August 1996 Federal Election Commission Volume 22, Number 8

Table of Contents

Court Cases

1 FEC v. Colorado Republican

Federal Campaign Committee

5 New Litigation

Regulations

1 New Regulations on Cable

Television Debates and News

Stories Take Effect

800 Line

2 Bundling By Individuals

Compliance

3 Alabama Pre-Runoff Nonfiler

Statistics

5 PACs Give $90.8 Million to

Candidates in First 15 Months of

’96 Election Cycle

6 Advisory Opinions

7 Federal Register Notices

11 Index

Court Cases Regulations

New Regulations on Cable

Television Debates and News

Stories Take Effect

On June 21, 1996, the FEC’s

revised regulations governing

candidate debates and news stories

staged, produced or distributed by

cable television organizations took

effect (61 FR 31824, June 21,

1996). The rules were published in

the Federal Register on April 24,

1996 (61 FR 18049).

The new regulations extend the

news story exemption at 11 CFR

100.7(b)(2) and 100.8(b)(2) to cable

television operators, programmers

and producers acting in their

capacities as press entities. Additionally, FEC rules exempt from the

definitions of contribution and

expenditure federal candidate

debates staged by broadcasters and

bona fide print media.

Copies of the Federal Register

notices on the revised rules may be

obtained by calling the FEC at 800/

424-9530 or through the FEC’s

automated Flashfax system: dial

202/501-3413 and request document

229. ✦

FEC v. Colorado Republican

Federal Campaign Committee

On June 26, 1996, the U.S.

Supreme Court ruled that the

coordinated party expenditure limits

at 2 U.S.C. §441a(d) could not be

constitutionally applied to a radio

advertisement aired by the Colorado

Republican Federal Campaign

Committee (the committee) in

connection with the 1986 U.S.

Senate election. The Court found

that the ad was not coordinated with

any candidate; rather it was an

independent expenditure that could

not constitutionally be subject to the

coordinated party expenditure limit.

The Court decided not to address

a constitutional challenge to the

§441a(d) coordinated limits brought

by the committee. Instead, the Court

chose to “defer consideration of the

broader issues until the lower courts

have reconsidered the question in

light of our current opinion.”

This decision vacated the 10th

Circuit Court of Appeals’ judgment

(see the August 1995 Record, page

1). The case was remanded to the

lower courts for further proceedings

consistent with this decision.

(continued on page 4)
2

Federal Election Commission RECORD August 1996

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/219-3420

202/501-3413 (Flashfax Service)

202/219-3336 (TDD)

800/877-8339 (FIRS)

Lee Ann Elliott, Chairman

John Warren McGarry,

Vice Chairman

Joan D. Aikens, Commissioner

Danny L. McDonald,

Commissioner

Scott E. Thomas, Commissioner

John C. Surina, Staff Director

Lawrence M. Noble, General

Counsel

Published by the Information

Division

Louise D. Wides, Director

Dario Bard, Editor

800 Line

Bundling By Individuals

This article explains the rules

governing bundling by individuals.

“Bundling” is a term often used by

the general public and the press to

describe when a person collects and

delivers contributions from other

individuals earmarked for a specific

candidate.

Please note that the focus of this

article is on bundling by individuals.

Political committees should consult

the appendix on earmarking in the

appropriate FEC Campaign Guide.

Definition of Earmarked

Contribution

An earmarked contribution is one

which the contributor directs (either

orally or in writing) to a candidate

or his or her authorized committee

through an intermediary or conduit.

11 CFR 110.6(b)(1).

the campaign and occupy significant

positions in the campaign, are

viewed as agents of the campaign

rather than as conduits. 11 CFR

110.6(b)(2)(i)(A) and (E). These

individuals are not subject to the

earmarking requirements.

Use of Workplace for Bundling

Incidental Use Exception. Under

the “incidental use” exception,

employees of corporations and labor

organizations2

 are permitted to

spend up to one hour a week (four

hours a month) during working

hours for their personal volunteer

activity, including bundling activity,

as long as the individual reimburses

the employer for any increased

operating costs (e.g., long-distance

calls). 11 CFR 114.9(a) and (b).

Advance Payment Exception. An

employee of a corporation or labor

organization may, in an effort to

bundle contributions or otherwise

raise funds for a candidate, make

use of the organization’s personnel,3

food services (including outside

catering obtained by the organization) and mailing lists in the activity

if the organization receives advance

payment from a permissible source

(i.e., the employee, the campaign or

the organization’s SSF) at the fair

market value for the goods or

services. 11 CFR 114.2(f)(2)(i)(A),

(C) and (E).

General Rule. Apart from the two

exceptions discussed above, if an

individual engages in personal

volunteer activity while on the job,

2 In Advisory Opinion (AO) 1979-22,

the Commission noted that the regulations regarding the incidental use of

corporate facilities for individual

volunteer activity by employees applied

to a partnership associate’s use of firm

facilities and staff.

3 Employees of the organization may not

be coerced, through the threat of job

actions or financial reprisals, into

engaging in fundraising activities or

making a contribution. 11 CFR

114.2(f)(2)(iv).

Definition of Conduit or

Intermediary

With certain exceptions discussed

below, a conduit or intermediary

(the terms are synonymous) is a

person who receives and forwards

(i.e., “bundles”) an earmarked

contribution to a candidate or

authorized committee. 11 CFR

110.6(b)(2). A conduit may be an

individual, a partnership or a

federally registered political committee. (This article, however,

explains the conduit requirements

for individuals only.)

Who May Not Act as Conduit.

Individuals who are prohibited from

making contributions in connection

with federal elections are not

allowed to act as conduits for

bundled contributions. 11 CFR

110.6(b)(2)(ii). Specifically:

• Foreign nationals (i.e., foreign

citizens who do not have green

cards lawfully admitting them for

permanent residency in the U.S.)

may not act as conduits;

• Nor may individuals under contract to the federal government or

individual sole proprietors with

federal government contracts.

