February 2001 Federal Election Commission Volume 27, Number 2

Table of Contents

Reports

1 Statements of Organization

Require Amendment

2 Commission Certifies Nevada for

State Filing Waiver

Alternative Dispute Resolution

1 ADR Program Resolves First

Case

Electronic Filing

2 FECFile Version 4 Software

Available

2 Advisory Opinions

Court Cases

8 On Appeal

8 General Counsel—Vacancy

Announcement

Audits

8 Commission Makes Final

Determination on 1996

Presidential Audits

Compliance

9 MUR 4762

10 MUR 5029

Outreach

11 Roundtables

11 April Conferences

11 Public Appearances

12 Index

ADR Program Resolves

First Case

On December 21, 2000, the

Commission certified the first case

resolved through its Alternative

Dispute Resolution program (ADR).

The respondent, FJC Corporation,

negotiated an agreement on November 7, 2000, to pay an $850 civil

penalty for violations of the Federal

Election Campaign Act (the Act)

relating to corporate contributions.

The ADR office first received the

case on October 13, 2000.

The ADR program’s goal is to

expedite resolution of some violations of the Act, reduce the cost of

processing complaints and audit

referrals and enhance overall FEC

enforcement. For a case to be

considered for the program, the

respondent must express a willingness to engage in the ADR process,

agree to set aside the statute of

limitations while the case is pending

in the ADR Office and agree to

participate in bilateral negotiations

and, if necessary, mediation.

Bilateral negotiations through

ADR are oriented toward reaching

an expedited resolution in a manner

that is mutually satisfying to both

Alternative

Dispute

Resolution

Reports

Statements of Organization

Require Amendment

Under the Commission’s Mandatory Electronic Filing regulation,

which became effective January 1,

2001, any committee with a Web

site, whether it files electronically or

not, must provide that Web site’s

address on its Statement of Organization (FEC Form 1). 11 CFR

102.2(a)(1)(vii). A committee that

has a Web site that is not already

listed on its Statement of Organization must amend the Statement to

provide the committee’s Web site

address. 11 CFR 102.2(a)(2).

Electronic Filers

Filers who are either required to

file electronically, or who do so

voluntarily, must amend electronically-filed reports by electronic

means. The regulation further

requires a committee that is required

to file electronically to include its email address on its Statement of

Organization. An electronic filer

that has not yet disclosed its e-mail

address on its Statement of Organization must amend its Statement to

provide this information. 11 CFR

102.2(a)(1)(vii) and 11 CFR

104.18(b).

(continued on page 2) (continued on page 2)
Federal Election Commission RECORD February 2001

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/694-1100

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

800/877-8339 (FIRS)

Danny L. McDonald, Chairman

David M. Mason, Vice Chairman

Karl J. Sandstrom, Commissioner

Bradley Smith, Commissioner

Scott E. Thomas, Commissioner

Darryl R. Wold, Commissioner

James A. Pehrkon, Staff Director

Lois G. Lerner, Acting General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Amy L. Kort, Editor

http://www.fec.gov

sides and is focused on correcting

the activities that provoked the

complaint or referral. If a resolution

is not reached in bilateral negotiation, the case proceeds to mediation.

Resolutions reached in ADR

negotiations or mediation are

subsequently submitted to the

Commissioners for final approval

and certification. Cases resolved

through ADR do not set a precedent

for other enforcement actions or

procedures.

Closed ADR-negotiated settlement summaries are available from

Paper Filers

A committee that files on paper

must disclose its Web site address.

To do so, the committee must

amend its Statement of Organization

using the revised FEC Form 1. This

form is now available:

• On line (go to the FEC’s Web site

at http://www.fec.gov/pdf/

fecfrm1.pdf);

• By fax (call the FEC’s automated

faxline at 202/501-3413 and

request document 801); or

• By mail (call 800/424-9530, press

1 and then 3).

A committee that does not file its

reports electronically may also

amend its Statement of Organization

by sending a letter to the Commission explaining the amendment.

Amendments filed with the FEC

by mail should be addressed to the

Federal Election Commission, 999

E Street N.W., Washington, DC

20463. Senate candidate committees

Reports

(continued from page 1)

Alternative Dispute

Resolution

(continued from page 1)

Commission Certifies Nevada

for State Filing Waiver

On December 22, 2000, the

Commission certified that Nevada

qualified for a state filing waiver.1

Consequently, federal committees

and candidates in Nevada no longer

have to file copies of their federal

reports with the Nevada Office of

the Secretary of State. The first

report affected by the waiver was

the 2000 Year-End report.

1

 The Commission has certified that the

following states and territories qualify

for filing waivers: Alabama, American

Samoa, Arkansas, California, Colorado, Connecticut, Delaware, Florida,

Georgia, Hawaii, Idaho, Illinois,

Indiana, Kansas, Kentucky, Louisiana,

Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska,

Nevada, New Hampshire, New Jersey,

New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma,

Oregon , Pennsylvania, Rhode Island,

South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,

Virgin Islands, Washington, West

Virginia, Wisconsin and Wyoming.

Committees that file their reports at the

FEC need not file copies in these states.

(and other persons who support

Senate candidates only) file with the

Secretary of the Senate.✦

the Public Records Office at 999 E

Street, N.W., Washington, DC

20463. The Public Records Office

may also be contacted at 1/800-424-

9530 (press 3).✦

Electronic

Filing

FECFile Version 4 Software

Now Available

Version 4 of FECFile, the FEC’s

electronic filing software, may now

be downloaded from the FEC Web

site at www.fec.gov (click on the

Electronic Filing icon). The software has been updated to conform

to the new format requirements and

now produces electronic Statements

of Organization, Statements of

Candidacy and 24 Hour Notices,

and it also includes space for cover

letters, explanations of transactions

and other miscellaneous text.

