Federal 

Election 

Commission 

Annual Report 1992 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

Scott E. Thomas, Chairman 

Trevor Potter, Vice Chairman 

Joan D. Aikens, Commissioner 

Lee Ann Elliott, Commissioner 

Danny L. McDonald, Commissioner 

John Warren McGarry, Commissioner 

Ex Officio Commissioners 

Walter J. Stewart, Secretary of the Senate 

Donnald K. Anderson, Clerk of the House 

Statutory Officers 

John C. Surina, Staff Director 

Lawrence M. Noble, General Counsel 

Lynne A. McFarland, Inspector General 

The Annual Report is prepared by the 

Information Services Division. 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 1, 1993 

The President of the United States 

The United States Senate 

The United States House of Representatives 

Dear Mr. President, Senators and Representatives: 

we are pleased to submit for your information the 18th 

annual report of the Federal Election Commission, as 

required by the Federal Election Campaign Act of 1971, as 

amended. The Annual Report 1992 describes the activities 

performed by the Commission in carrying out its duties under 

the Act. The report also outlines the legislative 

recommendations the Commission adopted and transmitted to 

the President and the Congress for consideration in January 

1993. We are hopeful that you will find this annual report a 

useful summary of the Commission's efforts to implement the 

Federal Election Campaign Act. 

Respectfully, 

_._,_..-------

Scott E. Thomas 

Chairman 
Table of Contents 

Introduction 1 

Chapter 1 

Presidential Activity 3 

Presidential Election Campaign Fund 3 

Primary Elections-1992 4 

"Non-major" Party Candidates 5 

Nominating Conventions-1992 7 

General Election-1992 7 

Enhancing Timeliness of Audits-1992 8 

Repayments-1988 11 

Chapter 2 

Administration of the Law 19 

Public Disclosure 19 

Press Office 20 

Regulations 20 

Advisory Opinions 21 

Assistance and Outreach 21 

Review of Reports 22 

Enforcement 23 

Clearinghouse on Election Administration 24 

Chapter 3 

Legal Issues 25 

"Soft Money" 25 

Corporate/Labor Communications 26 

Other Corporate and Labor Issues 29 

Candidate Issues 29 

Contribution Issues 31 

Disclosure 33 

FEC Jurisdiction 34 

Chapter 4 

Campaign Finance 

Statistics 37 

Chapter 5 

The Commission 45 

Commissioners 45 

International Delegations 45 

Ethics 45 

Total Quality Management 45 

Equal Employment Opportunity Program 46 

Inspector General 46 

The FEC's Budget 46 

Chapter 6 

Legislative 

Recommendations 49 

Public Financing 49 

Registration and Reporting 54 

Use of Campaign Funds 60 

Contributions and Expenditures 60 

Compliance 68 

Litigation 71 

Disclaimers 72

Public Disclosure 74 

Agency Funding 76 

Miscellaneous 77 

Appendices 

1 . Biographies of Commissioners 

and Officers 79 

2. Chronology of Events, 1992 83 

3. FEC Organization Chart 87 

4. FEC Offices 89 

5. Statistics on Commission Operations 93 

6. 1992 Federal Register Notices 97 

7. Revisions to Allocation Regulations 99 

8. Rules on Bank Loans to 

Political Committees 101 
Introduction 

For the Federal Election Commission, the 1992 election year brought with it an extraordinary increase in 

activity. During October alone, for example, the 

Commission's Information Office received over 

12,000 telephone calls, compared with 8,069 calls 

received in October 1988. The offices of the Commission which respond to inquiries about the law (Information, the Reports Analysis Division, the Press 

Office and the Clearinghouse on Election Administration) fielded unprecedented numbers of requests for 

information. Offices involved in processing disclosure 

information and making it available to the public, 

including Data Systems, Reports Analysis and Public 

Disclosure, experienced a similar record increase in 

workload. 

Several factors contributed to the high volume of 

activity. It was, of course, a Presidential election 

year, and interest in the Presidential race was substantial. In addition to the interest engendered by 

contests for the nominations of both major parties, 

the year found Ross Perot becoming the first independent candidate in years to fund a competitive 

campaign in the general election. After Mr. Perot's 

first appearance on CNN's Larry King program, the 

Commission began receiving calls from people 

throughout the country who were interested in mounting efforts to place Mr. Perot's name on the ballot in 

their states. Although Mr. Perot's campaign did not 

participate in the public funding program, it generated 

questions from the public throughout the year. 

Nineteen ninety-two also witnessed a sharp increase in the number of candidates seeking office in 

the U.S. House of Representatives. In part, this was 

due to the 1990 census, and the resultant impact of 

redistricting on Congressional races. An unusually 

high number of retiring Members served to swell 

contested House races in which no incumbent was 

seeking re-election. In the 1992 general election, for 

example, 232 candidates ran for 91 open seats in the 

U.S. House of Representatives. 

Another factor contributing to the increased activity 

at the Commission was the fact that the 1992 election was the first held under the Commission's revised regulations concerning the allocation of expenditures that benefit both federal and nonfederal races 

(i.e., the "soft money" regulations). Consequently, 

many affected committees, particularly party committees, sought FEC guidance in applying the new regulations, and considerably more staff time was needed 

to review the new reports filed by committees disclosing allocated expenses, and to enter this data into the 

computer. 

While meeting the demands associated with this 

unusual election year, the Commission continued to 

carry out its administrative and enforcement responsibilities. The material that follows describes and 

illustrates the Commission's activities during 1992. 
Chapter 1 3 

Presidential Activity 

Back in January 1991, at the beginning of the Presidential election cycle, many predicted an uneventful 

campaign season, with few participants. How wrong 

they were. Despite a slow warm up, the primary campaign season witnessed a heated contest among 

seven Democrats, two Republicans and two candidates seeking the nominations of other parties. 1 Even 

more striking was the entrance of a serious independent candidate in the general election. Against this 

background of late, but intense, campaign activity, 

the Commission pledged to speed up the 1992 Presidential audits and continued to certify the eligibility of 

competing candidates and their entitlements. In the 

end, the Presidential Fund remained solvent, but the 

agency recognized that, without a legislative change, 

1992 would stand as the last year in which the Presidential public funding program functioned fully. 

Presidential Election Campaign 

Fund 

How the Fund Works 

Public funding has been part of our Presidential election system since 1976. Using a fund consisting of 

the dollars checked off by taxpayers on their federal 

income tax returns, the federal government provides 

grants to the Presidential nominees for their general 

election campaigns and to the major parties for their 

Presidential nominating conventions. Additionally, 

matching funds are given to qualified Presidential 

primary candidates. 

If the Fund is insufficient to cover all entitlements, 

current law requires the U.S. Department of Treasury 

to allocate remaining funds, giving first priority to the 

conventions, second priority to the general election 

and third priority to the primaries. 

Shortfall 

Since 1988, the Commission has predicted a shortfall 

in the Presidential Election Campaign Fund. Initially, 

Commission staff projected a deficit for 1996. Then, 

in early 1990, the Commission warned that the Fund 

balance might not even be sufficient to cover all 1992 

primary matching fund payments. By the end of 

1991, however, the situation had changed. Submissions in December and January by eight Presidential 

candidates were considerably smaller than had been 

expected. In addition, the rate of inflation (which governs the size of the payouts) was well below expectations; and tax checkoff receipts (which fund the program) declined much less than had been anticipated. 2 Consequently, the FEC announced at a press 

conference on January 3, 1992, that a shortfall in 

1992 was unlikely. Nevertheless, the agency continued to project a substantial deficit for 1996. 

Three months later, Commission Chairman Joan 

Aikens announced that, although the Fund had narrowly avoided a shortfall in 1992, the Fund would 

experience a shortfall of between $75 and $100 million by 1996, unless Congress took action. 

The Chairman said that a shortfall was inevitable 

because of a "fatal flaw" in the public funding program: Payments from the Fund are indexed to inflation, but the $1 tax checkoff that finances the system 

is not. Therefore, as the consumer price index increases, the Fund needs more and more taxpayers 

to designate dollars in order to keep pace with the 

increasing payments to qualified committees. Internal 

Revenue Service (IRS) statistics, however, indicate 

that citizen participation has declined. After peaking 

at 28 percent in 1980, the percentage of tax forms on 

which the taxpayer checked yes fell to a low of 17.7 

percent in 1992. 

1The eleven candidates (Agran, Brown, Buchanan, 

Bush, Clinton, Fulani, Hagelin, Harkin, Kerrey, Tsongas 

and Wilder) were those Presidential candidates eligible to 

receive federal primary matching funds. 

2The FEC had originally projected a $2 million decrease, 

based on an anticipated decline in checkoff receipts in the 

year preceding the Presidential year (a pattern that had 

occurred in every other election cycle under the public funding program). In fact, the receipts only declined by approximately $140,000-from $32,462,979 in 1990 to $32,322,336 

in 1991. However, checkoff receipts for 1992 declined approximately $2.7 million compared to 1991 receipts. 
4 

Public Education Program 

The Commission's 1992 nationwide public information program expanded an effort that was launched 

last year. The purpose of the program was to pro~ide 

the public with straight information about the Presidential financing system, so that taxpayers could 

make "an informed choice." The program stressed 

three key areas: 

• The purpose of the Presidential public funding program; 

• How much money is collected and spent on the 

program; and 

• How the public funds are allocated and spent. 

This year's education campaign, which relied primarily on the generation of press attention, and on 

free public service announcements, featured:. . 

• Implementation of a new toll-free number to mv1te 

taxpayers to request a free brochure explaining the 

checkoff; 

• New radio and television public service spots in 

both English and Spanish; 

• Similar materials for print publications, for public 

service placement in newspapers and magazines; 

• Distribution of hundreds of information packets 

throughout the country to reporters and editors who 

cover Presidential campaigns or tax issues; and 

• Distribution of information to tax preparers and software companies that produce software on income 

tax filing. 

The media announcements, which aired during the 

height of the tax-filing season, urged taxpayers to 

make "an informed choice" when deciding whether to 

designate one dollar of their taxes for the Presidential 

public funding program. People read, saw or heard 

about the checkoff an estimated 145 million times. 

In another outreach effort, FEC Chairman Joan 

Aikens was a featured guest on several nationwide 

radio and television broadcasts, including "The Larry 

King Show" on the Mutual Radio Network and "Road 

to the White House" on C-SPAN. On both shows, the 

Chairman was interviewed, and she fielded questions 

from listeners throughout the country. 

Among the most significant of the Commission's 

legislative recommendations this year are those dealing with the public financing of Presidential elections. 

The Commission noted, "If Congress wishes to preserve the Presidential public funding system, a legislative remedy is essential." For more information, 

see the Public Financing recommendations beginning on p. 49. 

Primary Elections-1992 

The maximum amount a primary candidate may receive in public funds is half of the statutory spending 

limit ($1 0 million, adjusted for inflation). The 1991 

cost-of-living adjustment (COLA) brought the 1992 

spending limit to $27,620,000. A candidate could. 

have received half that amount, or $13,810,000, m 

matching funds. 

Certification of Matching Funds 

Under the Presidential Primary Matching Payment 

Account Act, candidates may submit documentation 

to establish their eligibility for matching funds the 

year before the primaries are held. By the end of the 

pre-nomination period, the Commission had declared 

11 candidates eligible to receive primary matching 

funds. 

To be eligible to receive matching funds, a candidate must first raise in excess of $5,000 in each of 20 

states (i.e., over $100,000 in matchable contributions). Only contributions from individuals apply toward this threshold. Although an individual may contribute up to $1 ,000 to a candidate, only a maximum 

of $250 counts as a matchable contribution, applicable to the $5,000 threshold. 

To be eligible for matching funds, the candidate 

must also submit a letter of agreement and certification in which the candidate agrees to comply with the 

provisions of the Federal Election Campaign Act and 

the Presidential Primary Matching Payment Account 

Act, including the limits set on campaign spendi~g. 

Once certified eligible, candidates may subm1t 

additional matching fund requests for Commission 
5 

review. The Audit staff evaluates the submissions to 

see if the requests contain proper documentation. 

Reflecting the Treasury Department's decision to 

make payments on a monthly basis, the Commission 

adopted conforming regulations for certifying payment once a month.3 

By the beginning of 1992, Edmund G. Brown, Jr., 

George Bush, Bill Clinton, Lenora Fulani, Tom 

Harkin, Bob Kerrey, Paul Tsongas and Douglas 

Wilder had become eligible for matching funds. The 

Commission certified a total of $6.4 million to these 

eight eligible candidates with the first certification in 

January 1992. Later in 1992, the Commission also 

declared Patrick Buchanan, Larry Agran4 and John 

Hagelin eligible. By December 31, 1992, all of these 

candidates had been certified to receive a total of 

$42,208,155.45 in federal matching funds. 

The chart below lists the eligible candidates and 

the total amount of matching funds certified to each 

through the end of February 1993. 

1992 Matching Fund History 

Candidate . Contributors Contributionst Amount Certified 

Agran 4,230 5,274 $ 269,692 

Brown 83,904 84,565 4,239,405 

Buchanan 144,875 175,541 5,199,987 

Bush 108,891 139,480 10,557,743 

Clinton 152,085 175,600 12,536,135 

Fulani 95,589 103,443 2,013,323 

Hagelin 3,368 4,668 349,322 

Harkin 33,922 46,572 2,103,362 

Kerrey 29,680 44,135 2,195,530 

Tsongas 37,059 39,889 2,989,289 

Wilder 2,303 2,341 289,027 

TOTAL 695,906 821,508 $42,742,815 

·rota! number of contributors contained on the matching 

fund summissions. 

tTotal number of contributions submitted for matching. 

"Non-major" Party Candidates 

A Commission press release in the fall of 1992 

reported that 23 Presidential candidates appeared on 

the ballot in at least one state. Four candidates were 

on the ballot in all 50 states plus the District of Columbia: George Bush, Bill Clinton, Ross Perot and 

Libertarian Party candidate Andre Marrou. Lenora 

Fulani, who received federal matching funds for her 

primary campaign, was on the ballot in 40 states; in 

most states, she was identified as the nominee of the 

New Alliance Party. John Hagelin of the Natural Law 

Party qualified for the ballot in 29 states. 

30n May 10, 1991, the Department of Treasury, Internal 

Revenue Service, published new rules that, among other 

things, changed the payment schedule for primary matching funds. Under the new rule (which the Commission had 

opposed), Treasury made matching fund payments to 

primary campaigns only once a month, at the end of the 

month. Previously, Treasury had made payments soon 

after the Commission certified them, which was usually 

every two weeks. Treasury said that it made the change to 

ensure that, in case of a shortfall in the Fund, there would 

be sufficient funds to cover the entitlements of general 

election candidates. See discussion in Annual Report 

1991, p. 6. 4 Mr. Agran attempted to establish his eligibility for 

matching funds after failing to receive more than 10 percent of the vote in two consecutive primaries. The Commission certified his eligibility because the "1 0 percent 

rule" applies only to elections held after a candidate becomes eligible for matching funds. 
6 

John Hagelin and the Natural Law Party 

On October 15, the Commission found that John 

Hagelin, Presidential nominee of the Natural Law 

Party, was eligible to receive federal matching funds 

to pay primary debts and winding-down expenses.5 

Previously the Commission had determined, in AO 

1992-30, that the Natural Law Party of the United 

States qualified as the national committee of a political party and could therefore make coordinated party 

expenditures on behalf of its candidates under 2 

U.S.C. §441a(d). 

The Party qualified as a "national committee" of a 

political party, defined under 2 U.S.C. §431 (14), because it demonstrated sufficient activity at the 

national level. Among other things, the Party had: (1) 

placed candidates on the ballots in 22 states; (2) 

nominated candidates for the Presidential ticket and 

for the House and Senate; and (3) held voter registration drives in various regions of the country 

LaRouche Denied Matching Funds: 

Final Determination 

In a final determination made February 27, the Commission denied matching funds to Lyndon H. 

LaRouche, Jr., for his 1992 Presidential campaign. 

The Commission based its decision on Mr. 

LaRouche's record: (1) his 1988 criminal conviction 

and imprisonment for fraudulent fundraising practices, including those related to a previous publicly 

funded Presidential campaign; (2) his 15-year pattern 

of abuse of the matching fund program, including 

submitting false information, fraudulently inducing 

individuals to contribute and submitting contributions 

that lacked the requisite donor intent to make a campaign contribution; and (3) his past repudiation of 

promises made in letters of candidate agreements 

and certifications filed with the FEC. The Commission 

also considered Mr. LaRouche's 1988 criminal conviction for conspiring to defraud the Internal Revenue 

Service.6 

Denial of Petition to Withhold Public Funding 

from Clinton Campaign 

On June 25, 1992, the Commission denied a petition 

submitted by the Republican National Committee 

(RNC), which challenged Governor Bill Clinton's eligibility for federal matching funds and federal funding 

in the general election. 

The RNC's petition arose from a televised "Town 

Meeting" on June 12, 1992, during which Governor 

Clinton answered questions from the television audience. During the broadcast, an 800 telephone number was flashed on the screen. One of the options 

available to callers was to make a contribution. The 

Democratic National Committee (DNC) paid for the 

broadcast (about $400,000). 

The RNC claimed that the program was a primary 

election event because it was used to raise funds for 

the primary election. Therefore, the RNC alleged, the 

DNC had exceeded its $5,000 contribution limit for 

the primary election, and the Clinton Committee had 

accepted an unlawful contribution. In the alternative, 

the RNC asserted, if the DNC's spending constituted 

coordinated party expenditures on behalf of its general election nominee, under 2 U.S.C. §441 a(d), then 

the Clinton Committee could not use its primary 

funds to pay for expenses related to the program 

(e.g., staff salaries, travel costs). 

As explained in the Statement of Reasons supporting its decision, the Commission denied the 

RNC's petition because the facts and circumstances 

presented did not on their face constitute fraud, 

which is the standard for justifying the suspension of 

public funding. This standard is based on FEC regulations and an opinion of the U.S. Court of Appeals 

for the District of Columbia Circuit, In re Carter 

Mondale Reelection Committee, Inc., 642 F.2d 

(1980). 5The Commission certified Dr. Hagelin's eligibility for 

matching funds, even though he had become ineligible prior 

to the Commission's certification date. Since he had made 

his threshold submission several weeks before his party 

had nominated him {the date of his ineligibility), the Commission concluded that he had been eligible at the time of 

his submission. 

6ln LaRouche v. FEC, No. 92-1100 {D.C. Cir. March 3, 

1992), petitioners ask the court to review the Commission's 

denial of matching funds to Mr. LaRouche's campaign. 
7 

As to specific claims made in the RNC petition, the 

Commission had previously concluded (in AO 1984-

15) that a party committee could make coordinated 

party expenditures prior to the nomination of the candidate. Although it was not clear whether the precedent would apply to the DNC's expenditures for the 

Town Meeting, the allegations raised in the petition 

did not appear to constitute fraud. 

The Commission also noted that candidates may 

make general election expenditures for limited purposes during the primary period without precluding 

their ability to make subsequent primary expenditures 

and without rendering them ineligible to receive further matching funds. 

In addition, the Commission determined that the 

RNC's challenge to Governor Clinton's general election funding was not ripe for agency review, since the 

Democratic party had not then selected its Presidential nominee and Governor Clinton had not yet applied for general election funding. 

Nominating Conventions-1992 

Under the public funding law, national party committees of major parties may become eligible to receive 

public funds to pay the official costs of their Presidential nominating conventions. Eligible committees receive $4 million plus an adjustment for inflation, provided they agree to certain requirements, including 

the filing of periodic disclosure reports and detailed 

audits. A party receiving public funding for the convention may not spend more than the public funding 

grant, although host cities and committees may provide certain facilities and expend additional funds. 

Certification of Convention Funds 

In 1991 , the Commission certified that the 1992 

Democratic National Convention Committee and the 

Committee on Arrangements for the 1992 Republican 

National Convention were eligible to receive $1 0.6 

million each in public funds. Under the terms of the 

Act, these are the earliest funds paid out by the Treasury in each cycle. The Department of Treasury 

made the payments in July 1991, and in 1992 made 

an additional cost-of-living payment ($448,000), thus 

bringing to $11 ,048,000 the total certified to each 

convention committee. 

General Election-1992 

The $20 million statutory entitlement for major party 

nominees, when adjusted by the 1991 cost-of-living 

adjustment (COLA), increased to $55.24 million for 

the 1992 nominees. 

On July 17, 1992, the Commission certified a 

$55.24 million payment to the campaign of the 

Democratic Presidential nominee, Governor Bill 

Clinton, and his Vice Presidential running mate, 

Senator AI Gore. The same amount was certified on 

August 21 to the Republican ticket, President George 

Bush and Vice President Dan Quayle. The U.S. Treasury paid the funds shortly after their certifications. 

The Democratic and Republican parties filed reports 

disclosing $10.2 million each in coordinated expenditures made on behalf of their respective nominees.7 

Ross Perot, running as an independent in all 50 

states and the District of Columbia, filed reports disclosing $64.7 million in general election expenditures.8 

7Not included in these figures is an additional $67.8 

million in "soft money" received by the two major national 

party committees. Although soft money is not considered to 

be a contribution or expenditure to influence federal elections, it is reported by the national party committees to the 

Federal Election Commission. (For more information about 

soft money, see Chapter Three, Legal Issues.) 

8Ross Perot did not ask for any public funds; nor would 

he have qualified for them, because he spent more than 

$50,000 in personal funds on expenditures for his campaign. To be eligible for public funds in the general election, a candidate must, among other things, pledge not to 

spend more than $50,000 in personal funds. 
8 

Special Use of Compliance Fund by Clinton/Gore 

'92 Campaign Committee 

In Advisory Opinion 1992-38, the Commission found 

that, after the general election, the Clinton/Gore '92 

Campaign Committee could accept a temporary $1 

million loan from its general election legal and compliance fund (GELAC fund) to cover amounts not yet 

reimbursed by the U.S. Secret SeNice. However, the 

.loan could be used only to defray qualified campaign 

expenses, and the committee had to repay the loan 

immediately upon receiving reimbursement payments 

from the U.S. Secret SeNice. 

The campaign was experiencing a cash flow problem after the general election and was waiting to 

receive about $1.2 million in anticipated reimbursements from the Secret SeNice for transportation and 

related seNices provided to Secret SeNice staff. The 

temporary loan would permit the campaign to pay 

urgent expenses before it received the Secret Service reimbursements. 

Under the public funding laws, a campaign that 

received full public funding for the general election, 

as the Clinton/Gore campaign did, must limit campaign spending to the amount of the grant and may 

not accept any contributions to pay for qualified campaign expenses. 2 U.S.C. §441 A(B)(1) and 26 U.S.C. 

§9003(b)(1) and (2). A campaign's compliance fund 

may, however, accept private contributions to pay for 

costs associated with complying with the law. 11 

CFR 9002.11 (b)(5). The Commission's regulations 

also permit the use of such funds to pay for unreimbursed costs of providing transportation to the Secret 

SeNice. 11 CFR 9003.3(a)(2)(i)(H). 

In AO 1992-38, issued November 11 , 1992, the 

Commission noted that, if the reimbursements received were less than anticipated, any shortfall in the 

loan repayment would result in an improper use of 

contributions "and have repayment or other consequences under the Act and Commission regulations." 

