
Gephardt's principal campaign committee as he seeks the 2004
nomination of the Democratic Party for election to the
office of President of the United States. Congressman
Gephardt filed his Statement of Candidacy with the
Commission on January 6, 2003, and the Committee filed its
Statement of Organization on the next day, January 7, 2003.
On November 4, 2003, the Committee filed a letter signed by
Congressman Gephardt, which contained the requisite
provisions of Candidate and Committee Agreements and
Certifications under 26 U.S.C. 9033 and 11 CFR 9033.1 and
9033.2, and a Threshold Submission, which, according to the
Committee, documented contributions from 1315 contributors
in 21 States for a total of $321,479 in matchable
contributions. On December 3, 2003, the Commission
certified to the Secretary of the United States Department
of Treasury that Congressman Gephardt and the Committee are
entitled to an initial payment of $100,000 from the
Presidential Primary Matching Payment Account on or after
January 1, 2004. The Committee has indicated that the
Commission's certification will not be pledged as security
for any loan during the Committee's reconsideration of its
participation in the Matching Payment Act's public funding
program. Congressman Gephardt and the Committee presented
an additional submission for payment of primary matching
funds on December 1, 2003, which is under review.
Questions Presented
1. After the Commission has certified a candidate and his
or her principal campaign committee eligible to receive
payments under the Matching Payment Act, and prior to the
payment date for any such payments, may the candidate and
the principal campaign committee withdraw from the public
funding program?
If the answer to question 1 is yes:
2. Is the Committee required to refund any contributions?
Is there a required timetable for any such refunds?
3. Is the Committee required to obtain the authorization
of any contributors to retain their contributions? Is there
a required method for such authorizations?
4. Will any of the legal requirements imposed as a result
of participation in the public funding program under the
Matching Payment Act continue to apply to the Committee
after it withdraws from the program?
5. In the alternative, may the payment scheduled for
January 2, 2004, from the United States Treasury to the
Committee be deferred until a later date to preserve the
Committee's option to withdraw from the program prior to
receiving funds?
Legal Analysis and Conclusions
The answer to your first question is yes, and the
answer to the rest of your questions is no.
1. After the Commission has certified a candidate and his
or her principal campaign committee eligible to receive
payments under the Matching Payment Act, and prior to the
payment date for any such payments, may the candidate and
the principal campaign committee withdraw from the public
funding program?
Congressman Gephardt and the Committee have executed a
binding contract with the Commission in the Candidate
Agreements and Certifications. Furthermore, both sides have
partially performed in accordance with the terms of that
contract: the Congressman and the Committee by submitting
the documentation for the contributions in the Threshold
Submission, and the Commission by examining the Candidate
Agreements and Certifications and the Threshold Submission
for compliance with applicable requirements and, more
significantly, by certifying to the Treasury that
Congressman Gephardt and the Committee are entitled to a
payment of $100,000 from the Presidential Primary Matching
Payment Account on or after January 1, 2004.
The Committee wishes to reconsider its decision to
participate in the Matching Payment Act public funding
program and inquires, in effect, whether the Commission
would consent to a rescission of this contract. The
Matching Payment Act does not address a candidate who the
Commission has certified as eligible to receive payments
under the Matching Payment Act who no longer wishes to
participate in the Matching Payment program. Nor do the
Commission's regulations address such a situation.
The legislative history of the Matching Payment Act
does not address certified candidates withdrawing from the
public funding programs. It does, however, expressly
recognize that a Presidential primary candidate's
participation in the Matching Payment Act public funding
program is voluntary. See H.R. Conf. Rep. No. 93-1438, at
116 (1974) (referring to "candidates who elect to receive
matching payments" (emphasis added)). The Matching Payment
Act's dependence on a candidate's written agreement and
certification in 26 U.S.C. 9033 implicitly recognizes the
voluntary nature of the matching payment program as well.
The Supreme Court held that the voluntary nature of all
of the public funding programs permits the related
expenditure limits, while simultaneously striking down
expenditure limits that were not voluntarily accepted as
part of a public funding program. See Buckley v. Valeo, 424
U.S. 1, 57 n.65 (1976) (stating: "Congress may engage in
public financing of election campaigns and may condition
acceptance of public funds on an agreement by the candidate
to abide by specified expenditure limitations. Just as a
candidate may voluntarily limit the size of contributions he
chooses to accept, he may decide to forgo private
fundraising and accept public funding.") See also Buckley,
424 U.S. at 88 n.120, 89 & n.123, 95, 99, 107-08, and 108-
09. The importance of the fact that the program is
voluntary also leads to the conclusion that rescission of
the Candidate and Committee Agreements and Certifications is
appropriate prior to the payment date for any Matching
Payment funds.