Committees may continue to use

FECFile version 3 to create and

upload reports to the FEC through

June 30, 2001. The Second Quarter

report, the Mid Year report and the

July 20 monthly report, however,

must be filed with the FEC’s new

software or with other software that

supports the new format.✦

Advisory

Opinions

AO 2000-24

Preemption of Alaska State

Restrictions on State Party’s

Allocation Ratio

The Alaska Democratic Party

(ADP) may pay its administrative

and generic voter drive expenses

entirely from its federal account,

despite the Alaska Public Offices

Commission’s (APOC) finding that

it must pay for some portion of

these costs with funds from its
February 2001 Federal Election Commission RECORD

3

1

 When making a disbursement using

both federal and nonfederal funds, the

committee has the option of either:

• Paying the entire amount from its

federal account, in which case it

would transfer funds from its

nonfederal account to its federal

account to cover the nonfederal share

of the allocable expenses; or

• Establishing a separate allocation

account, in which case the committee

would transfer the appropriate funds

from both the federal and nonfederal

accounts to the allocation account

and pay the allocable expenses from

that account. 11 CFR 106.5(g)(1)(iii).

In either case, the funds must be

transferred from the nonfederal to the

federal account, or from both of these

accounts to the allocation account,

within 10 days before or 60 days after

the bill for the allocable expense is

paid.

nonfederal account. Under the

Federal Election Campaign Act (the

Act), a committee may pay for all

such expenses with funds from its

federal account and, under the Act,

federal law preempts any state law

with respect to federal elections. 2

U.S.C. §453 and 11 CFR 108.7(a).

Allocation and Using Federal

Funds

When a political committee has

separate accounts to make disbursements for federal and nonfederal

elections, the committee may

choose to pay for all of its shared

expenses with federal funds. Alternatively, it may allocate its expenses

between its federal and nonfederal

accounts according to formulae

specified in Commission regulations.1

 The appropriate formula for

generic voter drive and administrative expenses is the “ballot composition method.” This method is

based on the ratio of federal offices

to the total of federal and nonfederal

offices expected on the ballot in the

state’s next general election. 11

CFR 106.5(d)(1)(i).

The federal portion represents the

minimum amount that must be paid

from the federal account, and the

nonfederal portion calculated using

this method represents the maximum

amount that can be paid using

nonfederal funds.2

 In other words, a

committee is not precluded from

paying for allocable expenses—

including generic voter drive and

administrative expenses—with a

higher percentage of federal funds

or with only federal funds.

For the 1999-2000 election cycle,

ADP’s allocation ratio was 40

percent federal to 60 percent

nonfederal funds. ADP, however,

used its federal funds to pay substantially more than 40 percent of its

allocable expenses. ADP asserted

that it was more successful in

raising funds for its federal account

than for its nonfederal account

because new Alaska contribution

limits and prohibitions are in some

ways more restrictive than those of

the Act.

State Restrictions on Nonfederal

Activity

APOC, Alaska’s agency for

campaign finance regulation, issued

a letter asking that ADP pay some

portion of its administrative and

generic voter drive expenses using

nonfederal funds because most of

ADP’s activity was in support of

nonfederal candidates. APOC

stated that it would accept an

allocation percentage that ADP

determined in good faith to represent the use of nonfederal funds in

support of nonfederal activity and

federal funds in support of federal

activity and that ADP could change

this ratio if necessary.

Preemption

Under the Act and Commission

regulations, the Act supersedes any

provision of state law with respect

to election to federal office. 2

U.S.C. 453; 11 CFR 108.7(a). By

their very nature, the shared expenses of a state party committee—

as distinguished from funds raised

for and spent solely for the support

of a nonfederal candidate—are

intertwined with the expenses that

pay for and can affect federal

election activity. Thus, the Act and

Commission regulations preempt

any requirement imposed by APOC

that would limit the amount of

federal account funds that ADP used

to pay for administrative and

generic voter drive expenses.

Commissioners McDonald and

Thomas further explained their

reasons for voting to approve this

opinion in a separate concurring

statement issued on December 18,

2000.

Date Issued: December 18, 2000,

Length, 7 pages.✦

2

 In making this determination, the

Commission looked to the two Explanation and Justifications of the revisions

to the allocation rules (1990 and 1992),

which suggested that allocating a

portion of certain costs to a

committee’s nonfederal account was a

permissive rather than a mandated

procedure. See the June 26, 1990,

Federal Register (55 FR 26058, 26063,

26064) and the March 13, 1992 Federal

Register (57 FR 8990, 8991). See also

AO 1993-17.

AO 2000-28

Disaffiation of Trade

Association PACs

Following the December 31,

2000, effective date of a formal

separation agreement between

American Seniors Housing Association (ASHA), a previously unincorporated business association, and

National Multi Housing Council

(NMHC), an incorporated trade

association, these two organizations

are no longer affiliated with one

another. As a result, their respective

political action committees (PAC)

are also no longer affiliated organizations.

Affiliation

Under the Federal Election

Campaign Act (the Act) and Com-

(continued on page 4)
Federal Election Commission RECORD February 2001

4

mission regulations, committees

established by the same corporation,

person or group—including any

parent, subsidiary, branch, division,

department or local unit of a given

entity—are affiliated. 2 U.S.C.

§441a(a)(5) and 11 CFR 100.5(g)(2)

and 110.3(a)(1)(ii). Affiliated

committees are considered to be a

single committee and share contribution limits. Therefore, contributions made to or by affiliated

committees are considered to have

been made to or by one committee.