In a dissenting opinion, Commissioner Aikens 

noted that, instead of transferring money from the 

compliance fund, the Committee might have used a 

bank loan or line of credit to alleviate reported cash 

flow problems. She believed that the Commission 

should have maintained the position "that the General Election Legal and Accounting Compliance Fund 

is for a limited purpose and may not be commingled 

with public funds, and that private contributions may 

not be used to pay qualified campaign expenses to 

which the limits apply." 

Commissioner Potter, in a concurring opinion, said 

he voted for AO 1992-38 because its conclusion was 

consistent with previous Commission decisions in the 

area. However, he said, the Commission "should revisit the Presidential legal and accounting compliance 

fund exemption and review both the existence and 

scope of this exemption." He believes that the fund 

"has grown far beyond its intended bounds" and "provides the spectacle of private fundraising by Presidential campaigns which have signed an agreement to 

forgo such activity." 

Enhancing Timeliness of 

Audits-1992 

The Commission is required by law to audit all Presidential candidates and convention committees receiving federal funds to ensure that the funds are not misused and that committees maintain proper records 

and file accurate reports. In the past, these audits 

often took two to four years to complete, for several 

reasons. Each cycle raised new, and often complex, 

issues, and the Commission's audit resources were 

severely taxed. In addition, the administrative processes associated with the audits frequently took 

substantial time (when, for example, a committee 

presented new information at a Commission hearing 

late in the process or sought several extensions of 

time to prepare responses to Commission findings). 

Recognizing the importance of concluding the audits 

speedily, the Commission has taken several measures to ensure more timely audits of the 1992 campaigns. The agency changed its audit procedures, 

modified certain regulations, updated the technology 

used to conduct the audits and increased its audit 

staff. 

By the end of 1992, fieldwork was already complete on audits of five of the eleven 1992 Presidential 

primary committees: Agran, Harkin, Kerrey, Tsongas 

and Wilder. 
9 

Changes in Audit Procedures 

On January 31, 1992, the Commission approved the 

1992 edition of the Financial Control and Compliance 

Manual for Presidential Primary Candidates Receiving Public Financing. The Manual suggested an overall plan to control and manage campaign accounting, 

reporting and recordkeeping and included, as an 

appendix, the revised computerized magnetic media 

requirements discussed below. Moreover, the Commission revised its audit procedures to streamline the 

process and to overcome problems that had delayed 

audits in past election cycles. These new procedures 

are summarized below. 

• Full Disclosure of All Findings in Final Audit 

Report. In the past, if an audit revealed the possibility of substantial violations of the law, the final audit 

report was issued only after the violations had undergone legal review and the Commission had decided whether to open an enforcement case (Matter 

Under Review or MUR) against the committee. 

Moreover, if certain types of violations of the election law were pursued in a MUR, mention of the 

related audit findings was purged from the public 

audit report. Under the new procedures, the final 

audit report will be placed on the public record in its 

entirety, disclosing all findings, including any that 

may later be referred for enforcement action. This 

new procedure is expected to result in fuller and 

more timely public disclosure of audit findings. 

• Limit on Extension of Time. Under the public 

funding rules, a committee has 30 days from its 

receipt of the interim audit report to submit comments on audit findings. During the 1988 Presidential audits, however, some committees received up 

to three extensions of time. In some instances, a 

committee had up to 6 months to respond to the 

interim audit report alone. Under the new procedures, each committee will be given only one 45-

day extension of time to the 30-day response period. The Commission has also limited extensions of 

time for responses to the final audit report; committees will be given only one 45-day extension. 

• Records Inventory Before Fieldwork. When fieldwork was begun in past election cycles, Audit Division staff sometimes found that committee records 

were incomplete or unorganized. Missing records 

were sometimes not available until the audit was 

nearly complete. These deficiencies made the audit 

task more difficult and time consuming. 

Audit staff will now conduct a thorough inventory 

of committee records before starting fieldwork. If 

records are not satisfactory, Audit staff will notify the 

committee, in writing, that it has 30 days to correct 

listed deficiencies or the Commission will issue 

subpoenas to vendors, financial institutions and 

other appropriate parties (including the committee) 

to obtain the records in question. This procedure 

will also apply to the computerized records submitted before fieldwork. Under the new system for 

1992, auditors are more likely to find complete and 

organized documents, and when documents are not 

in good order, the agency will have a clear record 

showing why some audits were not completed in a 

timely way. 

• Requests for Records During Fieldwork. If, during fieldwork, a committee does not respond to an 

informal request for records, auditors will make a 

written request with a specific due date. Therequest will warn the committee that the Commission 

will subpoena the records if the committee does not 

produce them by the due date. 

• Pre-Audit Use of Computerized Data. For 1992 

audits, the Audit Division for the first time will have 

records of a committee's receipts and disbursements in a usable computerized format prior to the 

beginning of fieldwork. Generally, this information is 

very useful in identifying possible problem areas 

early, and in designing effective procedures for use 

during fieldwork. 

• Audit Testing Using Sampling Technique. Most 

of the audit testing of contributions and supporting 

documentation will now be performed using a sampling technique widely accepted in the audit profession. (The agency has used sampling techniques 

since 1980 to determine the amount of a committee's matching funds.) The Commission decided 

to implement this approach in an effort to save time 

and money for all concerned in the audit process 

without sacrificing the essential accuracy of audit 

findings. In the past, auditors often reviewed voluminous contribution records to compile lists of potentially prohibited or excessive contributions. 
10 

Using the sampling technique, the Commission 

will evaluate a committee's compliance with the 

contribution limits and prohibitions and with the 

recordkeeping and reporting rules on contributions. 

The agency will then project, for example, the dollar 

value of contribution violations in each category, 

based on apparent violations identified in the 

sample. This would then be used as the basis of 

audit findings, in addition to other apparent violations discovered in other reviews of the committee's 

records. Committees will have the opportunity to 

demonstrate that any of the identified sample exceptions were not errors. A new projection would 

then be made based on a reduced number of violations in the sample. The committee would make 

payments to the U.S. Treasury to resolve the matter. 

First Election Under Revised Rules 

on State Limits 

The 1992 primary election was the first conducted 

under the Commission's new rules on state spending 

limits. In past elections, these limits had proven difficult to audit and enforce. Iowa and New Hampshire, 

the first two primary states, have relatively low 

spending limits (because their voting age population 

is relatively small) but they have traditionally been 

important tests for Presidential campaigns. As a result, campaigns often devised complex systems to 

reduce the amounts allocated to the Iowa and New 

Hampshire limits. The Commission, in turn, spent 

considerable resources to determine whether campaigns were exceeding state limits and to enforce 

any violations discovered. In some cases, this effort 

contributed to lengthy audits. (For more information, 

see the Commission's legislative recommendation on 

eliminating the state expenditure limits, p. 50.) 

In 1990 and 1991, the Commission revised its 

rules to simplify the process of allocating expenses to 

the state spending limits, a requirement for primary 

candidates receiving matching funds. Beginning with 

the 1992 Presidential election cycle, expenses are 

allocable only if they fall within one of five specified 

categories: media expenses, mass mailings, overhead expenses, special telephone programs and 

public opinion polls. Expenses falling outside those 

five categories are not allocable to the state spending 

limits but do count against the national spending limit. 

The regulations also set out specific recordkeeping 

requirements associated with these expenses. 

Revised Regulations on 

Submissions on Magnetic Media 

During the 1988 election cycle, the Commission devoted considerable time and resources to reformatting computerized information submitted during the 

audit process. Reformatting the data to permit efficient processing utilizing the capabilities of the 

Commission's computer system involved, in many 

cases, significant effort and expense by both the 

Commission and the campaigns. New regulations 

were adopted as part of the agency's effort to reduce 

the cost of audits. 

For the 1992 cycle, the new rules require committees that have computerized their receipt and/or expenditure processing to submit that information on 

computer tapes or diskettes in a format compatible 

with the FEC's computer processing capability. The 

rules also clarify that the committee (and not the 

Commission) must pay any cost for producing the 

materials in the required format.9 The volume of material processed by the Commission in administering 

the public funding program is significant. For example, during the 1992 Presidential cycle, the Commission expects to audit over one million transactions 

reported by recipients of public funding. 

Other Improvements 

Other changes have also been undertaken to accelerate audits. The Audit Division has added six 

auditors and enhanced its use of computer resources, expanding the system used by the division 

in its offices. In addition, new laptop computers now 

facilitate fieldwork and subsequent processing of the 

data from field audits. 

9A standardized format for matching fund submissions 

has been in place since 1986. 
11 

Repayments-1988 

The Process 

After a candidate's date of ineligibility, the Commission begins to audit every committee that received 

public funds. For each committee, an audit report 

documenting the committee's financial activity is prepared by the Audit Division for Commission consideration. 

The final audit report, approved by the Commission and released to the public, may include an initial 

determination by the Commission that the committee 

repay public funds. 10 A repayment is required when 

the Commission determines that a primary or general 

election committee: 

• Received public funds in excess of the amount to 

which it was entitled; or 

• Incurred nonqualified campaign expenses by 

spending in excess of the limits, by using public 

funds for expenses not related to the campaign or 

by insufficiently documenting the expenditure of 

public funds. 

There are other bases for repayment as well (e.g., 

stale-dated checks). 

Additionally, a general election candidate is required to make repayments if the committee received 

interest on the investment of payments from the 

Fund. Primary campaigns are also required to make 

repayments if they have surplus funds remaining on 

the date of ineligibility. 

If a committee wishes to dispute the Commission's 

initial repayment determination, the committee may 

submit a written response to support its view. The 

committee may also request an aral presentation 

before the Commission. 

The basis for the Commission's final repayment 

determination is set forth in a statement of reasons 

prepared by the Office of General Counsel. A committee that disputes the initial repayment determination must nevertheless repay the amount specified in 

the final determination within the payment deadline 

unless the committee obtains a stay from the Commission pending an appeal of its decision. 

The paragraphs below summarize repayment 

findings with respect to 1988 Presidential committees. The findings were contained in the final audit 

reports released in 1992.11 

George Bush for President, Inc. On February 24, 

the Commission released the final audit report on 

President Bush's 1988 primary campaign committee, 

which had received $8.393 million in matching funds. 

The final audit report found that the Committee had 

to repay $113,080 in matching funds to the Treasury. 

The repayment amount included: (1) the pro rata 

portion of amounts spent in excess of the state 

spending limits for Iowa and New Hampshire; and (2) 

the total of stale-dated checks that were never 

cashed by payees. The committee made its repayment in March 1992. 

Americans for Robertson, Inc. On March 26, 1992, 

the Commission approved the final audit report for 

the Rev. Pat Robertson's 1988 Presidential campaign committee. Based on audit findings, the Commission made an initial determination that the Committee repay $388,544 in public funds to the Treasury. The committee had received $10.4 million in 

matching funds. The repayment amount included: (1) 

the pro rata portion of expenditures exceeding the 

Iowa and New Hampshire state limits and (2) the pro 

rata portion of nonqualified campaign expenses 

(such as tax penalties and undocumented transfers). 

Auditors also found that the Committee had apparently received excess reimbursements from media 

organizations for press travel and had to repay the 

firms $1 05,635. 

At a December 2, 1992, hearing the campaign 

argued that the FEC should reduce the repayment 

amount. 

10The Interim Audit Report, however, constitutes notification of a repayment determination under 11 CFR 9007.2(a) 

(2) and 9038.2(a)(2). 

11 For other audit reports pertaining to 1988 candidates, 

see Annual Report 1989, pp. 14-15; Annual Report 1990, 

pp. 7-9 and Annual Report 1991, pp. 8-10. 
12 

Jesse Jackson 1988 Campaign. On April9, 1992, 

the Commission approved the final audit report on 

the Jesse Jackson for President '88 Committee and 

two other committees the candidate authorized for 

his 1988 primary (the California and New York Committees). The Commission made initial determinations that the Committees repay $310,906 in public 

funds to the U.S. Treasury. The Jackson campaign 

had received over $8 million in matching funds for the 

1988 campaign. 

The repayment amount included: (1) the pro rata 

portions of nonqualified campaign expenses (such as 

tax penalties, insufficiently documented disbursements and apparent overpayments to a vendor); (2) 

matching funds the committee received to which it 

was not entitled; and (3) stale-dated checks written 

by the New York committee. 

In a hearing on October 28, 1992, counsel for the 

committee urged the Commission to reduce the repayment. 

Dole Committee. On February 6, the Commission 

made a final determination that the Dole for President 

Committee, Inc., repay $235,822 in matching funds 

to the U.S. Treasury. The repayment amount represented: (1) a pro rata portion of undocumented disbursements by delegate committees affiliated with 

the Dole campaign; (2) the pro rata portion of 

amounts spent in excess of the expenditure limits in 

Iowa and New Hampshire; and (3) the total of staledated committee checks never cashed by the payee. 

The Committee made the full repayment to the U.S. 

Treasury in March. 

Gephardt Committee. On May 21, the Commission 

made a final determination that the Gephardt for 

President Committee, Inc., repay $118,944 in primary 

matching funds to the U.S. Treasury. The repayment 

amount reflected the pro rata portion of amounts 

spent in excess of the Iowa expenditure limits. An 

additional repayment of $2,628 was included as an 

addendum to the final audit report on August 4, 1992. 

The Commission received payment of the entire 

amount ($121 ,572) on November 9, 1992.12 

Jack Kemp for President. On July 31, the Commission made a final determination that the Kemp for 

President Committee repay $103,555 in public funds. 

The amount consisted of a pro rata portion of expenditures in excess of limits in New Hampshire and 

Iowa, and the full amount of stale-dated committee 

checks never cashed by the recipients. The U.S. 

Treasury received the committee's repayment on 

November 5, 1992. 

Bush-Quayle '88. The Commission made a final 

determination that the Bush-Ouayle Committee repay 

$134,834.71 to the Treasury. The repayment included: (1) amounts spent by the Committee for nonqualified campaign expenses; (2) excessive travel 

reimbursements received from media organizations; 

and (3) stale-dated committee checks. 

The committee was also ordered to refund over 

$195,000 to media organizations for travel overpayments and unused prepayments. 

The committee made its final repayment on August 3, 1992. 

LaRouche Democratic Campaign. On September 

17, the Commission made a final determination that 

the LaRouche Campaign repay $151 ,260 in matching 

funds to the U.S. Treasury. The Campaign had received over $825,500 in matching funds for Lyndon 

LaRouche's 1988 Presidential primary campaign. 

The final repayment consisted of: (1) the pro rata 

portion of expenditures made after the candidate's 

date of ineligibility; (2) stale-dated committee checks 

never cashed by the payees; and (3) over $100,000 

in matching funds received in excess of the candidate's entitlement. 

On October 22, 1992, Lyndon LaRouche and the 

LaRouche Democratic Campaign '88 filed an appeal 

of the FEC's final repayment determination in the 

12For more information, see the December 1992 Record, 

p. 2. 
13 

U.S. Court of Appeals for the District of Columbia 

Circuit. In Lyndon H. LaRouche, Jr. v. FEC, 13 the 

petitioners asked the court to rule on whether the 

FEC's repayment determination and the methods it 

used to determine the repayment amount were arbitrary, capricious and not in accordance with the law. 

They also asked the court to consider whether the 

FEC waived its rights to require repayment of matching funds the Campaign received after the candidate's date of ineligibility because the FEC had certified the funds based on debt statements submitted in 

good faith by the Campaign. 

Hearing on Simon Repayment Determination 

In a hearing on August 5, 1992, counsel for Senator 

Paul Simon's 1988 Presidential committee urged the 

Commission to reduce the amount the committee 

had to repay to the U.S. Treasury. The Commission 

had made an initial determination that the Paul 

Simon for President Committee repay $430,465 in 

federal matching funds. 14 Before making a final repayment determination, the Commission will consider 

the committee's oral and written responses. 

13No. 92-1555. 

14See Annual Report 1991, p. 9. For more information 

about the hearing, see the October 1992 Record, p. 4. 
14 

Presidential Election Campaign Fund: 

Projections for 1996 

Payments and Funds Available 

1992 Balance 

Primary Matching 

General Election Grants 

-Convention Grants 

'--'-----"--' 1993-96 Receipts 

Millions of Dollars 

250~---------------------------------------~----------------~------

2001---

1501----

100~-----

501----

OL---

Projected Demand Funds Available 
15 

Presidential Election Campaign Fund 

1992 Balance by MonthTotal and Available for Primary Matching 

Total 

• Available for Matching 

Millions of Dollars 

150 ~-----------------------------------------------------------

120 

90 

60 

30 

0 

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 

Revenue and Payments from the 

Presidential Election Campaign Fund -

Convention 

Primary 

-General 

• Receipts 

Millions of Dollars 

200 ~-----------------------------------------------------------

50 

0 

1976 1980 1984 1988 1992 
16 

Receipts of Presidential Primary 

Campaigns by Source 

-Individuals 

-Matching Funds 

-Loans 

C"'~:: 1Other 

Millions of Dollars 

0 10 

A gran 

Brown 

Clinton 

Harkin 

Kerrey 

Tsongas 

Wilder 

Buchanan 

Bush 

Fulani 

Hagelin 

20 30 40 50 
17 

Less Than 200 Individual Contributions 

To Presidential Primary Campaigns l$200-$499 

By Size of Contribution -$500-$749 

- $750 Or More 

A gran Brown Clinton

$0.3 million $5.18 million $25.3 million 

Harkin Kerrey Tsongas

$3.1 million $4.0 million $4.9 million

Wilder Buchanan Bush 

$0.5 million $7.2 million $27.8 million
18 

Presidential Spending by 1992 

General Election Campaign 

Clinton 

-Bush 

-Perot 

Millions of Dollars 

30 r----------------------------------------------------------------

0 

July August September October 1 - October 15 - November 24 -

October 14 November 23 December 31 

1992 General Election: 

Funding Sources Party Expenditures 

-Individual Contributions 

-Expenditures by the Candidate 

- Contributions to Compliance Fund 

Perot/Stockdale 

Bush/Quayle 

0 10 20 30 40 50 60 70 80 
19 

Chapter 2 

Administration of the Law 

The Federal Election Commission is the independent 

regulatory agency with sole authority over the administration and civil enforcement of the Federal Election 

Campaign Act (the Act) and the Presidential public 

financing statutes. This chapter summarizes the 

agency's efforts to fulfill its mission during the unprecedented activity level of the 1992 election year. 

Public Disclosure 

With the extraordinary increase in filings made under 

the campaign finance laws in 1992, great demands 

were made upon the offices of the Commission that 

are charged with processing the information from 

those filings and making it available to the public. The 

material below describes the activities of these offices. 

Public Records 

Disclosing campaign finance information is an essential part of the FEC's mission. Under the Act, all campaign reports filed by federal committees must be 

available for inspection in the agency's Public 

Records Office within 48 hours of receipt. Reporters, 

committees and other interested persons visit the 

Public Records Office to review these reports and 

computer printouts, monitoring the sources of funds 

and spending patterns or looking for possible errors 

and violations of the law. 

This year, the Commission sought to improve the 

technology that enables the public to access and 

review reports. Using a prototype image processing 

program developed by the Data Systems Division, 

the agency scanned all major Presidential filings in 

1992, totaling approximately 30,000 pages. Previously, the public could review microfilm copies of 

reports filed by committees and could access summary information through computer indexes. The new 

approach permits the public to review both the summary data and the actual forms through the computer. The Commission anticipates that eventually 

the reports and data of other political committees will 

be available to the public through this new image 

processing system. 

Public Records staff are trained to offer personalized assistance to visitors, helping them identify and 

locate the documents and research tools they need. 

Visitors have access to numerous materials in the 

Public Records Office, including: reports and statements filed by the regulated community; standard 

computer indexes, updated daily; FEC Reports on 

Financial Activity, the final statistical studies of each 

election cycle; advisory opinions; enforcement files 

(closed MURs); audit reports; and the agenda documents prepared for discussion in open Commission 

meetings. Public Records visitors are also afforded 

access to research space and photocopying equipment to facilitate their work. Requests for materials 

are also handled over the phone. Callers ordering 

documents on a regular basis set up running accounts, a convenient way to pay the fees for copying 

and using computer services. 

Data Processing 

The amount of information processed by the Commission during 1992 was exceptional. Twice as many 

House candidates filed with the Commission during 

1992 than had done so in any previous year. During 

the month of October alone, the Commission received over 10,000 financial reports and nearly 4,000 

48-hour notices (notices filed by authorized committees showing receipt of a contribution of $1 ,000 or 

more during the period between 20 days and 2 days 

before the election). Each report and notice was processed, coded and entered in the Commission's data 

base. 

More data was coded and made available to the 

public than ever before. On October 20, 1992, for 

example, the agency received 26,000 pages of information. Forty-eight hours later, a summary was ready 

for 1 ,500 news organizations, and the information 

was also available to the public on-line (see below). 

The Commission continued to enhance its computer capabilities in 1992, expanding public access to 

on-line campaign finance information. The Direct 

Access Program (DAP}, which permits subscribers to 

review disclosure information on-line on their own 

computers, continued to gain acceptance, with more 

subscribers than ever before. The DAP averaged 

about 240 hours of "user-time" per month. The range 
20 

of information available through the DAP also increased in 1992, as Advisory Opinions issued since 

1975 and court case summaries from Selected Court 

Case Abstracts were added to the system. Reporters 

and political committees were the primary users of 

the program. 

For those who did not subscribe to DAP, the 

FEC's state access program provided on-line access 

to campaign finance data. The general public could 

request printouts of FEC indexes in 24 state offices 

around the country. 1 

The Data Division continued to explore how best 

to apply new technologies to internal Commission 

operations. Working closely with the Audit Division 

and the Office of General Counsel, Data developed 

computer strategies to enhance productivity in those 

offices. 

Press Office 

In 1992 the Press Office continued to brief the media 

on a variety of election-related topics-from campaign finance reports to Commission rulemakings. 

With the advent of the 1992 Presidential campaign, 

however, the number of inquiries handled by the 

press office skyrocketed. By the end of October 

1992, the Press Office had taken 20,000 phone calls 

{3,000 more than during the same period in 1988) 

and had met with 3,000 reporters. 

The Press Office conducted briefings, seminars 

and workshops for numerous media bureaus and 

journalism graduate groups. Also, in one-on~one 

briefings with reporters, the Press Office explained 

provisions of the election law, agency procedures 

and the Commission's discussions of issues. 

Increasingly, the Press Office has been fielding 

calls from reporters outside the Washington area. 

Smaller local and even weekly newspapers have 

turned to the Press Office for information, especially 

about House races. This year also saw a dramatic 

increase in inquiries from reporters with foreign me1Participating states include: AK, AZ, CA, CO, CT, GA, 

HI, IL, lA, LA, MD, MA, Ml, NE, NV, NJ, NM, OH, TN, TX, 

UT, VT, WA and WI. 

dia, including reporters from Japan, Germany, Bulgaria, Spain, Great Britain, France, Italy and India. 

The Press Officer also serves as the 

Commission's Freedom of Information Officer. In that 

capacity he responded to a record number of FOIA 

requests in 1992. Items processed under the FOIA 

include requests for computer tapes and access to 

the Commission's Direct Access Program. 

Regulations 

The Commission's regulations interpret and explain 

the statute's requirements in detail. The Commission 

prescribed its first regulations in 1977 and has continued over the years to amend its rules to give increased guidance to committees. In 1992, the Commission prescribed new regulations regarding: 

• Application of rules on the allocation of federal and 

nonfederal expenses; 

• Use of candidates' names by unauthorized committees; 

• Bank loans; 

• Interim ex parte rules; and 

• Rulemaking petitions. 

