'< 

i 

FEDERAL ELECTION COMMlSSlON 

Washington, DC 20463 

MEMORANDUM 

TO: Commissioners 

Staff Director Pehrkon 

General Counsel Noble 

Press Office Harris 

FROM: Mary W. QoveNeneshe FerebeeYine 

Commission Secretary 

DATE: August 12,1999 

SUBJECT: Corrected Statement of Reasons For MUR 4378 

Attached is a copy of the Statement of Reasons in MUR 4338 

signed by Chairman Scott E. Thomas and Commissioner Danny Lee 

McDonald. This was received in the Commission Secretary's Office on 

August 11,1999 at 9:s a.m. 

cc: V. Convery 

Attachments 
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FEDERAL ELECTlON COMMISSION 

WASHlNGTOh. DC 20461 

Hn the Matter of 1 

1 

National Republican Senatorial 1 

Committee, Stan Huckaby as treasurer 

STATEMENT OF REASONS 

At issue in MUR 4378 was whether the National Republican Senatorial 

Committee (‘?\IRSC”) exceeded the contribution limits ofthe Faded Election Campaign 

Act (“FECA” or “the Act”) by disguising a negative advertising campaign agaimst Senate 

candidate Max Baucus as so-called “issue advertising.” Mer an extensive investigation 

into the matter, the Commission’s Office of General Cowl mommended that the 

Commission find probable cause 15 believe the NRSC had violated the statutory limits. 

Three Commissioners (Elliott, Mason, and Wold) voted against the recommendation, and 

one Commissioner (Sandstrom) abstained. Because the NRSC advertising Campaign was 

plainly “in connection with” the Senate Campaign and there was clear evidence of 

coordination between the NRSC md the Republican Senate candidate in Montana 

regarding this advertising, we agreed with the Office of General Cour~l’s legal 

recommendations and voted to find probable cause the NRSC had violated the Act. 

In 1996, Senator Max Baucus was a candidate for re-election to the United States 

Senate from Montana. In late 1995, the National Republican Senatorial Committee 

indicated that it planned to pun advertisements to “ensure that voters know that their 

Democratic Senator and Democratic Senate candidates ‘raised taxes tos much.’ This is a 

great issue for the GOP because voters always suspected it was me.”’ NRSC Press 

Release, October 19, 1995 (emphasis added). Elaborating on the NwSC’s intent, the 

Executive Director of the NRSC indicated that “We’re going to hammer the Democrats 
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who voted for this [a tax increase]." Washington Times. October 20, 1993. One of the 

Senators listed by the NRSC as a potential "target" of these ads was Senator Baucus. 

Several months later, the NRSC began to run an extended advertising campaign-- 

directed specifically to Montana voters-repeatedly attacking the Baucus campaign for 

its position on taxes. The fust of these negative campaign ads began airing on Montana 

radio stations on April 16, 1996: 

Liberal Max Baucus voted to raise his own pay, then voted to raise our 

taxes. He was wrong. While working families are having a tough time 

making ends meet here in Montana, Max Baucus is back in 

Washington giving himself a big pay raise. then voting to raise our 

taxes. Max Baucus increased his pay by more than $23.000. then 

increased our taxes by more than $2.600 per family. That's an 

outrage. Pay raises. . . higher taxes. That's not Montana - but it is 

Max Baucus. 

Soon the Senate will vote on term limits - and the people of Montana 

support it. But not Max Baucus. In fact, he's already opposed term 

limits. It's just what you expect from a Senator who's been in 

Washington for twenty-one long, liberal years. 

Call liberal Max Baucus. Tell him he was wrong to vote himself a big 

pay raise. then vote to raise our taxes. Tell him it's time to vote for 

term limits. 

Paid for by the National Republican Senatorial Committee. 

MUR 4378, May 24, 1996 Complaint at Exhibit A. 

On April 25. 1996 the NRSC began airing another radio ad: 

You already know that liberal Max Baucus voted to raise his own pay 

by $23.000 then voted to raise your taxes by more than $2,600 per 

family. But did you know that in the 21 long liberal years that Baucus 

has been in Washington. our debt skyrocketed to $5 trillion. 

It's a fact. 

And still liberal Max Baucus refuses to consistently vote for a real 

balanced budget. 

Instead, he's voted to spend billions more on wasteful government 

spending. 

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That's right. Billions more. 

Liberal Max Baucus even vote61 to spend our tax dollars to pay for an 

alpine slide in Puerto Rico and a casino in Connecticut. 

That's not Montana. But it is Max Baucw. 

Call Liberal Max Bsucus at (800) 332-6106 Tell him to stop wasting 

our hard earned money. Tell him to vote for Congress' balanced 

budget plan. 

Paid for by the National Republican Senatorial Committee. 

Zd. at Exhibit €3. 

Anoth-,~ NRSC-financed radio advertisement attacking Max Baucus began eo air 

on May 8, 1996: 

The top movie is Godfather Part 11. 

Streaking becomes a national fad. 

Max Baucus goes to Washington. and QUT national debt is $484 

million. 

A lot's changed in 21 years - for example, Max Baucus' salary has 

more than tripled. from $42.000 to $133,000 a year. And the national 

debt has skyrocketed to $5 trillion. 

What have we gotten koom Baucus' 21 long liberal yeas? More taxes 

and more debt. Liberal Baucus voted for five of the largest tax 

incremes in hencan history. In one vote alone, he increased taxes 

on Montana families by $2,600 a year. 

