Proposed Rule2022-26778
Candidate Salaries
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 12, 2022
Issuing agencies
Federal Election Commission
Abstract
After considering comments received in response to its May 3, 2021, Notification of Availability, the Federal Election Commission seeks comments on proposed changes to its regulations regarding the use of campaign funds by a candidate's principal campaign committee to pay compensation to the candidate. The Notification of Availability was published in response to a Petition for Rulemaking filed by a former candidate for the United States House of Representatives. The Commission has made no final decision on the issues presented in this rulemaking.
Full Text
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<title>Federal Register, Volume 87 Issue 237 (Monday, December 12, 2022)</title>
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[Federal Register Volume 87, Number 237 (Monday, December 12, 2022)]
[Proposed Rules]
[Pages 75945-75955]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26778]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 /
Proposed Rules
[[Page 75945]]
FEDERAL ELECTION COMMISSION
11 CFR Part 113
[NOTICE 2022-21]
Candidate Salaries
AGENCY: Federal Election Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: After considering comments received in response to its May 3,
2021, Notification of Availability, the Federal Election Commission
seeks comments on proposed changes to its regulations regarding the use
of campaign funds by a candidate's principal campaign committee to pay
compensation to the candidate. The Notification of Availability was
published in response to a Petition for Rulemaking filed by a former
candidate for the United States House of Representatives. The
Commission has made no final decision on the issues presented in this
rulemaking.
DATES: Comments must be received on or before February 10, 2023. The
Commission may hold a public hearing on this rulemaking. Commenters
wishing to testify at a hearing must so indicate in their comments. If
a hearing is to be held, the Commission will publish a notice in the
Federal Register announcing the date and time of the hearing.
ADDRESSES: All comments must be in writing. Commenters are encouraged
to submit comments electronically via the Commission's website at
<a href="http://sers.fec.gov/fosers">http://sers.fec.gov/fosers</a>, reference REG 2021-01. Alternatively,
comments may be submitted in paper form addressed to the Federal
Election Commission, Attn.: Ms. Amy L. Rothstein, Assistant General
Counsel for Policy, 1050 First Street NE, Washington, DC 20463.
Each commenter must provide, at a minimum, his or her first name,
last name, city, and state. All properly submitted comments, including
attachments, will become part of the public record, and the Commission
will make comments available for public viewing on the Commission's
website and in the Commission's Public Records Office. Accordingly,
commenters should not provide in their comments any information that
they do not wish to make public, such as a home street address,
personal email address, date of birth, phone number, social security
number, or driver's license number, or any information that is
restricted from disclosure, such as trade secrets or commercial or
financial information that is privileged or confidential.
FOR FURTHER INFORMATION CONTACT: Amy L. Rothstein, Assistant General
Counsel for Policy, Joseph P. Wenzinger, Attorney, or Cheryl A.
Hemsley, Attorney, 1050 First Street NE, Washington, DC 20463, (202)
694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: Following its receipt and consideration of a
Petition for Rulemaking (``Petition'') \1\ from Ms. Nabilah Islam, a
former candidate for the United States House of Representatives in
Georgia, and public comments on the Petition, the Commission now
proposes to amend its regulations regarding the use of campaign funds
to pay candidates' compensation, including salaries, health insurance
premiums, and dependent care costs. The Commission invites public
comments on these regulatory proposals.
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\1\ Petition for Rulemaking to Improve Candidate Salary Rules
(``Petition'') (Mar. 23, 2021), <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=413694">https://sers.fec.gov/fosers/showpdf.htm?docid=413694</a>.
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I. Background
The Federal Election Campaign Act (the ``Act'') \2\ prohibits a
candidate's authorized committee from converting campaign funds to
``personal use.'' \3\ ``Personal use'' is defined as the use of
campaign funds ``to fulfill any commitment, obligation, or expense of a
person that would exist irrespective of the candidate's election
campaign or individual's duties as a holder of Federal office.'' \4\
The Act and Commission regulations provide a non-exhaustive list of
expenses that, when paid using campaign funds, constitute per se
conversion of those funds to personal use.\5\ The Commission determines
on a case-by-case basis whether the use of campaign funds to pay
expenses other than those listed would be a prohibited conversion of
the funds to personal use.\6\
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\2\ 52 U.S.C. 30101-45.
\3\ Id. 30114(b).
\4\ Id. 30114(b)(2); see also 11 CFR 113.1(g) (defining
``personal use'').
\5\ See 52 U.S.C. 30114(b)(2); 11 CFR 113.1(g)(1)(i).
\6\ See 11 CFR 113.1(g)(1)(ii) (providing non-exhaustive list of
expenses to be determined for personal use on a case-by-case basis).
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A. Candidates' Salaries
The Act does not identify the use of campaign funds to pay
candidate salaries as per se personal use. In Advisory Opinion 1999-01
(Greene), however, the Commission concluded that the Act would prohibit
a federal candidate from using campaign funds to pay himself a salary
because the candidate would indirectly use the funds to pay his
mortgage, utilities, groceries, and clothing--all of which are per se
personal use.\7\
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\7\ Advisory Opinion 1999-01 (Greene) at 4.
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In 2002, the Commission proposed to codify this conclusion in a
regulation.\8\ The proposed regulation would have prohibited candidates
``from using campaign funds to pay themselves salaries or otherwise
compensate themselves in any way for income lost as a result of
campaigning for Federal office.'' \9\ The Commission received several
public comments opposing this proposal, and no public comments
supporting it. As the Commission explained in the explanation and
justification accompanying the final rules, the commenters argued that
the proposed rule would favor incumbents who do not face a reduction in
compensation for time spent campaigning, and wealthy challengers who
can afford to forego compensation.\10\ The commenters also argued that
the use of campaign funds to pay candidates' salaries would not fulfill
a commitment, obligation, or expense that would exist irrespective of
the campaign, and therefore satisfies the Act's ``irrespective'' test
because, ``were it not for their campaign responsibilities, candidates
would not
[[Page 75946]]
have to leave their jobs and give up their salaries.'' \11\
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\8\ Disclaimers, Fraudulent Solicitation, Civil Penalties, and
Personal Use of Campaign Funds (``2002 Proposed Rule''), 67 FR 55348
(Aug. 29, 2002), <a href="https://www.govinfo.gov/content/pkg/FR-2002-08-29/pdf/02-21893.pdf">https://www.govinfo.gov/content/pkg/FR-2002-08-29/pdf/02-21893.pdf</a>.
\9\ Id. at 55353.
\10\ See Disclaimers, Fraudulent Solicitation, Civil Penalties,
and Personal Use of Campaign Funds (``2002 Final Rule''), 67 FR
76962, 76971-72 (Dec. 13, 2002), <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=8982#page=11">https://sers.fec.gov/fosers/showpdf.htm?docid=8982#page=11</a>.
\11\ Id. at 76971.
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The Commission ``agree[d] with the commenters that the payment of a
salary to a candidate is not a prohibited personal use as defined under
Commission regulations.'' \12\ The Commission explained that this use
of campaign funds satisfied the ``irrespective'' test because, ``but
for the candidacy, the candidate would be paid a salary in exchange for
services rendered to an employer.'' \13\ Moreover, the Commission
stated, a ``salary paid to a candidate would be in return for the
candidate's services provided to the campaign and the necessity of that
salary would not exist irrespective of the candidacy.'' \14\
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\12\ Id.
\13\ Id.
\14\ Id.
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The Commission included in the final regulation various safeguards
against abuse. To be a permissible use of campaign funds, the salary
paid to a candidate must not exceed the lesser of the minimum salary
paid to a ``Federal officeholder holding the Federal office that the
candidate seeks'' or the earned income received by the candidate the
year before becoming a candidate.\15\ Further, any earned income that a
candidate receives from salary or wages from any source other than
campaign funds counts against the minimum salary paid to a federal
officeholder as described in the regulation.\16\ These limitations were
designed, in part, to ``help ensure that campaign salaries are not used
to enrich candidates, but instead used to compensate candidates for
lost income that is forgone due to becoming a candidate.'' \17\ The
regulation also provides that campaign funds cannot be used to pay a
candidate's salary before the filing deadline for access to the primary
election ballot for the federal office that the candidate seeks, as
determined by state law, or January 1 of each even-numbered year in
states that do not conduct primaries.\18\ Finally, the regulation
requires salary payments to be computed on a pro-rata basis and
prohibits candidates who are also federal officeholders from receiving
salary payments from campaign funds.\19\
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\15\ 11 CFR 113.1(g)(1)(i)(I).