The first three items are discussed under "Legal Issues" in Chapter 3, and summaries of the last two 

are provided in this chapter, below. 

During 1992, the Commission also sought comments on proposed rules concerning transfers of 

funds between the authorized committees of a federal candidate; transfers of funds and assets from a 

candidate's nonfederal campaign to his or her federal 

campaign (see p. 31 ), proposed changes to the definition of "member"; the impact of the MCFL court 

decision on election-related activities of corporations 

and labor organizations; and the "best efforts" requirements. In addition, the Commission repealed all 

FEC regulations on honoraria to reflect the legislative 

repeal of 2 U.S.C. §44ti. 

Ex Parte Communications: Interim Rules 

The Commission amended its regulations to add a 

new Part 201 setting out interim rules on ex parte 

communications, effective December 9, 1992. The 

Commission also solicited comments on the interim 
21 

rules and will evaluate them in light of comments 

received. 

The interim rules prohibit ex parte communications 

made in connection with ongoing Commission audits 

and litigation. They supplement an existing ban on ex 

parte communications pertaining to compliance matters. The explanation accompanying the interim rule 

said that such a ban is necessary ''to avoid the possibility of prejudice, real or apparent, to the public interest in these activities." 

Ex parte communications are permitted in the 

case of rulemaking proceedings and advisory opinions, but any such comments must be made part of 

the public record. 

The new rules apply to Commissioners, Special 

Deputies of ex officio Commissioners, and all individuals serving under their personal supervision. The 

Commission noted that it planned to consider recommendations for internal guidelines in this area for 

other Commission employees as well. 

Final Regulations on Rulemaking 

Petition Procedures 

The Commission approved final rules that establish 

procedures for filing petitions for rulemaking for the 

agency's consideration. The new rules became effective on September 4, 1.992. Based on the agency's 

previous procedures, the new regulations provide the 

public with easy access to the information. 

In newly created 11 CFR Part 200, the new rules: 

• Describe what information is required in a 

rulemaking petition; 

• Explain the steps the agency takes in responding to 

a petition; 

• List the factors the Commission may consider in 

deciding whether to initiate a rulemaking; 

• Provide for the reconsideration of petitions that are 

denied; and 

• Define the administrative record (i.e., the documents upon which the agency will base its decision 

on the petition) for purposes of judicial review. A 

"Statement of Basis and Purpose" accompanied the 

rules, as required by the Administrative Procedures 

Act. 

Advisory Opinions 

Advisory opinions, which the Commission discusses 

and votes on in public meetings, clarify the election 

law for the requester and anyone else in the same 

situation as the requester. The Commission issued 

39 advisory opinions in 1992. Requests for advisory 

opinions sometimes bring to light areas of the law 

that need further clarification, leading eventually to 

revised regulations. 

Selected advisory opinions issued in 1992 are 

discussed in Chapter 3, Legal Issues. 

Assistance and Outreach 

From its earliest days, the Commission has fostered 

voluntary compliance with the law by offering information, advice and clarification to those seeking help. 

Some of the specific activities undertaken by the 

agency during 1992 are discussed below. (See also 

Appendix 4, which describes the activities of each of 

the FEC offices.) 

Telephone Assistance 

Central to the Commission's strong outreach program to help those who must comply with the campaign finance law is the agency's toll-free information 

line (800-424-9530). Public affairs specialists answer 

thousands of questions on the toll-free and local lines 

each year, often researching relevant advisory opinions and litigation for callers. In 1992, the number of 

calls taken on the toll-free lines increased dramatically. In her December 14 news conference, Chairman Joan Aikens noted that the agency "handled 

more than twice the usual number of inquiries" during 

1992. 

Reporting Assistance 

Reports analysts, knowledgeable about the complexities of reporting and related compliance matters, are 

available to discuss reporting problems or questions 

with political committees. Any committee with reporting questions is encouraged to call the Commission 

and speak directly to the analyst assigned to review 

the committee's reports. (See also Review of Reports, below.) 
22 

The FEC recognizes the need to inform committees about reporting rules and upcoming reporting 

dates. The agency sends each committee treasurer a 

reminder of upcoming deadlines three weeks before 

the due date of a report. The FEC's monthly newsletter, the Record, also publishes reporting schedules 

and requirements. 

Publications 

The Record, published monthly, is essential reading 

for those who wish to follow Commission decisions 

and activity. In addition to detailing the reporting requirements, it includes summaries of new advisory 

opinions, regulations and litigation. The Record also 

includes longer articles focusing on specific subjects 

of interest. All treasurers automatically receive the 

Record, but anyone may order a free subscription. 

In January 1992, the Commission published the 

Legal History of the Presidential Election Campaign 

Fund Act, compiled and edited by the FEC's library 

staff. The Legal History traces the development of 

the public funding law from 1966, when the first public funding legislation was enacted, through 1980, 

when the current law was amended to increase the 

public funding entitlement for major party conventions. It reprints the bills, accompanying reports and 

floor debates from which the present law was derived, and also includes the body of a 1957 report on 

campaign finance activity in the 1956 general election (the Gore Report). 

The Public Records Office released 

PACRONYMS, an alphabetical list of acronyms, abbreviations and common names of political action 

committees (PACs), and 1992 Presidential Primary 

Election Results. The FEC also distributed, as a 

courtesy to political committees, an Internal Revenue 

Service document, "Election Year Issues," which 

discusses the taxation of political committees and the 

restrictions on campaign activities of 501 (c) organizations. 

In 1992 the agency published a completely revised 

edition of the Campaign Guide for Corporations and 

Labor Organizations reflecting advisory opinions and 

regulations issued since the previous Guide was 

published in 1986. Additionally, the agency published 

a totally revised Information brochure-in both English and Spanish. The Commission also published 

updated editions of Selected Court Case Abstracts, 

the FEC regulations (11 CFR), a brochure on overlapping federal and state law, a brochure on the sale 

and use of campaign finance information, and the 

Combined Federal/State Disclosure Directory. 

During 1992, Commissioners and staff published 

articles on the election law in a variety of journals, 

newsletters and other publications. 

Conferences 

Each year, the agency sponsors conferences in 

which Commissioners and staff conduct a variety of 

technical workshops on the law and have the opportunity to respond to questions from those who attend. 

At the 1992 conferences, held in Washington, D.C., 

Orlando and Los Angeles, Internal Revenue Service 

staff were also available to discuss tax-related issues. Attendees at these conferences include treasurers and representatives of candidate and party 

committees, as well as individuals representing corporate and labor separate segregated funds and 

nonconnected committees. 

Media Appearances 

As noted above, 1992 saw increased public interest 

in the Commission's activities in general and in the 

public funding of Presidential elections in particular. 

Chairman Joan Aikens represented the Commission 

at several press conferences and media appearances, including interview call-in programs on the 

Larry King radio show and on C-SPAN and the Cable 

News Network (CNN). 

Review of Reports 

Reports analysts examine each report filed with the 

Commission to ensure full disclosure of campaign 

finance information and compliance with the statute 

and regulations. If a report suggests ,that a committee 

may be in violation of the law, the reports analyst 

sends the committee a letter (called a request for 

additional information or RFAI). The letter gives filers 

an opportunity to correct errors and omissions on 
23 

their report or to explain the possible violation. Serious violations are referred to the Office of General 

Counsel or the Audit Division for appropriate action. 

There was not only a significant increase in the 

number of reports received this year but also an increase in the length (20 percent longer compared 

with 1990 reports) and complexity of the reports. 

Reports were longer because there was more financial activity and because new schedules were added 

to the form: Schedules H1-H4 (allocation expense 

schedules) and Schedules C-1 and C-P-1 (bank 

loans and lines of credit). As a result, reports analysts notified more committees of potential problems 

than in any previous year. Analysts continued to work 

closely with filers, and met or spoke with committee 

representatives several thousand times throughout 

the year. 

Enforcement 

Possible violations of the law are brought to the 

Commission's attention through its internal monitoring procedures, through externally generated complaints and by referrals from other law enforcement 

officials. Potential violations are known as Matters 

Under Review (MURs) and are assigned case numbers. Under the Act, all phases of the enforcement 

process remain confidential until the Commission 

closes a case and places it on the public record (although the respondent may give written consent to 

waive confidentiality at any time). Respondents are 

given an opportunity to demonstrate that no action 

should be taken against them. If the Commission 

decides there is "reason to believe" a violation of the 

law has occurred, it investigates the matter. The 

Commission may issue orders and subpoenas requiring individuals to answer written questions, produce 

documents or provide testimony. When necessary, 

the agency may ask a federal district court to enforce 

the Commission's orders and subpoenas. Following 

an investigation, the General Counsel prepares a 

brief on the issues, and the respondents are given an 

opportunity to file a response brief. If, after reviewing 

these briefs, the Commission determines there is 

"probable cause to believe" the respondent violated 

the law, the agency must try to resolve the matter 

through a conciliation agreement. If conciliation attempts fail, however, the agency may file suit against 

the respondent in a federal district court. The accompanying table shows the Commission's caseload of 

MURs from 1986 through 1992. 

The Commission's Office of General Counsel has 

developed and is refining a method to prioritize its 

caseload of MURs to ensure that it will focus the 

office's resources on the most important cases and 

better assist the Commission in exercising its 

prosecutorial discretion. 

Among the Commission's recent legislative recommendations, several significant proposals addressed 

enforcement issues, including: the enhancement of 

criminal provisions; expedited enforcement procedures and injunctive authority; protection for those 

who file complaints or give testimony; and ensuring 

the independent authority of the agency in all litigation. See Chapter 6. 

Caseloads of MURs 

1986 1987 1988 1989 1990 1991 1992 

Pending at Beginning of Year 137 143 171 220 201 237 198 

Opened During Year 191 261 236 218 195 256 260 

Closed During Year 

Pending at End of Year 

185 

143 

233 

171 

187 

220 

237 

201 

159 

237 

295 

198 

129 

329 
24 

Clearinghouse on Election 

Administration 

The Commission's National Clearinghouse on Election Administration serves as a central exchange for 

research and information on the administration of 

elections. This section covers Clearinghouse activities during 1992. 

Advisory Panel 

During 1992, the Clearinghouse planned the next 

meeting of its Advisory Panel. The Panel, composed 

of election officials drawn from all over the country, 

was scheduled to meet in Savannah, Georgia, March 

24-26, 1993. Topics for discussion, arising from the 

1992 elections, were to include disaster recovery 

planning, privacy issues in voter registration, crisis 

communications, and independent testing of voting 

equipment. These topics reflected the concerns of 

state election officials. In conjunction with this meeting, the Clearinghouse planned to publish the Advisory Panel Pictorial, containing the names, addresses, pictures and biographies of each panel 

member. 

Publications 

Campaign Finance Law '92. This biennial publication 

summarizes the campaign finance laws of each 

state, and includes quick reference charts showing 

campaign finance law requirements in each state; 

contribution and solicitation limits expenditure limitations; and states with special tax or public financing 

provisions. 

Innovations in Election Administration. This new series of monographs describes recent technological 

and administrative innovations in state and local election offices. The various publications discuss topics 

such as the use of the Voting Authority Card, optical 

scanning technology, election signature retrieval 

systems, the use of the national change of address 

card to verify voter registration lists, and agency and 

motor voter registration programs. 

Essays in Elections 1: The Electoral College. This 

document provides a detailed view of the origins and 

development of the electoral college, its current workings, and a review of arguments both for and against 

the college. The participation of Ross Perot as an 

independent Presidential candidate in the general 

election heightened public interest in the electoral 

college. During 1992, the Commission distributed 

over 13,000 copies of this discussion of the electoral 

college; state and local election offices also reproduced and distributed the document. Future essays 

will be published on an irregular basis. 

Education 

The Clearinghouse began an analysis of the educational needs of local election officials prior to developing, over the next decade, a series of training videos 

and handbooks, each focusing on a particular aspect 

of election administration. These materials will provide state and local officials with a vehicle for conducting short, issue-specific training or, once the 

series is completed, longer and more comprehensive 

training seminars. 
25 

Chapter 3 

Legal Issues 

As the independent regulatory agency responsible for 

administering and enforcing federal campaign 

finance laws, the Federal Election Commission promulgates regulations explaining the requirements of 

the Federal Election Campaign Act (the Act), and 

also issues advisory opinions applying these provisions to specific situations. The Commission has 

primary jurisdiction over the civil enforcement of the 

Act. This chapter examines the major campaign 

finance issues confronting the Commission during 

1992 as it deliberated on regulations, advisory opinions and enforcement actions. 

"Soft Money" 

The 1992 election was the first election cycle under 

the Commission's "soft money" regulations that went 

into effect January 1, 1991. Those regulations require 

political committees that maintain separate accounts 

for federal and nonfederal activity to allocate shared 

expenses between the two accounts according to set 

formulas. The allocation regulations were designed to 

ensure that committees would not use nonfederal 

"soft money" to subsidize federal election activities. 

In 1992, the Commission further clarified the allocation rules through advisory opinions (AOs) and 

regulatory amendments. It also disclosed new data 

on soft money. 

Advisory Opinions 

Since the allocation regulations became effective in 

1991, the Commission has received a number of 

requests for advisory opinions applying the allocation 

rules to specific situations. 

Among the requests received in 1992, one pertained to funds which, under state law, party committees must use to administer elections. In Texas, state 

law mandates that the Democratic and Republican 

state and county executive committees administer 

primary elections (including runoffs), using state 

funds, ballot access fees and privately raised donations. In Advisory Opinion 1991-33,1 issued to the 

Republican Party of Texas and the Texas Democratic 

1Aithough AO 1991-33 applied to the administration of a 

1992 primary election, the opinion was issued during 1991. 

Party, the Commission clarified that these payments 

are not subject to federal/nonfederal allocation under 

11 CFR 1 06.5(a)(2) and are not reportable under 

FEC rules. 

Other AOs asked about reallocation of expenses. 

The Democratic National Committee (DNC) treated 

all of its 1991 salary expenses as administrative expenses for purposes of allocating them between its 

federal and nonfederal accounts. In AO 1992-2, the 

Commission said that the DNC could reallocate, as 

fundraising expenses, the staff salaries and benefits 

of employees who worked full time on fundraising 

activities, provided that the reallocation was made 

within 30 days of the issuance of the advisory opinion. 

Similarly, in AO 1992-27, the Commission found 

that the National Republican Senatorial Committee 

(NRSC) could retroactively reallocate certain dis~ 

bursements for fundraising programs that collected 

funds for both federal and nonfederal candidates. 

Another area of the allocation regulations to receive clarification involved in-kind donations. In AO 

1992-33, the Commission said that, if one of two 

specified conditions were met, the Democratic and 

Republican National Party Committees could accept 

in-kind donations of goods and services from corporations and other prohibited sources in connection 

with two categories of allocable expenses: administrative activities and fundraising programs that collect 

both federal and nonfederal funds. The Commission 

stressed that, to ensure that the prohibited funds · 

represented by such a donation were not used to pay 

for the federal share of the expenses, the federal 

account had to transfer the federal share of the value 

of the goods or services to the nonfederal account in 

advance of the donation or on the day the donation 

was received. Alternatively, the committee had to 

prepay or escrowthe federal portion of anticipated inkind donations by making an advance bulk transfer in 

that amount from the federal account to the nonfederal account. 

Revisions to Regulations 

Revised regulations on the allocation of federal and 

nonfederal expenses became effective on June 18, 

1992. The amended regulations, issued in response 
26 

sponse to a petition for rulemaking requested by the 

Association of State Democratic Chairs, eased certain requirements for state and local party committees.2 (See Appendix 7.) 

Revised Record Supplement 

In a continued effort to help committees understand 

the allocation rules, the Commission published a 

revised supplement to its monthly newsletter, the 

Record, summarizing the provisions of the allocation 

regulations as amended. The revised supplement 

explained and illustrated the reporting requirements. 

Enhanced Disclosure of Nonfederal Activity 

For the first time, the comprehensive disclosure of 

nonfederal funds received by national party committees was required by the FEC in the 1992 election 

cycle. Chapter 4, Campaign Finance Statistics, 

shows the "soft money" activity reported by the two 

major national party committees. 

In this year's legislative recommendations, the 

Commission noted that Congress may wish to consider whether new legislation is required to regulate 

"soft money." Such changes, the Commission said, 

could include: (1) more disclosure of nonfederal account receipts; (2) limits on nonfederal account donations coupled with tighter affiliation rules regarding 

party committees; (3) prohibiting nonfederal accounts 

for certain types of committees; (4) prohibiting the 

use of a federal candidate's name or appearance to 

raise soft money; (5) confining soft money fundraising to nonfederal election years; (6) requiring all party 

committees to disclose all nonfederal activity that is 

not exclusively related to nonfederal candidate support; (7) requiring that all party activity which is not 

exclusively on behalf of nonfederal candidates be 

paid for with federally permissible funds; and (8) limiting the use of soft money to nonfederal election year 

activity. 

20n March 21, 1991, the Association of State Democratic Chairs (ASDC) had submitted a rulemaking petition 

asking the Commission to consider changing some of the 

allocation formulas and payment procedures set out in the 

regulations that became effective January 1 , 1991. See 

Annual Report 1991, pp. 19-20. 

Corporate/Labor Communications 

Numerous matters involving communications by corporations and labor organizations have been before 

the Commission in recent years. In 1992 the Commission considered corporate and labor communications in a rulemaking proceeding and in several advisory opinions and court cases as well. 

Background 

The subjects addressed in these matters spring from 

the U.S. Supreme Court decision in FEC v. Massachusetts Citizens for Life (MCFL), 479 U.S. 239 

(1986), and subsequent cases. 

In MCFL, the Court ruled on December 15, 1986, 

that the Act's prohibition on corporate expenditures at 

2 U.S.C. §441 b was unconstitutional as applied to 

independent expenditures made by a narrowly defined type of nonprofit corporation. Three features of 

MCFL qualified it for an exception to the general ban 

on corporate expenditures: 

• It was a nonprofit corporation established to promote political ideas and did not engage in business 

activities; 

• It had no shareholders or other persons with a claim 

on its assets or earnings, and persons associated 

with the organization would have no economic disincentive for disassociating with it; and 

• It was not set up by a corporation or union and had 

an established policy of not accepting corporate or 

union donations. 

The Court also stated that "an expenditure must 

constitute 'express advocacy' in order to be subject 

to the prohibition of §441 b." 

In another case, Faucher v. FEC (No. 90-0112-8), 

the U.S. District Court for the District of Maine ruled 

as unconstitutional, a Commission regulation gover~­ ing the public distribution of voter guides by corporations. In its opinion, later upheld by the U.S. Court of 

Appeals, the district court said, "...issue advocacy by 

a corporation cannot constitutionally be prohibited... 

only express advocacy ...is constitutionally within the 

statute's prohibition." The Supreme Court subsequently denied the FEC's petition asking for a review 

of the appeals court decision and reconsideration of 

the Court's "express advocacy" construction in MCFL. 
27 

Rulemaking 

In an effort to clarify the meaning of "express advocacy" and other aspects of corporate and labor activities affected by these decisions, the Commission 

published a Notice of Proposed Rulemaking in the 

Federal Register on July 29, 1992. Under the proposed rules, included in the draft notice, only public 

communications containing "express advocacy" 

would be subject to the prohibition on corporate and 

labor expenditures. The draft rules would not, however, change the prohibition against contributions 

made by corporations and labor organizations, and 

new provisions in the rUles would indicate when corporate or labor organization activities would result in 

a prohibited in-kind contribution. 

The Commission also sought comments on two 

proposed definitions of "express advocacy" at 11 

CFR Part 109, and asked whether a different definition of "express advocacy" should be incorporated at 

11 CFR Part 114 to govern corporate and labor communications. 

The proposed rules also presented two alternative 

sets of requirements for qualifying as an MCFL-type 

corporation (i.e., the type that would be allowed to 

use its treasury funds to make independent expenditures). The notice included proposed rules on the 

reporting requirements for MCFL-type corporations 

and on the level of independent expenditure activity 

that would cause such corporations to become political committees (i.e., the "major purpose" test). 

The notice also sought comments about candidate 

appearances (under 114.3 and 114.4) and candidate 

debates, voter drives, voter guides and voting 

records (under 114.4). 

The proposed rules further sought comments 

about several matters not now addressed in the 

Commission's regulations, including: 

• The use of corporate or labor letterhead or logos by 

individuals and candidates; 

• The identification of an individual as a representative of a corporation or labor organization when the 

individual makes express advocacy statements or 

solicits contributions; 

• The facilitation of contributions by corporations and 

labor organizations; and 

• The endorsement of candidates by corporations 

and labor organizations. 

On October 14 and 15, 1992, the Commission 

held a public hearing on the MCFL rulemaking. The 

Commission received 31 written comments on the 

proposed rules and heard testimony from representatives of 25 organizations and representatives of thirdparty Presidential campaigns. 

Court Decision: MCFL Standards Do Not 

Apply to NRA 

In a November 15, 1991 , order (modified on December 11 ), the U.S. District Court for the District of Columbia found that the National Rifle Association 

(NRA) was not an MCFL-type corporation because 

the NRA received corporate funds. 3 

At issue was a $415,7 45 payment made by the 

National Rifle Association-Institute for Legislative 

Action (ILA) to NRA's separate segregated fund 

(SSF). The payment was a corporate contribution in 

violation of 2 U.S.C. §441b(a), the court said. 

The payment had originated from two solicitations 

that ILA had paid for in March and July of 1988. The 

SSF had reimbursed ILA for the full cost of the mailings on August 1, but ILA then returned the $415,745 

to the SSF on October 20, 81 days after the August 

payment. Regulations require that such reimbursements be made within 30 days. 11 CFR 114.5(b)(3). 

3FEC v. NRA Political Victory Fund, No. 90-3090. 
28 

The defendants had argued that the October 20 

payment was permissible under the Supreme Court's 

decision in MCFL. 4 

Advisory Opinion: Ads Sponsored by 

Membership Organization 

The Commission encountered the issue of "express 

advocacy" again in its consideration of AO 1992-23, 

requested by the National Rifle Association {NRA). 

The Commission concluded that the NRA, an incorporated membership organization, could not pay for 

ads similar to newspaper and radio ads financed by 

its PAC because those ads contained express advocacy. 

The Commission based its decision on court rulings in MCFL {supra) and FEC v. Furgatch. In MCFL, 

the Supreme Court stated that an express advocacy 

message need not necessarily include the Buckley 5 

catch phrases {e.g., "vote for," "support," etc.) if the 

message "went beyond issue discussion to express 

electoral advocacy." The court of appeals in FEC v. 

Furgatch, interpreting express advocacy, said that 

the communication "must, when read as a whole, and 

with limited reference to external events, be susceptible of no other reasonable interpretation but as an 

4The defendants had also asserted that the FEC lacked 

authority to bring suit because the FEC is a constitutionally 

flawed agency, claiming that the Act's designation of the 

Clerk of the House and the Secretary of the Senate as 

nonvoting members violated the separation of powers. 

Finding no showing that the nonvoting members participated in any decisions involving this case, the court said 

there was "no need to concern itself" with this argument. . 