2 U.S.C. §441(a)(5) and 11 CFR

100.5(g)(2), 110.3(a)(1) and

110.3(a)(1)(ii). Additionally, a

corporation may solicit contributions to its PAC from the restricted

class of its subsidiaries or other

affiliates. 2 U.S.C.

§441b(b)(4)(A)(i) and 11 CFR

114.5(g)(1).

ASHA and NMHC

In cases where the relationship of

one company to another—and, by

extension, of one company’s PAC to

another’s—is not automatically

clear, Commission regulations

provide a list of factors that the

Commission considers when, on a

case-by-case basis, it examines the

relationship to determine whether or

not the companies are affiliated.

See 11 CFR 100.5(g)(4)(i) and

(ii)(A)-(J), 11 CFR 110.3(a)(3)(i)

and (ii)(A)-(J), and Advisory

Opinions 1999-39 and 1995-36.

In advisory opinion 1996-38, the

Commission found that ASHA and

NMHC were affiliated based on

several factors:

• All members of ASHA were

required to be members of NMHC;

• ASHA’s activities were funded by

NMHC from dues paid to NMHC;

• ASHA was founded by the NMHC

board and others associated with

NMHC; and

• The two organizations had significant personnel in common.

Advisory Opinions

(continued from page 3)

New ASHA

Since that time, however, ASHA

has become an incorporated trade

association (New ASHA) and has

formally separated from NMHC.

Following a separation agreement

that became effective December 31,

2000, circumstances, which previously indicated affiliation between

the two organizations, are altered:

• New ASHA members are not

required to be members of NMHC,

and membership overlap is minimal;

• New ASHA’s activities are funded

by dues paid directly to it;

• New ASHA’s employees terminated their employment with

NMHC; and

• The composition of the board of

directors of each organization

suggests that the two are separate

entities.

These changes signify that

NMHC does not control or finance

New ASHA.1

 As a result, the two

organizations, and their respective

PACs, were no longer affiliated as

of December 31, 2000. ASHA PAC

must amend its statement of organization to replace NMHC with New

ASHA as its connected organization, and it can no longer list NMHC

PAC as an affiliated committee.

Consequences of Disaffiliation

New ASHA may maintain ASHA

PAC as its separate segregated fund

and may pay its administrative

expenses. Solicitations for contributions to this PAC, however, are now

limited to the restricted class of New

ASHA.

As a trade association, New

ASHA may also solicit its

noncorporate members and the

restricted classes of its corporate

members so long as it obtains

written permission from the corporate member. 11 CFR 114.8.

Permission granted to NMHC PAC,

for solicitations of contributions by

corporations that are members of

both New ASHA and NMHC, no

longer extends to ASHA PAC.

Finally, the prior affiliation

between the two organizations and

their PACs affects the contributions

that they can now make. AOs 1997-

25 and 1996-42. Although the

PACs now have separate contribution limits, they shared one set of

contribution limits while affiliated.

Thus, to determine the amount that

each PAC may contribute to a given

candidate after December 31, 2000,

the committees must consider the

amounts given by each of them for a

particular election before this date.

The sum of the amounts given by

each committee prior to disaffiliation must be attributed to each

committee’s contributions for that

election after disaffiliation. For

example, if before disaffiliation

NMHC PAC gave $2,000 to a

candidate for the 2002 primary

election and ASHA PAC gave

$1,000 to that candidate for that

election, each PAC is considered,

after December 31, to have made a

$3,000 contribution. As disaffiliated

committees, each may now contribute an additional $2,000 to that

candidate for that election before

reaching its $5,000 per candidate,

1

 New ASHA and NMHC will have some

continued contacts and financial

transactions following their disaffiliation. For example, as part of the terms

of separation, NMHC agreed to license

to New ASHA certain of its assets that

related to the operation of ASHA and to

provide New ASHA a one time secured

loan. Such transactions do not, however, suggest affiliation. Rather, they

can be seen as part of the process to

establish the independence of New

ASHA from its organizational parent.

The agreement also includes an

understanding that the organizations

will cooperate whenever each organization decides independently that it is in

its best interests to do so. Significantly,

however, the agreement does not

compel cooperation and, in cases of

more tangible, financial cooperation,

requires that the parties negotiate an

“arms-length fee” for assistance in

research and advocacy.
February 2001 Federal Election Commission RECORD

5

per election contribution limit.2

Contributions made by each PAC

after December 31 will, however,

only be attributed to the PAC

making the contribution.

Date Issued: December 18, 2000;

Length: 13 pages.✦

2

 Both ASHA PAC and NMHC PAC are

registered as multi-candidate committees and have a $5,000 per candidate,

per election contribution limit under 2

U.S.C. §441a(a)(2)(A).

AO 2000-34

Name and Acronym of SSF

S.D. Warren Company (the

Company), which is a subsidiary of

SAPPI Limited, may name its

separate segregated fund (SSF)

“SAPPI Fine Paper North America/

S.D. Warren Company Political

Action Committee” and may use the

acronym SAPPI PAC for common

uses, such as on checks and letterhead.

Under the Federal Election

Campaign Act and Commission

regulations, the name of an SSF

must include the name of its connected organization.1

 The regulations also permit the use of a clearly

recognized abbreviation or acronym,

so long as the SSF uses both the

abbreviation (or acronym) and the

full name on all reports, including

the Statement of Organization, and

in all disclaimer notices. 11 CFR

102.14(c). See also AOs 1999-20,

1993-7 and 1987-26.

Since the official name of the

corporation, S.D. Warren Company,

is included in the Company’s

proposed SSF name, the name is

permissible. Moreover, since the

abbreviation “SAPPI,” which is part

of a company trademark, is used in

various, well-known financial

reference sources that are available

to the public, it meets the requirement of being clearly recognized

and, thus, is also permissible.