11 CFR 110.4(a) and 115.5.

Moreover, an individual is not

permitted to conduct bundling activity

when acting as a representative of a

prohibited entity (i.e., a corporation,

labor organization, national bank,1

foreign national or federal government contractor (such as a partnership with a federal contract)).

11 CFR 110.4(a); 110.6(b)(2)(i)(A)

and (E); 114.2(a) and (b); and

115.2(a).

Who Is Not Considered a Conduit.

Individuals who are employees or

full-time volunteers for a campaign,

or who are expressly authorized to

engage in fundraising on behalf of

1 Foreign nationals and national banks

are prohibited from making contributions in connection with any election:

local, state or federal. 11 CFR 110.4(a)

and 114.2(a).
3

August 1996 Federal Election Commission RECORD

compensation paid by his or her

employer for the time spent at work

on bundling activity (or any activity

to influence federal elections) may

be considered a contribution from

the employer to the candidate

benefiting from the activity. 11 CFR

100.7(a)(3). Moreover, the use of the

employer’s facilities for bundling or

other federal election activity results

in an additional contribution from

the employer unless the use is

incidental, as described above, or

the individual reimburses the

employer the usual and normal

charge for the use of the facilities

within a commercially reasonable

time. 11 CFR 100.7(a)(1)(iii) and

(a)(4); 114.9. If the employer is a

corporation or other prohibited

source, the resulting contribution

would be illegal. Even if the employer is permitted to make contributions, the value of the contribution

must remain within the $1,000 per

candidate, per election contribution

limit. 11 CFR 100.7(a)(1)(iii) and

110.1(b)(1).

Bundling and the Contribution

Limits

Solicitation Costs. Any costs an

individual incurs when acting as a

conduit—including payments made

for the use of an employer’s facilities and advance payments for the

costs described above—are considered in-kind contributions to the

candidates benefiting from the

activity and are subject to the

$1,000 per candidate, per election

limit. 11 CFR 100.7(a)(1)(iii) and

110.1(b)(1); AO 1980-46.

Direction or Control. An earmarked contribution counts against

the original contributor’s limit for

the recipient candidate. 11 CFR

110.6(a). The conduit’s contribution

limit is affected only if the conduit

exercises direction or control over

the choice of the recipient candidate.

In that case, the earmarked contribution counts against the contribution

limits of both the original contributor and the conduit. 11 CFR 110.6(d).

Handling of Contributions by

Conduit

Ten-day Forwarding Rule. An

individual acting as a conduit must

forward both the earmarked contribution and certain information

needed for the candidate’s FEC

report to the recipient committee

within 10 calendar days after the

conduit’s receipt of the contribution.

11 CFR 102.8 and 110.6(c)(1)(iii).

No Commingling. Individuals are

prohibited from commingling

campaign funds with personal funds

in a personal bank account. 11 CFR

102.15. Thus, an individual who

bundles earmarked contributions

should forward the original contribution checks to the campaign.

Reporting

An individual who bundles earmarked contributions must forward

certain information to the recipient

committee within 10 days after the

conduit’s receipt of the contribution.

Moreover, the individual must also

disclose information about the

earmarked contributions in a letter

to the FEC within 30 days after

forwarding the earmarked contributions. 11 CFR 110.6(c)(1)(i)-(iii).

Contents of Report.4 The conduit’s

reports to the recipient committee

and to the FEC must contain the

following information:

• Whether the contribution was

transmitted to the candidate in the

form of cash or the contributor’s

check. (Note that contributions

bundled by an individual should

not be transmitted in the form of

the conduit’s check, due to the prohibition on commingling campaign

funds with personal funds.);

• The name and mailing address of

the contributor, and if the contribution is from an individual and

exceeds $200, the contributor’s

occupation and employer;

• The candidate for whom the

contribution was earmarked; 5

• The amount of the contribution;

• The date of receipt by the conduit;

• The date the contribution was

forwarded to the candidate’s

campaign; and

• If the individual exercised direction or control over the choice of

the recipient candidate, a statement

that the earmarked contribution

counts against the conduit’s limit

for the recipient candidate as well

as the contributor’s limit. 11 CFR

110.6(c)(1)(ii) and (d)(2).

The conduit should also inform

the campaign of any costs incurred

in soliciting the earmarked contributions, as the campaign must report

those costs as an in-kind contribution. 11 CFR 104.3(a)(4). ✦

5 It is suggested that the conduit also

include the election for which the

contribution was designated (if any),

the office sought by the candidate and

the name and address of the recipient

candidate committee.

Alabama Pre-Runoff Nonfiler

The Billy Joe Camp for Congress

committee was the only candidate

committee that failed to file a preelection report for Alabama’s June

25 runoff election. The committee is

Billy Joe Camp’s principal campaign committee for his bid for the

U.S. House seat representing

Alabama’s 3rd district. See the FEC

news release of June 21, 1996.

The FEC is required by law to

publicize the names of nonfiling

candidate committees. 2 U.S.C.

§438(a)(7). The FEC pursues

enforcement actions against nonfilers

on a case-by-case basis. ✦

Compliance

4 Campaigns should consult the

Campaign Guide for Congressional

Committees for guidance on reporting

earmarked contributions.
4

Federal Election Commission RECORD August 1996

Background

At 2 U.S.C. §441a(d), the Federal

Election Campaign Act permits

political party committees to make

expenditures up to specified amounts

“in connection with the general

election campaign of candidates for

Federal office.” During the 1986

U.S. Senate race in Colorado, the

committee made an expenditure of

$15,000 for a radio advertisement

titled Wirth Facts #1. The ad

criticized then-Representative Tim

Wirth, who was seeking the Democratic Senate nomination.1

The ad was broadcast throughout

the state several months after

Representative Wirth had registered

as a candidate with the FEC, but

before the Colorado primary election. At the time the ad was aired,

three candidates were seeking the

Republican nomination.

In its campaign finance reports,

the committee characterized the ad

as a generic voter education expense

that was not subject to the §441a(d)

limit. The FEC, however, acting in

response to a complaint, viewed it

as a coordinated party expenditure.