Baucus even voted to raise taxes on Social Security, small businesses, 

and gasoline. 

Call libera! Max Baucu.. Tell him to balance the budget. Tell him he 

was wrong to raise taxes and spend w; into debt. Tefl Ern to vote for 

the majority's plan to balance the budget. 

Paid for by the National Republican Senatorial ComiRee. 

MUR 4378, November 13.1998 General Counsel's Report at 14-17. 

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On May 12.1996. the NRSC shifted from radio and began auwing television 

advertisements against the Baucus Campaign: 

VIDEO AUDIO 

GRAPHICS: 1974 1974 

Baucus sfill Liberal Max Baucus goes to Washington 

GRAPHICS: Your share of national 

debt - $2300. 

Your share of the national debt - $2300 

22 long liberal yms later. Government 

spending explodes. 

GRAPHICS: 1996 

GRAPHICS: Baucus votes fos five of the 

biggest tax increases in American history. 

Baucus votes for five of the biggest tax 

Headline on Spending. Incmes in history. 

GRAPHICS: Your share ufnational YOW shti~~ ofthe mtiOn;?l debt ~ Eli 9,000. 

debt - 6 19000. 

MOV-ING UPWARD ARROW 

AGAMST GWH LABELED 

BAUCUS SALARY 

mat else is up? 

Arrow ends at $ 133.000 Baucus's salary. It's tripled to $133,000. 

We need a balanced budget. 

Raocus pix. 

GRAPHICS: Call Max BaucusPhone 

#??/Balance the Budget 

Disclaimer 

Call liberal Max Baucus and tell him 

to support the majority's balanwd 

budget plan. 

id. at 17-18. 

Less than two weeks later, May 24. !996, the NRSC began airing a different 

attack ad on television for Montana voters. The script read: 

By one vote, the Senate passed the largest tax increase in history. That 

one vote - Max Baucus. 

He voted for more taxes OR Social Security, gasoline and family farms. 
It’s no surprise. 

For twenty-two long liberal years. Baucus has spent our money and 

raised our taxes. He’s the sixth biggest spender in the Senate. 

Max Baucus - definitely a liberal. 

Cali. Tell Baucus to vote for the majority’s plan to balance the budget. 

Id. at 18. 

One week later, on May 3 1, 1996, the NRSC continued its attack on the Baucus 

campaign with another anti-Baucus advertisement on Montana television stations: 

VIDEO 

Hand presses button to start tape recorder 

Fuse lit and burns spread over video. 

Hands pick up Baucus photo fiom manila file 

folder marked TOP SECRET in block stencil 

Hand flips to next piece of paper with 

GRAPHICS: Max Baucuwoted for 5 of the 

Biggest Tax Increases in American History 

Hand ¶ips to piece of paper with GRAPHICS: 

Max BaucusNoted to Raise Taxes on: Social 

SecurityEmily Farms (8/6/93) 

Tape recorder playing. 

AUDIO 

bouncer: 

Good morning Mr. Phelps. 

?his is Max Baucus, liberal 

from Montana. 

Baucus disguises his record. 

Baucus voted for five of the 

biggest tax increases in history. 

Baucus voted to raise taxes on 

Social security and family farms. 

Your mission. which may be 

impossible, is to gat Baucus to 

support the majority’s balanced 

budget plan. 

Good luck, Jim. 

Hand presses off button on tape recorder. Announcer: 

5 
(800) 332-4105 Help Jim. Call liberal Max 

Baucus. This message will1 

self-destruct in one second. 

Disclaimer 

Id. at 18-19. 

On June 21,1994, the NRSC ran one more attack d qinst Senator Baucus on 

Montana television stations: 

VIDEO AUDIO 

Scrolling list of Baucus votes for more taxes. In his 22 long liberal years, Max 

Baucus has voted over fifty times 

to raise taxes. 

Baucus even ~oted to mise taxes on 

Social Security, Medicare recipients. 

small businesses and the family 

fm. 

Max, you can’t hide hm your 

record- you’re definitely a liberal. 

Call, tell Max Baucus to support the 

majority’s plan to balance the budget 

and cut our taxes. 

Id. at 19-20. 

On May 3 1.1994, Senator Baucus and his campaign organization, “Friends of 

Mas Baucus ‘96‘”, filed a complaint with the Federal Election Commission. 

Specifically. the complaint alleged that the NRSC: (1) exceeded the 2 U.S.C. $44la(d) 

limitations on coordinated party expenditures when it paid for the anti-Baucus radio and 

television advertising campaign; (2) used prohibited or excessive monies to pay for these 

advertisements in violation of2 U.S.C. $4 44lb and 441a; and (3) failed to report these 

expenditures properly in violation of 2 U.S.C. 0 434(b). 

The Office of General Counsel prepared a report for Commission consideration 

that contained a factual and legal analysis of the complaint’s allegations as well as the 

NRSC’s response to the complaint. On June 17, 1997, the Commission approved the 

General Counsel’s legal recommendations by a 5-0 vote and found reason to believe that 

the NRSC violated 2 U.S.C. $0 44la(r). 434(b) and 441b, as well as 11 C.F.R. 6 102.5(a). 

The Commission also approved the General Counsel’s recommendation to conduct an 

investigation into the matter to veri@ the allegations of the complaint. 