Defendants next claimed that the appointment of Commission members impermissibly restricts the appointment 

power granted the President under Article II because the 

President may not appoint more than three Commissioners 

from the same political party. Moreover, they said, because 

the President cannot control or remove Commissioners, 

the execution of the law does not rest with the President, 

an infringement of the President's sole executive power. 

The court ruled that the defendants did not have standing 

to raise these claims. The decision in this case is pending 

on appeal in D.C. Circuit. 

58uck/ey v. Valeo, 424 U.S. 1 (1976). 

6807 F.2d 857, 864 (9th Cir.), cert. denied, 484 U.S. 850 

(1987). 

exhortation to vote for or against a specific candidate."6 

In AO 1992-23, the Commission found that each 

of the ads paid for by NRA-PVF constituted such an 

exhortation and not simply issue discussion. The ads 

satirized the record of Congressman Beryl Anthony 

on a number of issues but did not encourage any 

action in connection with the issues {such as urging 

the Congressman to vote for or against specific bills). 

Based on their content and timing {close to the 

Congressman's primary election), the Commission 

found, the ads constituted express advocacy. 

Advisory Opinion: Candidate Appearance 

at University 

In the Notice of Proposed Rulemaking mentioned 

earlier, the Commission solicited comments on a 

proposal that would allow incorporated 501 {c){3) 

educational institutions to permit candidates to speak 

on school premises under specified circumstances. 

The same issue was addressed in an advisory opinion requested by a Presidential candidate. 

In AO 1992-6, the Commission found that 

Vanderbilt University's payment of an honorarium 

and travel expenses to David Duke for a speech 

would not result in a contribution to his Presidential 

campaign. Among the factors considered by the 

Commission were the following: 

• Mr. Duke would receive the payment as personal 

income {not as a campaign contribution); 

• The staging of the speech would not afford Mr. 

Duke an opportunity to solicit or collect contributions 

from attendees; 

• He would not mention his own or anyone else's 

candidacy; 

• The University, and not Mr. Duke, would control the 

event and who was admitted; 

• Neither Mr. Duke nor his staff would conduct or 

participate in collateral campaign events {e.g., rallies, press conferences, luncheons); and 

• The invitation to speak and the proposed appearance were based not only on Mr. Duke's status as 
29 

Presidential candidate, but also on his reputation as 

a college speaker. 

Other Corporate and Labor Issues 

While the Act prohibits corporations and labor organizations from making contributions or expenditures in 

connection with federal elections, it does permit them 

to use their general treasury funds to establish and 

administer separate segregated funds. In several 

advisory opinions issued in 1992 the Commission 

helped clarify these provisions. 

Administrative Costs of SSF 

In Advisory Opinion (AO) 1991-36, the Commission 

found that the Boeing Company, whose PAC was 

making a contribution to a fundraiser sponsored by 

the Democratic Congressional Campaign Committee, 

could use its general treasury funds to pay travel and 

lodging costs for a corporate representative to attend 

the event. Such costs, the Commission said, could 

be viewed as administrative expenses arising from 

Boeing PAC's participation in the fundraiser. 

The Commission addressed another aspect of the 

payment of an SSF's administrative costs in AO 

1992-20, requested by the American Speech-Language-Hearing Association (ASHA). ASHA is an 

incorporated membership organization whose members are individual professionals. The Commission 

said that when ASHA received PAC contributions 

drawn on the incorporated private practices of its 

members, ASHA could use the checks to pay the 

PAC's administrative and solicitation expenses after 

the checks were endorsed to ASHA, deposited in the 

ASHA general treasury fund and recorded in a separate book account used to defray such expenses. 

Payment of Employee/Candidate's Benefits 

Under the regulations at 11 CFR 114.12(c)(1 ), a corporation may not pay fringe benefits (such as health 

or life insurance or retirement) for an employee on 

leave without pay to participate in a federal campaign. In AO 1992-3, however, the Commission permitted Reynolds Metal Company to pay fringe benefits on behalf of an employee on unpaid leave to 

pursue a federal candidacy because the benefits 

would be paid under a pre-existing company policy 

that applied to all employees and because the period 

covered would be relatively brief-31 days. The 

Commission distinguished this situation from that 

considered in AO 1976-70, in which the corporation 

did not have a pre-existing policy equally applicable 

to all employees regardless of the purpose of the 

leave of absence. 

Corporate Structure/ Affiliation 

Corporate structure and issues of affiliation have 

been the subject of numerous AOs over the years. In 

AO 1992-7, the Commission found that major and 

satellite franchisees of H & R Block, Inc., were considered affiliates by virtue of the company's control 

over their operations. Because the franchisees were 

considered affiliated organizations, the H & R Block 

Political Action Committee could solicit contributions 

from their executive and administrative personnel 

and their families. 

In AO 1992-17, the Commission concluded that 

the PAC of DuPont Merck, a partnership owned by 

two corporations, was affiliated with the PACs of 

each of the corporations. 7 By virtue of this affiliation, 

the two corporations could pay the administrative and 

solicitation costs of the partnership's PAC. The partnership itself could also pay the costs, and such payments would not be considered a contribution to the 

PAC, because DuPont Merck is a partnership owned 

entirely by corporations with which it is affiliated. 

Candidate Issues 

Ban on Use of Candidate's Name in Fundraising 

Projects by Unauthorized Committees 

New regulations, effective November 4, 1992, prohibit party committees, PACs and other unauthorized 

committees from usihg candidate names in the titles 

of special fundraising projects and other activities. 

Unauthorized committees have long been prohibited 

7Previously, in AO 1989-8, the Commission said that 

when a partnership is affiliated with a corporation that has 

an SSF, the partnership's PAC is subject to the same solicitation restrictions as those of the SSF. 
30 

from using a candidate's name in their registered 

committee name. Under revised 11 CFR 1 02.14(a), 

unauthorized committees are further prohibited from 

using the name of any candidate "in any name under 

which a committee conducts activities, such as solicitations or other communications, including a special 

project name or other designation." 

In recent years, unauthorized committees had 

often used a candidate's name in the title of a special 

project. This practice had the potential for confusing 

the public and diverting funds from authorized candidate committees. Candidates had objected to the use 

of their name in special projects when they received 

none of the fundraising proceeds or disagreed with 

the views expressed in the communication. When the 

Commission sought comments on proposed changes 

to the regulations, one Presidential campaign stated 

that an unauthorized project had raised over $1 o 

million despite the candidate's disavowal of the 

project's activities. Additionally, a television documentary (which was placed in the rulemaking record) 

reported that a PAC had raised $9 million in numerous projects whose titles included candidates' 

names; none of the funds went to the named candidates. 

Bank Loans 

The Act and the Commission's regulations prohibit 

corporations, including banks, from making contributions or expenditures in connection with a federal 

election. As an exception to this rule, a bank may 

loan money to a federal committee provided that 

certain conditions are met. Among them is a requirement that the loan be "made on a basis which assures repayment." New Commission regulations designed to clarify this standard became effective April 

2, 1992. The Commission also adopted new loan 

reporting forms, Schedule C-1 and, for Presidential 

committees, Schedule C-P-1. The new regulations 

are summarized in Appendix 8. 

Use of Campaign Funds 

In two advisory opinion requests, the Commission 

grappled with·questions involving payments by a 

principal campaign committee of the candidate's 

personal living expenses. In both instances, the 

Commission failed to reach a majority decision on 

whether such payments would fall within a committee's wide discretion in making expenditures or 

whether they would constitute the candidate's personal use of excess campaign funds, which is prohibited under 2 U.S.C. §439a. 

In AO 1992-1, Roger Faulkner, a 1992 Senate 

candidate, proposed receiving a salary from his campaign committee to pay for his personal living expenses during the campaign. Although the Commission was unable to reach a decision on that part of 

Mr. Faulkner's request, the Commission did agree 

that the "wide discretion" principle mentioned above 

would permit the committee to reimburse the candidate for travel, subsistence and other campaignrelated expenses he paid from his personal funds. 

In AO 1992-4, John Michael Cortese, another 

1992 Senate candidate, proposed using campaign 

contributions to pay his own living expenses and 

those of his wife, who would assist in the campaign. 

Although again the Commission failed to reach a 

majority decision on whether the payments to the 

candidate were permissible, it found that the committee's wide discretion did extend to paying Mrs. 

Cortese a salary for her campaign services. 

Contributions Received by Committees 

Two authorized committees this year sought the 

Commission's guidance on how to treat certain contributions. The Russo for Congress Committee, the 

principal campaign committee of Congressman Martin A. Russo, received contributions designated for 

the 1992 general election before the Congressman 

lost his Illinois primary on March 17, 1992. In AO 

1992-15, the Commission said that Russo's committee had 60 days from the primary to either obtain 

redesignations of the contributions to another election or to refund them. 

The Liz Holtzman for Senate Committee also 

asked for guidance concerning contributions it had 

received. In AO 1992-29, the Commission said that 

the committee had to refund contribution checks that 

had been lying in a desk drawer for approximately six 

months, without having ever been deposited. The 
31 

Commission noted that 11 CFR 103.3(a) requires 

that all receipts be deposited within 1 0 days of the 

treasurer's receipt, and that previous opinions (AOs 

1989-21 and 1980-42) have recognized that the receipt of contributions by a committee's agent may be 

viewed as the equivalent of the treasurer's receipt. 

Candidates' Media Appearances 

The Commission has frequently considered whether 

activities involving the participation of a candidate, or 

communications referring to a candidate, result in a 

contribution to or an expenditure on behalf of the 

candidate under the election law. In 1992 the Commission issued two advisory opinions concerning 

media appearances by candidates for federal office. 

In AO 1992-5, the Commission said that Congressman James P. Moran could appear in two public affairs forums televised on local cable stations in 

his district, and that the programs would not result in 

a contribution to his campaign because their content 

would be restricted to a discussion of public issues, 

with no mention of the campaign. Neither of theseries featuring the Congressman would include any 

solicitations, express advocacy or campaign promotion. 

In another AO, 1992-37, the Commission said that 

Randall A. Terry, host of a daily radio talk show, 

could continue to serve as host of the program while 

running as a House candidate in New York. His radio 

employment would not result in prohibited corporate 

contributions to his campaign from the production 

company, or from the radio stations or network, the 

Commission said, because the program would not air 

in the 23rd District; he would not use the program to 

promote or raise funds for his candidacy or against 

his opponent; and his campaign ads (or ads against 

his opponent) would not be run during the show. 

Transfer of Funds from State to Federal 

Campaign Committees 

On August 6, 1992, the Commission approved a final 

rule to prohibit transfers of funds and assets from a 

candidate's nonfederal campaign to his or her federal 

campaign, but the rule did not go into effect in 1992 

because Congress adjourned before the rule had 

been before it for the required 30 legislative days. On 

December 3, 1992, the Commission voted to resubmit the regulation to the 1 03rd Congress.8 

The new regulation at 11 CFR 11 0.3(d) would 

replace the current regulation at 11 0.3(c)(6), which 

permits candidates to transfer funds from their nonfederal to federal campaigns as long as the transfers 

do not contain any contributions that are impermissible under the Act. The new rule grants a petition for 

rulemaking filed by Congressman William Thomas, 

who alleged that the current regulation fails to prevent nonfederal campaigns from using impermissible 

funds to raise permissible contributions that are then 

transferred to federal campaigns. 

Contribution Issues 

Earmarked Contributions 

An earmarked contribution is a contribution that the 

contributor directs to a clearly identified candidate or 

candidate's committee through an intermediary or 

conduit. An earmarked contribution counts against 

the contributor's contribution limit for the recipient 

candidate. The limit of the conduit is affected only 

when the conduit exercises direction or control over 

the choice of the recipient candidate. 11 CFR 

11 0.6(d)(2). Determining whether an intermediary 

has exercised "direction or control" has often involved 

complex analysis by the Commission and the courts. 

In FEC v. National Republican Senatorial Committee,9 the U.S. Court of Appeals for the District of 

Columbia Circuit reversed the district court's judgment in a case involving earmarked contributions. 

The district court had ruled that, in the 1988 election, 

the National Republican Senatorial Committee 

(NRSC) had exceeded the contribution limits through 

its exercise of "direction or control" over earmarked 

contributions. (In a previous case reversing the 

Commission's initial dismissal of the same MUR on a 80n March 11, 1993, the Commission voted to revise its 

plan for implementing the rule and to delay the rule's effective date until July 1, 1993. 9No. 91-5176. 
32 

3 to 3 vote, Common Cause v. FEC, the district court 

had ordered the FEC to conform to the court's own 

interpretation of "direction or control.") The court of 

appeals, however, in its decision of June 12, 1992, 

found that the district court had erred in that decision.10 

In addressing the central issue-the interpretation 

of direction or control-the appeals court cited its 

decision in Democratic Congressional Campaign 

Committee (DCCC) v. FEC. In that opinion, the court 

had held that, when the FEC dismisses a complaint 

due to a 3-3 deadlock, the action is subject to judicial 

review, and the three Commissioners who voted to 

dismiss must provide a statement of reasons for their 

vote. The court noted that the DCCC opinion also 

"strongly suggests that, if the meaning of the statute 

is not clear, a reviewing court should accord deference to the Commission's rationale." 

In the case of FEC v. NRSC, the appeals court 

pointed out that the three Commissioners who had 

voted against probable cause in the original compliance case, MUR 2282, had voted in favor of reopening the enforcement proceedings only because they 

felt they "were obligated to follow the [district] court's 

order." The court of appeals analyzed Commissioner 

Thomas J. Josefiak's11 Statement of Reasons explaining the three initial votes to dismiss MUR 2282. 

The court observed that Commissioner Josefiak's 

statement "identified the two main factors the 

Commission's General Counsel, and later the district 

court, invoked to support a finding of direction or 

control, and pointed out the present inadequacy of 

each." The court concluded that the Josefiak statement was a reasoned justification for not finding a 

violation. 

Contributions in the Name of Another 

At 2 U.S.C. §441f, the Act prohibits contributions 

made by one person in the name of another person. 

Friends of Senator D'Amato asked the Commission 

how to proceed when the committee was unable to 

determine the original source of contributions sus1°For a summary of the issues and the district court's 

decision, see Annual Report 1991, pp. 22-23. 

11 Commissioner Josefiak has since left the Commission. 

pected of having been made in the names of others. 

In AO 1991-39, the Commission said that, in such 

unusual circumstances, the funds should be disbursed for a purpose unrelated to federal elections 

(e.g., to the federal government, to a state or local 

government, or to a charity described under 26 

U.S.C. §170(c)). 

Foreign Nationals 

Under 2 U.S.C. §441e, foreign nationals are prohibited from making contributions, directly or through 

any other person, in connection with any election in 

this country. Over the years, the Commission has 

received numerous advisory opinion requests concerning U.S. corporations owned by foreign nationals. 

In 1992, the Commission considered the situation 

of Nansay Hawaii, Inc., a domestic corporation that is 

wholly owned by a foreign national corporation, 

Nansay Corporation (Japan). Nansay Hawaii receives funds from its foreign national parent and has 

one foreign national member on its four-member 

Board of Directors. 

In AO 1992-16, the Commission found that the 

U.S. corporation could make contributions to nonfederal candidates without violating the prohibition on 

contributions from foreign nationals, provided that the 

following requirements were met: 

• The U.S. corporation had to be able to demonstrate 

through a reasonable accounting method that it had 

sufficient funds in its account-other than funds 

given or loaned by the foreign national parent-to 

make the nonfederal contributions. 

• The U.S. corporation could not use funds received 

from the foreign national parent to replenish any 

portion of the contributions the subsidiary had made 

since the preceding payment. 

• Only those board members of the U.S. corporation 

who were not foreign nationals could participate in 

the decision-making process for election activities. 
33 

Disclosure 

Sale and Use Restriction 

On July 1 0, 1992, the U.S. Court of Appeals for the 

District of Columbia Circuit, sitting en bane, upheld 

the constitutionality of 2 U.S.C. §438(a)(4) in FEC v. 

International Funding Institute (No. 91-5013). That 

provision of the Act prohibits anyone from using or 

selling, for solicitation or commercial purposes, the 

information on individual contributors listed in political 

committee reports filed with the FEC. 

International Funding Institute (IFI), using a data 

base containing information on individual contributors 

compiled from FEC reports, had developed and marketed a mailing list. The list was rented to a number 

of customers, including a political committee operated by IFI's president, which used the list for several 

solicitations. 

In an enforcement matter, the FEC had found 

probable cause to believe that IFI had knowingly and 

willfully violated the law. Unable to reach a conciliation agreement, the FEC had filed suit in the U.S. 

District Court for the District of Columbia. Defendants 

had asked the district court to dismiss the case, arguing that §438(a)(4) violated the First Amendment. 

The FEC then had moved to certify the constitutional 

question to the court of appeals. 

The appeals court held that, under an intermediate 

level of scrutiny, section 438(a)(4) was constitutional 

as applied to the defendants' conduct because it 

"advances an important governmental interest" (preserving the value of a political committee's contributor list) and "is no broader than is necessary to that 

task." On November 30, 1992, the U.S. Supreme 

Court denied certiorari in this case. 

In another case involving the "sale or use" restriction, FEC v. Political Contributions Data (PCD), 12 the 

U.S. District Court for the Southern District of New 

12"fhe U.S. Court of Appeals for the Second Circuit had 

previously held, in August 1991, that PC D's sale of specialized contributor lists was permissible because they did not 

contain addresses or phone numbers, but did include a 

warning against the use of the information for solicitation or 

commercial purposes, and there was no evidence that 

PCD's customers had actually used PCD's lists for political 

or commercial solicitation. 

York said that the FEC was "substantially justified" in 

bringing suit against PCD. Noting that the FEC's 

position had a "reasonable basis both in law and fact" 

and "could satisfy a reasonable person," the court 

denied defendant's request for attorney's fees under 

the Equal Access to Justice Act, which would have 

been payable by the FEC. This case is now pending 

on appeal in the 2nd Circuit Court of Appeals. 

"Best Efforts" 

In a letter sent to Presidential candidates and their 

treasurers, Chairman Joan D. Aikens underlined the 

need for committees to obtain the required information about individual contributors-name, address, 

occupation and employer-and to disclose that information in FEC reports. This information is required 

for each individual whose aggregate contributions to 

a political committee exceed $200 in a calendar year. 

Under FEC rules, a treasurer must make "at least 

one effort per solicitation" to obtain the required information. The requestmust inform the contributor that 

"the reporting of such information is required by law." 

11 CFR 104.7(b). The Chairman's letter provided 

examples of acceptable requests as well as an example of a request that would not meet the "best 

efforts" standard. 

The Chairman pointed out that, if a committee's 

solicitation did not contain a satisfactory "best efforts" 

request, the committee would have to make further 

efforts to obtain the information. If information became available after a report had been filed, 

amended reporting would be required. 

On September 24, the Commission published a 

Notice of Proposed Rulemaking seeking comments 

on proposed changes to the "best efforts" regulation 

at 104.7(b). The changes were designed to 

strengthen the rule and to emphasize the importance 

of disclosing contributor information. 

In its 1992 recommendations to Congress, the 

Commission suggested that Congress might wish to 

amend the law to address "the recurring problem of 

committees' inability to provide full disclosure about 

their contributors." (See p. 58.) 
34 

Computer-Generated Forms 

In AO 1992-11, the Commission said that, in preparing FEC reports for political committees,·Coopers & 

Lybrand may use a computer-generated Form 3X 

Summary Page as long as the pages are in the exact 

format of the original FEC forms. In the AO, Coopers 

& Lybrand was directed to modify its computer-produced forms to correct certain deviations from the 

original form. The changes would ensure that reports 

filed on the reproduced forms would be uniformly 

easy to read and review. 

FEC Jurisdiction 

"Speech or Debate" and "Self-Discipline" 

Clauses; Enforcement of Repealed Provisions 

(FEC v. Wright) 

The U.S. District Court for the Northern District of 

Texas, Fort Worth Division, ordered James C. 

Wright, Jr., former Speaker of the U.S. House of 

Representatives, to answer the FEC's questions in 

connection with an administrative complaint filed 

against him (No. 4-91-0454-A). The court rejected 

Mr. Wright's arguments that the FEC lacked the authority to investigate his activities. The former 

Speaker had based several of his arguments on the 

"speech or debate" and "self-discipline" clauses in the 

Constitution. He had also claimed that the FEC 

lacked authority because the alleged violation fell 

under a statutory provision that had since been repealed. 

In July 1988, Citizens for Reagan had filed a complaint alleging that Speaker Wright had violated 2 

U.S.C. §441 i. That provision, since repealed, prohibited a federal officeholder from accepting more than a 

$2,000 honorarium for a speech, appearance or 

article. The complaint alleged that Speaker Wright, 

during 1985 and 1986, accepted excessive honoraria 

disguised as proceeds from the sale of his book, 

Reflections of a Public Man. In January 1990, the 

Commission opened an investigation. When Mr. 

Wright refused to comply with an FEC order seeking 

answers to questions about his appearances and the 

sale of his book, the agency asked the district court 

to enforce the order. 

In its judgment of November 12, 1991 ,13 the court 

concluded that the FEC's order complied with a 

three-pronged test for validity: the investigation was 

for a lawful purpose; the information sought was relevant; and the agency's demand was reasonable. 

The speech or debate clause cited by Mr. Wright 

states that "for any Speech or Debate in either House 

they [Senators or Representatives] shall not be questioned in any other Place." Art. I, §6. Mr. Wright contended that the clause nullified the FEC's authority to 

seek answers to questions on activities that took 

place when he was a House Member. The court, 

however, found that the clause did not apply to the 

FEC's questions, which concerned activities occurring "outside, and away from, the House" and which 

were "totally unrelated to anything done in the course 

of the legislative process ...." 

Mr. Wright further argued that the Constitution's 

self-discipline clause, when read with the speech or 

debate clause, effectively allocated to the House the 

sole authority to enforce violations of the honorarium 

limit by Members. The self-discipline clause states, in 

part: "Each House may determine the Rules of its 

Proceedings [and] punish its Members for disorderly 

Behavior...." Art. I, §5. The court rejected this argument for two reasons. First, it "is tantamount to a 

contention that the relevant provisions of the Act 

[Federal Election Campaign Act] are unconstitutional." Second, it "fails to recognize that the standards of conduct and rules of enforcement found in 

the Act are, indeed, self-disciplinary rules-the combined votes of the two Houses created the statutory 

provisions in question." 

Mr. Wright also claimed that the FEC no longer 

had authority to investigate or enforce §441 i because 

of recent legislation: he Ethics Reform Act of 1989 

(effective January 1, 1991) prohibited House Members from accepting honoraria and amended §441 i to 

remove House Members from its scope; §441 i itself 

was repealed on August 14, 1991. 

13The former Speaker appealed the judgment on January 9, 1992, but later agreed to a settlement with the FEC 

on the administrative complaint. On May 1, 1992, the U.S. 

Court of Appeals for the Fifth Circuit dismissed the appeal. 
35 

The court noted that, if Congress had intended to 

eliminate the FEC's authority to enforce §441 i violations occurring before the repeal, the legislation 

would have expressed that intent. "Thus, to this day," 

the court said, "§441 i is deemed to be in full force 

and effect as to any conduct of Wright occurring before the date of its repeal." 

Civil Rights Act 

The Freedom Republicans, Inc., and its president, 

Lugenia Gordon, alleged that the Republican Party's 

delegate selection process for its 1992 convention 

discriminated against African Americans in violation 

of Title VI of the Civil Rights Act of 1986, 42 U.S.C. 