\16\ Id.
\17\ 2002 Final Rule, 67 FR at 76972.
\18\ 11 CFR 113.1(g)(1)(i)(I). Under this regulation, if the
candidate wins the primary election, his or her principal campaign
committee may pay him or her a salary from campaign funds through
the date of the general election, up to and including the date of
any general election runoff. If the candidate loses the primary,
withdraws from the race, or otherwise ceases to be a candidate, no
salary payments may be paid beyond the date he or she is no longer a
candidate. In odd-numbered years in which a special election for a
federal office occurs, the principal campaign committee for that
office may pay the candidate a salary from campaign funds starting
on the date the special election is set and ending on the day of the
special election.
\19\ Id.
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B. Candidates' Childcare Expenses
The Act and Commission regulations do not include the use of
campaign funds to pay candidates' childcare expenses as a per se
personal use. The Commission has addressed this use of campaign funds
in several advisory opinions, and has approved the use of campaign
funds to pay candidates' overnight childcare expenses incurred when the
candidates travel for their own campaigns,\20\ and to pay caregiver
expenses and full-time daycare when candidates' campaign
responsibilities and activities prevented them from caring for their
children themselves.\21\ In each of these advisory opinions, the
Commission concluded that the candidate could use campaign funds to pay
the candidate's childcare expenses to the extent that the expenses were
a ``direct result of campaign activity,'' because such expenses would
not have existed irrespective of the candidate's campaign.\22\
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\20\ Advisory Opinion 2022-07 (Swalwell); Advisory Opinion 1995-
42 (McCrery).
\21\ Advisory Opinion 2018-06 (Liuba for Congress); Advisory
Opinion 2019-13 (MJ for Texas).
\22\ Advisory Opinion 2022-07 (Swalwell) at 3-4; Advisory
Opinion 2019-13 (MJ for Texas) at 3; Advisory Opinion 2018-07 (Liuba
for Congress) at 3; Advisory Opinion 1995-42 (McCrery) at 2; c.f.
Advisory Opinion 2005-09 (Dodd) at 3 (approving proposed use of
campaign funds to pay travel expenses for candidate's children to
accompany their parents ``provided that the parents are traveling to
participate in a function directly connected to the Senator's bona
fide official responsibilities''); Advisory Opinion 1995-20 (Roemer)
at 2 (approving proposed use of campaign funds to pay travel
expenses of candidate's young children when they travel with
candidate and his wife for campaign events, where such travel is
``only required because of the campaign'').
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C. Candidates' Medical Insurance Premiums
The Act and Commission regulations do not include the use of
campaign funds to pay candidates' medical insurance premiums as a per
se personal use, and the Commission has not addressed this issue in
advisory opinions.\23\ The Commission has, however, addressed the use
of campaign funds to pay health insurance premiums in an enforcement
matter. In MUR 7068 (Mowrer for Iowa), the Commission found reason to
believe that a congressional candidate and his campaign committee had
improperly converted campaign funds to personal use by using funds from
the candidate's principal campaign committee to reimburse the candidate
for payment of his health insurance premiums.
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\23\ The petitioner had previously requested an advisory opinion
to clarify whether a candidate's health insurance premiums were a
permissible campaign expense, see Advisory Opinion Request 2020-01
(Nabilah for Georgia), but her request became moot when she stopped
being a candidate.
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D. Petition for Rulemaking
On March 23, 2021, the Commission received the Petition, asking the
Commission to amend Section 113.1(g) of its regulations to expand the
category of candidates eligible to receive compensation from their
authorized committees and the duration of their eligibility, and to
authorize the use of campaign funds to pay candidates' health insurance
premiums.\24\
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\24\ Petition at 4-5.
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The Petition asserts that ballot access deadlines for state
primaries, which ``vary wildly based on state law,'' \25\ leave many
candidates with short periods for receiving a salary under the
Commission's regulation.\26\ Moreover, the Petition alleges that the
current maximum salary limitation ``leaves candidates who are full time
caretakers or who have had gaps in employment out in the cold,'' \27\
and that rising health insurance costs act as a barrier to the
prospective candidacies of ``working class people.'' \28\
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\25\ Id. at 3-4.
\26\ Id. at 4 (noting, for example, that in Pennsylvania in
2018, Congressional candidates were eligible to receive a salary for
only 56 days).
\27\ Id. at 4-5.
\28\ Id. at 5.
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The Petition asks the Commission to ``lower the barriers for
working Americans to run for Federal office'' by amending its personal
use regulations at 11 CFR 113.1(g) to:
(1) Extend the date on which a candidate may begin drawing a
campaign salary to at least 180 days before the primary election; \29\
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\29\ Id. at 4, 6.
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(2) Establish a minimum candidate salary of no less than the
annualized salary of $15 per hour; \30\ and
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\30\ Id. at 4-5.
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(3) Expressly permit a candidate to use campaign funds to pay the
costs of any health benefit plan already provided to other campaign
employees beginning on the date the candidate is eligible to receive a
campaign salary.\31\
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\31\ Id. at 5.
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E. Public Comments on the Petition
On May 23, 2021, the Commission published a Notification of
Availability (``NOA'') seeking public comment on
[[Page 75947]]
the Petition.\32\ The Commission received 22 comments in response, 6
from organizations and 16 from individuals.\33\ Fourteen commenters,
including the organizations, generally supported initiating a
rulemaking. They agreed that some version of the Petition's proposals
would make it easier for individuals of modest means who are not
already federal officeholders to run for federal office. Several
commenters noted that the current candidate salary regulation offers
little assistance to full-time caregivers or those who have experienced
a recent financial hardship because candidate salaries cannot currently
exceed the amount of income earned in the year before their candidacy.
Thus, a candidate who worked full time caring for the candidate's
children or other family members without remuneration the year prior to
becoming a candidate could not receive a campaign salary. Similarly, a
candidate who was unemployed during any portion of the year prior to
becoming a candidate would be able to receive only a reduced amount of
salary from campaign funds, and potentially none at all.\34\ Commenters
also suggested that the period during which a candidate is eligible to
receive a salary is too short and does not reflect the financial costs
and other demands of campaigning today.\35\
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\32\ Rulemaking Petition: Candidate Salaries, Notification of
Availability (``NOA''), 86 FR 23300 (May 3, 2021), <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=413869">https://sers.fec.gov/fosers/showpdf.htm?docid=413869</a>.
\33\ The comments are available on the Commission's website at
<a href="https://sers.fec.gov/fosers/">https://sers.fec.gov/fosers/</a>, referencing REG 2021-01 (Candidate
Salaries).
\34\ See Issue One, Comment at 2 (June 29, 2021), REG 2021-01,
<a href="https://sers.fec.gov/fosers/showpdf.htm?docid=414051">https://sers.fec.gov/fosers/showpdf.htm?docid=414051</a>.
\35\ See Campaign Legal Center, Comment at 2 (June 30, 2021),
REG 2021-01, <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=414052">https://sers.fec.gov/fosers/showpdf.htm?docid=414052</a>;
DSCC and DCCC, Comment at 1 (July 2, 2021), REG 2021-01, <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=414049">https://sers.fec.gov/fosers/showpdf.htm?docid=414049</a>.
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These commenters also generally agreed that a candidate's campaign
committee should be able to use campaign funds to pay the candidate's
health insurance premiums. One commenter cited statistics showing that
most Americans obtain health insurance coverage through their
employment \36\ and argued that health insurance is, thus, inextricably
linked to employment. Another commenter further urged the Commission to
reconsider its conclusion in MUR 7068 (Mowrer for Iowa) that the use of
campaign funds to pay a candidate's health insurance premiums is a
prohibited personal use, ``in light of current societal conditions that
pose challenges for working Americans'' who want to run for office.\37\
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\36\ Petition at 5; AFL-CIO et al., Comment at 3 (July 4, 2021),
REG 2021-01, <a href="https://sers.fec.gov/fosers/showpdf.htm?docid=414082">https://sers.fec.gov/fosers/showpdf.htm?docid=414082</a>.
\37\ AFL-CIO et al., Comment at 3 (July 4, 2021).
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Five individual commenters opposed initiating a rulemaking. Two of
them opposed using campaign funds to pay candidate salaries in any
circumstance; the others opposed the proposed minimum salary because it
exceeded the federal minimum wage or could encourage ``professional
candidates.'' \38\ Three commenters did not address issues raised in
the NOA.