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Afner a full investigation and review of the responses and materials submitted by 

the NRSC. the Office of General Counsel prepared a report for Commission 

consideration analyzing the pertinent factual and legal issues. The central finding of the 

General Counsel‘s office was that the three-month..anti-Baucus advertising campaign 

financed by the NRSC from April-June 1996, was “in connection with” the U.S. Senate 

race. The total cost of this advertising campaign was approximately 5209.292. The 

General Counsel’s Report also found the anti-Baucus expenditures were coordinated with 

the campaign of Senator Baucus‘s Republican opponent Dennis Rehberg and his 

campaign committee. Montanans for Rehberg. As a result. the General Counsel 

recommended that the Commission find probable cause to believe the WRSC (1) violated 

2 U.S.C. Q 441a(h) by making a total of $309,292 ii; coordinated expenditures on behalf 

of the Rehberg campaign; (2) violated 2 U.S.C. 0 434(b) by misreporting the media 

campaign as allocable administrative costs/generic voter drive expenditures; and (3) paid 

for a portion of the advertising campaign from the NRSC non-federal account in violation 

of2U.S.C.§~141a(f)and44lb,aswellas 11 C.F.R.4 102.5. 

Motions to adopt the General Counsel’s recommendations failed to secure the 

four affirmative votes necessary to rnake a probable cause to believe determination. 

2 U.S.C. Q437g(a)(4). More specificdiy, the undersigned voted to support the General 

Counsel‘s recommendation regarding section 441a(h) and Commissioners Elliott. Mason 

and Wold opposed the motion. Commissioner Sandstrom abstained. Motions to approve 

the General Counsel’s recommendations with respect to 2 U.S.C. $0 434(b), 441a(f), 

441b. as well as 1 1 C.F.R. Q 102.5(a) also failed with Commissioners Thomas, 

McE)onald and Sandstrom voting to support the General Counsel’s recommendations and 

Commissioners Elliott. Mason. and Wold voting to oppose the recommendations. 

11. 

This enforcement matter is about the circumvention of the Act’s contribution 

limitations by the NRSC. The Federal Election Campaign Act limits the contributions 

party committees may make to or on behalf of candidates for federal office. 2 U.S.C. 

Q 441a. More specifically. section 441a(h) authorizes the “Republican or Democratic 

Senatorial Campaign Committee. or the national committee of a political party. or any 

combination of such committees” to contribute “not more than $1 7,500 to a senatorial 

candidate. The NRSC, which is a political committee organized specifically to support 

Republican candidates in elections for the United States Senate, is subject to the section 

441a(h) contribution limitation. 

The Act also allows the national and state committees ofthe political parties to 

make ‘-coordinated expenditures” in connection with the genera4 election campaigns of 

the parties‘ candidates. but such expenditures may not exceed ceatain dollar limitations. 

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2 U.S.C. 9 441a(d).' As noted by the Supreme Court in Colorado Republican Federal 

Campaign Committee v. FEC ("Colorado"'), 518 US. 604,610 (1996). this special 

provision for party committees is an exception to the g441a contribution limitations. 

Although the NRSC is authorized by 5 441a(h) to contribute up to $17.500 to a candidate 

for election to the Senate, it is not authorized by 4 441a(d) to make additional coordinated 

party expenditures on behalf of candidales for election to the Senate. The national and 

state party committees may authorize the NRSC. however. to expend their respective 

section 441 a(d) allowance on their behalf. See FEC 17. Democratic Senatorial Campaign 

Committee. 454 U.S. 27 (1981).' 

In the 1996 race for United States Senate from Montana the NRSC made full use 

of the contribution limit available to it. The NRSC made direct contributions totalling 

$17,500 to the Republican Senate candidate, Montanans for Rehberg. The NRSC. 

however, could not make any section 441a(d) expenditures because the RNC had 

exhausted both the national and the state party section 441a(d) limitations. Apparently 

authorized by the state party committee to make expenditures against its limit. the RNC 

reported a total of $1 22.000 in section 441a(d) expenditures. 

Even these contributions and expenditures, however, were not enough. From 

April to June of 1996, the NRSC spent an additional $309.292 on an advertising 

campaign meant to diminish support for the Baucus campaign. In other words. the 

amount of money spent on this springtime offensive against the Baucus campaign was 

' Specifically, 4 441a(d) provides in pninent pan: 

(3) The national committee ofa political party. or a State committee of a political 

pan. including any subordinate committee of a State committee. may not make 

any expenditure m comemum wth the general election campaign of a candidare 

for Federal office in a State who is affiliated with such party which exceeds- 

(A) in the case of a candidate for election to the office of Senator, or 

of Representative from a State which is entitled to only one Representative. 

the greater of- 

(i) 2 cents multiplied by the voting age population of the State (as certified 

under subsection (e) of this section); or 

(ii) $20.000: 

2 U.S.C. 5 44la(d)(3)(emphasis added) 

' The 5 44 la(d) coordinated expenditure allowance is considerably larger than the allowabie contribution 

limit for a Senate race. For the 1996 elections. in rhe least populated states. the Stare pany and national 

party were each entitled to spend $61.820 under 5 441a(d) for their Senate candidate. For their House 

candidates, each could spend $30.910. See FEC Record, at 14-15 (April, 1996). With the coordinated 

expenditure and contribution limit provisions. Congress struck a reasonable balance between the need to 

encourage party activity and the need to prevent parties from becoming a vehicle for evading the limits on 

contributions to candidates. Without the limits on party spending, a group of persons could easily effect 

massive support on behalf of a particular candidate by contributing not only to the candidate but also to 

pain. committees likely to spend on behalf of such candidate. For example, a group of ten PACs might be 

coaxed by a House committee chairman to give $15.000 each to a national party committee. but the 

coordinated expenditure limit would prevent the party from spending the full $150.000 amount on ads 

sought by that chairman's reelection campaign. 