After unsuccessful efforts to reach a

negotiated settlement, the Commission filed suit against the committee

for violating the Act’s party expenditure limits and the corresponding

reporting requirements.

The FEC alleged that Wirth Facts

#1 was subject to the §441a(d)

limits because it contained an

“electioneering message” about a

clearly identified candidate. AOs

1984-15 and 1985-14.

The committee argued that the ad

did not contain express advocacy

and was therefore not subject to the

§441a(d) limits. Further, it counterclaimed with a First Amendment

challenge to the constitutionality of

the §441a(d) limits.

Lower Court Decisions

The U.S. District Court for the

District of Colorado held that only

communications containing express

advocacy counted towards the

§441a(d) spending limits. Since, in

its view, Wirth Facts #1 did not

contain express advocacy, it declined to address the constitutional

question. 839 F.Supp. 1448 (D.Col.

1993). See the November 1993

Record, page 1.

The U.S. Court of Appeals for the

10th Circuit reversed. 59 F.3d 1015

(10th Cir. 1995). See the August

1995 Record, page 1. The 10th

Circuit upheld the FEC’s “electioneering message” standard as applied

to Wirth Facts #1, as well as the

constitutionality of these spending

limits.

Supreme Court Decision

In the landmark 1976 case,

Buckley v. Valeo, and successor

cases, the Supreme Court distinguished between independent

expenditures, which it held cannot

be constitutionally limited,2

 and

contributions, which can be limited.

The FEC had concluded that

political parties, because of their

special function, are incapable of

making electoral expenditures that

are “independent” of their own

candidates, since the sole reason for

a political party’s existence is to

elect its candidates to public office.

The Court disagreed, stating that,

with reference to Wirth Facts #1,

there was no evidence of coordination between the committee and the

three candidates who were then

seeking the Republican Senate

nomination. Rather, Wirth Facts #1

“was developed by the Colorado

Party independently and not pursuant to any general or particular

understanding with a candidate.”

The Court also found that the

potential for, or appearance of,

corruption, which the Buckley Court

found sufficient to justify limiting

contributions, was not present to the

extent that would justify limiting

such independent spending by

political parties on behalf of their

candidates. Accordingly, the Court

concluded that the First Amendment

precludes application of the §441a(d)

limits to independent campaign

expenditures by political parties.

Impact on Publicly Funded

Presidential Campaigns

This decision pertained to party

spending in connection with congressional races. The Court warned

that this opinion does not “address

issues that might grow out of the

public funding of Presidential

campaigns.”

Concurring and Dissenting

Opinions Accompanying This

Judgment

Justice Breyer wrote the plurality

opinion announcing the judgment of

the Court. Although seven Justices

concurred in the judgment, only

Justices O’Connor and Souter joined

Justice Breyer’s plurality decision.

There were also two separate

concurring opinions and one dissent

which the remaining Justices signed

on to, as follows:

• Justice Kennedy, joined by Chief

Justice Rehnquist and Justice

Scalia, filed an opinion concurring

in the judgment and dissenting in

Court Cases

(continued from page 1)

1 As permitted by law, the committee

had previously assigned its entire right

to make coordinated expenditures

under §441a(d) to the Republican

National Senatorial Committeee. FEC

v. Democratic Senatorial Campaign

Committee, 454 U.S. 27 (1981). Thus

any coordinated expenditure it made in

connection with the 1986 Senate

election would have exceeded its

§441a(d) spending limit.

2 Buckley addressed independent

expenditures made by individuals. A

1985 Supreme Court decision, FEC v.

National Conservative Political Action

Committee, applied the same reasoning

to expenditures by independent political

committees.
5

August 1996 Federal Election Commission RECORD

part. This opinion reasoned that

coordinated party expenditures

cannot constitutionally be limited

because this would impermissibly

infringe upon the parties’ First

Amendment right to engage in

political speech.

• Justice Thomas, joined in part by

Chief Justice Rehnquist and Justice

Scalia, filed an opinion concurring

in the judgment and dissenting in

part. This opinion also reasoned

that the §441a(d) limits are unconstitutional. Justice Thomas, writing

for himself only, first explained

that there is no constitutional

difference between expenditures

and contributions, and that neither

can constitutionally be limited at

all. For this reason, he would

overrule Buckley v. Valeo and find

unconstitutional all statutory limits

on contributions and expenditures.

Chief Justice Rehnquist and

Justice Scalia did not join this part

of Justice Thomas’ opinion, but

agreed with Justice Thomas’

conclusion that, under Buckley, the

party expenditure limits at §441a(d)

are unconstitutional in their

entirety because there is insufficient evidence that coordinated

spending by political parties poses

a substantial risk of corruption.

• Justice Stevens, joined by Justice

Ginsberg, dissented. The dissenters

agreed with the FEC’s view that all

campaign expenditures by political

parties should be treated as coordinated with the party’s candidates,

and concluded that the limit on

party expenditures at §441a(d) is

constitutional because it serves

compelling governmental interests

in avoiding both actual corruption

and the appearance of corruption,

and in leveling the playing field in

election campaigns.

U.S. Supreme Court (95-489);

Court of Appeals for the 10th

Circuit (93-1433 and 93-1434), D.C.

No. 89-N-1159. ✦

New Litigation

FEC v. John J. Murray for

Congress Committee

The FEC asks the court to find

that the John J. Murray for Congress

Committee violated the law by

failing to file a 48-hour notice on a

$100,000 contribution in the form of

a loan from the candidate.

Within 48 hours of receiving a

contribution of $1,000 or more after

the 20th day but more than 48 hours

before an election, a candidate

committee must file a notice providing, among other information, the

date of receipt of the contribution,

its amount and the identity of the

contributor. 2 U.S.C. §434(a)(6)(A).

The FEC claims that the Committee

failed to file such a notice within 48

hours of its receipt of a $100,000

loan from John J. Murray, a House

candidate in Pennsylvania’s May

1994 primary election.