§2000d, which bars racial and ethnic discrimination in 

any program receiving federal funding. Plaintiffs also 

claimed that the FEC, as the agency responsible for 

certifying public funds, was responsible for ensuring 

that the convention funding program complied with 

Title VI. Plaintiffs had included these allegations in an 

administrative complaint that was dismissed by the 

FEC for lack of jurisdiction. On January 17, 1992, the 

Freedom Republicans filed suit against the Commission, asking the court (among other things) to order 

the FEC to: (1) accept jurisdiction over the administrative complaint and (2) adopt regulations to implement Title VI with respect to convention funding. 

On April 7, 1992, in No. 92-0153, the U.S. District 

Court for the District of Columbia remanded The 

Freedom Republicans, Inc., v. FEC to the FEC, ordering the agency "with all deliberate speed...[to] 

begin rulemaking proceedings designed to consider 

the means through which the FEC will ensure compliance with Title VI of the Civil Rights Act.. .." Title VI 

bars racial discrimination in any program receiving 

federal funds which, the court found, includes the 

financing of national party conventions provided under 26 U.S.C. §9008. The court revised its order on 

May 4 to clarify that the order referred to a 

rulemaking governing the delegate selection process 

of federally funded national party conventions. The 

amended order also made clear that the court was 

not imposing a deadline for promulgating the rules. 

This decision is pending on the FEC's appeal to 

the D.C. Circuit. 

In its current legislative recommendations, the 

Commission asks Congress to clarify that Title VI 

does not apply to the public financing of campaigns 

and conventions receiving payments from the Presidential Election Campaign Fund. (For more information, see p. 52.) 
37 

Chapter 4 

Campaign Finance 

Statistics 

PAC Growth, 1975-92* D 

e 

Corporate 

Nonconnected 

• 

~ 

Trade/Membership/Health 

Labor 

• Othert 

Number 

of PACs 

2000 ~--------------------------------------------------------------

* For the years 197 4 through 1976, numbers are not available for Nonconnected PACs, Trade/Membership/Health PACs 

and PACs in the "Other" category. 

t "Other" category includes PACs formed by corporations without capital stock and PACs formed by incorporated 

cooperatives. 
38 

PAC Contributions to Candidates and 

Closing Cash on Hand 

As of December 31 of Election Year 

Contributions to Candidates 

-Cash on Hand 

Millions of Dollars 

88 90 92 88 90 92 88 90 92 88 90 92 88 90 92 

Corporate Labor Trade/Member- Other Corporate * Nonconnected t 

ship/Health 

* Other Corporate category consists of separate segregated funds whose connected organizations are cooperatives or 

corporations without capital stock. 

t Unlike separate segregated funds, nonconnected PACs do not have connected organizations. See 11 CFR 100.6. 
39 

House and Senate Activity 

Through December 31 of Election Year 

800 

Receipts 

- Disbursements 

Millions of Dollars 

1988 1990 1992 
40 

House Campaigns of Major Party Candidates 

in the General Election Through December 31 

of the Election Year 

Contributions, Disbursements, Cash on Hand 

and Debts 

- 1990 Cycle (804 candidates) 

- 1992 Cycle (843 candidates) 

Contributions Contributions Contributions 

Millions of Dollars 

350~------------------------------~----------~--------------------

100 

50 

0 

Net Cash on Hand Debts 

from from and Loans Disbursements * 

Individuals Other from the 

Committees * Candidatet 

Median Disbursements § -Democrats 

-Republicans Thousands of Dollars 

600.------------------------------------------------------------------

300 

200 

100 

0 

1988 1990 1992 1988 1990 1992 1988 1990 1992 

Incumbents Challengers Open Seats 

*"Other Committees" include PACs and all other committees that are not party committees. 

t Candidates in the 1990 election cycle contributed $2.49 million and loaned $12.17 million to their own campaigns from their 

personal funds. The figures for the 1992 cycle are: contributions, $6.61 million; loans, $19.90 million. 

*Net disbursements means total disbursements minus transfers from other committees authorized by the candidate. 

§Median disbursements means that an equal number of candidates had activity below and above the amount shown in each bar. 
41 

Senate Campaigns of Major Party Candidates 

in the General Election Through December 31 

of the Election Year 

Contributions, Disbursements, Cash on Hand 

and Debts - 1990Cycle 

- 1992Cycle 

Millions of Dollars 

175r------------------------------+~==== 

1251----

100 

75 

50 

25 

0 

200.------------------------------,-----------,----------------------

150r------------------------------+-

Contributions Contributions Contributions Net 

from from and Loans Disbursements * 

Individuals Other from the 

Committees * Candidatet 

Cash on Hand Debts 

Median Disbursements § Democrats 

-Republicans Thousands of Dollars 

600.-------------------------------------------------------------------

300 

200 

100 

0 

1988 1990 1992 1988 1990 1992 1988 1990 1992 

Incumbents Challengers Open Seats 

*"Other Committees" include PACs and all other committees that are not party committees. 

t Candidates in the 1990 election cycle contributed $2.49 million and loaned $12.17 million to their own campaigns from their 

personal funds. The figures for the 1992 cycle are: contributions, $6.61 million; loans, $19.90 million. 

*Net disbursements means total disbursements minus transfers from other committees authorized by the candidate. 

§Median disbursements means that an equal number of candidates had activity below and above the amount shown in each bar. 
42 

National Party Committees: Transfers to 

State Party Committees 

January 1991 Through December 31, 1992 

-Transfers from Nonfederal Accounts 

-Transfers from Federal Accounts 

Millions of Dollars 

15~----------------------------

12 

9 

6 

3 

0 

DNC * RNC DCCC N.RCC QSCC NRSC 

National Party Committees:* Nonfederal 

Account Receipts and Disbursements 

January 1991 Through December 31, 1992 

- Nonfederal Receipts 

- Nonfederal Disbursements 

Millions of Dollars 

60.----------------------------

30 

20 

10 

0 

Democratic Republican 

* Abbreviations are as follows: 

DNC-Democratic National Committee 

RNC-Republican National Committee 

DCCC-Democratic Congressional Campaign Committee 

NRCC-National Republican Congressional Committee 

DSCC-Democratic Senatorial Campaign Committee 

NRSC-National Republican Senatorial Committee 

* Graph shows the aggregate activity of each party's three 

national-level committees (the national committee, and the 

House and Senate campaign committees). 
Federal Account Receipts of DNC and 

RNC:* Comparison of Presidential 

Election Cycles 

- DNC Federal Receipts 

- RNC Federal Receipts 

Year Before Election Year 

Millions of Dollars 

40.----

351----

301----

251----

1984 1988 1992 

January Through March of Election Year 

Millions of Dollars 

40.--------------

35~-------------

30~-------------

25~-------------

1984 1988 1992 

April Through June of Election Year 

Millions of Dollars 

40~------------~ 

351-----------------

30~---------------

251-----------------

20~---------------

1992 

43 

July Through 20 Days Before Election Day 

Millions of Dollars 

40.----------------

10 

5 

0 

1984 1988 1992 

* DNC is the Democratic National Committee; RNC is the Republican National Committee. 
44 

Nineteen Days Before Election 

Through December 

Millions of Dollars 

40.-----~---------------------

35~----------------~---------

30~---------------------------

25~---------------------------

20~---------------------------

15~---------------------------

5 

0 

10~-----

1984 1988 1992 
45 

Chapter 5 

The Commission 

Commissioners 

During 1992, Joan D. Aikens served as Chairman of 

the Commission, and Scott Thomas was the 

Commission's Vice Chairman. In December 1992, 

the Commission elected Scott Thomas to be its 1993 

Chairman and Trevor Potter to be Vice Chairman for 

1993. 

For biographies of the Commissioners, the Staff 

Director, General Counsel and Inspector General, 

see Appendix 1 . 

International Delegations 

In recent years, the Federal Election Commission 

has shared information and experience concerning 

electoral systems with representatives of many foreign nations. During 1992, more than 400 journalists, 

party leaders and election officials from 60 countries 

visited the agency, learning first-hand about the 

American election process and the Commission's 

role in that process.1 

Ethics 

During 1992, the ethics staff carried out the 

Commission's responsibilities with respect to personal financial disclosure reports filed by Presidential 

candidates. 

The Office of Government Ethics issued new rules 

on confidential disclosure reports filed by staff, and 

government-wide standards of conduct which became effective February 3, 1993. The Commission's 

ethics staff worked on implementation of these new 

requirements. 

The FEC's General Counsel, who serves as 

Designated Agency Ethics Official, also directed his 

staff to continue its ethics training sessions for new 

employees. These sessions briefed new staff members on the Ethics Reform Act of 1989, the Hatch Act 

and the FEC Standards of Conduct. The ethics staff 

published an intra-agency newsletter to further advise the staff on conflict of interest matters and participated in the agency's supervisor training sessions. 

The Ethics Official took on new responsibilities 

with the Commission's adoption of interim rules on ex 

parte communications. Under the interim rules, which 

became effective December 9, 1992, a Commissioner or member of a Commissioner's staff who is 

unable to avoid receiving a prohibited communication 

must file a report on any such communication with 

the Designated Agency Ethics Official within 48 

hours. 

Total Quality Management 

The Commission's Office of General Counsel began 

implementation of a Total Quality Management 

(TOM) program during 1992. The program is designed to ensure that the office provides quality legal 

services to the Commission and to the public. Training of staff began early in January. 

Management and the National Treasury Employees Union (NTEU) reached an agreement concerning 

the TOM program. The first Quality Improvement 

Team (QIT), composed of the General Counsel, the 

four Associate General Counsels, and a member 

selected by NTEU, guided the office's TOM efforts. 

The QIT formed five subcommittees: Education, to 

educate staff in OGC and other divisions on TOM; 

Corrective Action, to identify problems with procedures or processes, try to correct them and monitor 

the effectiveness of corrections; Cost of Quality, to 

evaluate the savings achieved from specific solutions; Awareness and Recognition, to promote quality awareness and employee recognition; and Measurement, to measure staff perception of quality 

throughout OGC and to survey the rest of the agency 

as well. 

Activities undertaken during TOM's first year in the 

Counsel's office included publication of the newsletter "Quality News," presentations of TOM awareness 

sessions for other offices of the Commission, implementation of a Team Mentoring Program to help staff 

integrate TOM in their everyday work, and the design 1The visits were sponsored by the United States Information Agency (USIA). 
46 

and testing of a system to prioritize enforcement 

cases. 

Equal Employment Opportunity 

Program 

During 1992, the EEO Director developed and wrote 

an updated EEO Program and Affirmative Employment Plan (AEP) for Minorities and Women for 1993. 

The EEO Director manages the EEO Program, 

which also encompasses the Federal Women's Program and special emphasis programs for minorities. 

Each year the Director submits, to the Equal Employment Opportunity Commission, statistical reports on 

discrimination complaint processing and the 

Commission's workforce. 

In addition, the Director files, with the Office of 

Personnel Management, status reports on the Disabled Veterans Affirmative Action Plan. 

The Office of Equal Employment Opportunity Programs (OEEOP) undertook a variety of activities in 

1992. It created an EEO Advisory Committee, made 

recommendations on recruitment, sponsored a oneday education seminar, participated in the 

Commission's orientation program and cosponsored, 

with the Personnel Office, the Commission's comprehensive in-house training course for supervisors. The 

OEEOP also published a bimonthly newsletter, EEO 

Focus, for Commission staff, provided counseling for 

those with equal employment concerns and sponsored a workshop on sexual harassment prevention 

for new employees. 

Inspector General 

Under the Inspector General Act, the Commission's 

Office of Inspector General (OIG) is authorized to 

conduct audits and investigations to detect waste, 

fraud and abuse. The OIG audited several facets of 

Commission operations in 1992. In addition, the OIG 

participated in the supervisory training sessions conducted by the Personnel Office, and in the orientation 

program for new employees, to familiarize staff with 

the duties and responsibilities of the OIG. 

The FEC's Budget 

Fiscal Year 1992 

The final appropriation for FY 1992 was $18.808 million and 266 FTE. That amount was reduced by 

$13,000, however, as part of a $15.8 million government-wide travel reduction. Minor spending cuts were 

expected for training, publications and printing. 

Fiscal Year 1993 

The Commission received an appropriation of 

$21,031,000 and 276 FTE for FY 1993. Items contained in the FY 1993 Management Plan include: 

• The replacement of Public Disclosure microfilm processing and retrieval equipment with new technology; 

• Enhanced ADP support for the Audit and Reports 

Analysis Divisions; and 

• Sufficient space and basic support funds to ensure 

adequate support for a full time staff of 276 FTE and 

for the operations of the Commission as it continues 

to meet the demands associated with the 1992 

Presidential and Congressional elections. 

A comparison of the allocation of budget resources for 

FYs 1992 and 1993 appears in the table and graphs 

below. 

Request for Fiscal Year 1994 

On September 1, 1992, the Commission sent a $23.9 

million budget request for FY 1994 to Congress and to 

the Office of Management and Budget. The request was 

based primarily on the desire to have the necessary staff 

level to support the public disclosure and information 

programs, as well as the enforcement and Presidential 

public funding programs. 

"There is recent evidence of increased public distrust 

of the political process in general," FEC Chairman Joan 

Aikens wrote in the budget request. "It would be tragic to 

add to this trend by failing to fund adequately the agency 

most responsible for public disclosure of the campaign 

finance portion of the political process." 

The FY 1994 request calls for a full time Commission 

staff of 319. In FY 1992, the Commission's budget of 

$18.8 million provided for 266 full time employees; the 

FY 1993 budget provides for $21 million and a full time 

staff of 276. 
47 

Functional Allocation of Budget 

FY 1992 FY 1993 

Personnel $13,692,175 $14,674,000 

Travel 211,794 273,000 

Motor Pool 7,085 8,000 

Commercial Space 20,708 24,000 

GSA Space 1,905,422 2,253,000 

Equipment Rental 324,015 333,500 

Equipment Purchase 218,762 916,000 

Printing 304,519 361,000 

Support Contracts 764,759 730,000 

Administrative Expenses 209,814 232,546 

Supplies and Materials 243,395 239,389 

Publications 199,326 212,000 

TelephonefTelegraph 277,935 290,000 

Postage 221,000 190,000 

Training 76,240 100,425 

GSA Services, Other 107,457 188,140 

Total $18,797,406 $21 ,031,000 
48 

Divisional Allocation -FY1993 

-FY1992 

Percent 

Allocation of Budget 30 35 

* Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Services 

Public Disclosure 

Reports Analysis 

Percent 

Allocation of Staff t 

*Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Services 

Public Disclosure 

Reports Analysis 

* Includes Inspector General's Office and Representational Fund. 

tThe Commission averaged 266 full-time equivalent possitions (FTE) in FY 1992 and projected 276 FTE for FY 1993. 

*Includes Inspector General's Office. 
49 

Chapter 6 

Legislative 

Recommendations 

In anticipation of Congressional interest in campaign 

finance legislation, the Commission expedited prepa~ 

ration of its legislative recommendations and on 

January 26, 1993, sent the President and Congress a 

comprehensive set of 63 recommendations. This was 

the largest package it has ever submitted. The complete set of recommendations follows. Parenthetical 

references to 1993 indicate new recommendations or 

recommendations that were newly revised this year. 

Public Financing 

Presidential Election Campaign Fund (revised 

1993) 

Section: 26 U.S.C. §6096 

Recommendation: Without Congressional action, 

there will be a shortfall in the Presidential Election 

Campaign Fund in 1996. There will be no money 

available for primary candidates and less than a full 

entitlement for the general election candidates. If 

Congress wishes to preserve the Presidential public 

funding system, a legislative remedy is essential. 

In addition, Congress may want to examine the 

priorities for distributing public funds among the party 

nominating conventions, the general election nominees and the primary election candidates. 

Explanation: Although the Fund did not experience a 

shortfall during the 1992 Presidential year,1 the Commission has informed Congress that a serious public 

funding shortage is assured in 1996. One of the reasons for this is a structural flaw in the checkoff program. The payout to candidates and parties (for their 

conventions) is indexed to inflation, but the dollar 

checkoff is not. Spending limits are increased each 

election cycle to reflect the change in the cost-ofliving index. In 1974, the statutory spending limit for 

the general election was established at $20 million. In 

1992, each major party nominee received $55.2 million, representing over two and one half times the 

amount received by the nominees in 1976 ($21 .8 

million). Thus, as the consumer price index increases, the Fund needs more and more checkoff 

dollars to make the appropriate payments to qualified 

candidates and parties. If the checkoff amount had 

been increased at the same rate as the payments, 

there would be no shortfall in 1996. 

Another reason for the shortfall is the shrinking 

participation of taxpayers in the checkoff program. 

After peaking at 28 percent in 1980, the percentage 

of tax forms on which the taxpayer checked yes has 

fallen to approximately 19 percent. 

Without a legislative remedy, the FEC predicts that 

the shortfall in 1996 will be a serious problem. The 

law requires that priority be given first to party nominating conventions, then to general election nominees and last to primary election candidates. There 

will not be enough money in the Fund to cover all 

phases. We estimate that $124 million will have accumulated in the fund through 1996. This amouritwill 

only fully fund the two major party conventions, at 

about $12 million each. The two general election 

· nominees, who will be entitled to more than $60 million each, will not be fully funded. There will be no 

money for the primary candidates. Consequently, the 

shortfall will force candidates to become more dependent on large contributions from individuals and 

groups and, ultimately, defeat the purpose of the 

public funding process. 

1The Commission's projection that a shortfall would 

occur in 1992 did not materialize because the assumptions 

on which that projection was based changed. First, matching fund requests were considerably smaller than had been 

expected, based on the experience of previous years. 

Second, total checkoff receipts deposited into the Fund in 

1991 declined much less than had been anticipated. The 

FEC had expected a decline of $2 million. In fact, the 

checkoff dollars to the Fund declined by approximately 

$140,000. Third, the inflation rate was lower than had been 

expected, which decreased the expected demand on the 

Fund. 
50 

Primary Election Audits (1993) 

Section: 26 U.S.C. §§9032, 9033, 9035, 9038, 

9039(a)(1) 

Recommendation: Congress may want to eliminate 

the requirement under the Presidential Primary 

Matching Payment Account Act that matching funds 

be used only for "qualified campaign expenses" and 

substitute instead specific criteria to be used in Commission audits of publicly funded primary candidates. 

Explanation: To carry out the current requirement 

contained in 26 U.S.C. §9038(a), the Commission has 

had to determine, through audits, whether campaigns 

were using public funds to make qualified campaign 

expenses or unqualified campaign expenses. That 

determination has required considerable government 

resources. Additionally, the effort has resulted in prolonged audits, whose results have often not been 

published until 4 years after the election was over. 

One way of reducing the time and expense of these 

complex audits would be to eliminate the requirement 

that the Commission determine which disbursements 

were "qualified campaign expenses" and which were 

not. The test for whether or not a candidate used his 

or her public funds for legitimate campaign purposes 

would be based, instead, on the public's judgment. In 

order to make that judgment, full disclosure of campaign finance operations would be required. All disbursements, including their purpose, would be disclosed in full. With that information, the public would 

express its judgment, through the ballot box, on 

whether the candidate had spent the funds wisely and 

fairly. 

The Commission would continue, however, to audit 

campaigns to ensure that they complied with the Federal Election Campaign Act and the Presidential Primary Matching Payment Account Act, including provisions on expenditure limits2 and the limits and prohibitions on contributions. Additionally, the audits would 

be conducted to ensure that campaigns did not use 

funds for any illegal purpose, that campaigns did not 

convert excess campaign funds to personal use, that 

matching funds were used only for expenses incurred 

during the candidate's period of eligibility, and that all 

contributions were properly matched. Any surplus 

funds would have to be repaid to the U.S. Treasury, 

as now required under the law. Similarly, campaigns 

would be required to make repayments if the Commission determined that they had not complied with the 

campaign laws or had used funds for illegal purposes. 

Supplemental Funding for Publicly Funded 

Candidates (1993) 

Section: 26 U.S.C. §§9003 and 9004 

Recommendation: Congress may wish to consider 

whether publicly funded candidates should receive 

additional public funds when a nonpublicly funded 

candidate exceeds the spending limit. 

Explanation: Major party Presidential candidates who 

participate in the general election public funding process receive a grant for campaigning. In order to 

receive the grant, the candidate must agree to limit 

expenditures to that amount. Candidates who do not 

request public funds may spend an unlimited amount 

on their campaign. Congress may want to consider 

whether the statute should ensure that those candidates who are bound by limits are not disadvantaged. 

State Expenditure Limits for Publicly Financed 

Presidential Primary Campaigns (revised 1993) 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends 

that the state-by-state limitations on expenditures for 

publicly financed Presidential primary candidates be 

eliminated. 

Explanation: The Commission has now administered 

the public funding program in five Presidential elections. Based on our experience, we believe that the 

limitations could b~ removed with no material impact 

2This proposal assumes that Congress would also re­ on the process. 

peal the state-by-state expenditure limits, leaving only a 

national expenditure limit for the Commission to enforce. 
51 

Our experience has shown that, in past years, the 

limitations have had little impact on campaign spending in a given state, with the exception of Iowa and 

New Hampshire. In most other states, campaigns 

have been unable or have not wished to expend an 

amount equal to the limitation. In effect, then, the 

administration of the entire program has resulted in 

limiting disbursements in these two primaries alone. 

If the limitations were removed, the level of disbursements in these states would obviously increase. 

With an increasing number of primaries vying for a 

campaign's limited resources, however, it would not 

be possible to spend very large amounts in these 

early primaries and still have adequate funds available for the later primaries. Thus, the overall national 

limit would serve as a constraint on state spending, 

even in the early primaries. At the same time, candidates would have broader discretion in the running of 

their campaigns. 

Our experience has also shown that the limitations 

have been only partially successful in limiting expenditures in the early primary states. The use of the 

fundraising limitation, the compliance cost exemption, 

the volunteer service provisions, the unreimbursed 

personal travel expense provisions, the use of a personal residence in volunteer activity exemption, and 

a complex series of allocation schemes have developed into an art which, when skillfully practiced, can 

partially circumvent the state limitations. 

In addition, experience has shown that one of the 

Congressional concerns motivating the adoption of 

state expenditure limits is no longer an issue. Congress adopted the state limits, in part, as a way of 

discouraging candidates from relying heavily on the 

outcome of big state primaries. The concern was that 

candidates might wish to spend heavily in such 

states as a way of securing their party's nomination. 

In fact, however, under the public funding system, 

this has not proven to be an issue. Rather than 

spending heavily in large states, candidates have 

spent large amounts in the early primaries, for example, in Iowa and New Hampshire. 

Finally, the allocation of expenditures to the states 

has proven a significant accounting burden for campaigns and an equally difficult audit and enforcement 

task for the Commission. For all these reasons, the 

Commission decided to revise its state allocation 

regulations for the 1992 Presidential election. Many 

of the requirements, such as those requiring distinctions between fundraising and other types of expenditures, were eliminated. Since the Commission has 

not yet completed its administration of this Presidential cycle, the full impact of these changes is not yet 

clear. However, the rules could not undo the basic 

requirement to demonstrate the amount of expenditures relating to a particular state. Given our experience to date, we believe that this change to the Act 

would still be of substantial benefit to all parties concerned. 