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more than double the amount of money which the NRSC and the RNC legally sp-nt on 

the 1996 Senate campaign under sections 44 I a(h) and 44 1 a(d). 

In MUR 4378, we believe that the NRSC made excessive in-kind contributions of 

$309,922 in violation of 2 U.S.C. 9 441a(h). As the Qffce of General Counsel noted. 

because the coordinated expenditure allowance was used up. any additional coordinated 

expenditures were subject to the contribution limitations at section 441 a(h). Accordingly. 

the $309,922 can be analyzed properly as a violation of section 44la(h). In determining 

whether party communications are coordinated expenditures under section 441a(d) or inkind contributions under section 441a(h), the legal analysis is essentially the same. In 

Advisoiy Opinion 1985-14. Fed. Elec. Camp. Fin. Guide (CCH) 7 5819. the Commission 

clarified that the section 441a(d) ”in connection with” test would be applied.’ Moreover. 

the Commission has specified that an expenditure for generic activities like registration or 

get-out-the-vote-drives need not be attributed to individual candidates unless the 

expenditure is “made on behalf of a clearly identified candidate. and the expenditure can 

be directly attributed PO that c,mdidate.” 11 C.F.R. § 106.l(c). 

As we show below. the factual record in this matter demonstrates the anti-Baucus 

expendirures made by the NRSC were “in connection with” a federal election. 2 U.S.C. 

$441a(d). And second. the evidence clearly shows the NRSC made these expenditures 

in coordination with the Rehberg campaign. 

A. 

Section 441a(d) provides that a national party committee may not make 

coordinated expenditures “in connection with” the general election campaigns of the 

parties’ candidates beyond a certain dollar limitation. It is clear from the factual record 

that the NRSC advertising campaign against Senator Baucus was “in connection with” 

the general election for United States Senate. Indeed. the evidence indicates the anti- 

’ in determining whether the NRSC advertisements were “in connection witK the election. the General 

Counsel’s Report relied upon the Commission’s analysis in Advisory Opinions 1984-15 and 1985-14. See. 

c.R.. MUR 4378. General Counsel‘s Probable Cause Brief at 7-9. 50. We agree with the General Counsel’s 

analysis in this regard. Two days afier the Commission deadlocked on probable cause to believe in this 

matter. Commissioners Sandsfrom. Elliott. Mason and Wold issued a statement indicating that they no 

longer agreed with a shorthand reference to the legal analysis contained in those opinions-”electioneering 

message.” in reaching this conclusion. they did not address those cases where the courts have expressly 

used the “electioneering message” phrase. See. e.g.. Democrutic Congresionul Cumpaign Committee v. 

F€C. 645 F.Supp. 169. 175 (D.D.C. 1986). ufd in ,nor1 amdrem~nded, 83 1 F.2d 1 13 I (D.C. Cir. 1987) 

(“1 find that the NRCC mailer conveys an ‘electioneering message’ as defined by the FEC’s own Advisory 

opinions and as interpreted by its Genemi Counsel. Thus, the FEC’s dismissal ofthe plaintiRs complaint 

was connary to law.”); FEC v. Colorado Republican Federal Compuign Commitfee. 59 F.3d 1015. 1022 

( 10‘“ Cir. 1995) (Courl of Appeals expressly deferred to the Commission’s long-standing ”construction of 

5 44 I a(d) as regulating political committee expenditures depicting a clearly identified candidate and 

conveying an electioneering message . . . .”), reversed on ofher gpounds. SI8 US. 604 (1996). 

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Baucus advertisements financed by the NRSC were designed specifically to diminish 

support for the Baucus campaign. 

in a candidly-worded press release issued on October 19. 1995, the NRSC bluntly 

stated that it intended to target certain Democratic Senators with negative campaign ads 

in connection with the 1996 Senate elections. Under the heading, “GOP SENATE 

CAMPAIGN COMMITTEE PREPARING TO USE CLINTON “TAXED TOO MIICH” 

COMMENT IN 1996 SENATE RACES,” John Heubusch, Executive Director of the 

NRSC, stated “[wle plan on letting vorers how their Senator supported the Clinton tax 

increase and. that now, the President said the tax increase was too big.” September 3. 

1997. Response of Dennis Rehberg to Document Request (emphasis added). The NRSC 

Press Release expressly indicated that “lp]ossible ad targets include Senator[] Max 

Baucus/MT ... .” Id Mr. Heubusch promised that: 

We will ensure that voters know their Democratic Senator and 

Democratic Senate candidates ‘raised taxes too much’. This is a great 

issue for the GOP because voters always suspected it was true-and 

now the President has himself confirmed it. 

Id. (emphasis added). Elaborating for the Washington Times. Mr. ).Iearbusch explained 

*.We ‘re going 10 hummer the Democruts who voted for this and ask them if they are going 

to apologize too. ffe‘s [President Clinton] created D great 1996 election i5sue.“ 

Washingfon Times, October 20, 1995 (emphasis added). 