Date Issued: December 7, 2000;

Length: 4 pages.✦

1

 A fund established by a corporation

with many subsidiaries need not include

the name of each subsidiary in its

name, and an SSF established by a

subsidiary need not include the name of

the parent corporation or another

subsidiary of the parent in its own

name.

AO 2000-36

Disaffiliation of LLP PACs

As the result of an August 7,

2000, arbitration order, Arthur

Andersen PAC (AAPAC) and

Andersen Consulting PAC

(ACPAC) are no longer subject to

coordination and governance by the

same body and, therefore, are no

longer affiliated.

Corporate Structure/Background

ACPAC is a multicandidate

committee maintained and controlled by the partners of Andersen

Consulting LLP (AC), and AAPAC

is a multicandidate committee

maintained and controlled by the

partners of Arthur Andersen LLP

(AA). Until an arbitration order was

issued on August 7, 2000, ACPAC

and AAPAC operated as affiliated

PACs. Prior to the arbitration order,

AC and AA were part of the structure of the Andersen Worldwide

Organization (AWO). As AWO

member firms, AA and AC were

coordinated by Arthur Andersen &

Co. Societe Cooperative (AWSC), a

Swiss cooperative entity that

coordinates the professional practices of AWO members worldwide.

Also, AA and AC were each bound

by a Member Firm Interfirm Agreement (MFIFA) with AWSC that

established common standards,

compatible policies and other

responsibilities for all member

firms.

Statutory and Regulatory

Requirements

Under the Federal Election

Campaign Act and Federal Election

Commission regulations, committees, including separate segregated

funds, that are established, financed,

maintained or controlled by the

same entity or group of persons are

affiliated. For cases in which

committees are not per se affiliated,

FEC regulations provide for the

examination of other factors to

determine whether one company is

affiliated with another and, hence,

whether the political committees

controlled by the companies are

affiliated. 11 CFR 100.5(g)(4)(i) and

(ii)(A)-(J), and 110.3(a)(3)(i) and

(ii)(A)-(J). Contributions made to

or by affiliated committees are

considered to have been made to or

by a single committee and thus such

committees share contribution

limits. 2 U.S.C. 441a(a)(5); 11 CFR

100.5(g)(2), 110.3(a)(1), and

110.3(a)(1)(ii).

Restructuring/Disaffiliation

An arbitration order, effective

August 7, 2000, separated AC and

AA. Specifically, the order:

• Excused AC (and the other 43 AC

entities outside the US) from any

further obligations to AWSC (and

thus to AA) under the MFIFA;

• Ordered AC (and its sister entities)

to cease to represent itself as

associated with any Arthur Anderson member firm and to discontinue use of the Andersen name;

and

• Ordered that AC (and its sister

entities) end its use of certain

“Andersen Technology.”

In addition to the terms of the

arbitration order, the following

facts, when measured against the

FEC’s criteria for affiliation,

indicate a lack of affiliation between

AAPAC and ACPAC as of August

7, 2000:

• AC is no longer within the structure or under the limited governance of AWSC;

• Neither AA nor AC owns any

financial interest in the other;

(continued on page 6)
Federal Election Commission RECORD February 2001

6

• No AA partner or Arthur Anderson

entity can participate in AC’s

governance;

• No AA partner or Arthur Anderson

entity has personnel authority over

any officer of AC;

• AC has no obligations to AA

except to change its name and

return certain Andersen Technology;

• Since August 7, 2000, there have

been no common partners, officers

or employees between AC and

AA, nor have there been any

common officers or employees

between AAPAC and ACPAC.

• Also, since the date of the arbitration order, there has been no

significant transfer of funds,

services or goods between AC and

AA or between their PACs, with

the exception of substantial

payments between AA, AC and

AWSC made in connection with

the separation process and mandated by the arbitration order.

• The only ongoing relationship

between ACPAC and AAPAC

prior to the issuance of the advisory opinion has been the monitoring of expenditures so as not to

exceed the single contribution limit

shared by affiliated committees.

Disaffiliation and Contribution

Limits

Based upon the terms of the

arbitration order and the other facts

mentioned, ACPAC and AAPAC

are no longer affiliated, as of August

7, 2000. As a result of disaffiliation, ACPAC and AAPAC will

operate under separate contribution

limits after that date; however,

because of their affiliated status

before that date, the two committees

cannot disregard each other’s

contributions made prior to disaffiliation. AOs 1997-25 and 1993-23.

To determine the amount that each

PAC may contribute to a candidate

after disaffiliation, each PAC must

add the amounts given by both

PACs prior to disaffiliation and

attribute that sum to its per-election

contribution limit for that same

candidate. See example given in

AO 1993-23.

Date: December 18, 2000;

Length: 6 pages.✦

Advisory Opinions

(continued from page 5)

AO 2000-37

Campaign’s Purchase and

Distribution of Liberty

Medals

The Udall for Us All Committee

(the Committee) may use campaign

funds to purchase Liberty medals

and to pay expenses connected with

their presentation to veterans by

U.S. Representative Tom Udall.

Expenses associated with the medals

and their presentation would not

exist irrespective of Mr. Udall’s

duties as a federal office holder and,

therefore, these expenditures would

not be a personal use of campaign

funds. 2 U.S.C. §439(a) and 11 CFR

113.1(g).

Under the Federal Election

Campaign Act (the Act) and Commission regulations, campaigns have

wide discretion in expending their

funds, but may not convert these

funds to personal use. 2 U.S.C.

§§431(9) and 439a and 11 CFR

113.1(g) and 113.2(d). See also

AOs 2000-12, 1998-1 and 1997-11.

Commission regulations define

personal use as “any use of funds in

a campaign account of a present or

former candidate to fulfill a commitment, obligation or expense of any

person that would exist irrespective

of the candidate’s campaign or

duties as a Federal officeholder.”