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\38\ 16 Individual Comments (Monk, William) at 2, REG 2021-01,
<a href="https://sers.fec.gov/fosers/showpdf.htm?docid=414054">https://sers.fec.gov/fosers/showpdf.htm?docid=414054</a>.
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II. Proposed Regulations
The Commission proposes to amend its regulations as described below
to address issues raised in the Petition and public comments on the
Petition. A general overview of the proposed amendments is followed by
specific details of each proposal. The Commission seeks comments on its
proposed amendments and emphasizes that it has not made any final
decisions on whether or how to amend its regulations.
A. Overview
The Commission's current regulations at 11 CFR 113.1(g)(1) through
(8) address personal use, and the candidate salary regulation is at 11
CFR 113.1(g)(1)(i)(I). The Commission proposes to remove and reserve 11
CFR 113.1(g)(1)(i)(I), redesignate current paragraphs (g)(6), (g)(7),
and (g)(8) as (g)(7), (g)(8), and (g)(9), respectively, and add new
paragraph (g)(6) to address candidate compensation.
New paragraph (g)(6) addressing candidate compensation would have
several subparagraphs as follows.
Proposed 11 CFR 113.1(g)(6)(i) would prohibit federal officeholders
from receiving compensation as candidates from campaign funds. This
prohibition already appears in the Commission's regulation.\39\
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\39\ See 11 CFR 113.1(g)(1)(i)(I).
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Proposed 11 CFR 113.1(g)(6)(ii) would cap the amount of
compensation that a candidate could receive from campaign funds. A
compensation cap already appears in the Commission's regulation.\40\ As
explained further below, the Commission proposes six alternative caps.
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\40\ See id.
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Proposed 11 CFR 113.1(g)(6)(iii) would define ``compensation'' for
purposes of the candidate salary regulation. This definition does not
currently appear in the candidate salary regulation. As explained
further below, the Commission proposes three alternative definitions.
Proposed 11 CFR 113.1(g)(6)(iv) would require a candidate's
committee to reduce the maximum amount of compensation that the
candidate could receive from campaign funds by the amount of any earned
income the candidate receives from any other source while the candidate
receives compensation from campaign funds. As explained further below,
this amendment would expand a requirement in the Commission's current
regulation.\41\
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\41\ See id.
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Proposed 11 CFR 113.1(g)(6)(v) would establish the period during
which a candidate would be eligible to receive compensation from
campaign funds. An eligibility period already appears in the
Commission's regulation.\42\ As explained further below, the Commission
proposes to lengthen the eligibility period.
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\42\ See id.
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Proposed 11 CFR 113.1(g)(6)(vi) would prohibit a candidate's
principal campaign committee that seeks to settle debts for less than
their full value from paying compensation to the candidate or
satisfying a debt to the candidate for compensation. It would also
prohibit any debt settlement plan created under 11 CFR 116.7 from
providing for the payment of compensation to the candidate before all
other creditors are paid. This requirement does not currently appear in
the Commission's regulations.
Last, proposed 11 CFR 113.1(g)(6)(vii) would require a candidate to
provide evidence of earned income from prior years upon the request of
the Commission in certain circumstances. This requirement currently
appears in the Commission's regulation. The new regulation would also
require a candidate to maintain or preserve such evidence for three
years, pursuant to the Commission's regulations on the preservation of
records.
B. Proposed 11 CFR 113.1(g)(6)(i)--Federal Officeholder's Receipt of
Compensation as a Candidate From Campaign Funds
The Commission's current regulations prohibit a federal
officeholder who is also a candidate for federal office from receiving
salary payments from campaign funds.\43\ Proposed 11 CFR 113.1(g)(6)(i)
would maintain this prohibition and would also apply it to any other
form of compensation that a
[[Page 75948]]
candidate could receive from campaign funds.
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\43\ 11 CFR 113.1(g)(1)(i)(I). The term ``federal officeholder''
is defined at 11 CFR 113.1(c).
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C. Proposed 11 CFR 113.1(g)(6)(ii)--Cap on Candidate Compensation (Six
Alternatives)
Under the current regulation, salary payments from campaign funds
to a candidate are limited to the lesser of the minimum salary paid to
a federal officeholder holding the federal office that the candidate
seeks, or the earned income that the candidate received during the year
prior to becoming a candidate.\44\ Accordingly, candidates may receive
salary payments from campaign funds only if they earned income the year
prior to becoming a candidate. The Commission intended this limitation
to provide an ``additional safeguard [to] help ensure that campaign
salaries are not used to enrich candidates, but instead used to
compensate candidates for lost income that is forgone due to becoming a
candidate.'' \45\
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\44\ Id.
\45\ 2002 Final Rules, 67 FR at 76972.
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The Petitioner and several commenters, however, suggest that this
limitation necessarily excludes any candidate who did not earn income
in the previous year from receiving compensation from campaign funds,
even though that individual also forgoes income by becoming a
candidate. They noted that the current regulation does not cover
``candidates who are full time caretakers or who have had gaps in
employment,'' or who have otherwise gone through a recent period of
``minimal or low income.'' \46\ Moreover, as one commenter noted, the
Commission has explained that the use of campaign funds to pay a
candidate's salary is not personal use because the ``salary paid to a
candidate would be in return for the candidate's services provided to
the campaign and the necessity of that salary would not exist
irrespective of that candidacy.'' \47\ According to the commenter, the
Commission ``chose to cap salaries at the rate a candidate earned in
the previous year, but there is nothing inherent to the Commission's
approach to personal use that requires doing so, provided the salary
and other benefits paid to the candidate are fair compensation for
services rendered to, or otherwise necessary for, their campaign.''
\48\
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\46\ Petition at 4-5; see also Issue One, Comment at 2 (June 29,
2021) (noting that the current regulation leaves out candidates who
spent all or part of the previous year ``caring for family members''
or experiencing ``gaps in employment''); Common Cause, Comment at 2
(July 2, 2021) (noting that ``under the current regulation, a pause
in paid employment or a period of very low wages currently leaves
working people seeking federal office in a precarious financial
position''); DCCC and DSCC, Comment at 2 (July 2, 2021) (noting that
``candidates who have spent the previous year as homemakers or
caretakers of young children or ailing family members, are
prohibited from drawing a salary at all''); Brennan Center for
Justice, Comment at 2-3 (July 2, 2021) (noting that ``nontraditional
candidates, such as those with significant caregiving
responsibilities (which even today fall disproportionately on women)
are at a significant disadvantage'').
\47\ Brennan Center for Justice, Comment at 4-5 (July 2, 2021)
(citing 2002 Final Rule, 67 FR at 76972).
\48\ Id.
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Because the current regulation might not adequately cover
individuals who had a gap in employment or an unusually low level of
income the year before becoming a candidate, the Commission is
proposing six alternative ways to cap the amount of compensation that a
candidate could receive from campaign funds. The Commission has not
decided on any approach and invites comment on these proposals,
detailed below. Should the Commission's approach to candidate salaries
be directed toward compensating candidates for services rendered, or
instead be based upon the opportunity cost incurred by a candidate
running for office or other considerations? Which proposal would most
accurately reflect fair compensation for services rendered by a
candidate to the candidate's campaign committee? Which proposal would
most accurately reflect the income lost or foregone by becoming a
candidate? For each alternative, are the calculations clear and
workable? Are there other alternatives for capping candidate
compensation that the Commission should consider? Should the Commission
combine certain aspects of various alternatives?
Moreover, several of the alternatives would cap a candidate's
compensation at ``the minimum salary paid to a Federal officeholder
holding the Federal office that the candidate seeks,'' which is the
current regulatory language.\49\ The Commission has explained that the
``minimum salary'' as used in the current regulation does not refer to
the salary actually paid to the current incumbent of the office sought
by the candidate, but the ``lowest salary for the . . . office.'' \50\
For example, if a candidate seeks a seat held by a member of the House
of Representatives who holds a leadership position and is thus paid
more than the minimum salary payable to a member of the House of
Representatives, the candidate's salary is capped at the lowest salary
for that office, not the salary of the incumbent. Should the Commission
consider revising the language in the regulation to clarify that the
cap refers to the minimum annual salary for the office, rather than the
minimum salary paid to the individual currently holding the office?
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\49\ 11 CFR 113.1(g)(1)(I)(i).