Fulfilling its promise. the NRSC began to run ads “hammering” the Baucus 

campaign over the tax issue in April, 1996. The NRSC advertising ran for three months 

and repeatedly emphasized the tax theme: “Pay raises.. .Higher taxes, That’s not 

Montana - but it is Max Baucus.“ April 16, 1906 ad; “liberal Max Baucus. . .voted to 

raise your taxes by more than $2600 per family,” April 25, 1996 ad; “Likmi Max 

Baucus voted for five ofthe largest tax increases in American history,” May 8. 1996 ad; 

“Baucus votes for five of the biggest tax increases in American history,” May 12, I996 

ad: “For twenty-two long liberal years, Baucus has spent our money and raised our 

taxes.” May 24, 1996 ad; “Max Haucus, liberal from Montana. . .voted for five ofthe 

biggest tax increases in history.” May 31, 1996 ad; and “In his 22 long liberal years, Max 

Baucus has voted over 50 times to raise taxes. June 2 I, 1996 ad. Moreover, none of the 

election-year ads mentioned any specific Senate legislation-either by bill number or 

reference to an upcoming legislative vote. We believe that the anti-Baucus advertising 

campaign financed by the NRSC should be recognized for what is was--a series of 

expenditures made “in connection with” the 1996 Senate election under 2 U.S.C. 

9 44 I a(d ). 

Reinforcing our conclusion is the simple fact that the goal ofa plitical party 

committee such as the NRSC is to do everything it can to help its candidates win 

elections. The Supreme Court recognized this when it described the NRSC as ‘’a political 

committee orgunized specificul1.v to support Republican candidutes in elections for the 
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United States Senate.” FEC 1’. Democratic Senatorial Campaign Committee, 454 1J.S. 

27,29 (!98l)(emphasis added). Similarly, the Act reflects this basic understanding when 

it defines “political party” solely in election-related terms: 

The term “political party” means an association. committee, or 

organization which nominates a candidate for election to any federal 

otfice whose name appears on the election bdlot as the candidate of 

such association, cornittee, or organization. 

2 U.S.C. 8 431( 16). In addition to the Supreme Court, other courts have recognized that 

“[tlhe party’s ultimate goal . . . is to obtain control of the levers of government by 

winning elections. . . .”Nuder 11. Schajier, 417 F.Supp. 827. 844 @. Conn. 1976). ufld 

mem., 429 U.S. 989 (1 976). See also Rosario v. RockefeHer, 458 F.2d 649,652 (2d Cir. 

1972), afd., 410 U.S. 752 (1973)(political party composed of “individuals drawn 

together to advance certain aims by nominating and electing candidates who will pursue 

those aims once in ofice”). Indeed, the standard dictionary definition of “party” is “an 

organized group which tries to elect its candidates to office.” Webstea’s New World 

Dictionary (1966). Significantly, under tax rules, the NRSC must concede that its 

primary purpose is attempting to influence the selection of public or political officials. 

26 U.S.C. 5 527(e)( l), (2). We have no doubt the NRSC, as a poiitical party committee. 

ran its anti-Baucus advertising campaign in order to elect its candidate to office. 

Our finding that the NRSC advertisements weee campaign-related is consistent 

with the Commission’s recent decision in MUR 3918. There, the Commission found 

certain radio advertisements run by Hyatt Legal Services (“the Firm”) constituted 

excessive contributions to the United States Senate campdgn of Democratic candidate 

Joel Hyatt. The basis for the Commission’s unanimous finding was that the Firm’s 

advertisements were coordinated with the candidate and referred to issues raised in the 

campaign. The Commission made this finding (and extracted a civil penalty) even 

though the ads did not mention the name or contain a picture of or make any reference to 

Mr. Hyatt’s opponent; nor, for that matter, was the name “Joel Hyan” or the candidate’s 

picture similarly seen in the advertisement. The Commission having found that the Hyatt 

Legal Services advertisements were campaign-related, it is difficult to understand how 

some Commissioners found the anti-Baucus ads run by the NRSC-ads designed to 

“hammer” the Baucus campaign- were not made “in connection with” the election. 

B. 

The Supreme Court in Colorudo determined political parties are capable of 

making “independent” expenditures on behalf of their candidates for federal office and 

that such expenditures are not subject to the coordinated expenditure limits found at 

section 441a(d). In so mling. the Court rejected a Commission regulation which 

presumed coordination between political parties and their candidates. See 11 C.F.R. 
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Q 110.7(b)(4)( 1996). As a result. a political party expenditure is covered by Q 441a(d) 

only if it has been “coordinated with a candidate. 

Having concluded that political party committees could make independent 

expenditures, the Court in Coiorudo was faced with the issue of whether the expenditures 

made by the Colorado Republican Party actually were “independent.” In light of the 

presumption of coordination. it is not surprising there was little facd development done 

on this point and, as a result. the record was sketchy at best. The most that could be said 

for coordination was that the State Party Chairman admitted, as a general proposition. 

that “it was the practice of the party to ’coordinat[e] with the candidate’ ‘campaign 

strategy.”’ 518 U.S. at 614. The State Chairman also acknowledged he tried to be “’as 

involved as [he] could be’ with the individuals seeking the Republican nomination by 

making avai!able to them ‘all of the assets of the party,’” Id. There was, however, no 

mention of any candidate involvement with respect to the specific anti-Wirth advertising 

campaign undertaken by the party committee. 