11 CFR 113.1(g). The regulation

lists a number of expenditures that

would constitute personal use per

se. Travel expenses (including

subsistence expenses incurred

during travel), however, are among

those specifically listed examples to

be analyzed on a case-by-case basis.

11 CFR 113.1(g)(1)(ii)(C).

In this case, the purchase and

presentation of replica Liberty

medals to military service veterans

is a form of community service that

is an integral part of the duties of a

Member of Congress. The replica

medals are low in cost and have

little monetary value, and the benefit

to the veteran is the recognition of

his service by a Member of Congress. 1

 Thus, the Committee may

use its campaign funds to purchase

these medals for distribution to

eligible veterans who are constituents of Representative Udall.

The Committee may also use its

funds to pay for the expenses

involved in presenting these medals—primarily Representative

Udall’s travel expenses—because

these expenses would not exist

irrespective of his duties as an

officeholder.2

 If, however, there are

any additional expenses resulting

from personal activities by the

Representative or his staff (additional travel stops, for example) the

person benefiting from the expenditure must reimburse the Committee

within thirty days. 11 CFR

113.1(g)(1)(ii)(C).

The Committee should report

payments to purchase and distribute

the medals as “other disbursements.” It should itemize the

disbursements, with the purpose of

the disbursement noted, in cases

where the recipient of the payment

1

 Two dozen medals cost approximately

$328, plus additional costs for shipping

and handling. This type of recognition,

if it involved the use of campaign funds

to purchase an intrinsically valuable

item for the veterans, would be problematic under Commission regulations

in cases where it extended beyond an

honorific purpose and entailed the use

of campaign funds to confer a significant personal benefit on the recipient

veteran.

2

 The Commission expressed no opinion

regarding the application of any rules

of the House of Representatives or any

tax ramifications of this activity

because these issues were not within its

jurisdiction.
February 2001 Federal Election Commission RECORD

7

AO 2000-38

Registration of Party

Committee Due to Delegate

Expenses

The Democratic Party of the

Commonwealth of Puerto Rico

(DPPR) must register with the

Commission as a political committee and disclose its contributions

and expenditures even though it did

not support any federal candidates.

Funds the DPPR solicited in order to

send delegates to the National

Democratic Convention (the Convention) and funds it spent at the

Convention meet the definitions of

contribution and expenditure that

are contained in the Federal Election

Campaign Act (the Act) and Commission regulations; and the contributions received exceeded the

$1,000 contribution threshold at

which a committee is required to file

as a political committee under the

Act. 2 U.S.C. §431(4) and 11 CFR

100.5(a).

The DPPR is the equivalent of a

state party within the Democratic

party of the United States. It does

not nominate candidates for political

office in Puerto Rico, or for any

federal office.1

 The DPPR was,

however, involved in the Convention, and its delegates had full

voting rights at the Convention. The

DPPR received donations totaling

$40,000 solicited from individuals,

with the understanding that some of

the funds would be used to pay the

costs of delegates’ and other party

members’ attendance at the 2000

Convention. The solicitations did

not mention or advocate the election

of any federal candidates. The

DPPR subsequently used a portion

of these funds to send four delegates

and a secretary to the Convention,

and to cover their Convention

expenses.

Funds Raised and Spent for

Convention Delegates

Commission regulations do not

specifically address disbursements

by a party committee for the expenses of a delegate at a national

convention. The regulations’

definitions of contribution and

expenditure, and the treatment of

such spending with respect to

delegates and delegate committees,

however, indicate that disbursements for the expenses of delegates

and delegate committees at a

national convention are expenditures (or in-kind contributions to the

delegates) and that donations made

for the purpose of supporting these

delegates are contributions.

Under the Act and Commission

regulations, contributions and

expenditures are defined as funds

given or spent in order to influence

a federal election. 2 U.S.C.

§§431(8)(A)(i) and 431(9)(A)(i); 11

CFR 100.7(a)(1) and 100.8(a)(1). A

nominating convention, which

chooses the party’s presidential

nominee through selection by

delegates to that convention, is

included within the statutory and

regulatory definitions of an “election.” 2 U.S.C. §431(1)(B) and 11

CFR 100.2(e) and 9008.2(g).

In this case, the DPPR’s payments enabled the delegates to

participate in the convention and

thus could be considered as having

been made for the purpose of

influencing an election. Amounts

received in response to solicitations

for money to support convention

delegates would, therefore, be

contributions to the party.

Although the DPPR’s solicitations mentioned that funds would be

used for other purposes, apart from

Convention expenses, the solicitations did not provide any method for

allocating the donations among

various purposes. Consequently, the

full amount of donations—

$40,000—is considered when

determining whether the DPPR’s

contributions exceeded the threshold

for determining political committee

status ($1,000).

Registration and Reporting

The DPPR was obligated to

register within ten days of receiving

the $40,000 and to file all appropriate reports. 2 U.S.C. §434(a)(4) and

11 CFR 104.6(c).

The DPPR must, within thirty

days of its receipt of this opinion,

file a Statement of Organization and

file all reports that were due after

the date that it qualified as a political committee. In these reports, the

DPPR should:

• Report the $40,000 in contributions on line 11a and itemize each

contribution that exceeds $200;

• Report any expenditures for travel,

lodging, food and entertainment

related to the Convention, and

expenditures for other administrative expenses, as operating expenditures; and

• Report, as other disbursements,

Convention disbursements related

to shirts and stickers and the

personal, non-Convention expenses of the delegates and

secretary.