Compliance Fund {1993) 

Section: 2 U.S.C. §441 a(b)(1 )(B); 26 U.S.C. 

§§9002(11 ), 9003(b) and (c), 9004(c) 

Recommendation: Congress may wish to clarify what 

funds Presidential Election Campaign Fund recipients may utilize to meet the accounting and compliance requirements imposed upon them by the Federal Election Campaign Act. If private funds are not to 

be used, Congress may wish to either raise the 

spending limits to accommodate such costs or establish a separate fund of the Treasury to be used for 

this purpose. 

Explanation: Through regulation, the Commission has 

provided for the establishment by Presidential committees of a General Election Legal and Accounting Compliance Fund (GELAC fund) consisting of private contributions otherwise within the limits acceptable for any 

other Federal election. The GELAC funds, which 

supplement funds provided out of the U.S. Treasury, 

may be used to pay for costs related to compliance with 

the campaign laws. Determining which costs may be 

paid is sometimes difficult and complex. Contributions 

to the GELAC fund are an exception to the general rule 

that publicly funded Presidential general election campaigns may not solicit or accept private contributions. 

Congress should clarify whether GELAC funds are 

appropriate and, if not, specify whether additional federal grants are to be used. If GELAC funds are appropriate, Congress should provide guidelines indicating 

which compliance costs are payable from such funds. 
52 

Applicability of Title VI to Recipients of Payments 

from the Presidential Election Campaign Fund 

(1993) 

Section: 26 U.S.C. §§9006(b), 9008(b)(3) and 9037. 

Recommendation: Congress should clarify that committees receiving public financing payments from the 

Presidential Election Campaign Fund are exempt 

from the requirements of Title VI of the Civil Rights 

Act of 1964, as amended. 

Explanation: This proposed amendment was 

prompted by the decision of the U.S. District Court for 

the District of Columbia in Freedom Republicans, Inc., 

and Lugenia Gordon v. Federal Election Commission, 

No. 92-153 (CRR) (D.D.C. April7, 1992), appeal 

pending, No. 92-5214 (D.C. Cir.). The Freedom Republicans' complaint asked the district court to declare 

that the Commission has jurisdiction to regulate the 

national parties' delegate selection process under 

Title VI. It also requested the court to order the Commission to adopt such regulations, direct the Republican Party to spend no more of the funds already received for its 1992 national nominating convention, 

and seek refunds of moneys already disbursed if the 

Republican Party did not amend its delegate selection 

and apportionment process to comply with Title VI. 

The court found that the Commission "does have an 

obligation to promulgate rules and regulations to insure the enforcement of Title VI. The language of Title 

VI is necessarily broad, and applies on its face to the 

FEC as well as to both major political parties and 

other recipients of federal funds." Slip op. at 6. The 

court gave the Freedom Republicans the opportunity 

to reassert their other claims after the Commission 

promulgates rules. Slip op. at 10. 

The Commission appealed this ruling on a number of 

procedural and substantive grounds, including that Title 

VI does not apply to the political parties' apportionment 

and selection of delegates to their conventions. However, the court of appeals might overrule the district 

court decision on one of the non-substantive grounds 

leaving the door open for other lawsuits involving the 

national nominating conventions or other recipients of 

federal funds certified by the Commission. 

In the Commission's opinion, First Amendment 

concerns and the legislative history of the public funding campaign statutes strongly indicate that Congress 

did not intend Title VI to permit the Commission to 

dictate to the political parties how to select candidates 

or to. regulate the campaigns of candidates for federal 

office. Nevertheless, the potential exists for persons 

immediately prior to an election to invoke Title VI in 

the federal courts in a manner that might interfere with 

the parties' nominating process and the candidates' 

campaigns. The recommended clarification would 

help forestall such a possibility. 

For these reasons, Congress should consider adding the following language to the end of each public 

financing provision cited above: "The acceptance of 

such payments will not cause the recipient to be conducting a 'program or activity receiving federal financial assistance' as that term is used in Title VI of the 

Civil Rights Act of 1964, as amended." 

Deposit of Repayments 

Section: 26 U.S.C. §9007(d) 

Recommendation: Congress should revise the law to 

state that: All payments received by the Secretary of 

the Treasury under subsection (b) shall be deposited 

by him or her in the Presidential Election Campaign 

Fund established by section 9006(a). 

Explanation: This change would allow the Fund to 

recapture monies repaid by convention-related committees of national major and minor parties, as well as 

by general election grant recipients. Currently the 

Fund recaptures only repayments made by primary 

matching fund recipients. 

Enforcement of Nonwillful Violations 

Section: 26 U.S.C. §§9012 and 9042 

Recommendation: Congress should consider amending the Presidential Election Campaign Fund Act and 

the Presidential Primary Matching Payment Account 

Act to clarify that the Commission has authority for 

civil enforcement of nonwillful violations (as well as 

willful violations) of the public funding provisions. 
53 

Explanation: Section 9012 of the Presidential Election Campaign Fund Act and section 9042 of the 

Presidential Primary Matching Payment Account Act 

provide only for "criminal penalties" for knowing and 

willful violations of the spending and contribution 

provisions and the failure of publicly funded candidates to furnish all records requested by the Commission. The lack of a specific reference to nonwillful 

violations of these provisions has raised questions 

regarding the Commission's ability to enforce these 

provisions through the civil enforcement process. 

In some limited areas, the Commission has invoked other statutes and other provisions in Title 26 

to carry out its civil enforcement of the public funding 

provisions. It has relied, tor example, on 2 U.S.C. 

§441 a(b) to enforce the Presidential spending limits. 

Similarly, the Commission has used the candidate 

agreement and certification processes provided in 

26 U.S.C. §§9003 and 9033 to enforce the spending 

limits, the ban on private contributions, and the requirement to furnish records. Congress may wish to 

consider revising the public financing statutes to provide explicit authority for civil enforcement of these 

provisions. 

Eligibility Requirements for Public Financing 

(revised 1993) 

Section: 26 U.S.C. §§9002, 9003, 9032 and 9033 

Recommendation: Congress should amend the eligibility requirements for publicly funded Presidential 

candidates to make clear that candidates who have 

been convicted of a willful violation of the laws related to the public funding process or who are not 

eligible to serve as President will not be eligible for 

public funding. 

Explanation: Neither of the Presidential public financing statutes expressly restricts eligibility for funding 

because of a candidate's prior violations of law, no 

matter how severe. And yet public confidence in the 

integrity of the public financing system would risk 

serious erosion if the U.S. Government were to provide public funds to candidates who had been convicted of felonies related to the public funding process. Congress should therefore amend the eligibility 

requirements to ensure that such candidates do not 

receive public financing for their Presidential campaigns. The amendments should make clear that a 

candidate would be ineligible for public funds if he or 

she had been convicted of fraud with respect to raising funds tor a campaign that was publicly financed, 

or if he or she had failed to make repayments in connection with a past publicly funded campaign or had 

willfully disregarded the statute or regulations. In addition, Congress should make it clear that eligibility to 

serve in the office sought is a prerequisite for eligibility 

for public funding. 

Eligibility Threshold for Public Financing 

Section: 26 U.S.C. §§9003 and 9033 

Recommendation: Congress should raise the eligibility threshold for publicly funded Presidential candidates. 

Explanation: The Federal Election Commission has 

administered the public funding provisions in four 

Presidential elections, and is in the midst of doing so 

for the fifth time. The statute provides for a cost-ofliving adjustment (COLA) of the overall primary 

spending limitation. There is, however, no corresponding adjustment to the threshold requirement. It 

remains exactly the same as it was in 1974. An adjustment to the threshold requirement would ensure 

that funds continue to be given only to candidates 

who demonstrate broad national support. To reach 

this higher threshold, Congress could increase the 

number of states in which the candidate had to raise 

the qualifying amount of matchable contributions; 

and/or increase the total amount of qualifying matchable contributions that had to be raised in each of the 

states. 
54 

Contributions to Presidential Nominees Who 

Receive Public Funds in the General Election 

(revised 1993) 

Section: 26 U.S.C. §9003 

Recommendation: Congress may wish to clarify that 

the public financing statutes prohibit the making and 

acceptance of contributions (either direct or in-kind) 

to Presidential candidates who receive full public 

funding in the general election. 

Explanation: The Presidential Election Campaign 

Fund Act prohibits a publicly financed general election candidate from accepting private contributions to 

defray qualified campaign expenses. 26 U.S.C. 

§9003(b)(2). The Act does not, however, contain a 

parallel prohibition against the making of these contributions. Congress should consider adding a section 

to 2 U.S.C. §441 a to clarify that individuals and committees are prohibited from making these contributions. 

Fundraising Limitation for Publicly Financed 

Presidential Primary Campaigns 

Section: 2 U.S.C. §§431 (9)(B)(vi) and 441 a 

Recommendation: The Commission recommends 

that the separate fundraising limitation provided to 

publicly financed Presidential primary campaigns be 

combined with the overall limit. Thus, instead of a 

candidate's having a $1 0 million (plus COLA3) limit 

for campaign expenditures and a $2 million (plus 

COLA) limit for fundraising (20 percent of overall 

limit), each candidate would have one $12 million 

(plus COLA) limit for all campaign expenditures. 

Explanation: Campaigns that have sufficient funds to 

spend up to the overall limit usually allocate some of 

their expenditures to the fundraising category. These 

campaigns come close to spending the maximum 

permitted under both their overall limit and their special fundraising limit. Hence, by combining the two 

limits, Congress would not substantially alter spending 

amounts or patterns. For those campaigns which do 

not spend up to the overall expenditure limit, the separate fundraising limit is meaningless. Many smaller 

campaigns do not even bother to use it, except in one 

or two states where the expenditure limit is low, e.g., 

Iowa and New Hampshire. Assuming that the state 

limitations are eliminated or appropriately adjusted, 

this recommendation would have little impact on the 

election process. The advantages of the recommendation, however, are substantial. They include a reduction in accounting burdens and a simplification in reporting requirements for campaigns, and a reduction in 

the Commission's auditing task. For example, the 

Commission would no longer have to ensure compliance with the 28-day rule, i.e., the rule prohibiting 

committees from allocating expenditures as exempt 

fundraising expenditures within 28 days of the primary 

held within the state where the expenditure was made. 

Registration and Reporting 

Candidates and Principal Campaign Committees 

(1993) 

Section: 2 U.S.C. §§432(e)(1) and 433(a) 

Recommendation: Congress should revise the law to 

require a candidate and his or her principal campaign 

committee to register simultaneously. 

Explanation: An individual becomes a candidate under the FECA once he or she crosses the $5,000 

threshold in raising contributions or making expenditures. The candidate has 15 days to file a statement 

designating the principal campaign committee, which 

will subsequently disclose all of the campaign's financial activity. This committee, in turn, has 10 days from 

the candidate's designation to register. This schedule 

allows 25 days to pass before the committee's reporting requirements are triggered. Consequently, the 

financial activity that occurred prior to the registration 

is not disclosed until the committee's next upcoming 

report. This period is too long during an election year. 

For example, should a report be due 20 days after an 

individual becomes a candidate, the unregistered 

3Spending limits are increased by the cost-of-living 

adjustment (COLA), which the Department of Labor calculates annually. 
55 

committee would not have to file a report on that date 

and disclosure would be delayed. The next report 

might not be filed for 3 more months. By requiring 

simultaneous registration, the public would be assured of more timely disclosure of the campaign's 

activity. 

Candidate Leadership PACs (1993) 

Section: 2 U.S.C. §441 a( a) 

Recommendation: Congress should consider whether 

leadership PACs should be deemed affiliated with the 

candidate's principal campaign committee. 

Explanation: A number of candidates for federal office 

and incumbent federal officeholders have established 

leadership PACs in addition to their principal campaign committees. Under current law, the leadership 

PACs generally are not considered authorized committees. Therefore, they may accept funds from individuals up to the $5,000 limit permitted for unauthorized committees in a calendar year and may make 

contributions of up to $5,000 per election to other 

federal candidates once they achieve multicandidate 

status. In contrast, authorized committees may not 

accept more than $1,000 per election from individuals 

and may not make contributions in excess of $1,000 

to other candidates. 

The existence of leadership PACs can present 

difficult issues for the Commission, such as when 

contributions are jointly solicited with the candidate's 

principal campaign committee or the resources of the 

leadership PAC are used to permit the candidate to 

gain exposure by traveling to appearances on behalf 

of other candidates. At times the operations of the two 

committees can be difficult to distinguish. 

If Congress concludes that there is an appearance 

that the limits of the Act are being evaded through the 

use of leadership PACs, it may wish to consider 

whether such committees are affiliated with the candidate's principal campaign committee. As such, contributions received by the committees would be aggregated under a single contribution limit and subjected 

to the limitations on contributions to authorized committees. The same treatment would be accorded to 

contributions made by them to other candidates. 

Campaign-Cycle Reporting 

Section: 2 U.S.C. §434 

Recommendation: Congress should revise the law to 

require authorized candidate committees to report on 

a campaign-to-date basis, rather than a calendar year 

cycle, as is now required. 

Explanation: Under the current law, a reporter or researcher must compile the total figures from several 

year-end reports in order to determine the true costs 

of a committee. In the case of Senate campaigns, 

which may extend over a six-year period, this change 

would be particularly helpful. 

Monthly Reporting for Congressional Candidates 

Section: 2 U.S.C. §434(a)(2) 

Recommendation: The principal campaign committee 

of a Congressional candidate should have the option 

of filing monthly reports in lieu of quarterly reports. 

Explanation: Political committees, other than principal 

campaign committees, may choose under the Act to 

file either monthly or quarterly reports during an election year. Committees choose the monthly option 

when they have a high volume of activity. Under those 

circumstances, accounting and reporting are easier 

on a monthly basis because fewer transactions have 

taken place during that time. Consequently, the committee's reports will be more accurate. 

Principal campaign committees can also have a 

large volume of receipts and expenditures. This is 

particularly true with Senatorial campaigns. These 

committees should be able to choose a more frequent 

filing schedule so that their reporting covers less activity and is easier to do. 
56 

Reporting Deadlines for Semiannual, Year-End 

and Monthly Filers (revised 1993) 

Section: 2 U.S.C. §§434(a)(3)(B) and (4)(A) and (B) 

Recommendation: Congress should change the reporting deadline for all semiannual, year-end and 

monthly filers to 15 days after the close of books for 

the report. 

Explanation: Committees are often confused be· 

cause the filing dates vary from report to report. Depending on the type of committee and whether it is 

an election year, the filing date for a report may fall 

on the 15th, 20th or 31st of the month. Congress 

should require that monthly, quarterly, semiannual 

and year-end reports are due 15 days after the close 

of books of each report. In addition to simplifying 

reporting procedures, this change would provide for 

more timely disclosure, particularly in an election 

year. In light of the increased use of computerized 

recordkeeping by political committees, imposing a 

filing deadline of the fifteenth of the month would not 

be unduly burdensome. 

Require Monthly Filing for Certain Multicandidate 

Committees (1993) 

Section: 2 U.S.C. §434(a)(4) 

Recommendation: Multicandidate committees which 

have raised or spent, or which anticipate raising or 

spending, over $1 00,000 should be required to file on 

a monthly basis during an election year. 

Explanation: Under current law, multicandidate committees have the option of filing quarterly or monthly 

during an election year. Quarterly filers that make 

contributions or expenditures on behalf of primary or 

general election candidates must also file pre-election reports. 

Presidential candidates who anticipate receiving 

contributions or making expenditures aggregating 

$100,000 or more must file on a monthly basis. Congress should consider applying this same reporting 

requirement to multicandidate committees which 

have raised or spent, or which anticipate raising or 

spending, in excess of $100,000 during an election 

year. The requirement would simplify the filing schedule, eliminating the need to calculate the primary filing 

periods and dates. Filing would be standardizedonce a month. This change would also benefit disclosure; the public would know when a committee's report was due and would be able to monitor the larger, 

more influential committees' reports. Although the 

total number of reports filed would increase, most 

reports would be smaller, making it easier for the 

Commission to enter the data into the computer and 

to make the disclosure more timely. 

Reporting Last-Minute Contributions by Party 

Committees (1993) 

Section: 2 U.S.C. §434(a)(6) 

Recommendation: Congress should require party 

committees to file 48-hour notices, as now required of 

principal campaign committees at 2 U.S.C. 

§434(a)(6)(A), for the receipt of contributions of 

$1,000 or more received shortly before an election. 

Explanation: Contributions made to political parties at 

the last minute often make the difference in close 

races and should be subject to the same public scrutiny as is applied to contributions to candidates. 

Reporting of Last-Minute Independent 

Expenditures (1993) 

Section: 2 U.S.C. §434(c) 

Recommendation: Congress should clarify when lastminute independent expenditures must be reported. 

Explanation: The statute requires that independent 

expenditures aggregating $1,000 or more and made 

after the 20th day, but more than 24 hours, before an 

election be reported within 24 hours after they are 

made. This provision is in contrast to other reporting 

provisions of the statute, which use the words "shall 

be filed." Must the report be received by the filing 

office within 24 hours after the independent expenditure is made, or may it be sent certified/registered 

mail and postmarked within 24 hours of when the 
57 

expenditure is made? Should Congress decide that 

committees must report the expenditure within 24 

hours after it is made, committees should be able to 

file via facsimile (fax) machine. (See Legislative Recommendation titled "Facsimile Machines.") Clarification by Congress would be very helpful. 

Facsimile Machines (1993) 

Section: 2 U.S.C. §§434(b}(6)(B)(iii) and 434(c)(2) 

Recommendation: Congress should modify the Act to 

provide for the acceptance and admissibility of 24-

hour notices of independent expenditures via telephone facsimiles. 

Explanation: Independent expenditures that are 

made between 20 days and 24 hours before an election must be reported within 24 hours. The Act requires that a last-minute independent expenditure 

report must include a certification, under penalty of 

perjury, stating whether the expenditure was made 

"in cooperation, consultation, or concert with, or at 

the request or suggestion of, any candidate or any 

authorized committee or agent of such committee." 

This requirement appears to foreclose the option of 

using a facsimile machine to file the report. 

The next report the committee files, however, 

which covers the reporting period when the expenditure was made, must also include the certification, 

stating the same information. Given the time constraint for filing the report, the requirement to include 

the certification on the subsequent report, and the 

availability of modern technology that would facilitate 

such a filing, Congress should consider allowing such 

filings via telephonically transmitted facsimiles (''fax" 

machines). This could be accomplished by allowing 

the committee to fax a copy of the schedule disclosing the independent expenditure and the certification. 

The original schedule would be filed with the next 

report. 

Acceptance of such a filing method would facilitate 

timely disclosure and simplify the process for the filer. 

Waiver Authority (revised 1993) 

Section: 2 U.S.C. §434 

Recommendation: Congress should give the Commission the authority to adjust the filing requirements 

or to grant general waivers or exemptions from the 

reporting requirements of the Act. 

Explanation: In cases where re~orting requiremen!s 

are excessive or unnecessary, 1t would be helpful If 

the Commission had authority to suspend the reporting requirements of the Act. For example, the Commission has encountered several problems relating to 

the reporting requirements of authorized committees 

whose respective candidates were not on the election ballot. The Commission had to consider whether 

the election-year reporting requirements were fully 

applicable to candidate committees operating under 

one of the following circumstances: 

• The candidate withdraws from nomination prior to 

having his or her name placed on the ballot. . 

• The candidate loses the primary and therefore IS 

not on the general election ballot. . . 

• The candidate is unchallenged and his or her name 

does not appear on the election ballot. 

Unauthorized committees also face unnecessary 

reporting requirements. For example, the 1992 October Monthly report was due 2 days before the 12-Day 

Pre-General Election Report; however the Pre-General Election Report had to be mailed first. A waiver 

authority would have enabled the Commission to 

eliminate the requirement to file the monthly report, 

as long as the committee included the activity in the 

Pre-General Election Report and filed the report on 

time. The same disclosure would have been available before the election, but the committee would 

have only had to file one report. . 

In other situations, disclosure would be served 1f 

the Commission had the authority to adjust the filing 

requirements, as is currently allowed for special elections. For example, runoff elections are often scheduled shortly after the primary election. In many instances, the close of books for the runoff pre-election 

report is the day after the primary-the same day that 

candidates find out if there is to be a runoff and who 

will participate. When this occurs, the 12-day pre-
58 

election report discloses almost no runoff activity. In 

such a situation, the Commission should have the authority to adjust the filing requirements to allow for a 7-

day pre-election report (as opposed to a 12-day report), 

which would provide more relevant disclosure to the 

public. 

Granting the Commission the authority to waive 

reports or adjust the reporting requirements would reduce needlessly burdensome disclosure demands. 

Reporting and Recordkeeping of Payments to 

Persons Providing Goods and Services 

(revised 1993) 

Section: 2 U.S.C. §§432(c), 434(b)(5)(A), (6)(A) and 

(6)(8) 

Recommendation: The current statute requires reporting "the name and address of each...person to 

whom an expenditure in an aggregate amount or 

value in excess of $200 within the calendar year is 

made by the reporting committee to meet a candidate 

or committee operating expense, together with the 

date, amount, and purpose of such operating expenditure." Congress should clarify whether this is 

meant, in all instances, to require reporting committees to disclose only the payments made by the committee or whether additional reporting is required, in 

some instances, when a payment is made to an intermediary contractor or consultant who, in turn, acts as 

the committee's agent by making expenditures to 

other payees. If Congress determines that disclosure 

of secondary payees is required, the Act should require that committees maintain the name, address, 

amount and purpose of the disbursement made to 

the secondary payees in their records and disclose it 

to the public on their reports. Congress should limit 

such disclosure to secondary payments above a 

certain dollar threshold or to payments made to independent subcontractors. 

Explanation: The Commission has encountered on 

several occasions the question of just how detailed a 

committee's reporting of disbursements must be. 

See, e.g., Advisory Opinion 1983-25, 1 Fed. Election 

Camp. Fin. Guide (CCH), ~ 5742 (Dec. 22, 1983) 

(Presidential candidate's committee not required to 

disclose the names, addresses, dates or amounts of 

payments made by a general media consultant retained by the committee); Advisory Opinion 1984-8, 1 

Fed. Election Camp. Fin. Guide (CCH), ~ 5756 (Apr. 

20, 1984) (House candidate's committee only required to itemize payments made to the candidate for 

travel and subsistence, not the payments made by 

the candidate to the actual providers of services); 

Financial Control and Compliance Manual for Presidential Primary Election Candidates Receiving Public 

Financing, Federal Election Commission, pp. 123-

130 (1992) (distinguishing committee advances or 

reimbursements to campaign staff for travel and subsistence from other advances or reimbursements to 

such staff and requiring itemization of payments 

made by campaign staff only as to the latter). Congressional intent in the area is not expressly stated, 

and the Commission believes that statutory clarification would be beneficial. In the area of Presidential 

public financing, where the Commission is responsible for monitoring whether candidate disbursements 

are for qualified campaign expenses (see 26 U.S.C. 

§§9004(c) and 9038(b)(2)), guidance would be particularly useful. 

Incomplete or False Contributor Information 

(revised 1993) 

Section: 2 U.S.C. §434 

Recommendation: Congress may wish to amend the 

Act to address the recurring problem of committees' 

inability to provide full disclosure about their contributors. First, Congress might want to adopt a provision 

that would require political committees, when they fail 

to receive required contributor information (2 U.S.C. 