Consequently. the State Chairman‘s statements were dismissed quickly by the 

Court as “general descriptions of party practice. . . . [that] do not refer to the advertising 

campaign at issue here or to its preparation.” Id. Moreover, the Court found they did not 

“conflict with. or cast significant doubt upon. the uncontroverted direct evidence that this 

advertising campaign was developed by the Colorado Party independently and not 

pursuant to any general or particular understanding with [the candidates and their 

agents].” Id (emphasis added). As a result. the Court treated the party committee’s 

“expenditures. for constitutional purposes. as an ‘independent’ expenditure. not an 

indirect campaign contribution.” Id. 

By contrast. it is clear that the NRSC anti-Baucus advertising campaign was 

developed pursuant to at least a “general . . . understanding“ of the Rehberg campaign‘s 

needs. Indeed. unlike the Colorado case, the instant matter contains clear evidence of 

involvement on the part of the Rehberg campaign with respect to a specific advertising 

campaign undertaken by the NRSC. 

Soon after the NRSC issued its October 19, 1995 Press release targeting Max 

Baucus (a copy of which had been faxed to the Rehberg campaign), representatives of 

both the NRSC and the Rehberg campaign met to discuss the campaign. Representing 

the NRSC was Jo Anne Bamhart who served as political director of the NRSC during 

1995-1996 election cycle. Representing the Rehberg campaign was LaDonna Lee whose 

political consulting firm was hired as strategic consultants by Montanans for Rehberg. 

One of the firm‘s responsibilities for the Wehberg campaign was to act as liaison with the 

NRSC. where the principal contact for the campaign was Jo Anne Bamhart. 

When asked during her deposition if receipt of the NRSC press release triggered 

her conversation with Ms. Bamhart, Ms. Lee answered that “[t]his informed us that they 

were looking at doing [an] ad campaign, yes.” MUR 4378, General Counsel’s Report at 

37. At their meeting, Ms. Lee specifically recalls discussing with Ms. Barnhart the 

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advertising campaign which the NRSC was planning *‘on Mr. Baucus’ voting record and 

votes that he was facing.” Id. Moreover. it appears that the NRSC specifically described 

the content of the advertising program against Senator Baucus: 

>a_ 

d 

.=- 

.. -.“: 

Q. Did she [Ms. Bzu-rhrt] talk about specifics as to what issues they 

were planning to &dress in that program? 

A. His voting records in terms of how it was or was not in support of 

what Montana was, generally. 

Id. 

Having discussed the content ofthe ads with the NRSC, the Wehberg campaign 

then suggested that the proposed advertisements be run. According to a memorandum 

prepared by Ms. Lee, which she termed a “recap” of her campaign meting with 

Ms. Barnhart Ms. Lee wrote under the heading “State Party”: 

The party is going to undertake a message program showing MB [Max 

Baucus] out of touch wfi4ontana. Our P~~~~~~~~~~~~~ is a series of 

radio a& starting ASAP telling h4T that Mdps has calrrady voted 

ogainsl their cut in taxes, reducizg pvernment, ew The messages 

will then be adapted depending upon the news cycle. Jo Aniw said 

they have $35,000 to begin the program with and could spend over 

! 100.000 between now and the beginning af?he yea. 

MUR 4378. General Counsel’s Report at 39 (emphasis added).‘ 

This acknowledged consultation between the NRSC and the Kehkrg campaign, 

and the recommendation made by an agent of the Rehkg cmpaign that a series of 

attack ads regarding taxes be run against the Baucus campaign. appears to lie at the hem 

of what constitutes coordination. The Act explicitly states that expenditures made “in 

cooperation. consultation, Or concert With, or at rhr requesr or suggesrion o( D candidate, 

his authorized political committees, or their agents, shall be considered to be a 

contribution to such candidate.” 2 U.S.C. 5 441a(a)(7)(B)(i~ern~~~asis added). Similarly. 

$43 f (1 7) defines “independent expenditure” as: 

It may be that the Rehberg campaign‘s “recommendation” was made originally in the hop that the State 

Parry would be able io carry OUI this ad campaign by using its 5 44la(d) allowance. Fur example, 

Ms. Bamhan’s reference to the “over SIO0,OOB” thai could be spent on the advertising campaign 

corresponds roughly to the 6123.640 available to the state party ifauthorized by the national party under 

g 44:a(d). When asked during his deposition about Ms. Lee’s memorandum. Mr. Rehberg testified that 

this “was Ladonna’s recommendatiun to me &a! if the state party did do this. this is what she wmld likz tu 

see done. The state pany did not do this.” Id. Whether or not Ms. Lee hoped the Stace Party rould do 

this. it is clear she was conveying a positive suggestion tu the NRSC representative who had hdicated the 

NASC would undertake such an effort. More likely. Mr. Rehberg’s cunstructian is an effort to undermine 

the memo’s reference that “Jo Anne said fhey have S35.000 to begin tffe prog~~tt.’’ 

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..- ... ... . .- 

. .. 

.. 

.~ 

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.Ij .- 

[Aln expenditure by a person expressly advocating the election or 

defeat of a clearly identified candidate which is made without 

cooperation or consultation with any candidate, or my authorized 

committee or agent of such candidate. and which is not made in 

concert with, or at the request or suggestion of. any candidate. or any 

authorized committee or agent of such candidate. 

2 U.S.C. !j 431(17)(emphasis added). Likewise, Q 109.l(b)(4)(i) of the Commission’s 

regulations explains an expenditure is not considered independent if there is “[a]ny 

arrangement, coordination or direction by the candidate or his. . . agent prior to the 

publication. distribution. display or broadcast of the communication.’’ 1 I C.F.R. 

