Final rules eliminate de minimis exemption for Levin fund disbursements

On November 10, 2005, the Commission voted to remove from its regulations an exemption allowing state, district and local party committees and organizations to use only Levin funds¹ to pay for certain types of federal election activity (FEA) aggregating $5,000 or less in a calendar year.

Background

On July 29, 2002, the Commission promulgated regulations at 11 CFR 300.32(c)(4) requiring any state, district or local party committee that spends more than $5,000 for allocable Type 1 and Type 2 FEA² in a calendar year either to pay for such expenses entirely with federal funds or to allocate between federal and Levin funds. Under the so-called “de minimis exemption,” any state, district or local party committee that spent $5,000 or less for those types of FEA in a calendar year could finance the activity entirely with Levin funds.

In Shays v FEC, the district court held that the de minimis exemption was inconsistent with Congressional intent. The Commission appealed the court’s ruling, but also issued a Notice of Proposed Rulemaking (NPRM) to eliminate the exemption. (See the March 2005 Record, page 6.) On July 15, 2005, the Court of Appeals for the D.C. Circuit affirmed the district court’s opinion.

Final rules

In light of the appeals court’s decision, and after considering public comments, the Commission decided to eliminate the $5,000 de minimis exemption. The revised rules require state, district and local committees and organizations of political parties to pay for all allocable Type 1 and Type 2 FEA either entirely with federal funds or with an allocation of federal and Levin funds without regard to their total amount of annual disbursements.

The final rules appeared in the Federal Register on November 17. See 70 FR 69631.

¹ Levin funds, a type of nonfederal funds raised only by state, district or local political party committees, are limited to donations of $10,000 per calendar year and may be raised from sources otherwise prohibited by the Federal Election Campaign Act (except foreign nationals). 11 CFR 300.31.

² “Allocable Type 1 and Type 2” FEA is: 1) voter registration activity 120 days before a federal election; and 2) voter identification, get-out-the-vote activity or generic campaign activity in connection with an election in which a candidate for federal office appears on the ballot. Neither type of activity may be allocated if it refers to a clearly identified federal candidate. 11 CFR 100.24.