In addition to seeking a declaration that the Committee violated the

law, the FEC asks the court to assess

an appropriate civil penalty against

the Committee and to permanently

enjoin it from further violations of

§434(a)(6)(A).

U.S. District Court for the

Eastern District of Pennsylvania,

96CV-4490, June 20, 1996. ✦

Reilly v. FEC

Clinton Reilly asks the court to

quash the FEC’s investigation of

him because he believes the FEC

has no jurisdiction over his slate

mail operation, which distributes

lists of federal, state and local

candidates and advocates their

election or defeat.

Mr. Reilly, doing business as the

California Democratic Voter

Checklist, a for-profit sole proprietorship, sold space to candidates

and initiative committees who

wished to appear on a slate card that

he prepared and distributed to

voters. He gave some candidates

free space as a means of enhancing

the appearance and value of the slate

card.

Mr. Reilly asks the court to

declare that the FEC has no jurisdiction over the Checklist because it is

not a “political committee” under

the Federal Election Campaign Act.

The Checklist’s major purpose, he

claims, is to generate personal profit

for himself rather than to support or

oppose federal candidates. Alternatively, he asks the court to find that

the Checklist has no reporting

obligations under the Act other than

the reporting of free or reduced

space as independent expenditures.

U.S. District Court for the

Northern District of California, C

96-2335 SC, June 26, 1996. ✦

(continued on page 6)

Statistics

PACs Give $90.8 Million to

Candidates in First 15

Months of ’96 Election Cycle

PACs contributed a total of $90.8

million to all federal candidates

during the first 15 months of the ’96

election cycle. Of that total, $78

million went to congressional

candidates seeking election in 1996,

$10.5 million went to candidates

seeking to retire debts or to raise

money for elections held in other

years, and $2.2 million went to 1996

Presidential candidates.

The FEC examined the financial

activities of 4,294 PACs from

January 1, 1995, through March 31,

1996, and found that they raised

$248.6 million and spent $199.6

million during that time.

Republican congressional candidates received $44.8 million from

PACs, while Democratic congressional candidates received $33.2

million. During the same period in

1994, Democratic candidates
Statistics

(continued from page 5)

received $46 million from PACs

and Republicans received $23.7

million.

Incumbents received $65.1

million during the first 15 months of

the 1996 cycle, up from $61 million

in 1994. PACs gave $13 million to

nonincumbents by March 31, 1996,

compared with $8.7 million 2 years

earlier.

Corporate PACs gave the most to

1996 congressional candidates, with

contributions totaling $30.7 million.

The PACs of trade, membership and

health organizations were the next

biggest givers to 1996 congressional

candidates with $21.5 million in

contributions, followed by labor

PACs with $15.6 million, nonconnected PACs with $7.2 million,

the PACs of corporations without

stock with $1.7 million, and cooperatives with $1.4 million.

An FEC news release of June 7,

1996, contains this and other data on

PAC financial activity during the

first 15 months of the ’96 election

cycle (including top 50 PAC lists for

a variety of categories). A copy of

this release may be ordered from the

Public Records office: call 800/424-

9530 and press 3 at the prompt. To

receive faxed copies, call the 24-

hour Flashfax service at 202/501-

3413 and request document 532.

The release is also available on the

FEC’s World Wide Web site: http://

www.fec.gov (select “News Releases and Media Advisories”). For

the latest FEC data, select “Financial Information for Candidates,

Parties and PACs.”

The accompanying graph is based

on the data contained in the news

release. ✦

$0

$10

$20

$30

$40

$50

$60

$70

Republicans Democrats

$0

$10

$20

$30

$40

$50

$60

$70

Incumbents Nonincumbents

PAC Contributions to Candidates:

First 15 Months of Election Cycle

By Candidate’s Party Affiliation By Type of Candidate

Millions Millions

1996

1994

1996

1994

Advisory

Opinions

6

Federal Election Commission RECORD August 1996

AO 1996-13

Property Owned by Limited

Liability Company Used for

Campaign Events

Townhouse Associates, L.L.C.,

(TA) may make space available for

campaign events in the townhouse it

owns. Campaign committees must

pay the fair market value for the use

of the space. Alternatively, TA may

donate the space as an in-kind

contribution to a campaign committee as long as the value of using the

space does not exceed the limits at

2 U.S.C. §441a(a)(1).

TA is a limited liability company

organized under the laws of the

District of Columbia. Because the

laws of the District of Columbia

distinguish a limited liability

company as an entity that is neither

a corporation nor a partnership, TA

is allowed to make contributions in

connection with federal elections

subject to the limits placed on

individuals. AO 1995-11.

TA has a close relationship with

an incorporated law firm, Williams

& Jensen, P.C., raising the question

of whether TA’s contributions

should be attributed to the law firm.

TA is composed of 12 members, all

of whom are partners of the law

firm; the firm has only two partners

who are not TA members. No

member of TA may resign from TA

unless he or she also resigns from

the law firm. Both TA and the law

firm share one address. Moreover,

TA’s stated purpose is to loan funds

to the law firm from time to time

and to pledge funds on behalf of the

law firm.

Additionally, TA rents out some

space in its townhouse to the Firm.

The lease agreement between TA

and the Firm states that TA may use

other townhouse space (i.e., first

floor space) for receptions and
7

August 1996 Federal Election Commission RECORD

events with the prior consent of the

Firm.

Despite this close relationship

and lease agreement, TA’s in-kind

contributions are not considered to

have been made by the law firm. TA

is the party contracting with the

political committee and TA is the

owner of the resources. Moreover,

groups of individuals do business in

different forms. They may be able to

use funds from one form of business

(e.g., a partnership) to make contributions while unable to use funds

from another form of business (e.g.,

a corporation). Furthermore, there is

no suggestion that the firm owns

TA. TA is financed by the personal

funds of its members, and not from

the firm’s funds. Moreover, it is TA

that provides financial support to the

firm, and not the other way around.