!j 109.1 (b)(4)(i)(emphasis added). The regulations further state that an expenditure is 

presumed not to be independent if it is: 

(A) Based on information about the candidate’s plans, projects. or 

needs provided to the expending person by die candidate’s agents, 

with a view toward having an expenditure made; 

1 J C.F.R. $ 109.1(b)(4)(i)(A)(emphasis added). 

It seems clear that the Rehkrg campaign‘s “recommendation” to the MRSC 

constitutes a “request” or “suggestion” or “information about the candidate’s. . . needs 

provided. . . with a view towards having an expenditure made” which transforms an 

expenditure into a contribution. Where an agent ofthe Rehberg cmpaign maker; a 

“recommendation” to the NRSC to air certain ads dealing with a specific issue and 

alracking a specific candidate. and the NRSC later runs those specific ads. the 

expenditures for those advertisements should “be considered to be a contribution to such 

candidate.” 2 U.S.C. $ 44la(a)(7)(B)(i). 

Further evidencing coordination between the NRSC and the Rehberg campaign on 

the anti-Baucus tax ads. the factual record reveals the Rehberg campaign repeatedly 

pressed the NRSC’s representative on whether (and. if so. when) the ads would be m. In 

her deposition. Ms. Lee specifically recalled later contacts on the subject of whether the 

NRSC ever would carry out the requested advertising campaign-contacts evidencing the 

Rehberg campaign’s desire for aid and assistance: 

Q. Were there any other discussions that you had with lo Anne 

Barnhart, or anyone else at the NRSC, following those fall 

discussions about the ad campaign that they were planning for 

Montana? 

A. The on!y other specifc discussions were primarily centered wound 

was it ever going to happen. I know that there were conversations 

14 
about-from the stare party chairman ofgreat €lustration. ahey 

had been told by Jo Anne that it was going do happen. It wsn*i 

happening. So there was discussions regarding the lack c$ as 

opposed to any specijics. After a certain amount of months you 

kind of figure it was one more thing that was intended but hadn’t 

happened. 

Id, at 40 (emphasis added). Given its persistence, there is little question the Rehkrg 

campaign wanted these advertisements aired. Ofcome, the NRSC aired this extensive 

advertising campaign only after continued requests and inquiries from the Rehberg 

campaign to the NRSC’s political director. Rather than airing these ads as part of legaliypermissible coordinated state p+ expenditures under 5 rlM%a(d). however. &e ads were 

outside the $44la(d) Limitations and disguised as so-called legislative issue ads. 

In finding that coordination existed in this matter, we note the Commission bai 

not accepted the argument of some that coordination cannot exist absent candidate 

approval of specific ad text. as well as the timing and placement of the ad. Obviously. 

such a narrow view of coordination would open a large loophole in the statute. Under 

such a restricted definition. an organization could meet with a candidate”s campaign. 

discuss campaign smtegy and the development of issues cmd to the cmpaign. and 

then make “indeper.den!” expenditures based on his detailed knowledge. The only 

apparent restriction would be the campaign could not approve the final. finished ad or 

actually autbonze or approve a buy for the timing and placement of the ad. “his narrow. 

limited approach would render the coordination standard meaningless? 

Fairly recently. in MUR 3 1 16, the Commission unanimously found probable 

cause to believe that coordination existed between the Senate campaign of Democeatic 

candidate Charles Robb and the National Council of Senior Citizens (“NCSC‘) despite 

the fact there was no concrete evidence the Robb campaign specifically authorized or 

approved either the specific text ofthe NCSC ads or their timing and placement. In fact, 

the campaign broadly denied any coordination with NCSC regarding the advertisements. 

Even though there was no specific evidence of coordination regarding specific 

advertisements, apparently the Robb campaign and %he NCSC had a “general 

understanding,” Colorado, 51 8 U.S. at 614. regarding the development o€m advertising 

campaign financed by NCSC’s political action committee. The campaign’s request for an 

endorsement from NCSC, coupled with discussion of message content at a joint press 

conference, provided evidence that the candidate’s campaign had discussed the general 

content of the ads and that it would iike to see the ads run. 

‘ The recent decision in Federal &kction Commission v. The Christian Coolirion, 1999 Wl.. 569491 

(D.D.C.. Aog. 2. 1999). would not suggest a result different From that we propose. Surely. the multiple 

requests or suggestions ofthe Rehberg campaign’s agent would constitute “subsmiial discussion or 

negotiation” that would render the Rehberg campaign a ‘parmer or joint venturer.‘ ld: 

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... 

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:. .. .. 

.. 

.. 

.. 

.. 

.. 

In ow view. there seems to be little difference between MUR 4 1 16 and MUR 

4378. As in MUR 41 16, the Rehberg campaign discussed the content of the 

advertisements with the NRSC and plainly suggested the ads should m. Yet. for some 

reason,, while there were votes to find coordination and find probable cause against the 

Robb Committee, there was not a majority to proceed against the National Republican 

Senatorial Campaign 

III. 

Because we believe the NRSC’s expenditures for its anti-Baucus advertisements 

constituted contributions to the Rehberg campaign. we also believe .the NRSC violated 

the reporting provisions and prohibitions ofthe Act.’ The NRSC reponed its 

expenditures for its anti-Baucus advertisements as allocabie “administrative/voter drive” 

expenses. Instead, the NRSC should have reported its expenditures either as coordinated 

party expenditures pursuant to ij441a(d) or as in-kind contribuiions pursuant to 2 U.S.C. 