Once the DPPR files all due

reports, it may file a termination

report if it has no outstanding debts

and will no longer receive any

contributions or make any expenditures that will qualify it as a political

committee. The termination report

1

 The only election for federal office

held in Puerto Rico is for the Resident

Commissioner to Congress, and

candidates for this election are not

supported by local national parties

(e.g., Democratic, Republican or

national independent parties). The

Presidential general election is not held

in Puerto Rico. The DPPR spent no

funds with respect to a presidential

primary or caucus. (continued on page 8)

receives more that $200 from the

Committee during the 2001-2002

election cycle. 11 CFR

104.3(b)(2)(vi) and (b)(4)(vi).

Date Issued: December 12, 2000;

Length: 4 pages.✦
Federal Election Commission RECORD February 2001

8

must contain a final report of

receipts and disbursements and

include a statement explaining how

its remaining funds will be used.

Date Issued: December 18, 2000;

Length: 6 pages.✦

Advisory Opinions

(continued from page 7)

AO 2000-39

Status of State Party as State

Committee of Political Party

The Pacific Green Party of

Oregon (the Pacific Green Party)

satisfies the requirements for state

committee status.1

The Federal Election Campaign

Act (the Act) defines a state committee as “the organization which,

by virtue of the bylaws of a political

party, is responsible for the day-today operation of such political party

at the State level, as determined by

the Commission.” 2 U.S.C.

§431(15). In order to achieve state

committee status under Commission

regulations, an organization must

meet two requirements. It must

have:

• Bylaws or a similar document that

“delineates activities commensurate with the day-to-day operation”

of a party at a state level; and

• Ballot access for at least one

federal candidate who has qualified as a candidate under Commission regulations.

1

 The Pacific Green Party is affiliated

with the Association of State Green

Parties, one of the two national Green

Party organizations. The Association

of State Green Parties is not a recognized national committee. The Commission has, however, recognized the

state committee status of other party

committees affiliated with national

organizations that did not qualify as

national committees of a political party.

The most recent example is the granting

of state committee status to the Green

Party of Washington State. AO 2000-

35.

2

 An individual becomes a candidate for

the purposes of the Act once he or she

receives contributions aggregating in

excess of $5,000 or makes expenditures

in excess of $5,000. Federal candidates must designate a principal

campaign committee within 15 days

after qualifying as a candidate, and the

committee also becomes subject to

registration and reporting requirements. 2 U.S.C. §§432(e)(1) and

434(a); 11 CFR 101.1, 102.1 and

104.1.

Court Cases

Advisory Opinion Request

AOR 2001-01

Use of political party’s office

building fund to pay building

renovation costs and fundraising

expenses of building fund (North

Carolina Democratic Party, January

12, 2001)✦

On Appeal

Christine Beaumont, et al. v. FEC

On December 21, 2000, the

Federal Election Commission

appealed this case to the United

Audits

The Pacific Green Party meets

both requirements. It satisfies the

first requirement because its bylaws

set out a comprehensive organizational structure for the party from

the statewide level down through

local levels, and the bylaws clearly

identify the role of the Pacific Green

Party.

The Pacific Green Party satisfies

the second requirement—ballot

access for a federal candidate—in

that Ralph Nader gained ballot

access as the Pacific Green Party’s

candidate on the Oregon ballot in

2000. Mr. Nader meets the requirements for becoming a federal

candidate under 2 U.S.C. §441a(d).2

Date Issued: December 18, 2000;

Length: 4 pages.✦

Commission Makes Final

Determination on 1996

Presidential Audits

The FEC recently made final

determinations of the amount of

money that the Dole and Buchanan

Presidential campaigns must repay

to the U.S. Treasury for public funds

they used during the 1996 election.

In 1999, the Commission determined the amount that the Clinton

campaign owed (see Record, July

1999), which has since been repaid.

The Commission made its determinations after conducting audits of

the committees, which is required

for any authorized candidate committee that receives federal funds

Federal Election

Commission Seeks

General Counsel

The Commission is recruiting for

a General Counsel (EX-V,

$117,600 per annum). Interested

candidates should review the

entire announcement and

application requirements by

visiting our website at

www.fec.gov/jobs.htm or calling

202-694-1080. The FEC is an

Equal Opportunity Employer.

The closing date is March 20,

2001.

States Court of Appeals for the

Fourth Circuit. The appeal is from

the preliminary injunction issued by

the U.S. District Court for the

Eastern District of North Carolina

on October 26, 2000, which barred

the Commission from enforcing

statutory and regulatory provisions

against the plaintiffs pending the

final judgment by the district court.

See the November 2000 Record,

page 5.✦
February 2001 Federal Election Commission RECORD

9

Compliance

MUR 4762

Prohibited Union

Contributions and Other

Violations

The American Federation of

State, County & Municipal Employees (AFSCME), its separate segregated fund, the American Federation

of State, County & Municipal

Employees-PEOPLE (AFSCMEPEOPLE), and AFSCMEPEOPLE’s treasurer, William Lucy,

have agreed to pay a civil penalty of

$6,500 for violations of the Federal

Election Campaign Act (the Act).

The violations include:

• Making and accepting in-kind

contributions from a labor union in

the form of express advocacy

phone bank services;

• Misreporting contributions; and

• Making excessive contributions.

During the July, August and

September 1996 monthly reporting

periods, AFSCME-PEOPLE

disclosed a total of $15,995 in

reimbursements to AFSCME for inkind contributions to federal candidates in the form of phone bank

services. These services consisted

of a phone bank run by paid employees of AFSCME and from a

facility owned by AFSCME. The

calls made from the phone bank

were directed to the general public

and expressly advocated the election

of federal candidates.