In addition to making space

available to campaign committees,

TA indicated that it intends to make

space available to businesses and

charitable and service organizations

as well. Nonetheless, the Commission cautioned TA about becoming a

political committee. It pointed out

that an organization becomes a

political committee when its major

purpose is deemed to be campaign

activity—that is, “making payments

or donations to influence any

election to public office”—and it

has either raised or spent $1,000 in

connection with federal elections.

Date Issued: June 10, 1996;

Length: 6 pages. ✦

AO 1996-18

Conduit Accounts

Contributors to a conduit account

established under Wisconsin law by

an affiliate of the International

Association of Fire Fighters (IAFF)

(a labor organization) may direct

their contributions to IAFF’s federal

PAC, FIREPAC. Directed contributions are contributions from the

individual contributors only and not

from the conduit account.

With respect to the conduit

account, IAFF acts as a collecting

agent under federal election law. As

such, IAFF must: (1) transfer the

conduit-account contributions

directed to FIREPAC within established time frames and (2) provide

FIREPAC with the required contributor information.

Wisconsin Law and the Proposed

Conduit Account

Wisconsin State law permits

organizations to establish conduit

accounts to raise voluntary personal

contributions to Wisconsin’s nonfederal candidates. Under Wisconsin

law, a conduit account may only

disburse receipts in accordance with

directions received from individual

contributors, who may even request

a refund of some or all of the funds.

This is because the funds donated by

the individual contributor into a

conduit account are considered the

contributor’s funds. Therefore, a

contribution received from the

conduit is considered to be a contribution from the individual contributor, not the conduit.

Under IAFF’s proposed activity,

members of the IAFF affiliate who

contributed to the conduit account

would be asked to direct their

conduit-account funds to FIREPAC.

The IAFF affiliate will comport

with federal standards by voluntarily

restricting its solicitations to the

affiliate’s membership and refusing

contributions from those outside

IAFF’s retricted class.

Attribution of Contribution

The issue of control over the

funds in the conduit account is

relevant to determining whether the

later contribution to FIREPAC is

attributed in full to both the contributor and the conduit account or

to just the contributor.

The funds in the account remain

under the control of the individual

donor who alone determines when

and how much of those funds will

be contributed to FIREPAC. Since

neither IAFF nor FIREPAC controls

the account’s funds, the conduit

account is not considered to be

making or accepting contributions

for the purposes of the Federal

Election Campaign Act, and is

therefore not required to report as a

political committee. The account is

instead viewed as an accounting

process by which funds donated by

individual IAFF members are set

aside, awaiting future direction for

disbursement.

Collecting Agent Obligations

Upon receiving directions from a

contributor to disburse money to

FIREPAC, the conduit must forward

the amount it is directed to, as

follows: contributions of $50 or less

must be disbursed within 30 days of

receiving direction; contributions of

more than $50 must be disbursed

within 10 days of receiving direction, and they must be forwarded

with the contributor’s name and

address, and the date the direction

was received. Additionally, contributions of more than $200 require

that the conduit forward information

on the contributor’s occupation and

employer as well. 11 CFR 102.6(c)(4)

and (5), and 102.8(b)(1) and (2).

Date Issued: June 14, 1996;

Length: 4 pages. ✦

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1996-12

11 CFR 110: Candidate Debates

and News Stories (produced by

cable television organizations);

Announcement of Effective Date

(61 FR 31824, June 21, 1996)

Notice 1996-13

Filing Dates for Kansas Special

Election (61 FR 33508, June 27,

1996)

(Advisory Opinions continued on page 8)
8

Federal Election Commission RECORD August 1996

Advisory Opinions

(continued from page 8)

AO 1996-19

Use of Campaign Funds for

Travel to Presidential

Nominating Convention:

Wife and Children

Congressman James T. Walsh

may use campaign funds to pay for

his wife’s and children’s (ages 12

and 16) travel and subsistence

expenses in connection with the

Republican National Convention.

These expenses do not constitute a

personal use of campaign funds.

Congressman Walsh plans to

attend the Republican National

Convention as a delegate pledged to

Senator Robert Dole.1

 His family

will generally support his activities

by co-hosting and possibly sponsoring receptions for his constituents at

the convention. Specifically, the

Congressman plans to ask his

children to act as his representatives

at the Young Republicans’ convention function.

Campaign funds may not be

converted to the personal use of the

candidate or of any other person.

11 CFR 113.1(g) and 113.2(d).

Personal use is defined at 11 CFR

113.1(g) as any use of campaign

funds for an expense that would

exist irrespective of the candidate’s

campaign or duties as a federal

officeholder.

Congressman Walsh and his

family will engage in activities that

further his reelection campaign,

including maintaining contacts and

goodwill with persons who will

assist him in his fundraising efforts

and contribute to his campaign, and

discussing his campaign with his

constituents. Congressman Walsh

1 With respect to Congressman Walsh’s

own travel expenses, the FEC’s

regulations covering delegate activity

indicate that such costs would be for

the purpose of influencing a federal

election and, hence, not a personal use.

11 CFR 110.14(c) and (e).

considers his family’s attendance at

these events, whether alongside him

or in his place, to be important to his

reelection effort. Therefore, his

wife’s and children’s attendance at

the convention is campaign related,

and campaign funds may be used to

cover their travel expenses to and

from the event. Relevant to this

conclusion is the inherently political

nature of the national nominating

convention. The campaign should

report the costs as operating expenditures.

The Congressman also presented

the possibility of visiting a friend in

Santa Barbara prior to the convention. When official and campaign

travel is mixed with personal travel,

that portion of the expenses relating

solely to personal travel is considered a personal use of campaign

funds unless the person benefiting

from the use reimburses the campaign within 30 days. 11 CFR

113.1(g)(1)(ii). Since the Congressman affirmed that he would pay

expenses associated with that visit

(e.g., car rental, hotel and meals) out

of his own personal funds, he avoids

any impropriety with respect to the

personal use rules.