5 44 1 a(h). By misreporting ips contributions to the Rehberg campaign:n. the NRSC 

violated 2 U.S.C. 5 434(b). 

Moreover, by characterizing its advertisements as allocable “aclministmtive/vo~er 

drive“ activity. it zppears that non-federal funds were used to pay portions ~ftRc 

expenditures allocated to non-federal activity. The NRSC reported spending at least 

$309.792 on the advenisernents. Since the NRSC’s allocation fomuia for 1996 was 65% 

federal / 35% non-federal, it appears that the NRSC made payments &om its non-federal 

account totaling 61 08.252. Since non-federal account!; contain funds which are 

prohibited under the Act or exceed the Act’s contribution limitations, the NRSC violated 

2 U.S.C. $5 44la(f) and 44lb. In addifion. by using a non-federal account to make 

federal election-related expenditures, the NRSC also violated 11 C.F.R. ij 102.5. 

Nor. unfoonunately. is this unusual. It is hard to square the many cases where coordination findings have 

been blocked with those cases where there has been a majority to proceed. See MUR 2272 (American 

Medical Association Political Action Committee and Williams for Congress Committee): MUR 2766 (Auto 

Dealers and Drivers for Free Trade PAC and Friends of Connie Mack); MUR 3069 (National Security 

Political Action Committee and Bush-Quayle ‘88); MUR 4204 (Americans for Tax Reform and Lewis for 

Congress); MUR 4282 (Archdiocese of Philadelphia and Santonrm ’94); and now, MUR 4378 (NRSC) 

where coordination findings were blocked. Compare MUR 3918 (Hyan for Senate Cornminee), MUR 

41 16 (Robb for Senaie Committee). and MUR 2788 (Commission found coordination when Dukakis 

campaign told “independent” spender that is exhausted print budget prevented it from running spender’s 

proposed ad idea, “Listen to the Heart-AchekIem-Break of AmericdReach OutNotiore DukakisMentsen!”. 

but stlggestcd that spender was free to take out his own ad in &e New York Times). 

’ Akhough he did not join us and find that the NRSC made excessive in-kind conwibutions to Montanans 

for Rehberg in violation of2 U.S.C. 6 441a(h), Commissioner Sandstrom, nevertheless. did agree with us 

regarding the violations of 2 U.S.C. $434(b) as well as the violations of 2 U.S.C. $5 441a(O and 441b as 

well as 11 C.F.R. 5 102.5. 

16 
rv 

.. . 

. .~. 

... . 

.~. .~. 

.~~. . 

.. - - 

: ..: 

.. 

In Buckley 1%. Valeo 424 U.S. 1 (1976). the Supreme Court upheld the limits on 

contributions to federal candidates but ruled that a similar ceiling on independent 

expenditures was unconstitutional. In so ruling. the Court recognized the many 

opportunities for evasion of the contribution limits created by its holding. Thus, the 

Buckley Court drew a specific distinction between expenditures made “fofdly 

independenfly of the candidate and his campaign” and “prearranged or coardiriated 

zxpendirures amounting to disguised contributions” which could he constitutionally 

regulated. 424 U.S. at 47 (emphasis added). 

Clearly. the NRSC’s expenditures which financed the anti-Baucus advertising 

campaign were not made “todly independently” of &e Rehberg campaign. The factual 

record establishes that the NRSC advertisements, designed to hammer the Baucis 

campaign, were “recommended” by the Rehberg campaign and m by the NRSC after 

repeated inquiries by the Rehkrg campaign. As such. these “‘coordinaled expenditures” 

constituted ”disguised contributions” by the NRSC to the Rehkrg campaign. The 

Commission should have enforced the contribution lhihtions ofthe Act against the 

NRSC in this matter. Its failure to do so. in the face of ovewhehhg evidence, is 

squarely contrary to Ian,.’ 

Date ‘ E. Thomas 

Chairman 

x-/o- 99 

Date 

Along these lines. it is important to note that as of August 10, 1999. the four Commissioners who did not 

accept the General Counsel’s 9 441a(h) recommendation still have not filed a Statement of Reasons 

explaining their June 22. 1999 votes. In such circumstances. the D.C. Circuit has explicitly required that 

the “declining-to-go-ahead Commissioners” file such a Statement of Reasons. Common Cuuse Y. FEC. 842 

F.2d 436.439 (D.C.Cir. 1988). Moreover, the Commission’s Regulations explicitly require that these 

opinions “will be made available no later than 30 days froan the date on which a respondent is notified that 

the Commission has voted to take no further action and to close such an enforcement file.” 11 C.F.R. 

5 5.4(a)(4). The Commission unanimously reaff inned this principle by adopting internal guidelines which 

state: “The deadline for campletion af the statement will be the 30-day time period foilowing notification 

to the respondent a! which time the entire file ofthe closed MIJR will be released to the public.” PEC 

Open Meeting Minutes at 7 (February 5. 1987). In MUR 4378, these letters were sent out on June 29. 

1999. Faihire to file a Stacement places complainants. who may wish to exercise their statutory rights 

under 2 U.S.C. 5 437g(a)(8). in the untenable position of not knowing the reasoning of the “dcclining-togo-ahead Commissioners” and thus. whether their faiiure to proceed is contrary Lo law. 

17