\50\ 2002 Final Rules, 67 FR at 76972.
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Compensation Cap Alternative A (50% officeholder salary minimum
approach) would provide that the use of campaign funds by a candidate's
principal campaign committee to pay compensation to the candidate is
not personal use, provided that the amount of compensation paid to the
candidate does not exceed 50% of the minimum salary for the federal
office sought by the candidate (``Minimum Officeholder Salary''). This
cap would apply to all candidates for the same office, regardless of
the amount of income earned by any candidate the year before becoming a
candidate.
As proposed, the amount that a candidate could receive must be
calculated at the ``daily rate.'' The daily rate is determined by
taking 50% of the Minimum Officeholder Salary and dividing that amount
by 365 days per year. For example, if 50% of the Minimum Officeholder
Salary is $87,000, the daily rate is $238.00 ($87,000/365, rounded to
the nearest dollar). Under this scenario, a candidate who is eligible
to receive compensation from campaign funds for 100 days in a
particular year, for example, could receive up to $23,800 ($238.00 per
day x 100 days) in compensation from campaign funds in that year.
This alternative is intended to measure the value of a candidate's
services to a campaign, based on 50% of the minimum salary the
candidate could receive as an officeholder should the candidate win the
election. Is basing candidate compensation on 50% of the officeholder's
salary an accurate reflection of a candidate's duties, when compared to
that of an officeholder's in the position the candidate is seeking?
Would the 50% figure accurately reflect the candidates' opportunity
cost of running for office, or the value of the services provided to
the campaign? Would a different percentage provide a more accurate
reflection?
Compensation Cap Alternative B (hourly minimum wage approach) would
cap a candidate's compensation from campaign funds at the daily rate of
the annualized hourly minimum wage. Annualized hourly minimum wage
would mean the amount an individual receiving the federal minimum wage
would earn by working 40 hours a week
[[Page 75949]]
for 52 weeks, except that an individual residing in a state with a
higher minimum wage than the federal minimum wage could use the higher
state minimum wage. Alternative B is intended to measure the
opportunity cost to the candidate of running for office, not to provide
the actual hourly minimum wage to the candidate. Therefore, under
Alternative B, the amount that a candidate could receive from campaign
funds would be capped at the amount that the candidate would have
earned working 40 hours per week at the minimum wage in another job,
even if the candidate spends more than 40 hours per week campaigning.
For example, if a candidate lives in a state whose hourly minimum
wage is the same as or less than the current federal minimum wage of
$7.25 per hour,\51\ the annualized minimum wage would be $15,080 ($7.25
per hour x 40 hours per week x 52 weeks per year), and the daily rate
would be $41.00 ($15,080/365 days per year, rounded to the nearest
dollar). Therefore, under this example, a candidate who is eligible to
receive compensation from campaign funds for 100 days in a particular
year may receive no more than $4,100 in compensation from campaign
funds in that year. But if the state's hourly minimum wage is higher
than the federal minimum wage--for example, $10 per hour instead of
$7.25--then the candidate's principal campaign committee could use the
higher state minimum wage to determine the maximum amount of
compensation that the candidate could receive from campaign funds. At
$10 per hour, the annualized hourly minimum wage would be $20,800 ($10
per hour x 40 hours per week x 52 weeks per year), the daily rate would
be $57.00 ($20,800/365 days per year, rounded to the nearest dollar),
and the candidate could receive up to $5,700 that year as compensation
from campaign funds ($57.00 per day x 100 days).
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\51\ Minimum Wage, U.S. Department of Labor (last visited Aug.
25, 2022), <a href="https://www.dol.gov/general/topic/wages/minimumwage">https://www.dol.gov/general/topic/wages/minimumwage</a>.
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Is the minimum wage a reasonable estimate of the opportunity cost
of campaigning instead of obtaining a minimum wage job on the open
market? Does the minimum wage accurately reflect the value of services
provided by the candidate to the campaign committee?
Compensation Cap Alternative C ($15 per hour approach) would cap
candidate compensation based on the amount an individual receiving $15
per hour would earn by working 40 hours per week for 52 weeks--
calculated at the daily rate--rather than the federal or state minimum
wage. At $15 per hour, the daily rate would be $85.00 ($15 per hour x
40 hours per week x 52 weeks per year = $31,200; $31,200/365 days per
year = $85.00 per day, rounded to the nearest dollar). Therefore, if a
candidate is eligible to receive compensation for 100 days in a
calendar year, the candidate could receive up to $8,500 that year as
compensation from campaign funds. Compensation Cap Alternative C would
also require this amount ($15) to be adjusted for inflation in odd-
numbered years.
The Petitioner and several commenters suggested using $15 per hour
as the base rate, indexed for inflation.\52\ As one commenter noted,
although $15 per hour is more than double the federal minimum wage of
$7.25 per hour,\53\ it ``equates to less than one and a half times the
federal poverty limit for a family of three'' in 2021.\54\ Would $15
per hour more accurately reflect the value of a candidate's services to
the candidate's campaign committee or the candidate's opportunity costs
than would the minimum wage? Should the Commission index this rate for
inflation? Are the federal poverty limits relevant to determining
candidate compensation from campaign funds?
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\52\ Petition at 5; see also Issue One, Comment at 2 (June 29,
2021) (suggesting an annualized salary of $15 per hour for 40 hours
per week, indexed for inflation); Common Cause, Comment at 2 (July
2, 2021) (same); 16 Individual Comments at 3 (same).
\53\ The only jurisdiction in which the minimum wage exceeds $15
is the District of Columbia ($16.10). Consolidated Minimum Wage
Table, U.S. Department of Labor (last updated July 1, 2022), <a href="https://www.dol.gov/agencies/whd/mw-consolidated">https://www.dol.gov/agencies/whd/mw-consolidated</a>. At this time, 30 states
and the District of Columbia, Guam, and the Virgin Islands have a
minimum wage that exceeds the federal minimum wage; 15 states and
Puerto Rico and the Commonwealth of the Norther Mariana Islands have
a minimum wage that equals the federal minimum wage; and 5 states do
not have a minimum wage.
\54\ Brennan Center for Justice, Comment at 3 (July 2, 2021)
(citing Annual Update of the HHS Poverty Guidelines, 86 FR 7732,
7733 (Feb. 1, 2021) (providing that 2021 poverty guidelines for the
48 contiguous states and the District of Columbia for a 3-person
household was $21,960); see also Annual Update of the HHS Poverty
Guidelines, 87 FR 3315, 3316 (Jan 21, 2022) (providing that 2022
poverty guidelines for the 48 contiguous states and the District of
Columbia for a 3-person household is $23,030)).
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Compensation Cap Alternatives A, B, and C, unlike the alternatives
described below, do not consider any of the candidate's prior earned
income. In sum, as shown by the examples above and represented in this
table, a candidate who has no income in the 12-month period prior to
becoming a candidate could receive up to the following amounts in
compensation in a calendar year from campaign funds under the current
regulation and Compensation Cap Alternatives A, B, and C, assuming the
Minimum Officeholder Salary is $174,000 and the candidate is eligible
to receive compensation from campaign funds during the entire year:
------------------------------------------------------------------------
If the state
minimum wage is
less than or If the state
equal to $7.25/ minimum wage is
hr. (less than or $10/hr. (greater
equal to the than the federal
federal minimum minimum wage)
wage)
------------------------------------------------------------------------
Current regulation................ $0 $0
Alternative A (50% officeholder 23,800 23,800
salary minimum approach).........
Alternative B (hourly minimum wage 4,100 5,700
approach)........................
Alternative C ($15/hr. approach).. 8,500 8,500
------------------------------------------------------------------------
Compensation Cap Alternative D (prior 12-month income approach)
would cap a candidate's compensation from campaign funds at the
candidate's earned income in the 12-month period before becoming a
candidate or the annualized hourly minimum wage, whichever is greater,
but not to exceed the Minimum Officeholder Salary. The compensation,
earned income, annualized hourly minimum wage, and Minimum Officeholder
Salary would all be calculated at the daily rate, with annualized
hourly minimum wage
[[Page 75950]]
having the same definition as in Alternative B.
For example, under Alternative D, if a candidate earned $35,000 in
the 12 months before becoming a candidate, and this amount was greater
than the annualized hourly minimum wage and less than the Minimum
Officeholder Salary, the maximum daily rate for which the candidate
could be compensated from campaign funds would be $96.00 ($35,000/365
days per year, rounded to the nearest dollar), and the total maximum
amount of compensation in a particular year would be $96.00 multiplied
by the number of days that year that the candidate was eligible to
receive compensation from campaign funds.