Date Issued: June 10, 1996;

Length: 4 pages. ✦

AO 1996-20

Use of Campaign Funds for

Travel to Presidential

Nominating Convention:

Chief of Staff

Congressman Frank D. Lucas,

representing Oklahoma’s 6th

district, may use campaign funds to

pay for his chief of staff’s travel and

subsistence expenses in connection

with the Republican National

Convention to be held in San Diego.

These expenses do not constitute a

personal use of campaign funds.

Congressman Lucas plans to

attend the Republican National

Convention as a delegate from

Oklahoma.1

 His chief of staff will

accompany him in order to: serve as

the Congressman’s liaison with his

congressional office; make contact

with top Republican contributors

and meet with campaign vendors;

and attend activities in connection

with Congressman Lucas’s role as

National Co-Chairman of “Rural

Americans for Dole.”

Campaign funds may not be

converted to the personal use of the

candidate or of any other person.

11 CFR 113.1(g) and 113.2(d).

Personal use is defined at 11 CFR

113.1(g) as any use of campaign

funds for an expense that would

exist irrespective of the candidate’s

campaign or duties as a federal

officeholder.

As described above, the chief of

staff will engage in activities related

to the Congressman’s campaign and

his duties as a federal officeholder.

The Congressman’s campaign

committee may therefore pay for his

chief of staff’s travel and subsistence.

Such activities will not constitute

“personal use.” The committee may

either reimburse the chief of staff for

these costs or pay the costs directly

(see footnote 3 of the advisory

opinion for guidance on reporting

advances by the chief of staff).

Further, the fact that the Congressman and his chief of staff will

perform functions related to the

Dole Presidential campaign does not

result in the making of an in-kind

contribution to the Dole campaign.

It is understood that a person who

attends a national nominating

convention as an officeholder and a

delegate will participate in activities

aimed at supporting the party’s

Presidential nominee. However, this

advisory opinion assumes that the

1 With respect to Congressman Lucas’s

own travel expenses, the FEC’s

regulations covering delegate activity

indicate that such costs would be for

the purpose of influencing a federal

election and, hence, not a personal use.

11 CFR 110.14(c) and (e).
9

August 1996 Federal Election Commission RECORD

Dole campaign will pay for any

incremental travel, subsistence or

other expenses connected to the

Congressman’s and his chief of

staff’s involvement in Presidential

campaign activities, such as being

chairman of Rural Americans for

Dole.

Date Issued: June 14, 1996;

Length: 4 pages. ✦

AO 1996-21

Membership Organization

Communications

The Business Council of Alabama (BCA) may send to its individual members and to the official

representatives of its organizational

members communications that

endorse and/or oppose federal

candidates or that solicit contributions on behalf of the favored

candidates.

The Proposed Communications

BCA is an incorporated, nonprofit membership organization. Its

members include individuals, firms,

partnerships, organizations and

corporations.

The proposed communications

would be sent to BCA’s individual

members and to the individuals with

whom BCA normally conducts

business on behalf of its member

firms, partnerships, organizations

and corporations.

The expense of producing and

distributing these communications

would be paid by BCA. These

materials would contain the views

of BCA and would not be reproductions of literature originating from a

candidate campaign or other entity.

The communication would

provide information on how to make

contributions to the favored candidates; for instance, campaign names

and addresses would be provided.

BCA, however, would not provide

its members with the means to

actually make the contribution; for

instance, BCA would not provide

envelopes addressed to candidates

and would not receive or forward

contributions to the candidates. It

would, however, ask members to let

it know the amounts and recipients

of their contributions.

The Corporate Ban and Its

Exceptions

Corporations are prohibited from

providing anything of value to an

entity involved in a federal election.

2 U.S.C. §441b. There are some

exceptions to this general ban.

One exception allows corporations to send to their restricted class1

communications that expressly

advocate the election or defeat of a

clearly identified candidate and that

solicit contributions to be sent

directly to the candidate. 2 U.S.C.

§441b(b)(2)(A); 11 CFR 114.1(j)

and 114.2(f)(4)(ii). However, such a

corporate communication may not,

in any way, facilitate the making of

contributions. 11 CFR 114.2(f) and

114.3. Examples of illegal corporate

facilitation include acting as a

conduit for contributions and

providing potential contributors

with stamps and envelopes addressed to political committees other

than the corporation’s own PAC.

Although the corporation may not

provide addressed envelopes, it may

provide contributors with the

addresses of political committees.

BCA’s proposed communications

avoid facilitation problems and are

otherwise consistent with the abovedescribed legal guidelines. BCA

must also ensure that contributions

are made voluntarily, that no penalty

would attach to a BCA member who

did not make contributions, and that

contributions are not made in the name

of a BCA member by another entity.

The only issue remaining is

determining the permissible audience

for the proposed communications.

Determining Who May Receive

the Communications

Communications that contain

express advocacy or that solicit

contributions on behalf of candidates may be sent to individual

members of an incorporated membership organization.

Under 11 CFR 100.8(b)(4) and

114.1(e)(2), individuals and other

entities are considered members of

an incorporated membership

organization only if they satisfy one

of the following requirements: 1)

They have some significant financial attachment to the organization;

2) They pay organization dues on a

regular basis and are entitled to

vote, either directly or through a

chosen representative, for a member

of the organization’s highest governing body; or 3) They are entitled

to vote directly for all of the members of the organization’s highest

governing body.

These voting-rights requirements—11 CFR 100.8(b)(iv)(B) and

114.1(e)(2)—were struck down by

the U.S. Court of Appeals for the

District of Columbia in Chamber of

Commerce vs. FEC, on the basis

that they were too restrictive. See

the January 1996 Record, page 2.

The FEC has not yet developed

regulations incorporating the result

in Chamber. Nonetheless, since all

BCA members meet the more

stringent and former definition of

member (they pay annual dues and

directly elect BCA’s highest governing body), the Commission determined that BCA’s individual

members may be included in the

audience for the proposed communications.