The Commission subsequently

found reason to believe that the

respondents had violated the Act by

making and accepting prohibited

contributions from a labor organization. Under the Federal Election

Campaign Act, corporations and

labor organizations are prohibited

from making contributions and

expenditures to influence a federal

election, and political committees

under the Presidential Election

Campaign Fund Act and the Presidential Primary Matching Payment

Account Act. 26 U.S.C.§§9007.1(a)

and 9038.1(a).

Buchanan Committee

 Patrick J. Buchanan’s 1996

primary committee, Buchanan for

President, Inc., must repay $63,750

to the Treasury. This amount

represents matching funds received

by the Committee that were in

excess of the candidate’s entitlement

for matched contributions. The

Commission found that the Committee received matching funds for

contributions that were later determined to be non-matchable—

$62,116 for improperly reattributed

contributions and $1,634 for contributions that the Committee later

refunded. The Committee made a

partial repayment of $50,000 on

January 22, 2001.

Mr. Buchanan’s 1996 primary

committee made repayments

totaling $29, 328 for nonqualified

campaign expenses. This amount

represented $12, 159 for inadequate

documentation for disbursements

and $17, 169 for duplicate payments. The Commission determined

that the Committee must also make

a payment for stale-dated checks

totaling $27, 431.

Dole Committees

 Former Senator Bob Dole’s 1996

primary committee, Dole for

President, Inc., must repay $6,255 to

the Treasury. This amount represents public funds that the Committee spent on nonqualified campaign

expenses. These expenses included

$1,237 for the “refund” of an unpaid

contribution, $930 for payment for

services to prepare financial statements and $4,088 for miscellaneous

nonqualified campaign expenses. In

addition, the Commission found

$225,536 in stale-dated checks.

Most of this amount represents

contribution refund checks that the

contributors failed to cash. Under

Commission regulations this amount

must be paid to the Treasury. 26

U.S.C. §9038.6.

Dole/Kemp ’96, Inc., the general

election committee, must repay a

total of $1,416,093 to the Treasury.

This amount represents $1,369,583

spent in excess of the expenditure

limitation ($61.82 million) and

$46,510 in interest earned on federal

funds. The Commission found that

a significant factor in the excessive

spending related to overbilling the

press for many expenses, including

payment for event costs and air

travel. Like the primary committee,

Dole/Kemp’96, Inc., had stale dated

checks that require payment to the

Treasury. The amount is $44,046.

Clinton Committees

President Bill Clinton’s 1996

primary committee, Clinton/Gore

’96 Primary Committee, Inc., was

initially found to owe a total of

$114,450 to the Treasury, which

represented repayments for

nonqualified campaign expenses

that included catering services,

equipment, staff salaries, office

overhead and consulting work. The

Primary Committee, however, was

not required to repay this amount to

the Treasury because it received a

transfer of $309,008 from the

Clinton/Gore ’96 General Committee and $53, 319 from the Clinton/

Gore GELAC Committee to cover

these expenses. In addition, the

Primary Committee provided

documentation in 1999 demonstrating that stale-dated checks totaling

$1,050 cleared the bank and that the

Committee had repaid the remaining

$11,180 to the Treasury.

Clinton/Gore ‘96 General Committee, Inc., has repaid $3,241 to the

Treasury for interest earned on

federal funds. In addition, the

General Committee demonstrated

that it received a wire transfer of

$12,427 from the Primary Committee to pay for nonqualified campaign expenses, thereby relieving

the General Committee of its

obligation for repayment to the U.S.

Treasury.✦ (continued on page 10)
Federal Election Commission RECORD February 2001

10

1

 A labor organization may use its

funds, facilities and personnel only

within its restricted class to raise

contributions for and expressly advocate the election or defeat of a federal

candidate. 11 CFR 114.

MUR 5029

Contributions in the Name of

Another Made by

Corporation and

Government Contractor

MSE Technology Applications,

Inc., (MSE) has paid a civil penalty

of $19,500 for knowing and willful

violations of the Federal Election

Campaign Act (the Act). MSE, a

corporation and a federal government contractor, made contributions

in the names of others during 1998

to a campaign for federal office.

This matter was referred to the FEC

by the Department of Justice.1

Background

In August 1998, representatives

of MSE invited Senator Christopher

Bond of Missouri to visit their

facilities in Butte, Montana. The

president of MSE, Donald Peoples,

announced Senator Bond’s upcoming visit at an executive staff

meeting, during which it was

1

 MSE agreed to enter into a conciliation agreement with the Commission as

part of a plea agreement between MSE

and the U.S. Justice Department to

resolve MSE’s criminal violations of

the Act. The plea agreement provided

for a $97,500 criminal fine and two

years of probation. During the

probation period, MSE’s principal

officers were to implement a program

to prevent future violations of the Act,

as well as perform 200 hours of

community service by lecturing on the

requirements and prohibitions of the

Act.

are prohibited from accepting such

contributions. 2 U.S.C. §441b(a).1

Public communications that expressly advocate the election or

defeat of a clearly identified candidate, such as the communications

made through the phone bank, must

be directed and financed solely by

the organization’s separate segregated fund (SSF), not through the

use of the connected organization’s

general treasury funds. Moreover,

the SSF’s connected organization

may not pay for such communications, even if these funds are later

reimbursed by the SSF. 11 CFR

114.5(b) and AO 1984-24. Thus,

because AFSCME paid its employees on its premises to make the

express advocacy phone calls to the

general public and received the

payment from its SSF only after the

activity was completed, the activity

was impermissibly funded from

AFSCME’s treasury funds. The

activity constituted a prohibited inkind contribution from a labor

organization, in violation of 2

U.S.C. §441b(a). Respondents

AFSCME-PEOPLE and its treasurer

accepted these contributions—also

in violation of §441b(a).

AFSCME-PEOPLE also

misreported these contributions.