Would this alternative provide a workable way for a candidate who
earned income in the previous 12 months to receive compensation from
campaign funds that exceeds the minimum wage? To what extent does the
previous year's income reflect the opportunity cost of becoming a
candidate, or the value of the candidate's services to the campaign?
The final two alternatives would similarly permit a candidate to
look back at previous income in calculating the limit on compensation
from campaign funds but would extend the period to include three years.
Compensation Cap Alternative E (three-year income approach) would
enable the candidate to receive compensation from campaign funds up to
the average annual income that the candidate earned during the most
recent three calendar years in which the candidate earned income prior
to becoming a candidate, capped by the Minimum Officeholder Salary,
when both are calculated at the daily rate.
Compensation Cap Alternative F (three-year income with minimum wage
approach) would provide the same limits as under Alternative E, except
that a candidate under Alternative F would have the additional option
of using the minimum wage instead of earned income (see Alternatives B
and D) if the minimum wage is greater than the candidate's average
income in the most recent three calendar years in which the candidate
received earned income before becoming a candidate.
For example, under both Compensation Cap Alternatives E and F, if
an individual who earned income averaging $60,000 per year in 2020,
2018, and 2017, but who did not earn any income in 2021 or 2019, became
a candidate in 2022, that candidate would be entitled to receive up to
$60,000 in compensation from campaign funds in 2022, when calculated at
the daily rate. But if the same individual earned an average of only
$5,000 per year in 2020, 2018, and 2017--the most recent three years
that the individual earned income before becoming a candidate--under
Alternative E the individual would be limited as a candidate to
receiving a maximum of $5,000 per year from campaign funds calculated
at the daily rate, even if $5,000 is less than the federal minimum wage
(or the state minimum wage, if greater). Under Alternative F, by
contrast, the candidate would have the option of receiving up to the
federal minimum wage or state minimum wage, whichever amount is
greater, calculated at the daily rate.
Does the three-year lookback period provide a reasonable estimate
of the amount the candidate could expect to earn in the marketplace, or
the value of the candidate's services to the campaign? Should the
Commission consider a different, multi-year lookback period? Would the
proposed multi-year lookback provisions be overly complicated to
administer? If so, how could the Commission institute a multi-year
lookback provision that would be less complicated to administer, while
still providing a reasonable estimate of a candidate's opportunity cost
or value of the candidate's services to the campaign?
D. Proposed 11 CFR 113.1(g)(6)(iii)--Definition of ``Compensation''
(Three Alternatives)
The Commission has addressed the use of campaign funds to pay non-
salary compensation to candidates on a case-by-case basis in advisory
opinions and enforcement matters, using the ``irrespective'' test.
Several have involved health insurance premiums and childcare costs.
In MUR 7068 (Mowrer for Iowa), the Commission found reason to
believe that a congressional candidate and his principal campaign
committee had improperly converted campaign funds to personal use by
using them to reimburse the candidate for paying over $7,000 for his
health insurance premiums. The Commission reasoned that ``health
insurance premiums are of a character of those fringe benefit payments
to the candidate that the Commission [and Congress] has determined are
[per se] personal use,'' such as funeral, cremation, or burial
expenses, tuition payments, sporting event, concert, theater, or other
entertainment tickets,\55\ country or health club dues or fees, and
vacations--all of which, according to the Act and the Commission
regulations, would exist irrespective of the candidate's campaign.
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\55\ MUR 7068 (Mowrer for Iowa), Notification with Factual and
Legal Analysis to James Mowrer, Mower for Iowa and Dennis Skinner in
his official capacity as treasurer (Dec. 20, 2017), at 8-10 <a href="https://www.fec.gov/files/legal/murs/7068/18044452908.pdf">https://www.fec.gov/files/legal/murs/7068/18044452908.pdf</a>.
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On childcare, the Commission has concluded that using campaign
funds to pay a candidate's childcare expenses does not convert the
funds to personal use to the extent that the expenses are a ``direct
result of campaign activity,'' because such expenses would not have
existed irrespective of the candidate's campaign.\56\ Applying this
standard, the Commission has concluded that a federal candidate could
use campaign funds to pay overnight childcare expenses that he incurs
when he travels for his own campaign and his spouse is not available to
care for their children,\57\ and that a federal candidate who had given
up her in-home consulting work in order to campaign and hired a
caregiver for her children could use campaign funds to pay her
childcare expenses when her campaign responsibilities prevented her
from caring for the children herself.\58\ The Commission has also
concluded that a federal candidate who left her job to work full-time
on her campaign could use campaign funds to pay for full-time daycare
for her children, because she would be spending the ``vast majority''
of her time away from her family on campaign activities and would
reimburse the campaign for childcare costs incurred at times she is not
campaigning.\59\
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\56\ Advisory Opinion 2022-07 (Swalwell) at 4; Advisory Opinion
2019-13 (MJ for Texas) at 3; Advisory Opinion 2018-07 (Liuba for
Congress) at 3; see also Advisory Opinion 1995-42 (McCrery) at 2
(approving proposed use of campaign fund to pay Congressman's
childcare expenses when he and his wife attend campaign events,
where childcare expenses result only from campaign activity and
otherwise would not exist).
\57\ Advisory Opinion 2022-07 (Swalwell).
\58\ Advisory Opinion 2018-06 (Liuba for Congress).
\59\ Advisory Opinion 2019-13 (MJ for Texas); see also Advisory
Opinion 1995-42 (McCrery) at 2 (approving proposed use of campaign
fund to pay Congressman's childcare expenses when he and his wife
attend campaign events, where childcare expenses result only from
campaign activity and otherwise would not exist).
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The Petitioner and several commenters asked the Commission to
reconsider its conclusion in MUR 7068 (Mowrer for Iowa) that using
campaign funds to reimburse the candidate's payment of his health
insurance premiums converted the campaign funds to personal use. The
Petitioner noted that the average annual premiums for health insurance
for single coverage in 2019 were over $7,000, which made
[[Page 75951]]
the cost of running for office prohibitive for many people, and urged
the Commission to allow a candidate to join any health benefit plan
already provided by the campaign to its employees when the candidate
becomes eligible to receive compensation.\60\ Several commenters
pointed out that health insurance premiums are so intertwined with
employment that they cannot be considered separately from salary.\61\
As one commenter argued, the Commission ``has failed to consider the
simple fact that a majority of American adults obtain their health
insurance through work.'' \62\
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\60\ Petition at 5.
\61\ See Issue One, Comment at 2 (June 29, 2021); Campaign Legal
Center, Comment at 3 (June 30, 2021); Common Cause, Comment at 2
(July 2, 2021); DSCC & DCCC, Comment at 2 (July 2, 2021); Brennan
Center for Justice, Comment at 2 (July 2, 2021); AFL-CIO et al.,
Comment at 3-4 (July 2, 2021). One commenter suggested that, for a
candidate who quits his or her job to run for office and therefore
loses employer-based healthcare and must seek health insurance
through the Affordable Care Act (ACA) or Consolidated Omnibus Budget
Reconciliation Act (COBRA), the difference between the amount the
candidate is responsible for paying for an ACA or COBRA plan and the
amount the candidate was responsible for under the employer-based
plan, should be treated by the Commission as a permissible use of
campaign funds should a campaign choose to cover such costs.
Campaign Legal Center, Comment at 3 (June 30, 2021).
\62\ AFL-CIO et al., Comment at 4 (July 2, 2021).
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In addition to healthcare costs, one commenter argued that other
non-salary benefits are also ``often connected to employment, and
therefore the Commission should allow candidates to receive
compensation for other fringe benefits offered to full-time campaign
employees, including retirement contributions, life insurance, and
reimbursement for childcare expenses incurred to permit work outside of
normal business hours.'' \63\ That same commenter argued that the
Commission's rulemaking should ensure that candidates who do not opt to
pay themselves a salary can still use campaign funds to cover certain
essential life expenses necessitated by a run for office, including
payments for child and eldercare services.\64\
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\63\ Brennan Center for Justice, Comment at 2, 4 (July 2, 2021).
\64\ Brennan Center for Justice, Comment at 4 (July 2, 2021).