Further, BCA may also send the

proposed communications to the

individual representatives of its

corporate members with whom

BCA normally conducts business.

While BCA does not qualify as a

trade association under the Federal

Election Campaign Act, its situation

is analogous to the situation permit1 Under 11 CFR 114.7(a), the restricted

class of an incorporated membership

organization includes its members, its

executive and administrative personnel

and the families of both groups. (continued on page 10)
10

Federal Election Commission RECORD August 1996

ted at 11 CFR 114.8(h), which

addresses trade association communications with its member corporations. The Commission notes that,

based on the total number of corporate and noncorporate members,

there are less than two representatives per member on average. The

number of employees of BCA’s

corporate members who would

receive the communications is

therefore reasonable and consistent

with the purposes of 11 CFR

114.8(h).

Date Issued: June 14, 1996;

Length: 7 pages. ✦

Advisory Opinions

(continued from page 9)

AO 1996-22

Public Funding for NonMajor Party Candidates

If Ross Perot becomes the

Reform Party’s 1996 Presidential

nominee, he would be eligible for

pre-election public funding, provided he agrees to abide by the

conditions imposed by the Presidential Election Campaign Fund Act

and corresponding FEC regulations.

Background

Mr. Perot received nearly 19

percent of the popular vote in his

1992 bid for the U.S. Presidency. In

the 1992 election, he ran as an

independent in 43 states and as the

candidate of non-major parties in

seven states.

Mr. Perot has registered as a

candidate for the 1996 Presidential

election. He has named the Perot

Reform Committee as his principal

campaign committee.

According to Mr. Perot’s counsel,

the Reform Party will likely become

a political party once its efforts to

create state Reform Parties and gain

ballot status succeed. Moreover, it is

anticipated that most of the seven

parties that supported Mr. Perot’s

candidacy in 1992 will become state

affiliates of the Reform Party.

Application of Public Funding

Provisions

Under 26 U.S.C. §9004(a)(2)(B),

a Presidential candidate who received more than 5 percent but less

than 25 percent of the popular vote

in the previous Presidential general

election may receive pre-election

public funding. Since Mr. Perot

received 19 percent of the popular

vote in 1992, he would be eligible

for pre-election funding in 1996 if

he obtains the nomination of the

Reform Party or any other non-major

party and otherwise meets the eligibility requirements. The amount of

public funding such a candidate

would receive is based on the ratio

of the votes he or she received

previously compared to the average

received by the major party candidates.

Under 11 CFR 9003.1, a candidate who wishes to receive public

funding must submit to the FEC a

signed letter stating that he or she

agrees to abide by the conditions

imposed by FEC laws and regulations. Candidates must submit this

letter within 14 days of securing

ballot access in at least 10 states.

The Commission has the authority

to extend this deadline, and in the

case of Mr. Perot the Commission

granted him until 14 days after the

Reform Party convention to submit

his letter.

Unanswered Questions

Questions on whether a Reform

Party nominee other than Mr. Perot

would also be eligible for preelection public funding and whether

the Reform Party could receive

public funding for its convention

were left unanswered. These

questions hinge on whether the

Reform Party qualifies as a minor

party. Additionally, for convention

funding, the Reform Party would

also have to demonstrate that it

qualifies as a national party committee under 26 U.S.C. §9008.

A minor party is defined under

26 U.S.C. §9002(7) as a political

party whose Presidential nominee

received between 5 percent and 25

percent of the popular vote in the

last general Presidential election as

the candidate of that party.

Since, at the time of this opinion,

the Reform Party had not been

formed, the questions of whether it

qualified as a minor party or as a

national committee were hypothetical and the Commission deemed it

premature to address them.

Date Issued: June 14, 1996;

Length: 4 pages. ✦

AO 1996-24

Use Of Campaign Funds For

Certain Legal Expenses

U.S. Representative Wester S.

Cooley may use campaign funds to

pay for services rendered by a law

firm in connection with refuting

allegations of wrongdoing made by

the press. Representative Cooley

may also use campaign funds to pay

for legal expenses in connection

with establishing a legal expense

trust fund to raise funds to defray

his legal expenses. However, if a

Department of Veterans Affairs

(VA) inquiry results in an adverse

finding, campaign funds may not be

used to respond to such a finding.

Refuting Press Attacks

Representative Cooley has been

the subject of a number of allegations of improper conduct. He has

hired a law firm for the following

functions: (a) to handle direct

communications with the press,

including responses to press inquiries concerning Representative

Cooley’s positions on the allegations made; (b) to conduct research,

investigations and communications

with government officials directed

at refuting the allegations made; and

(c) to do research on Oregon law

relating to defamation and false

statements made by the press, and

subsequent demands for retractions

of false statements. The need for

these services exists because of the

greater scrutiny Representative
11

August 1996 Federal Election Commission RECORD

Cooley received as a candidate and

officeholder and his need to refute

allegations made by the press

against him. AOs 1995-23, 1995-21.

Under 2 U.S.C. §439a, excess

campaign funds may be used for any

lawful purpose that does not constitute

personal use, which is defined under

Commission regulations as the use

of campaign funds to pay for any

expense that would exist irrespective of the candidate’s campaign or

duties as a federal officeholder.

11 CFR 113.1(g)(1). In this case the

legal fees would not have existed

had Representative Cooley not been

a candidate or officeholder.

Responding to Legal Proceedings

One of the allegations against

Representative Cooley concerned

his spouse’s receipt of Veterans

benefits. Representative Cooley may

use campaign funds to request a VA

inquiry into the allegations as an

attempt to confirm that he had

complied with eligibility requirements for these benefits. However,

if the VA inquiry finds that benefits

were received improperly, he may

not use campaign funds to pay for a

legal response to this adverse

determination. The need to respond

to an adverse finding by the VA

would not arise from press allegations of wrongdoing, but rather from

the Cooleys’ obligation to comply

with VA requirements for eligibility

for benefits. Because this obligation

would exist irrespective of Representative Cooley’s campaign or

officeholder status, it would be

considered personal use.