Under the Act, all contributions

must be reported according to the

date made. AFSCME-PEOPLE and

its treasurer, Mr. Lucy, instead

reported AFSCME’s in-kind

contributions as of the date of the

reimbursements. 2 U.S.C. §434(b).

Additionally, the Commission

found that in May and October

1996, AFSCME-PEOPLE and its

treasurer made contributions to the

Cummings for Congress general

election campaign that, in the

aggregate, exceeded the $5,000 per

candidate, per election contribution

limit for multicandidate committees.

2 U.S.C. §441a(a)(2)(A).

Prior to finding probable cause to

believe the Act had been violated,

the Commission entered into a

conciliation agreement with the

respondents on September 18,

2000.✦

determined that 13 MSE employees

should be given “community

incentive awards.” The awards

consisted of payments of $750 and

were distributed on August 6, 1998.

Donald Peoples then invited

several individuals, including the

recipients of the community incentive awards, to attend an event for

Senator Bond and suggested that

they each contribute $500 to $1,000

to the Senator’s campaign committee, Missourians for Kit Bond (the

Committee). All 13 individuals who

received the awards contributed

amounts ranging from $750 to

$1,000 after encouragement from

officials at MSE.

Analysis

The Act prohibits corporations

from making contributions in

connection with federal elections. 2

U.S.C. §441b(a). In addition, the

Act prohibits contributions from

federal government contractors ( 2

U.S.C. §441c) and contributions in

the name of another person ( 2

U.S.C. §441f).

The Commission found reason to

believe that MSE knowingly and

willfully violated 2 U.S.C. §§441f,

441b(a) and 441c by making

contributions to the Committee in

the names of others. The Commission and MSE participated in

informal methods of conciliation,

prior to a finding of probable cause

to believe that the Act was violated,

and MSE entered into a conciliation

agreement and agreed to pay a civil

penalty of $19,500.✦

Compliance

(continued from page 9)
February 2001 Federal Election Commission RECORD

11

Conference for

Corporations

Date: April 4-6, 2001

Location: Washington, DC

(Lowe’s L’Enfant Plaza)

Registration: $375

FEC Announces April

Conferences

 The FEC will hold the first of its annual conferences in April

2001. More details will follow in the March issue of the Record.

To register for any conference, call Sylvester Management

Corporation at 800/246-7277. For program information, call the

FEC’s Information Division at 800/424-9530 (press 1, then 3) or

202/694-1100. For the latest information, go to

http://www.fec.gov/pages/infosvc.htm#Conferences.

Conference for Trade

Associations

Date: April 9-11, 2001

Location: Arlington, VA

(Hilton Crystal City)

Registration: TBA

Outreach

FEC Roundtables

The Commission will host

roundtable sessions in February and

March. See the table below for more

details.

FEC roundtables, limited to 12

participants per session, are conducted at the FEC’s headquarters in

Washington, DC.

The registration fee is $25, and

participants will be accepted on a

first-come, first-served basis. Please

call the FEC before registering or

sending money to be sure that

openings remain in the session.

Prepayment is required. The registration form is available at the

FEC’s Web site—http://

www.fec.gov/pdf/rndtabl.pdf—and

from Faxline, the FEC’s automated

fax system (202/501-3413, request

document 590). For more information, call 800/424-9530 (press 1,

then 3) or 202/694-1100.✦

Roundtables

March 7, 2001

9:30 - 11:00 a.m.

February 7, 2001

9:30 - 11:00 a.m.

Candidate Preparations for the Next Election Cycle

• New election-cycle reporting rules

• New electronic filing rules for campaigns

• Candidate registration

• Contribution limits and prohibitions

• House and Senate campaigns

• Lawyers, consultants and party

staff who advise campaigns

The New Electronic Filing Rules and FEC

Forms for PACs

Explanation and Q/A about the new electronic

filing requirements and the new paper forms

used by PACs and party committees.

• Corporate/labor/trade association

PACs

• Nonconnected PACs

• Party committees

• Lawyers and consultants to PACs

and party committees

Date Subject Intended Audience

February 14, 2001

Federalist Society at the University

of Chicago Law School

Chicago, Illinois

Commissioner Smith

February 21-25, 2001

Cato Institute

Cancun, Mexico

Commissioner Smith

Public Appearances
FEDERAL ELECTION COMMISSION

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Washington, DC 20463

Official Business

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Printed on recycled paper

Federal Election Commission RECORD February 2001

Index

The first number in each citation

refers to the “number” (month) of

the 2001 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

2000-24: Preemption of state

election law mandating fixed

allocation ratio for political

party’s administrative and voter

drive expenses, 2:2

2000-28: Disaffiliation of trade

associations and their PACs, 2:3

2000-32: Reporting uncollectable

loan, 1:9

2000-34: Name and acronym of

SSF, 2: 34

2000-35: Status of Green Party of

Washington as state committee of

political party, 1:10

2000-36: Disaffiliation of

nonconnected PACs, 2:5

2000-37: Use of campaign funds to

purchase and present Liberty

Medals, 2:6

2000-38: Registration of party

committee due to delegate

expenses, 2:7

2000-39: Status of party as state

committee, 2: 8

Compliance

MUR 4762: Prohibited union

contributions and other violations,

2:9

MUR 5029: Contributions in the

name of another made by corporation and government contractor,

2:10

Court Cases

_____ v. FEC

– Beaumont, Christine, 2:8

– Buchanan, 1:10

 – Natural Law Party of the United

States of America, 1:10

Other

– Hooker v. All Campaign Contributors, 1:10

Regulations

Final rules for general public

political communications coordinated with candidates and party

committees; independent expenditures, 1:2

Reports

Amendments to Statements of

Organization, 2:1

Nevada state filing waiver, 2:2

Reports due in 2001, 1:4