§434), to send one written request for contributor 

information or make one oral contact with the contributor afterthe contribution is received. Second, 

Congress might wish to prohibit the acceptance of 

contributions until the contributor information is obtained and recorded in the committee's records. Third, 

Congress might wish to amend the law to make contributors or the committee liable for submitting information known by the contributor or the committee to 

be false. 
59 

Explanation: There has recently been heightened 

concern expressed by the Commission, the public, 

and the press about the failure of candidates and 

political committees to report the addresses and occupations of many of their contributors. Some press 

reports have suggested that this requirement sometimes is deliberately evaded in order to obfuscate the 

special-interest origins of contributions. 

The prospect of post-election enforcement action 

will not ensure that this information is obtained and 

disclosed to the public in a timely fashion. In those 

cases where contributor information is inadequate, 

the law states that committees will be in compliance if 

they make "best efforts" to obtain the information. 

Current Commission regulations interpret this as a 

requirement to make one oral or written request for 

the information. Legislative history indicates that a 

single request for the information (which can be 

made in the original solicitation) may suffice. In the 

Commission's experience, however, a single request 

has been inadequate. In addition, determining what 

efforts were made to obtain this information and demonstrating that a campaign failed to make its "best 

efforts" to obtain it are difficult at best. 

In those cases where committees fail to receive 

complete information from their contributors, committees should be required to make an additional request after the contribution is received, either orally 

or in writing. The Commission recently published a 

Notice of Proposed Rulemaking seeking comment on 

proposals to require such additional requests and to 

provide to the Commission all information in the possession of the treasurer. 

An inducement to campaigns and political committees to fulfill this responsibility would be to prohibit 

the acceptance and/or expenditure of contributions 

until the contributor information is obtained and recorded in the committee's records. This would have 

an immediate effect upon a committee's ability to 

effectively campaign before the election, which would 

be a powerful inducement to campaigns and political 

committees to obtain the information promptly. Moreover, violations would be relatively easy to detect and 

prove by reviewing the committee's disclosure reports. 

Finally, Congress may wish to add other mechanisms for improving disclosure. Congress should 

make clear that the contributor or committee is liable 

for submitting information known by the provider of 

the information to be false. Taken together, these 

measures should improve efforts to achieve full disclosure. 

Excluding Political Committees from Protection 

of the Bankruptcy Code (revised 1993) 

Section: 2 U.S.C. §433(d) 

Recommendation: Congress should clarity the distribution of authority over insolvent political committees 

between the Commission's authority to regulate insolvency and termination of political committees under 2 U.S.C. §433(d), on one hand, and the authority 

of the bankruptcy courts, on the other hand. 

Explanation: In 2 U.S.C. §433(d), the Commission is 

given authority to establish procedures for "the determination of insolvency" of any political committee, the 

"orderly liquidation of an insolvent political committee," the "application of its assets for the reduction 

of outstanding debts," and the ''termination of an insolvent political committee after such liquidation ...." 

However, the Bankruptcy Code, 11 U.S.C. § 1 01 et 

seq., generally grants jurisdiction over such matters 

to the bankruptcy courts, and at least one bankruptcy 

court has exercised its jurisdiction under Chapter 11 

of the Bankruptcy Code to permit an ongoing political 

committee to compromise its debts with the intent 

thereafter to resume its fundraising and contribution 

and expenditure activities. In re Fund for a Conservative Majority, 100 B.R. 307 (Bankr. E.D.Va. 1989). 

Not only does the exercise of such jurisdiction by the 

bankruptcy court conflict with the evident intent in 2 

U.S.C. §433(d) to empower the Commission to regulate such matters with respect to political committees, 

but permitting a political committee to compromise 

debts and then resume its political activities can result in corporate creditors effectively subsidizing the 

comm~ttee's contributions and expenditures, contrary 

to the mtent of 2 U.S.C. §441 b(a). The Commission 
60 

has recently promulgated a regulation generally prohibiting ongoing political committees from compromising outstanding debts, 11 CFR 116.2(b), but the continuing potential jurisdiction of the bankruptcy courts 

over such matters could undermine the Commission's 

ability to enforce it. Accordingly, Congress may want 

to clarify the distribution of authority between the 

Commission and the bankruptcy courts in this area. In 

addition, Congress should specify whether political 

committees are entitled to seek Chapter 11 reorganization under the Bankruptcy Code. 

Use of Campaign Funds 

Disposition of Excess Campaign Funds (1993) 

Section: 2 U.S.C. §439a 

Recommendation: In those cases where a candidate 

has largely financed his campaign with personal funds, 

Congress may want to consider limiting the amount of 

excess campaign funds that the campaign may transfer 

to a national, state or local committee of any political 

party to $100,000 per year. 

Explanation: Under current law, a candidate may transfer unlimited amounts of excess campaign funds to a 

political party. This makes it possible for a candidate to 

contribute unlimited personal funds to his campaign, 

declare these funds excess and transfer them to a political party, thus avoiding the limit on individual contributions to political parties. 

Candidate's Use of Campaign Funds {1993) 

Section: 2 U.S.C. §439a 

Recommendation: Congress may wish to re-examine 

the appropriate use of campaign funds during or after 

the course of a campaign, specifically the ban on the 

personal use of excess campaign funds. Congress 

should define what would constitute "personal use" of 

those funds and what is meant by excess campaign 

funds. · 

Explanation: Under section 439a of the Act, excess 

campaign funds cannot be converted by any person 

to personal use. If Congress intends to restrict the use 

of campaign funds by banning personal use of the 

funds, some guidance as to what constitutes "personal use" is necessary. In the past, some have argued before the Commission, to cite a few examples, 

that campaign expenditures rightfully include candidate salaries, automobiles, meals, per diems and 

mortgage payments. 

If Congress does not intend to restrict the use of 

funds during the campaign, but wishes to restrict only 

the use of leftover campaign funds, then it should so 

specify. 

Contributions and Expenditures 

Contributions and Expenditures to Influence 

Federal and Nonfederal Elections (revised 1993) 

Section: 2 U.S.C. §§441 and 434 

Recommendation: Congress may wish to consider 

whether new legislation is needed to regulate the use 

of "soft moriey" in federal elections. 

Explanation: The law requires that all funds spent to 

influence federal elections come from sources that 

are permissible under the limitations and prohibitions 

of the Act. Problems arise with the application of this 

provision to committees that engage in activities that 

support both federal and nonfederal candidates. The 

Commission attempted to deal with this problem by 

promulgating regulations that required such committees to allocate disbursements between federal and 

nonfederal election activity. The focus of these regulations was on how the funds were spent. The public, 

however, has been equally concerned about the 

source of money that directly or indirectly influences 

federal politics. Much discussion has centered on the 

perception that soft money is being used to gain access to federal candidates. ("Soft money" is generally 

understood to mean funds that do not comply with the 

federal prohibitions and limits on contributions.) Even 

if soft money is technically used to pay for the nonfederal portion of shared activities (federal and nonfed-
61 

eral), the public may perceive that the contributors of 

soft money have undue influence on federal candi- ·· 

dates and federally elected officials. In light of this 

public concern, Congress should consider amending 

the law in this area as it affects the raising of soft 

money. Such changes could include any or all of the 

following: (1) more disclosure of non-federal account 

receipts (as well as "building fund" proceeds exempted under 2 U.S.C. §431 (8)(B)(viii)); (2) limits on 

non-federal account donations coupled with tighter 

affiliation rules regarding party committees; (3) prohibiting non-federal accounts for certain types of committees; (4) prohibiting the use of a federal candidate's 

name or appearance to raise soft money; and (5) 

confining soft money fundraising to non-federal election years. 

In addition, further restrictions on the spending of 

soft money should be considered such as: (1) requiring all party committees to disclose all non-federal 

activity that is not exclusively related to non-federal 

candidate support and expressly preempting duplicative state reporting requirements; (2) requiring that all 

party activity which is not exclusively on behalf of nonfederal candidates be paid for with federally permissible funds; and (3) limiting the use of soft money to 

non-federal election year activity. 

Broader Prohibition Against Force and Reprisals 

(1993) 

Section: 2 U.S.C. §441 b(b){3)(A) 

Recommendation: The Commission recommends that 

Congress revise the FECA to make it unlawful for a 

corporation, labor organization or separate segregated fund to use physical force, job discrimination, 

financial reprisals or the threat thereof to obtain a 

contribution or expenditure on behalf of any candidate 

or political committee. 

Explanation: Current section 441 b(b)(3)(A) could be 

interpreted to narrowly apply to the making of contributions or expenditures by a separate segregated 

fund which were obtained through the use of force, 

job discrimination, financial reprisals and threats. 

Thus, Congress should clarify that corporations and 

labor organizations are prohibited from using such 

tactics in the solicitation of contributions for the separate segregated fund. In addition, Congress should 

include language to cover situations where the funds 

are solicited on behalf of and given directly to candidates. 

Use of Free Air Time (1993) 

Section: 2 U.S.C. §§431 (9)(B)(i) and 441 b 

Recommendation: Congress should revise the FECA 

to indicate whether an incorporated broadcaster may 

donate free air time to a candidate or political committee and, if so, under what conditions and restrictions. 

Explanation: The Federal Election Campaign Act prohibits a corporation from providing "anything of value" 

~o a candidate without full payment. However, Sections 312{a)(7) and 315(b) of the Communications Act 

require that broadcast stations provide "reasonable 

access" to federal candidates, and prohibit stations 

from charging candidates more than the "lowest unit 

charge" for the same class and amount of time in the 

same time period. Under FCC rules, broadcasters 

may satisfy their "reasonable access" obligations by 

providing free air time to candidates, although the 

Federal Communications Commission does not require them to provide free time. Therefore, the question has been raised as to whether the donation of 

free air time by an incorporated broadcaster is a prohibited corporate contribution under the FECA, or 

whether such a donation comes within the exemption 

for news stories, commentaries and editorials. The 

Commission has twice considered and been unable to 

resolve this issue. Hence, Congress may want to 

consider offering guidance on whether donations of 

free air time are permissible under the FECA and, if 

so, under what conditions and restrictions. 
62 

Distinguishing Official Travel from Campaign 

Travel (1993) 

Section: 2 U.S.C. §431 (9) 

Recommendation: The FECA should be amended to 

clarify the distinctions between campaign travel and 

official travel. 

Explanation: Many candidates for federal office hold 

elected or appointed positions in federal, state or local 

government. Frequently, it is difficult to determine 

whether their public appearances are related to their 

official duties or whether they are campaign related. A 

similar question may arise when federal officials who 

are not running for office make appearances that 

could be considered to be related to their official duties or could be viewed as campaign appearances on 

behalf of specific candidates. 

Another difficult area concerns trips in which both 

official business and campaign activity take place. 

There have also been questions as to how extensive 

the campaign aspects of the trip must be before part 

or all of the trip is considered campaign related. Congress might consider amending the statute by adding 

criteria for determining when such activity is campaign 

related. This would assist the committee in determining when campaign funds must be used for all or part 

of a trip. This will also help Congress determine when 

official funds must be used under House or Senate 

Rules. 

Coordinated Party Expenditures (1993) 

Section: 2 U.S.C. §441 a(d) 

Recommendation: Congress may want to clarify the 

distinction between coordinated party expenditures 

made in connection with general elections and generic party building activity. 

Explanation: Section 441 a(d) provides that national 

and state party committees may make expenditures 

in connection with the general election campaigns of 

the party's nominees for House and Senate, and that 

these expenditures are in addition to the normal party 

contributions permissible under the FECA. The 

national party committees may also make such expenditures on behalf of the party's general election 

Presidential and Vice Presidential nominees. The 

Commission has interpreted these provisions to permit party committees to make nearly any type of expenditure they deem helpful to their nominees short of 

donating the funds directly to the candidates. Expenditures made under §441 a(d) are subject to a special 

limit, separate from contribution limits. 

Party committees may also make expenditures for 

generic party building activities, including get-out-thevote and voter registration drives. These activities are 

not directly attributable to a clearly identified candidate. In contrast to coordinated party expenditures, 

these activities are not subject to limitation. 

When deciding, in advisory opinions and enforcement matters, whether an activity is a 441 a(d) expenditure or a generic activity, the Commission has considered the timing of the expenditure, the language of 

the communication, and whether it makes reference 

only to candidates seeking a particular office or to all 

the party's candidates, in general. However, the Commission still has difficulty determining, in certain situations, when a communication or other activity is generic party building activity or a coordinated party 

expenditure. Congressional guidance on this issue 

would be helpful. 

Volunteer Participation in Exempt Activity (1993) 

Section: 2 U.S.C. §§431 (8)(x) and (xii) 

Recommendation: Congress should clarify the extent 

to which volunteers must conduct or be involved in an 

activity in order for the activity to qualify as an exempt 

party activity. 

Explanation: Under the Act, certain activities conducted by state and local party committees on behalf 

of the party's candidates are exempt from the contribution limitations if they meet specific conditions. 

Among these conditions is the requirement that the 

activity be conducted by volunteers. However, the 

actual level of volunteer involvement in these activities has varied substantially. 

Congress may want to clarify the extent to which 

volunteers must be involved in an activity in order for 
63 

that activity to qualify as an exempt activity. For example, if volunteers are assisting with a mailing, must 

they be the ones to stuff the envelopes and sort the 

mail by zip code or can a commercial vendor perform 

that service? Is it sufficient involvement if the volunteers just stamp the envelopes or drop the bags at the 

post office? 

Colleges and Universities {1993) 

Section: 2 U.S.C. §§441 a and 441 b 

Recommendation: Congress may wish to consider 

amending the FECA to spell out the circumstances in 

which colleges, universities and other educational 

institutions may engage in political activities such as 

sponsoring candidate appearances and candidate 

debates, and conducting voter registration drives. 

E~planation: Under 2 U.S.C. §441 b, incorporated 

~nvate educational institutions, like other corporations, are prohibited from making contributions in 

connection with any Federal election. Similarly, stateoperated educational institutions, if unincorporated, 

are "persons" and thus subject to the contribution 

limitations of 2 U.S.C. §441a. Within the existing 

framework of the FECA, the Commission is currently 

considering the conditions under which an educational institution may sponsor a candidate appearance or candidate debate or conduct a voter drive, 

and the conditions under which such activities will 

constitute in-kind contributions. However, Congress 

may wish to consider whether the important educational role these institutions play in the democratic 

process warrants treating them differently from the 

way other corporations are treated with respect to 

these or other forms of political activities. The Commi~s~~n notes that safeguards against certain political 

act1v1t1es already exist. For example, under the Internal Revenue Code, private schools that qualify as 

nonprofit corporations under §501 (c)(3) of the Internal Revenue Code may not participate or intervene in 

political campaigns. Similarly, state-operated schools 

may be required to ensure that state funds are not 

used for political purposes. 

Direction or Control {1993) 

Section: 2 U.S.C. §441 a(a)(8) 

Recommendation: Congress should consider 

whether the Act's provisions regarding earmarked 

contributions should incorporate the concept in the 

legislative history that contributions count toward a 

conduit's or intermediary's contribution limits when 

the conduit or intermediary exercises direction or 

control over them. If Congress does determine that 

such contributions count toward a conduit's or 

intermediary's contribution limit, then Congress 

should also include a definition of what constitutes 

direction or control. 

~xplanation: Under 2 U.S.C. §441 a(a)(8), contributions made by any person which are earmarked 

through a conduit or intermediary to a particular candidate are treated as contributions from that person 

to the candidate. The Commission has seen an increase in conduit activity in recent years. 

Congress has indicated that "if a person exercises any direct or indirect control over the making of 

a contribution, then such contribution shall count 

toward the limitation imposed with respect to such 

person [under current 2 U.S.C. §441 a], but it will not 

count toward such a person's contribution limitation 

when it is demonstrated that such person exercised 

no direct or indirect control over the making of the 

contribution involved." H.R. Rep. No. 93-1239, 93d 

Cong., 2d Sess. 16 (1974). The Commission believes 

that the FECA should be amended to expressly reflect Congressional intent that contributions count 

toward a conduit's limits if the conduit exercises direction or control over the making of those earma.rked contributions. In addition, determining what 

act1ons on the part of a conduit or intermediary constitute direction or control has presented difficulties 

for the Commission. Therefore, an amendment to the 

Act should also include standards for determining 

when "direction or control" has been exercised over 

the making of a contribution. 
64 

Nonprofit Corporations (revised 1993) 

Section: 2 U.S.C. §441 b 

Recommendation: In light of the decision of the U.S. 

Supreme Court in Federal Election Commission v. 

Massachusetts Citizens for Life, Inc. (MCFL), Congress should consider amending the provision prohibiting corporate and labor spending in connection 

with federal elections in order to incorporate in the 

statute the text of the court's decision. Congress may 

also wish to include in the Act a definition for the term 

"express advocacy." 

Explanation: In the Court's decision of December 15, 

1986, the Court held that the Act's prohibition on 

corporate political expenditures was unconstitutional 

as applied to independent expenditures made by a 

narrowly defined type of nonprofit corporation. The 

Court also indicated that the prohibition on corporate 

expenditures for communications is limited to communications expenditures containing express advocacy. Since that time, the Commission has published 

an Advance Notice of Proposed Rulemaking, and 

has conducted hearings on whether regulatory 

changes are needed as a result of the Court's decision. The Commission sought a second round of 

public comment following the Court's related decision 

in Austin v. Michigan Chamber of Commerce, 494 

U.S. 652 (1990). More recently, the Commission 

published a Notice of Proposed Rulemaking and held 

a second hearing on these issues. 

Congress should consider whether statutory 

changes are needed: (1) to exempt independent 

expenditures made by certain nonprofit corporations 

from the statutory prohibition against corporate expenditures; (2) to specify the reporting requirements 

for these nonprofit corporations; and (3) to provide a 

definition of express advocacy. 

The Court found that certain nonprofit corporations 

were not subject to the independent expenditure 

prohibitions of 2 U.S.C. §441 b. The Court determined, however, that these nonprofit corporations 

had to disclose some aspect of their financial activity-in particular, independent expenditures exceeding $250 and identification of persons who contribute 

over $200 to help fund these expenditures. The Court 

further ruled that spending for political activity could, 

at some point, become the major purpose of the corporation, and the organization would then become a 

political committee. 

Transfer of Campaign Funds from One 

Committee to Another (1993) 

Section: 2 U.S.C. §441 a(a)(1) and (5)(C) 

Recommendation: Congress may wish to consider 

requiring contributors to redesignate contributions 

before they are transferred from one federal campaign to another federal campaign of the same candidate, and clarify whether such contributions count 

against the contributors' limits for the transferee committee. 

Explanation: The Commission has traditionally permitted a committee to transfer funds from one campaign to another (e.g., from a 1992 election to a 1994 

election committee) without the original contributor's 

redesignation of the contribution or approval of the 

transfer. Congress may wish to re-examine whether 

such transfers are acceptable, and if so, how should 

they affect the original contributor's contribution limit 

vis-a-vis both committees. 

Contributions from Minors (1993) 

Section: 2 U.S.C. §441 a(a)(1) 

Recommendation: Congress should establish a minimum age for contributors. 

Explanation: The Commission has found that contributions are sometimes given by parents in their 

children's names. Congress should address this potential abuse by establishing a minimum age for contributors, or otherwise provide guidelines ensuring 

that parents are not making contributions in the name 

of another. 
65 

Application of Contribution Limitations to Family 

Members 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends 

that Congress examine the application of the contribution limitations to immediate family members. 

Explanation: Under the current posture of the law, a 

family member is limited to contributing $1 ,000 per 

election to a candidate. This limitation applies to 

spouses and parents, as well as other immediate 

family members. (SeeS. Cont. Rep. No. 93-1237, 

93rd Cong., 2nd Sess., 58 (1974) and Buckley v. 

Valeo, 424 U.S. 1, 51 (footnote 57)(1976).) This limitation has caused the Commission substantial problems in attempting to implement and enforce the 

contribution limitations. 4 

Problems have arisen in enforcing the limitations 

where a candidate uses assets belonging to a parent. 

In some cases, a parent has made a substantial gift 

to his or her candidate-child while cautioning the 

candidate that this may well decrease the amount 

which the candidate would otherwise inherit upon the 

death of the parent. 

Problems have also occurred in situations where 

the candidate uses assets held jointly with a spouse. 

When the candidate uses more than one-half of the 

value of the asset held commonly with the spouse 

(for example, offering property as collateral for a 

loan), the amount over one-half represents a contribution from the spouse. If that amount exceeds 

$1,000, it becomes an excessive contribution from 

the spouse. 

The Commission recommends that Congress consider the difficulties arising from application of the 

contribution limitations to immediate family members. 

Lines of Credit and Other Loans Obtained by 

Candidates (1993) 

Section: 2 U.S.C. §431 (8)(B)(vii) 

Recommendation: Congress should provide guidance on whether candidate committees may accept 

contributions which are derived from advances on a 

candidate's brokerage account, credit card, or home 

equity line of credit, and, if so, Congress should also 

clarify how such extensions of credit should be 

reported. 

Explanation: The Act currently exempts from the 

definition of "contribution" loans that are obtained by 

political committees in the ordinary course of business from federally-insured lending institutions. 2 

U.S.C. §431 (8)(B)(vii). Loans that do not meet the 

requirements of this provision are either subject to 

the Act's contribution limitations, if received from 

permissible sources, or the prohibition on corporate 

contributions, as appropriate. 

Since this aspect of the law was last amended in 

1979, however, a variety of financial options have 

become more widely available to candidates and 

committees. These include a candidate's ability to 

obtain advances against the value of a brokerage 

account, to draw cash advances from a candidate's 

credit card, or to make draws against a home equity 

line of credit obtained by the candidate. In many 

cases, the credit approval, and therefore the check 

performed by the lending institution regarding the 

candidate's creditworthiness, may predate the candidate's decision to seek federal office. Consequently, 

the extension of creditmay not have been made in 

accordance with the statutory criteria such as the 

requirement that a loan be "made on a basis which 

assures repayment." In other cases, the extension of 

credit may be from an entity that is not a federallyinsured lending institution. Congress should clarify 

whether these alternative sources of financing are 

permissible and, if so, should specify standards to 

ensure that these advances are commercially reasonable extensions of credit. 4While the Commission has attempted through regulations to present an equitable solution to some of these 

problems (see 48 Fed. Reg. 19019 (April 27, 1983) as 

prescribed by the Commission on July 1, 1983), statutory 

resolution is required in this area. 
66 

Honorarium 

Section: 2 U.S.C. §431 (S)(B)(xiv) 

Recommendation: Congress should make a technical 

amendment, deleting 2 U.S.C. §431 (S)(B)(xiv), now 

contained in a list of definitions of what is not a contribution. 

Explanation: The 1976 amendments to the Federal 

Election Campaign Act gave the Commission jurisdiction over the acceptance of honoraria by all federal officeholders and employees. 2 U.S.C. §441 i. In 

1991, the Legislative Branch Appropriations Act repealed section 441 i. As a result, the Commission has 

no jurisdiction over honorarium transactions taking 

place after August 14, 1991, the effective date of the 

law. 

To establish consistency within the Act, Congress 

should make a technical change to section 

431 (S)(B)(xiv) to delete the reference to honorarium 

as defined in former section 441 i. This would delete 

honorarium from the list of definitions of what is not a 

contribution. 