The Commission's previous resolution of similar issues
is consistent with permitting rescissions prior to the
payment of any Matching Payment funds. The Commission has
withdrawn a certification of a candidate's eligibility to
receive Matching Payment funds upon the candidate's request.
See Commission Certification, LRA 561 (Dec. 12, 1999).
Although the candidate at issue in that matter, Elizabeth H.
Dole, ceased to pursue the nomination of her party prior to
her request, her withdrawal from the primary election did
not require her to relinquish her claim to Matching Payment
funds for qualified campaign expenses incurred prior to her
withdrawal or for winding down expenses following her
withdrawal. Other candidates in that election cycle
received Matching Payment funds although their campaigns for
nomination also had ceased prior to the initial payment of
funds.
This withdrawal of a certification was distinguished
from Advisory Opinion 1996-7. In that advisory opinion, the
Commission refused to consider a candidate's eligibility for
matching funds because the candidate at issue had stated his
ideological opposition to accepting matching funds. On this
basis, the Commission concluded that the candidate did not
give the necessary assent to the Candidate Agreement under
26 U.S.C. 9033(a) and 11 CFR 9033.1(a)(2), and to all the
conditions stated therein.
The Matching Payment Act, Commission regulations, and
Department of Treasury regulations all require the Secretary
of the Treasury to achieve an equitable distribution of
available funds and to consider the sequence in which funds
are certified for candidates. 26 U.S.C. 9037(b). In the
event of a shortfall, the Secretary of the Treasury
considers all funds certified for all candidates in
determining the equitable distribution of the available
funds among the eligible candidates. If the Commission
withdraws its certification of funds for any candidate, the
Secretary of the Treasury will consider those funds
available for the other eligible candidates and will
redistribute those funds. Thus, a rescission of a
candidate's agreement to participate in the Matching Payment
program prior to the date of payment by the Treasury for any
certified Matching Payment funds to that candidate would not
prejudice the other recipients of Matching Payment funds.
Therefore, in light of the terms of the Matching
Payment Act, its judicial construction, its legislative
history, and the other policy considerations discussed
above, the Commission would withdraw a certification of a
candidate's eligibility to receive Matching Payment Act
funds prior to the payment date for any such funds to such
candidate or his or her committee upon receipt of a written
request signed by the candidate, provided that the
certification of funds has not been pledged as security for
private financing. The Commission's withdrawal of its
certification would constitute its agreement to a
candidate's request to rescind the Candidate and Committee
Agreements and Certifications. With respect to the initial
payment of matching funds on or after the first day of the
Presidential election year, the Commission cautions that it
must receive any such written request no later than December
30, 2003, to provide the Commission with one business day to
deliver a certification withdrawal to the Secretary of
Treasury prior to his issuance of payments on the first
business day of the Presidential election year.
2. If the answer to question 1 is yes, is the Committee
required to refund any contributions? Is there a required
timetable for any such refunds?
Withdrawing from the public funding program under the
Matching Payment Act does not impose any refund obligation
on the Committee. The Commission has considered
contributors' intent as to which election they are
contributing toward and which limits their contributions
count toward in certain circumstances. See, e.g.,
Contribution Limitations and Prohibitions; Final Rule, 67
Fed. Reg. 69928, 69930-31 (Nov. 19, 2002). However, under
the circumstances you presented, there is no question as to
which election the contributions pertain. The presumed
intent of contributors to the Committee was and is to assist
in Congressman Gephardt's campaign seeking the 2004
nomination of the Democratic Party for the office of
President of the United States, and the Committee's use of
such contributions for such purposes will satisfy that
intent, without regard to whether other public funds are
similarly employed.
In some instances, contributions to a publicly funded
Presidential primary candidate may not be submitted for
matching because the candidate elects not to submit them or
is prohibited from submitting further contributions for
matching. The Commission does not require that such
contributions be refunded, because whether a contribution is
matched by public funds is not an aspect of contributor
intent that the Commission previously has considered
sufficient to trigger refund obligations.
