AO 2006-24: Limits, prohibitions and reporting requirements apply to recount activities

Funds raised and spent by a candidate or a state party committee to pay recount and election contest expenses resulting from the general election are subject to the amount limitations, source prohibitions and reporting requirements of the Act, but are not contributions or expenditures. Similarly, the state party must spend federal funds to support the recount effort, but those payments are not subject to the coordinated spending limitations of 2 U.S.C. 441a(d)(3). National party committees may also participate in the recount process, but must finance their activities using federal funds.

Background

Commission regulations promulgated before the enactment of the Bipartisan Campaign Reform Act of 2002 (BCRA) exempt from the definition of “contribution” and “expenditure” payments made with respect to a recount of a federal election, but expressly bar the receipt or use of funds from foreign nationals, corporations, labor organizations and national banks. 11 CFR 100.91 and 100.151.

Under BCRA, candidates and officeholders may not solicit, receive, direct, transfer or spend funds “in connection with an election for federal office” unless the funds are subject to the limitations, prohibitions and reporting requirements of the Act. 2 U.S.C. 441i(e)(1)(A). Similarly, national party committees, including the NRSC and DSCC, may not solicit, receive, direct or spend any funds that are not subject to the limitations, prohibitions, and reporting requirements of the Act. 2 U.S.C. 441i(a)(1); 11 CFR 300.10(a).

Analysis

Limits, prohibitions and reporting by federal candidates

The Commission’s 1977 regulations pertaining to recounts are premised on the conclusion that recounts are “in connection with federal elections.” See 2 U.S.C. 441b(a), 441e(a)(1)(A), 11 CFR 100.91 and 100.151. Because of the limitations of 2 U.S.C. 441i(e)(1)(A), federal officeholders, candidates, their agents and entities directly or indirectly established, financed, maintained or controlled by or acting on behalf of one or more federal officeholders or candidates are prohibited from soliciting, receiving, directing, transferring or spending funds for expenses related to a recount of the votes cast in a federal election unless those funds are subject to the limitations, prohibitions, and reporting requirements of the Act. Therefore, donations to a recount fund established by a federal candidate may not exceed $2,100 per person or $5,000 per multicandidate political committee. Donations to a federal candidate’s recount fund are not “contributions” and therefore are not aggregated with contributions to the candidate for the general election nor are they subject to the aggregate biennial contribution limit.

A federal candidate may establish a recount fund either as a separate bank account of the candidate’s authorized committee, or as a separate entity. If the recount fund is a separate account of the federal candidate’s authorized committee, then its receipts and disbursements must be reported on the authorized committee’s report as “other receipts” and “other disbursements.” 11 CFR 104.3(a)(3)(x)(A) and (b)(2)(vi)(A). If the recount fund is a separate entity established by the federal candidate, then the separate entity must report as an authorized committee under 11 CFR 100.5(d).¹

Limits, prohibitions and reporting by political party committees.

Payments for recount activities involving federal races are disbursements “in connection with a federal election.” Therefore, a state party committee may not allocate payments for recount activities between federal and nonfederal funds. The state party must establish a separate federal account to pay for all federal recount activities and report all of the recount fund’s receipts and disbursements to the Commission in accordance with 2 U.S.C. 434 and 11 CFR 104.3. Donations to the recount fund must comply with the amount limitations of the Act and thus may not exceed $10,000 from a person or $5,000 from a multicandidate political committee per calendar year. However, as noted above, these donations are not aggregated with contributions made to the committee.

National party committees, including the NRSC and DSCC, and their agents may participate in strategy sessions regarding the raising and spending of funds on recount activities without violating the Act or Commission regulations, provided that the state party does not use nonfederal funds to pay expenses related to their participation. The NRSC and DSCC must pay for all recount activities they conduct using entirely federal funds.

While party committees may coordinate recount activities with their candidates, the limitations on coordinated spending by a state party for a particular federal candidate are not applicable to a state party’s recount fund. The limitations of 441a(d)(3) are applicable only “in connection with the general election campaign of a candidate for federal office.” Recount expenses are not in connection with the general election campaign of a federal candidate because the campaign has ended and because such funds are not otherwise permitted to be used for campaign activity. Preemption.

The Act supersedes and preempts any provision of state law with respect to election to federal office. 2 U.S.C. 453(a); 11 CFR 108.7(a). Specifically, 11 CFR 108.7(b)(3) preempts state laws concerning limitations on contributions made and received by and expenditures made by federal candidates and political committees. Although receipts and disbursements of the state party’s recount fund are not “contributions” or “expenditures” under the Act, these receipts and disbursements are “in connection with a federal election,” and not in connection with any nonfederal election. Thus, such recount funds are subject to the amount limitations and source prohibitions in the Act, preempting state law. Moreover because the state party’s recount fund is a separate federal account that is not used for nonfederal election spending, the reporting requirements of the Act and Commission regulations preempt the reporting requirements of state law.

Dissenting opinion

On October 20, 2006, Commissioner Hans von Spakovsky issued a dissenting opinion.

Length: 12 pages Date: October 5, 2006

¹ To the extent that AOs 1978-92 and 1998-26 permitted donations in excess of the contribution limits and did not require recount receipts to be reported, they are superseded.