The commenter noted that a bill has been introduced in the United
States House of Representatives, which would provide that campaign
funds could be used for childcare services, elder care services,
services similar to childcare or eldercare services which are
provided on behalf of any dependent who is a qualifying relative
under section 152 of the Internal Revenue Code of 1986, and health
insurance premiums if the payments for such services or premiums are
necessary to enable the participation of the candidate in campaign-
connected activities. Help America Run Act, H.R. 1623, 116th Cong.
Sec. 2 (2019).
---------------------------------------------------------------------------
In light of these comments, the Commission is proposing three
alternative definitions of candidate compensation at proposed 11 CFR
113.1(g)(6)(iii). Each alternative definition would include direct
payments to the candidate and payments for at least some other
employment-related benefits.
Compensation Definition Alternative A and Compensation Definition
Alternative B would both define ``compensation'' for purposes of 11 CFR
113.1(g)(6) as direct payments to the candidate and payments for any
employment-related benefit that the campaign also provides to its
staff, including, but not limited to, health insurance premiums and
dependent care costs. For example, if a campaign provides a $200 per
month credit to employees to use for full-time day care costs, this
benefit would also be available to candidates as compensation from
campaign funds.
Compensation Definition Alternative B also would provide that a
principal campaign committee may pay a candidate's dependent care
expenses as part of the candidate's compensation from campaign funds
when the same benefit is not made available to staff, to the extent the
expenses are incurred as a direct result of the candidate's campaign
activities. For example, under Alternative B, if a campaign provides a
$200 per month credit to employees to use for full-time daycare costs,
the candidate would be eligible to receive the same credit as
compensation from campaign funds. In addition, the campaign could pay
for any other dependent care costs incurred by the candidate as a
direct result of the candidate's campaign activities; the use of
campaign funds to pay any incremental dependent care expenses that
result from non-campaign activities would be personal use, unless the
candidate reimburses the campaign account for the incremental expenses
within 30 days.
Compensation Definition Alternative C would define compensation as
direct payments to the candidate and payments for any employment-
related benefit, regardless of whether that same benefit is provided to
campaign staff, including, but not limited to, health insurance
premiums and dependent care costs. Like Alternative B, Compensation
Definition Alternative C also would provide that, if a committee uses
campaign funds to pay dependent care expenses that are incurred from
both campaign and non-campaign activities, the incremental expenses
that result from the non-campaign activities would be personal use,
unless the candidate reimburses the campaign account for the
incremental expenses within 30 days.
These alternatives are not intended to permit candidate committees
to pay for expenses that are listed in the Act or Commission
regulations as a per se personal use.\65\ Is this clear from the text
of the proposals?
---------------------------------------------------------------------------
\65\ See 52 U.S.C. 30114(b)(2).
---------------------------------------------------------------------------
The use of campaign funds to pay any expense defined as
``compensation'' would be subject to the compensation cap. Therefore,
should the definition of ``compensation'' include the use of campaign
funds to pay a candidate's dependent care costs and health insurance
premiums, as in the proposed alternatives, or should these expenses be
separately provided for in the regulation? If the latter, should the
use of campaign funds to pay these expenses be subject to a separate
cap? If so, what should that cap be? Or should a candidate's principal
campaign committee continue to be able to pay an unlimited amount of
the candidate's dependent care costs if the costs directly result from
campaign activity? \66\ In Advisory Opinion 2022-07 (Swalwell) and
Advisory Opinion 1995-42 (McCrery), the Commission concluded that a
federal officeholder and candidate could use campaign funds to pay for
certain childcare expenses directly resulting from campaign activity.
If childcare expenses were included in the definition of
``compensation,'' then proposed 11 CFR 113.1(g)(6)(i) would supersede
these advisory opinions to the extent that a candidate is also a
sitting federal officeholder. Should the Commission distinguish between
federal officeholders and candidates who are not federal officeholders
for the purpose of determining whether childcare expenses exist
irrespective of the candidate's candidacy?
---------------------------------------------------------------------------
\66\ Prior advisory opinions have addressed only childcare
expenses and not expenses for care of other dependents. Advisory
Opinion 2022-07 (Swalwell); Advisory Opinion 2019-13 (MJ for Texas);
Advisory Opinion 2018-07 (Liuba for Congress); Advisory Opinion
1995-42 (McCrery).
---------------------------------------------------------------------------
One commenter suggested that the use of campaign funds to pay a
candidate's health insurance premiums would generally be personal use,
but there might be certain situations where a candidate would not incur
healthcare costs irrespective of candidacy.\67\ The commenter offered,
as an example, a candidate who left full-time employment to campaign
and thereby lost the employer-sponsored health insurance that the
candidate otherwise would have received. The commenter
[[Page 75952]]
suggested that the personal use prohibition would not apply to campaign
funds used to pay the difference between the amount paid by the
candidate for health insurance as a full-time employee, and the amount
paid by the candidate for health insurance obtained under the
Affordable Care Act or the Consolidated Omnibus Budget Reconciliation
Act (COBRA).
---------------------------------------------------------------------------
\67\ Campaign Legal Center, Comment at 3 (June 30, 2021).
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The Commission invites comments on this example. Should the
Commission issue regulations allowing campaign funds to be used to pay
only the additional expense incurred by candidates who previously had
health insurance but lost their coverage to campaign? Under what other
circumstances would a candidate incur health insurance costs that would
not exist irrespective of the candidacy?
The Help America Run Act,\68\ introduced in Congress in 2019, would
have authorized the use of campaign funds to pay for childcare,
eldercare, and similar services ``which are provided on behalf of any
dependent who is a qualifying relative under section 152 of the
Internal Revenue Code of 1986,'' as long as ``the services are
necessary to enable the participation of the candidate in campaign-
connected activities.'' \69\ Should the Commission consider identifying
in a regulation impermissible or permissible dependent care expenses,
as either an exhaustive or non-exhaustive list? If so, which expenses
should be included on the list?
---------------------------------------------------------------------------
\68\ H.R. 1623 Sec. 2. Under the Help America Run Act, the
amount of campaign funds that could be used to pay for childcare and
elder care services would have been subject to any otherwise
applicable salary cap, but the use of campaign funds to pay medical
insurance premiums would not have been capped.
\69\ Id.
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E. Proposed 11 CFR 113.1(g)(6)(iv)--Reduction of Candidate Compensation
for Other Income Earned by Candidate
As noted above, the Commission's current regulation caps the amount
of campaign funds that a candidate may receive in salary from the
candidate's principal campaign committee at either (1) the amount of
income earned by the candidate in the 12-month period immediately
preceding candidacy, or (2) the Minimum Officeholder Salary, whichever
amount is lower. For purposes of this calculation, the current
regulation further requires the minimum salary of the office that the
candidate seeks--but not the candidate's earned income from the prior
year--to be reduced by the amount of any earned income that the
candidate receives from salaries or wages from any source other than
the candidate's principal campaign committee.\70\
---------------------------------------------------------------------------
\70\ 11 CFR 113.1(g)(1)(i)(I).
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For example, if Candidate A earned $60,000 in the 12-month period
immediately preceding candidacy and Candidate B earned $600,000,
Candidate A would be capped at receiving $60,000 from campaign funds as
salary, while Candidate B would be capped at $174,000 (the Minimum
Officeholder Salary) because the Minimum Officeholder Salary is less
than Candidate B's earned income in the year preceding candidacy. Under
the current regulation, if both candidates earned income from outside
sources of $30,000 while receiving a salary from campaign funds, the
maximum amount of salary that Candidate A would be eligible to receive
from campaign funds would not be affected, but Candidate B would be
eligible to receive only up to $147,000 ($174,000 Minimum Officeholder
Salary--$30,000 earned income from outside sources) as salary from
campaign funds.
Proposed 11 CFR 113.1(g)(6)(iv) would rectify this apparent
imbalance in the salary cap reduction by requiring the amount earned by
a candidate from other sources to count against the maximum amount of
compensation that a candidate can receive from campaign funds, rather
than counting against only the minimum officeholder salary.
Should the Commission exclude health insurance premiums, dependent
care costs, or any other non-salary benefits from the reduction
requirement? Should the Commission continue to apply the reduction
requirement only to Minimum Officeholder Salary, as under the current
regulation?