3. If the answer to question 1 is yes, is the Committee
required to obtain the authorization of any contributors to
retain their contributions? Is there a required method for
such authorizations?
For the same reasons discussed in response to question
2, the Committee is not required to obtain authorizations
from any contributors to retain their contributions, should
the Commission withdraw its certification of the Committee's
eligibility to receive Matching Payment funds.
4. If the answer to question 1 is yes, will any of the
legal requirements imposed as a result of participation in
the public funding program under the Matching Payment Act
continue to apply to the Committee after it withdraws from
the program?
Because the Commission's withdrawal of its
certification would constitute its agreement to the
rescission of the Candidate and Committee Agreements and
Certifications under 26 U.S.C. 9033 and 11 CFR 9033.1 and
9033.2, none of the Matching Payment Act obligations that
are imposed solely by virtue of that contract would continue
to apply to Congressman Gephardt, the Committee, or the
Commission. The Commission cautions that some of the
provisions of the Agreement remain applicable pursuant to
other provisions of law, and Congressman Gephardt and the
Committee would remain subject to those obligations. For
example, 11 CFR 9033.1(b)(10) requires the candidate and the
candidate's authorized committee to agree to comply with the
applicable requirements of the Act. Of course, Congressman
Gephardt and the Committee would remain subject to the Act
and Commission regulations. Congressman Gephardt and the
Committee would not, however, be required to abide by the
expenditure limitation in 11 CFR part 9035, or to permit an
audit and examination pursuant to 11 CFR part 9038, although
a Commission audit pursuant to 2 U.S.C. 438(b) in the
appropriate circumstances would remain a possibility. Other
provisions required for Candidate and Committee Agreements,
namely 11 CFR 9033.1(b)(1) through (6), (8), (9), (11), and
(12), would no longer apply to Congressman Gephardt and the
Committee.
5. If the answer to question 1 is yes, in the alternative,
may the payment scheduled for January 2, 2004, from the
United States Treasury to the Committee be deferred until a
later date to preserve the Committee's option to withdraw
from the program prior to receiving funds?
The Matching Payment Act, Commission regulations, and
Department of Treasury regulations all require that the
Commission promptly certify amounts to which candidates are
entitled to the Secretary of the Treasury, who is in turn
required to pay the certified amount promptly, once the
Presidential election year has begun. See 26 U.S.C. 9036(a)
(requiring the Commission to certify eligible payments
within 10 days of candidate's eligibility);
26 U.S.C. 9037(b) (requiring the Secretary of the Treasury
to transfer certified amounts to candidates promptly upon
receipt of the Commission certification, once the
Presidential election year has begun); see also
11 CFR 9033.4(b); 11 CFR 9036.1(c); 11 CFR 9037.1; and
26 CFR 702.9037-2(a). Thus, the Commission and the
Secretary of the Treasury lack discretion to delay
certification of eligible payments or payments of certified
amounts. Consequently, requests for such delays cannot be
granted.
Nonetheless, candidates and their principal campaign
committees can delay the payment of any Matching Payments
until they have reached a final decision to accept them.
Commission regulations specifically permit a candidate to
"submit the threshold submission simultaneously with or
subsequent to his or her submission of the candidate
agreement and certifications required by 11 CFR 9033.1 and
9033.2." 11 CFR 9036.1(a) (emphasis added). In this
manner, candidates and their principal campaign committees
may simply withhold their threshold submission until they
determine they are prepared to accept the Matching Payments
and participate in the public funding programs.
Congressman Gephardt and the Committee submitted their
Threshold Submission with their Candidate and Committee
Agreement. Their only legal option to delay payment is to
request that the Commission withdraw its certification,
which will rescind the Agreement entirely. No provision of
law would prevent Congressman Gephardt and the Committee
from submitting another Candidate and Committee Agreement
and Certifications at a later point, and any matchable
contributions may be included in a subsequent Threshold
Submission.
This response constitutes an advisory opinion
concerning the application of the Act and Commission
regulations to the specific transaction or activity set
forth in your
request. See 2 U.S.C. 437f. The Commission emphasizes
that, if there is a change in any of the facts or
assumptions presented, and such facts or assumptions are
material to a conclusion presented in this advisory opinion,
then the requestor may not rely on that conclusion as
support for its proposed activity.
Sincerely,
(signed)
Ellen L. Weintraub
Chair
Enclosures (AO 1996-7)