Similarly, if any of the other

press allegations lead to legal

proceedings that could have arisen

irrespective of Representative

Cooley’s status as a candidate or

officeholder, he may not use campaign funds to pay legal costs

incurred in connection with any

such proceedings.

Voter Pamphlets

One of the allegations concerns

press allegations of false information in voter pamphlets produced

with campaign funds. Representative Cooley may use campaign

funds to pay for legal expenses in

connection with any formal proceedings that might result from

these allegations because the

pamphlets were produced as part of

his 1994 campaign for Congress.

Setting Up Legal Expense Trust

Representative Cooley is also

permitted to use campaign funds to

pay for expenses incurred in the

research into and establishment of a

legal expense trust fund to raise

funds to defray his legal costs. Legal

expense trust funds are a mechanism

to allow candidates and federal

officeholders to receive donations

without having to treat these

donations as contributions under the

Federal Election Campaign Act.

Setup costs for this trust fund would

not exist were Representative

Cooley not a candidate or federal

officeholder.

Freedom of Information Act

Expenses

Due to insufficient information

provided by the requester, the

Commission could not determine

whether Representative Cooley

could use campaign funds to pay for

expenses incurred regarding the

Freedom of Information Act and a

newspaper effort to obtain confidential information about him.

Date Issued: June 27, 1996;

Length: 7 pages. ✦

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1996-27

Qualifying as state committee of

national political party (Libertarian

Party of Illinois; June 21, 1996; 2

pages)

AOR 1996-28

Assignment of court award to candidate by his terminating committee

(Lehigh Valley Citizens for Don

Ritter; June 25, 1996; 3 pages)

AOR 1996-29

Allocation of in-kind contribution of

computer equipment over several

election cycles (Chris Cannon for

Congress; July 5, 1996; 2 pages plus

3-page attachment) ✦

Index

The first number in each citation

refers to the “number” (month) of

the 1996 Record issue in which the

article appeared. The second number,

following the colon, indicates the

page number in that issue. For example, “1:4” means that the article

is in the January issue on page 4.

Advisory Opinions

1995-38: Corporate vendor and

nonconnected PAC with common

officer, 1:14

1995-40: Disaffiliation of PACs, 3:7

1995-41: Preemption of state

disclosure requirements, 2:3

1995-42: Using campaign funds to

pay child-care expenses, 2:3

1995-43: Refunding legal fees to

candidate committee, 3:8

1995-44: Presidential primary

candidate excused from filing 48-

hour notices, 3:8

1995-45: Qualified campaign

expenses for ballot access, 3:9

1995-46: Purchase of candidate’s

book by his campaign, 3:9

1995-47: Use of campaign funds for

travel to party’s Presidential

nominating convention, 5:7

1995-48: Preemption of Georgia law

limiting receipt of contributions,

3:10

1995-49: Status of a state affiliate of

national party committee, 6:6

(continued on page 12)
FEDERAL ELECTION COMMISSION

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Washington, DC 20463

Official Business

Penalty for Private Use, $300

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Postage and Fees Paid

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Printed on recycled paper

Federal Election Commission RECORD August 1996

1996-1: Corporate partisan communications, 5:7

1996-2: Providing free on-line

accounts to candidates, 6:6

1996-3: Determining political

committee status, 6:7

1996-4: Public funding shortfalls

and bridge loans, 5:8

1996-5: Returning illegal contributions, 5:9

1996-7: Public funding certifications, 5:9

1996-8: Local party committees and

building funds, 7:6

1996-9: Building a library center

with excess campaign funds, 6:7

1996-10: Corporate employees as

stockholders, 7:7

1996-11: Incumbent appearances at

convention of membership

organization, 7:9

1996-12: Criteria for qualified

campaign expenses, 7:10

1996-13: Property owned by limited

liability company used for

campaign events, 8:6

1996-14: Use of excess campaign

funds for moving expenses, 7:11

1996-15: Discarding envelopes used

to mail reports to state, 7:11

1996-16: Defining a news entity, 7:11

1996-17: Cars provided as official

vehicles of convention, 7:12

1996-18: Conduit accounts, 8:7

1996-19: Use of campaign funds for

travel to Presidential nominating

convention: wife and children, 8:8

1996-20: Use of campaign funds for

travel to Presidential nominating

convention: chief of staff, 8:8

1996-21: Membership organization

communications, 8:9

1996-22: Public funding for nonmajor party candidates, 8:10

1996-24: Use of campaign funds for

certain legal expenses, 8:10

Court Cases

FEC v. _____

– Colorado Republican Federal

Campaign Committee, 8:1

– DSCC (95-2881), 1:5

– GOPAC, 4:1

– Hartnett, 4:12

– Legi-Tech, 4:9

– Murray, 8:5

– National Right to Work, 4:11

– Parisi, 3:6

– Wofford, 6:4

_____ v. FEC

– Albanese, 5:4

– Buchanan, 6:4

– Center for Responsive Politics, 1:3

– Chamber of Commerce, 1:2

– Clifton, 5:6; 7:1

– Common Cause (94-02104), 5:5

– DCCC (1:96CV00764), 6:4

– DSCC (95-0349), 7:5

– Grover, 7:6

– Hooker, 3:7

– Jordan, 4:12

– ME Right to Life Committee, 1:3; 4:9

– MN Citizens Concerned for Life,

3:6; 6:3

– RNC (94-1017), 4:10

– Reilly, 8:5

– Stockman, 2:9

– Whitmore, 3:6

On Appeal?, 5:6; 7:6

Reports

Electronic filing system, FEC

authorized to develop, 2:2

Point of entry change for House

candidates, 2:1

Reporting reminders, 4:3; 6:1

Schedule for 1996, 1:5

Special elections, 2:5; 3:2; 7:16

800 Line

Ballot access payments, 2:8

Bundling by individuals, 8:2

Conventions, permissible corporate

and labor activity, 2:7

Filing tips, 5:1

Index

(continued from page 11)