F. Proposed 11 CFR 113.1(g)(6)(v)--Eligibility Period for Receiving
Compensation From Campaign Funds
The current regulation prohibits the use of campaign funds to pay a
candidate's salary before the filing deadline for access to the primary
election ballot for the federal office that the candidate seeks, as
determined by state law, or January 1 of each even-numbered year in
states that do not conduct primaries.\71\ The current regulation also
prohibits the use of campaign funds to pay a candidate's salary after
the date the candidate loses the primary election, withdraws from the
race, or otherwise ceases to be a candidate or, if the candidate wins
the primary, after the date of the general election or general election
runoff.\72\ For special elections occurring in odd-numbered years, the
current regulation authorizes a candidate's principal campaign
committee to pay the candidate a salary from campaign funds starting on
the date the special election is set and ending on the day of the
special election, the date on which the candidate withdraws from the
race, or the date on which the candidate otherwise ceases to be a
candidate.
---------------------------------------------------------------------------
\71\ Id.
\72\ Id.
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The Petitioner and several commenters asked the Commission to
standardize the date that a candidate first becomes eligible to receive
a salary from campaign funds and to extend the period of time that a
candidate could draw a salary from campaign funds.\73\ The Petitioner
asserts that the ballot access deadlines for state primaries ``vary
wildly based on state law.'' \74\ According to the petition, during the
2018 election cycle, the date on which a candidate could begin drawing
a campaign salary under Commission regulations ``ranged from December
4, 2017 in Illinois to July 10, 2018 in Delaware, a difference of 218
days.'' \75\ The Petitioner also said that she, herself, could have
received a campaign salary for only 2 of the 16 months she campaigned
as a candidate for the United States House of Representatives from
Georgia.\76\
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\73\ Petition at 4; Issue One, Comment at 2 (June 29, 2021);
Campaign Legal Center, Comment at 2 (June 30, 2021).
\74\ Petition at 3.
\75\ Id. at 4.
\76\ Id. at 1.
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Several commenters confirmed this disparity in the eligibility
starting date.\77\ One commenter alleged that this ``disparity has real
consequences for candidates, who face grueling schedules--juggling
full-time jobs, families, and campaigning--while they wait to become
eligible to collect salaries.'' \78\ Another commenter argued that
``[t]here is no clear relationship between state primary ballot access
dates and whether candidate salary costs would pass the `irrespective'
test,'' given that ``[s]alary costs are no less irrespective of one's
candidacy whether one is campaigning in Illinois or Delaware.'' \79\
The Petitioner and commenters suggested that the Commission permit a
candidate to draw
[[Page 75953]]
a salary from campaign funds for at least 180 days before the primary
election.\80\
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\77\ See Issue One, Comment at 1-2 (June 29, 2021); Campaign
Legal Center (June 30, 2021) at 2; Comment, Common Cause (July 2,
2021) at 2; Comment, DSCC and DCCC (July 2, 2021) at 1.
\78\ Comment, Issue One (June 29, 2021) at 2.
\79\ Comment, Campaign Legal Center (June 30, 2021) at 2.
\80\ Petition at 4; Comment, Issue One (June 29, 2021) at 2;
Comment, Campaign Legal Center (June 30, 2021) at 2.
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Proposed 113.1(g)(6)(v)(A) would make it possible for candidates to
start receiving compensation from campaign funds as early as the first
day of their campaigns, rather than requiring them to wait until their
respective state's primary election ballot access deadline or January 1
in states that do not conduct primaries. Specifically, the proposed
regulation would prohibit compensation from accruing or being paid to a
candidate only before the date the candidate's principal campaign
committee files a Statement of Organization with the Commission. The
Commission invites comments on this proposal.
Moreover, proposed 11 CFR 113.1(g)(6)(v)(B) would enable candidates
who win the general election, general election runoff, or a special
election or special election runoff to continue to receive compensation
from campaign funds up to the date they are sworn into office. This
proposal would allow winning candidates, who have duties in winding
down a campaign, to continue receiving compensation from campaign funds
while they are unable to seek other employment as they await their term
in office. For candidates who win the general election or general
election runoff, or a special election or special election runoff, this
proposal would significantly extend the period that they remain
eligible to receive compensation from their principal campaign
committees. Does a candidate continue to lose or forego income between
the time the candidate wins the election and is sworn in? Is there any
reason why a candidate who wins a special election or special election
runoff should not be eligible to receive compensation from campaign
funds up to the date of the swearing in? Does a candidate who wins a
general or special election or runoff continue to provide services to
the candidate's campaign committee after the election, such that the
use of campaign funds to compensate the candidate would not exist
irrespective of the candidacy?
Proposed 11 CFR 113.1(g)(6)(v)(B) also would prohibit compensation
from being paid beyond the date an individual ceases to be a candidate
in all other cases, such as when the candidate loses a primary election
or withdraws from the race. This proposal would continue the approach
taken in the current regulation for candidates who do not win the
office sought.\81\
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\81\ 11 CFR 113.1(g)(1)(i)(I).
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Finally, proposed 11 CFR 113.1(g)(6)(v)(C) would address the
eligibility period for candidates running in special elections. It
would authorize a candidate's principal campaign committee to pay the
candidate compensation from campaign funds starting on the date the
special election is set and ending on the day of the special election,
the date on which the candidate withdraws from the race, or the date on
which the candidate otherwise ceases to be a candidate. This proposal
would continue the current regulation's approach to special elections,
except that the proposed regulation would apply to all special
elections, not just those in odd-numbered years.\82\ The Commission
invites comments on this proposal.
---------------------------------------------------------------------------
\82\ Id.
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G. Proposed 11 CFR 113.1(g)(6)(vi)--Candidate Compensation in Relation
to Debts
Any political committee that seeks to terminate and to settle its
debts for less than the full value is required to file a debt
settlement plan for Commission review.\83\ To prevent candidates from
enriching themselves at the expense of other campaign creditors,
proposed 11 CFR 113.1(g)(6)(vi) would prohibit any principal campaign
committee seeking to settle its debts for less than their full value
from paying compensation to the candidate or satisfying a debt to the
candidate for compensation. Is the proposed regulation clear that a
principal campaign committee would not be prohibited from settling its
debts for less than the full value because it paid its candidate
compensation prior to seeking to terminate? The proposed rule would
also prohibit a principal campaign committee from filing a debt
settlement plan that provides for the payment of compensation to the
candidate before all other creditors are paid. The Commission invites
comment on this proposal.
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\83\ Instructions for Debt Settlement Plan, Part I (FEC Form 8)
at 1, https://www.fec.gov/resources/cms-content/documents/
fecfrm8i.pdf#:~:text=Every%20terminating%20committee%20that%20settles
%20a%20debt%20for,not%20be%20made%20until%20completion%20of%20Commiss
ion%20review.; see also 11 CFR 116.7(a), 116.7(b) (describing debts
subject to settlement).
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H. Proposed 11 CFR 113.1(g)(6)(vii)--Evidence of Earned Income
Currently, any candidate receiving a salary from campaign funds
must provide income tax records and other evidence of earned income
upon request of the Commission.\84\ Proposed 11 CFR 113.1(g)(6)(vii)
would maintain this requirement under Compensation Cap Alternatives D,
E, and F--the alternatives that permit a candidate to receive
compensation from campaign funds as limited by the candidate's prior
earned income--and additionally require such evidence of earned income
to be maintained and preserved for three years after the report
disclosing the disbursement has been filed, pursuant to 11 CFR 102.9
and 104.14(b).\85\ This record preservation requirement would not apply
under Compensation Cap Alternatives A, B, or C, because they are not
based on a candidate's prior earned income. Should the Commission
require principal campaign committees to maintain and produce the
information they use to calculate candidate compensation for all
alternatives? Should a principal campaign committee be required to
provide evidence demonstrating a candidate's lack of earned income for
the purpose of complying with proposed 11 CFR 113.1(g)(6)(iv)
(requiring reduction of a candidate's compensation by the amount of
other income earned by the candidate)?
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\84\ 11 CFR 113.1(g)(1)(i)(I).
\85\ Sections 102.9 and 104.14(b) require certain records and
accounts of contributions and expenditures to be preserved for three
years after the report to which the records and accounts relate has
been filed.
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Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory
Flexibility Act)
The Commission certifies that the proposed rules, if adopted, would
not have a significant economic impact on a substantial number of small
entities. The proposed rules would provide flexibility to principal
campaign committees that choose to use campaign funds to pay their
candidates a salary. Any proposed rule that could be construed as
placing an obligation on a principal campaign committee would apply
only to campaigns that choose to pay their candidates compensation. The
proposed rules would not impose any new recordkeeping, reporting, or
financial obligations on principal campaign committees that do not
choose to pay their candidates compensation, and any such new
obligations that may be imposed on principal campaign committees that
do choose to pay compensation to their candidates would be minimal.
Thus, to the extent that any entities affected by these proposed rules
might fall within the definition of ``small businesses'' or ``small
organizations,'' the economic
[[Page 75954]]
impact of complying with these rules would not be significant.
List of Subjects in 11 CFR Part 113
Campaign funds.
For the reasons set out in the preamble, the Federal Election
Commission proposes to amend 11 CFR part 113 as follows:
PART 113--PERMITTED AND PROHIBITED USES OF CAMPAIGN ACCOUNTS
0
1. The authority citation for part 113 continues to read as follows:
Authority: 52 U.S.C. 30102(h), 30111(a)(8), 30114, and 30116.
0
2. In Sec. 113.1:
0
a. Remove and reserve paragraph (g)(1)(i)(I);
0
b. Redesignate paragraphs (g)(6) through (8) as paragraphs (g)(7)
through (9);
0
c. Add new paragraph (g)(6) to read as follows:
Sec. 113.1 Definitions (52 U.S.C. 30114).
* * * * *
(g) * * *
(6) Candidate compensation.
(i) A Federal officeholder, as defined in paragraph (c) of this
section, must not receive compensation as a candidate from campaign
funds.
Compensation Cap Alternative A
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the amount of compensation paid to the candidate does not
exceed 50% of the minimum annual salary paid to a Federal officeholder
holding the Federal office that the candidate seeks, when calculated at
the daily rate, rounded to the nearest dollar.
Compensation Cap Alternative B
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the amount of compensation paid to the candidate does not
exceed the amount of the annualized hourly minimum wage, when
calculated at the daily rate. Annualized hourly minimum wage means the
amount an individual receiving the Federal minimum wage would earn by
working 40 hours a week for 52 weeks, except that an individual
residing in a State that has a higher minimum wage than the Federal
minimum wage shall calculate the annualized hourly minimum wage based
on the State minimum wage, rounded to the nearest dollar.
Compensation Cap Alternative C
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the amount of compensation paid to the candidate does not
exceed the amount of an annualized hourly minimum wage of $15 per hour,
when calculated at the daily rate. Annualized hourly minimum wage means
the amount an individual receiving a minimum wage of $15 per hour would
earn by working 40 hours a week for 52 weeks, rounded to the nearest
dollar. The hourly minimum wage established in this section ($15) shall
be increased subject to the following conditions:
(A) Increases shall take place in odd-numbered years and shall
remain in effect for the 2-year period beginning on the first day
following the date of the last general election in the year preceding
the year in which the amount is increased and ending on the date of the
next general election.
(B) The amount shall be increased by the percent difference between
the price index as defined in 11 CFR 110.17(d), as certified to the
Commission by the Secretary of Labor, for the 12 months preceding the
beginning of the calendar year and the price index for the base period.
(C) For purposes of this paragraph (ii), the term base period means
calendar year 2022.
(D) If any amount after the increases under this paragraph (ii) is
not a multiple of $0.01, such amount shall be rounded to the nearest
multiple of $0.01.
Compensation Cap Alternative D
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the compensation does not exceed the earned income that
the candidate received during the 12-month period prior to becoming a
candidate or the annualized hourly minimum wage, whichever is greater.
Compensation may not exceed the minimum annual salary paid to a Federal
officeholder holding the Federal office that the candidate seeks.
Annualized hourly minimum wage means the amount an individual receiving
the Federal minimum wage would earn by working 40 hours a week for 52
weeks, except that an individual residing in a State that has a higher
minimum wage than the Federal minimum wage shall calculate the
annualized hourly minimum wage based on the State minimum wage. The
committee must calculate compensation, earned income, annualized hourly
minimum wage, and minimum annual salary at the daily rate, rounded to
the nearest dollar.
Compensation Cap Alternative E
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the compensation does not exceed the lesser of: the
minimum annual salary paid to a Federal officeholder holding the
Federal office that the candidate seeks, and the average annual income
that the candidate earned during the most recent three calendar years
in which the candidate earned income prior to becoming a candidate. The
committee must calculate compensation, minimum annual salary, and
average annual income at the daily rate, rounded to the nearest dollar.
Compensation Cap Alternative F
(ii) The use of campaign funds by a candidate's principal campaign
committee to pay compensation to the candidate is not personal use,
provided that the compensation does not exceed the annualized hourly
minimum wage or the average annual income that the candidate earned
during the most recent three calendar years in which the candidate
earned income prior to becoming a candidate, whichever is greater.
Compensation must not exceed the minimum annual salary paid to a
Federal officeholder holding the Federal office that the candidate
seeks for the same period of time. Annualized hourly minimum wage means
the amount an individual receiving the Federal minimum wage would earn
by working 40 hours a week for 52 weeks, except that an individual
residing in a State that has a higher minimum wage than the Federal
minimum wage shall calculate the annualized hourly minimum wage based
on the State minimum wage. The principal campaign committee must
calculate compensation, earned income, minimum annual salary, and
annualized hourly minimum wage at the daily rate, rounded to the
nearest dollar.
Compensation Definition Alternative A
(iii) For the purposes of this paragraph, compensation means direct
payments to the candidate and payments for any employment-related
benefit that the campaign also provides to its staff, including, but
not limited to, health insurance premiums and dependent care costs.
[[Page 75955]]
Compensation Definition Alternative B
(iii) For the purposes of this paragraph, compensation means direct
payments to the candidate and payments for any employment-related
benefit that the campaign also provides to its staff, including, but
not limited to, health insurance premiums and dependent care costs.
Compensation also includes payments for the candidate's dependent care
expenses when such payments are not included as a benefit to staff, if
the expenses are incurred as a direct result of the candidate's
campaign activities; the use of campaign funds to pay any incremental
dependent care expenses that result from non-campaign activities is
personal use, unless the candidate reimburses the campaign account
within thirty days for the incremental expenses.
Compensation Definition Alternative C
(iii) For the purposes of this paragraph, compensation means direct
payments to the candidate and payments for any employment-related
benefit including, but not limited to, health insurance premiums and
dependent care costs. If a committee uses campaign funds to pay for
dependent care expenses incurred from both campaign and non-campaign
activities, the incremental expenses that result from the non-campaign
activities are personal use, unless the candidate reimburses the
campaign account within thirty days for the incremental expenses.
(iv) The candidate's principal campaign committee must reduce the
maximum amount of candidate compensation permissible under this
paragraph by the amount of any earned income the candidate receives
from any other source while the candidate receives compensation from
campaign funds.
(v) Period of eligibility. (A) Compensation shall not accrue or be
paid to a candidate before the date the candidate's principal campaign
committee files a Statement of Organization with the Commission. See 11
CFR 102.1(a).
(B) If the candidate wins the general election, a general election
runoff, a special election, or a special election runoff, the
candidate's principal campaign committee may pay the candidate
compensation from campaign funds up to the date the candidate is sworn
into the office to which the candidate has been elected. In all other
situations in which an individual ceases to be a candidate, such as by
losing the primary election or withdrawing from the race, no
compensation may be paid beyond the date the individual is no longer a
candidate.
(C) In the case of a special election for a Federal office, the
principal campaign committee of a candidate for that office may pay the
candidate compensation from campaign funds starting on the date the
special election is set. See 11 CFR 100.24(a)(1)(ii).
(vi) Candidate compensation in relation to debts. Any principal
campaign committee seeking to settle debts for less than the full value
may not pay compensation to the candidate or satisfy a debt to a
candidate for compensation. Additionally, any debt settlement plan
created under 11 CFR 116.7 must not provide for the payment of
compensation to the candidate before all other creditors are paid.
For Compensation Cap Alternatives D, E, and F
(vii) The candidate must provide evidence of earned income from the
relevant years upon the request of the Commission. Any such evidence of
earned income must be maintained and preserved for three years after
the report disclosing the disbursement is filed, pursuant to 11 CFR
102.9 and 104.14(b).
* * * * *
Dated: December 1, 2022.
On behalf of the Commission,
Allen J. Dickerson,
Chairman, Federal Election Commission.
[FR Doc. 2022-26778 Filed 12-9-22; 8:45 am]
BILLING CODE 6715-01-P
</pre></body>
</html>Indexed from Federal Register on December 12, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.