Application of $25,000 Annual limit 

Section: 2 U.S.C. §441 a(a)(3) 

Recommendation: Congress should consider modifying the provision that limits individual contributions to 

$25,000 per calendar year so that an individual's 

contributions count against his or her annual limit for 

the year in which they are made. 

Explanation: Section 441 a(a)(3) now provides that a 

contribution to a candidate made in a nonelection 

year counts against the individual donor's limit for the 

year in which the candidate's election is held. This 

provision has led to some confusion among contributors. For example, a contributor wishing to support 

Candidate Smith in an election year contributes to 

her in November of the year before the election. The 

contributor assumes that the contribution counts 

against his limit for the year in which he contributed. 

Unaware that the contribution actually counts against 

the year in which Candidate Smith's election is held, 

the contributor makes other contributions during the 

election year and inadvertently exceeds his $25,000 

limit. By requiring contributions to count against the 

limit of the calendar year in which the donor contributes, confusion would be eliminated and fewer contributors would inadvertently violate the law. The 

change would offer the added advantage of enabling 

the Commission to better monitor the annual limit. 

Through the use of our data base, we could more 

easily monitor contributions made by one individual 

regardless of whether they were given to retire the 

debt of a candidate's previous campaign, to support 

an upcoming election (two, four or six years in the 

future) or to support a PAC or party committee. Such 

an amendment would not alter the per candidate, per 

election limits. Nor would it affect the total amount 

that any individual could contribute in connection with 

federal elections. 

Election Period Limitations 

Section: 2 U.S.C. §441a 

Recommendation: The Commission recommends 

that limits on contributions to candidates be placed 

on an election-cycle basis, rather than the current 

per-election basis. 

Explanation: The contribution limitations affecting 

contributions to candidates are structured on a "perelection" basis, thus necessitating dual bookkeeping 

or the adoption of some other method to distinguish 

between primary and general election contributions. 

The Act could be simplified by changing the contribution limitations from a "per-election" basis to an "election-cycle" basis. Thus, multicandidate committees 

could give up to $10,000 and all other persons could 

give up to $2,000 to an authorized committee at any 

point during the election cycle. 

Acceptance of Cash Contributions 

Section: 2 U.S.C. §441 g 

Recommendation: Congress may wish to modify the 

statute to make the treatment of 2 U.S.C. §441 g, 

concerning cash contributions, consistent with other 
67 

provisions of the Act. As currently drafted, 2 U.S.C. 

§441 g prohibits only the making of cash contributions 

which, in the aggregate, exceed $100 per candidate, 

per election. It does not address the issue of accepting cash contributions. Moreover, the current statutory language does not plainly prohibit cash contributions in excess of $100 to political committees other 

than authorized committees of a candidate. 

Explanation: Currently this provision focuses only on 

persons making the cash contributions. However, 

these cases generally come to light when a committee has accepted these funds. Yet the Commission has no recourse with respect to the committee in 

such cases. This can be a problem, particularly 

where primary matching funds are received on the 

basis of such contributions. 

While the Commission, in its regulations at 11 

CFR 11 0.4(c)(2), has included a provision requiring a 

committee receiving such a cash contribution to 

promptly return the excess over $100, the statute 

does not explicitly make acceptance of these cash 

contributions a violation. The other sections of the 

Act dealing with prohibited contributions (i.e., Sections 441 b on corporate and labor union contributions, 441 c on contributions by government contractors, 441 e on contributions by foreign nationals, and 

441 f on contributions in the name of another) all prohibit both the making and accepting of such contributions. 

Secondly, the statutory text seems to suggest that 

the prohibition contained in §441 g applies only to 

those contributions given to candidate committees. 

This language is at apparent odds with the 

Commission's understanding of the Congressional 

purpose to prohibit any cash contributions which 

exceed $100 in federal elections. 

Independent Expenditures by Principal 

Campaign Committees 

Section: 2 U.S.C. §432(e)(3) 

Recommendation: Congress should consider amending the definition of principal campaign committee to 

clarify whether these committees may make independent expenditures on behalf of other principal campaign committees. 

Explanation: A principal campaign committee is defined as an authorized committee which has not supported more than one federal candidate. It is not 

clear, however, whether the term "support" is intended to include both contributions and independent 

expenditures or whether it refers to contributions 

alone. The same section states that the term "support" does not include a contribution by any authorized committee to another authorized committee of 

$1,000 or less (2 U.S.C. §432(e)(3)(B)), but it is silent 

on the question of independent expenditures. The 

current language does not clearly indicate whether 

authorized committees can make independent expenditures on behalf of other committees, or whether 

Congress intended to preclude authorized committees from making independent expenditures. 

Certification of Voting Age Population Figures and 

Cost-of-Living Adjustment 

Section: 2 U.S.C. §§441 a(c) and (e) 

Recommendation: Congress should consider removing the requirement that the Secretary of Commerce 

certify to the Commission the voting age population of 

each Congressional district. At the same time, Congress should establish a deadline of February 15 for 

supplying the Commission with the remaining information concerning the voting age population for the nation as a whole and for each state. In addition, the 

same deadline should apply to the Secretary of Labor, 

who is required under the Act to provide the Commission with figures on the annual adjustment to the costof-living index. 

Explanation: In order for the Commission to compute 

the coordinated party expenditure limits and the stateby-state expenditure limits for Presidential candidates, 

the Secretary of Commerce certifies the voting age 

population of the United States and of each state. 2 

U.S.C. §441a(e). The certification for each Congressional district, also required under this provision, is 

not needed. 

In addition, under 2 U.S.C. §441 a(c), the Secretary 

of Labor is required to certify the annual adjustment in 
68 

the cost-of-living index. In both instances, the timely 

receipt of these figures would enable the Commission to inform political committees of their spending 

limits early in the campaign cycle. Under present 

circumstances, where no deadline exists, the Commission has sometimes been unable to release the 

spending limit figures before June. 

Compliance 

Persons Who Can Be Named As 

Respondents (1993) 

Section: 2 U.S.C. §§434(a)(1), 441 a(f), 441 band 

441f 

Recommendation: Congress should consider amending the Enforcement provisions of the Act to include a 

section that makes it a violation for anyone to actively 

assist another party in violating the Act. 

Explanation: Many sections of the Act specifically list 

the parties that can be found in violation of those 

sections. See, e.g., 2 U.S.C. §§434(a)(1 ), 441 a(f), 

441 b, 441 f. Oftentimes, however, parties other than 

those listed are actively involved in committing the 

violations. For example, section 441 b makes it illegal 

for an officer or director of a corporation, national 

bank or labor union to consent to the making of a 

contribution prohibited under that section. The Commission has seen many instances where these types 

of organizations have made prohibited contributions 

which were consented to by individuals who have the 

authority to approve the making of the contributions, 

even though those individuals did not hold the titles 

listed in the statute. . · 

This issue has also been addressed on a limited 

basis in the context of 2 U.S.C. §441f. That section 

prohibits anyone from making or knowingly accepting 

a contribution made in the name of another, or from 

knowingly allowing his/her name to be used to effect 

such a contribution. In many situations involving this 

section, there are additional parties, not specified in 

the statute, who are actively involved in carrying out 

the violation. Without an "assisting" standard, those 

active participants cannot be found to have violated 

that section. The court has recognized such a standard with regard to section 441 f, FEC v. Rodriguez, 

No. 86-687 Civ-T-10(8) (M.D. Fla. May 5, 1987)(unpublished order denying motion for summary judgment), and the Commission has reflected that decision in its regulations at 11 CFR 11 0.4. 

Although these actions have provided a basis for 

pursuing additional violators in a limited context, the 

preferable approach would be to codify the explicit 

statutory authority to pursue those who actively assist 

in carrying out all types of violations. 

Enhancement of Criminal Provisions (1993) 

Section: 2 U.S.C. §§437g(a)(5)(C) and 437g(d) 

Recommendation: The Commission should have the 

ability to refer appropriate matters to the Justice Department for criminal prosecution at any stage of a 

Commission proceeding. 

Explanation: The Commission has noted an upsurge 

of section 44 H contribution reimbursement schemes, 

that may merit heavy criminal sanction. Although 

there is no prohibition preventing the Department of 

Justice from initiating criminal FECA prosecutions on 

its own, the vehicle for the Commission to bring such 

matters to the Department's attention is found at 

section 437g(a)(5)(C), which provides for referral only 

after the Commission has found probable cause to 

believe that a criminal violation of the Act has taken 

place.5 Thus, even if it is apparent at an early stage 

that a case merits criminal referral, the Commission 

must pursue the matter to the probable cause stage 

before referring it to the Department for criminal prosecution. To conserve the Commission's resources 

and to allow the Commission to bring potentially ' 

criminal FECA violations to the Department's atten5The Commission has the general authority to report 

apparent violations to the appropriate law enforcement 

authority (see 2 U.S.C. §437d(a)(9)), but read together with 

section 437g, section 437d(a)(9) has been interpreted by 

the Commission to refer to violations of law unrelated to the 

Commission's FECA jurisdiction. 
69 

tion at the earliest possible time, the Commission 

recommends that consideration be given to explicitly 

empowering the Commission to refer apparent criminal FECA violations to the Department at any stage 

in the enforcement process. 

Audits for Cause (1993) 

Section: 2 U.S.C. §438(b) 

Recommendation: Congress should expand the time 

frame, from 6 months to 12 months after the election, 

during which the Commission can initiate an audit for 

cause. 

Explanation: Under current law, the Commission 

must initiate audits for cause. within 6 months after 

the election. Because year-end disclosure does not 

take place until almost 2 months after the election, 

and because additional time is needed to computerize campaign finance information and review reports, 

there is little time to identify potential audits and complete the referral process within that 6-month window. 

Random Audits (revised 1993) 

Section: 2 U.S.C. §438(b) 

Recommendation: Congress should consider legislation that would require the Commission to randomly 

audit political committees in an effort to promote voluntary compliance with the election law and ensure 

public confidence in the election process. 

Explanation: In 1979, Congress amended the FECA 

to eliminate the Commission's explicit authority to 

conduct random audits. The Commission is concerned that this change has weakened its ability to 

deter abuse of the election law. Random audits can 

be an effective tool for promoting voluntary compliance with the Act and, at the same time, reassuring 

the public that committees are complying with the law. 

Random audits performed by IRS offer a good model. 

As a result of random tax audits, most taxpayers try to 

file accurate returns on time. Tax audits have also 

helped create the public perception that tax laws are 

enforced. 

There are many ways to select committees for a 

random audit. One way would be to randomly select 

committees from a pool of all types of political committees identified by certain threshold criteria such as the 

amount of campaign receipts and, in the case of candidate committees, the percentage of votes won. With 

this approach, audits might be conducted in many 

states throughout the country. 

Another approach would be to randomly select 

several Congressional districts and audit all political 

committees in those districts (with the exception of 

certain candidates whose popular vote fell below a 

certain threshold) for a given election cycle. This system might result in concentrating audits in fewer geographical areas. 

Such audits should be subject to strict confidentiality rules. Only when the audits are completed should 

they be published and publicized. Committees with no 

problems should be commended. 

Regardless of how random selections were made, 

it would be essential to include all types of political 

committees-PACs, party committees and candidate 

committees-and to ensure an impartial, evenhanded 

selection process. 

Modifying Standard of "Reason to Believe" 

Finding (revised 1993) 

Section: 2 U.S.C. §437g 

Recommendation: Congress should modify the language pertaining to "reason to believe," contained at 2 

U.S.C. §437g, so as to allow the Commission to open 

an investigation with a sworn complaint, or after obtaining evidence in the normal course of its supervisory responsibilities. Essentially, this would change 

the "reason to believe" standard to "reason to open an 

investigation." 

Explanation: Under the present statute, the Commission is required to make a finding that there is "reason 

to believe a violation has occurred" before it may investigate. Only then may the Commission request 

specific information from a respondent to determine 

whether, in fact, a violation has occurred. The statutory phrase "reason to believe" is misleading and 

does a disservice to both the Commission and the 
70 

respondent. It implies that the Commission has 

evaluated the evidence and concluded that the respondent has violated the Act. In fact, however, a 

"reason to believe" finding simply means that the 

Commission believes a violation may have occurred 

if the facts as described in the complaint are true. An 

investigation permits the Commission to evaluate the 

validity of the facts as alleged. 

It would therefore be helpful to substitute words 

that sound less accusatory and that more accurately 

reflect what, in fact, the Commission is doing at this 

early phase of enforcement. 

In order to avoid perpetuating the erroneous conclusion that the Commission believes a respondent 

has violated the law every time it finds "reason to 

believe," the statute should be amended. 

Expedited Enforcement Procedures and 

Injunctive Authority (revised 1993) 

Section: 2 U.S.C. §437g 

Recommendation: Congress should consider 

whether the FECA should provide for expedited enforcement of complaints filed shortly before an election, permit injunctive relief in certain cases, and allow the Commission to adopt expedited procedures 

in such instances.6 

Explanation: The statute now requires that before the 

Commission proceeds in a compliance matter it must 

wait 15 days after notifying any potential respondent 

of alleged violations in order to allow that party time 

to file a response. Furthermore, the Act mandates 

extended time periods for conciliation and response 

to recommendations for probable cause. Under ordinary circumstances such provisions are advisable, 

but they are detrimental to the political process when 

complaints are filed immediately before an election. 

In an effort to avert intentional violations that are 

committed with the knowledge that sanctions cannot 

be enforced prior to the election and to quickly resolve matters for which Commission action is not 

warranted, Congress should consider granting the 

Commission some discretion to deal with such situations on a timely basis. 

Even when the evidence of a violation has been 

clear and the potential impact on a campaign has 

been substantial, without the authority to initiate a 

civil suit for injunctive relief, the Commission has 

been unable to act swiftly and effectively in order to 

prevent a violation. The Commission has felt constrained from seeking immediate judicial action by 

the requirement of the statute that conciliation be 

attempted before court action is initiated, and the 

courts have indicated that the Commission has little if 

6Commissioner Elliott filed the following dissent: 

The Act presently enables the Commission to seek 

injunctive relief after the administrative process has been 

completed and this is more than sufficient. (See 2 U.S.C. 

§437g{a){6){A).) 

I am unaware of any complaint filed with the Commission which, in my opinion, would meet the four standards 

set forth in the legislative recommendation. Assuming a 

case was submitted which met these standards, I believe it 

would be inappropriate for the Commission to seek injunctive relief prior to a probable cause finding. 

First, the very ability of the Commission to seek an 

injunction, especially during the "heat of the campaign," 

opens the door to allegations of an arbitrary and politically 

motivated enforcement action by the Commission. The 

Commission's decision to seek an injunction in one case 

while refusing to do so in another could easily be seen by 

candidates and respondents as politicizing the enforcement 

process. 

Second, the Commission might easily be flooded with 

requests for injunctive relief for issues such as failure to file 

an October quarterly or a 12-day pre-general report. Although the Commission would have the discretion to deny 

all these requests for injunctive relief, in making that decision the Commission would bear the administrative burden 

of an immediate review of the factual issues. 

Third, although the courts would be the final arbiter as to 

whether or not to grant an injunction, the mere decision by 

the Commission to seek an injunction during the final 

weeks of a campaign would cause a diversion of time and 

money and adverse publicity for a candidate during the 

most important period of the campaign. 

For these reasons, I disagree with the recommendation 

to expand the power of the Commission to seek injunctive 

relief except as presently provided for in the Act. 
71 

any discretion to deviate from the administrative procedures of the statute. In re Carter-Mondale Reelection Committee, Inc., 642 F.2d 538 (D.C. Cir. 1980); 

Common Cause v. Schmitt, 512 F. Supp. 489 

(D.D.C. 1980), aff'd by an equally divided court, 455 

U.S. 129 (1982); Durkin for U.S. Senate v. FEC, 2 

Fed. Election Camp. Fin. Guide (CCH) 1f 9147 

(D.N.H. 1980). If Congress allows for expedited handling of compliance matters, it should authorize the 

Commission to implement changes in such circumstances to expedite its enforcement procedures. As 

part of this effort, Congress should consider whether 

the Commission should be empowered to promptly 

initiate a civil suit for injunctive relief in order to preserve the status quo when there is clear and convincing evidence that a substantial violation of the Act is 

about to occur. Congress should consider whether 

the Commission should be authorized to initiate such 

civil action in a United States district court, under 

expressly stated criteria, without awaiting expiration 

of the 15-day period for responding to a complaint or 

the other administrative steps enumerated in the 

statute. The person against whom the Commission 

brings the action would enjoy the procedural protections afforded by the courts. 

The Commission suggests the following legislative 

standards to govern whether it may seek prompt 

injunctive relief: 

1. The complaint sets forth facts indicating that a 

potential violation of the Act is occurring or will occur; 

2. Failure of the Commission to act expeditiously 

will result in irreparable harm to a party affected by 

the potential violation; 

3. Expeditious action will not result in undue harm 

or prejudice to the interests of other persons; and 

4. The public interest would be served by expeditious handling of the matter. 

Protection for Those Who File Complaints 

or Give Testimony 

Section: 2 U.S.C. §437g 

Recommendation: The Act should be amended to 

make it unlawful to improperly discriminate against 

employees or union members solely for filing charges 

or giving testimony under the statute. 

Explanation: The Act requires that the identity of anyone filing a complaint with the Commission be provided to the respondent. In many cases, this may put 

complainants at risk of reprisals from the respondent, 

particularly if an employee or union member files a 

complaint against his or her employer or union. This 

risk may well deter many people from filing complaints, particularly under section 441 b. See, e.g., 

NLRB v. Robbins Tire & Rubber Company, 437 U.S. 

214, 240 (1978); Brennan v. Engineered Products, 

Inc., 506 F.2d 299, 302 (8th Cir. 1974); Texas Industries, Inc. v. NLRB, 336 F.2d 128, 134 (5th Cir. 1964). 

In other statutes relating to the employment relationship, Congress has made it unlawful to discriminate 

against employees for filing charges or giving testimony under the statute. See, e.g., 29 U.S.C. 

§158(a)(4) (National Labor Relations Act); 29 U.S.C. 

§215(3) (Fair Labor Standards Act); 42 U.S.C. 

§2000e-3(a) (Equal Employment Opportunity Act). 

Congress should consider including a similar provision in the FECA. 

Litigation 

Ensuring Independent Authority of FEC in All 

Litigation (revised 1993) 

Section: 2 U.S.C. §§437c(f)(4) and 437g 

Recommendation: Congress has granted the Commission authority to conduct its own litigation independent of the Department of Justice. This independence is an important component of the statutory 

structure designed to ensure nonpartisan administration and enforcement of the campaign financing statutes. Two clarifications would help solidify that structure: 

1. Congress should amend the Act to specify that 

local counsel rules (requiring district court litigants to 

be represented by counsel located within the district) 

cannot be applied to the Commission. 

2. Congress should give the Commission explicit 

authorization to appear as an amicus curiae in cases 

that affect the administration of the Act, but do not 

arise under it. 
72 

Explanation: With regard to the first of these rec?~­

mendations, most district courts have rules requmng 

that all litigants be represented by counsel located 

within the district. The Commission, which conducts 

all of its litigation nationwide from its offices in Washington, D.C., is unable to comply with those rules. 

without compromising its independence by engagmg 

the local United States Attorney to assist in representing it in courts outside of Washington, D.C. Although most judges have been willing to waive applying these local counsel rules to the.c~mmissi?n, 

some have insisted that the Comm1ss1on obtam local 

representation. An amendment to the statute specifying that such local counsel rules cannot be applied to 

the Commission would eliminate this problem. 

Concerning the second recommendation, the 

FECA explicitly authorizes the Commission to "ap- · 

pear in and defend against any action instituted under this Act," 2 U.S.C. §437c(f)(4), and to "initiate · 

...defend...or appeal any civil action...to enforce the 

provisions of this Act and chapter 95 and ch~p!er 96 

of title 26," 2 U.S.C. §437d(a)(6). These prov1s1ons 

do not explicitly cover instances in which the Commission appears as an amicus curiae in cases that 

affect the administration of the Act, but do not arise 

under it. A clarification of the Commission's role as 

an amicus curiae would remove any questions con~ 

earning the Commission's authority to represent itself 

in this capacity. 

Disclaimers 

Fundraising Projects Operated by Unauthorized 

Committees (revised 1993) 

Section: 2 U.S.C §432(e) 

Recommendation: When unauthorized committees 

(those not authorized by candidates) raise funds 

through special fundraising projects that name specific candidates, contributors are sometimes confused or misled, believing that they are contributing to 

a candidate's authorized committee when, in fact, 

they are giving to the nonauthorized committee that 

sponsors the project. To preclude this situation, Congress may wish to amend the statute. Several options are available. (1) Congress could specifically 

require that contributions solicited by an unauthorized 

committee (i.e., a committee that has not been authorized by a candidate as his/her campaign committee) 

be made payable to the registered name of the committee and that unauthorized committees be prohibited from accepting checks payable to any other 

name. (2) Congress could prohibit an unauthorized 

committee from using the name of a candidate in the 

name of any "project" or in the name of any other 

fundraising activity conducted by the committee. 

(3) Congress might combine these two solutions. 

Explanation: Unauthorized committees are not permitted to use the name of a federal candidate in their 

name. 2 U.S.C. §432(e)(4). Unauthorized committees however, frequently feature the name of candidate~ in their fundraising projects, such as "Citizens 

for Smith." Contributors may be confused, believing 

that they are contributing to the candidate's authorized committee when they make checks payable to 

these project names. This confusion sometimes 

leads to requests for refunds, allegations of coordination and inadequate disclaimers, and inability to 

monitor contributor limits. Contributor awareness 

might be enhanced if Congress were to modify t~e 

statute, for example, by requiring that all checks Intended for an unauthorized committee be made payable to the registered name of the unauthorized committee and prohibiting unauthorized committees from 

accepting checks payable to these project names. 

Alternatively, Congress might consider amending the 

statute to prohibit an unauthorized committee from 

using the name of any candidate in the name of a 

"project" or other fundraising acti~ity. Or, Congres~ 

might combine these two alternatives. The Commission recently promulgated new rules that prohibit an 

unauthorized committee from using a candidate's 

name in the name of a special project or other committee activity. However, changes to the law would 

give the Commission broader authority to address 

this ongoing problem. 
73 

Disclaimer Notices (revised 1993) 

Section: 2 U.S.C. §441 d 

Recommendation: Congress should revise the FECA 

to require registered political committees to display 

the appropriate disclaimer notice (when practicable) 

in any communication issued to the general public, 

regardless of its content or how it isdistributed. Congress should also revise the Federal Communications Act to make it consistent with the FECA's requirement that disclaimer notices state who paid for 

the communication. 

Explanation: Under 2 U.S.C. §441d, a disclaimer 

notice is only required when "expenditures" are made 

for two types of communications made through "public political advertising": (1) communications that solicit contributions and (2) communications that "ex:.. 

pressly advocate" the election or defeat of a clearly 

identified candidate. The Commission has encountered a number of problems with respect to this requirement. 

First, the statutory language requiring the disclaimer notice refers specifically to "expenditures," 

suggesting that the requirement does not apply to 

disbursements that are exempt from the definition of 

"expenditure" such as "exempt activities" conducted 

by local and state party committees under, for example, 2 U.S.C. §431 (9)(B)(viii). This proposal would 

make clear that all types of communications to the 

public would carry a disclaimer. 

Second, the Commission has encountered difficulties in interpreting "public political advertising," particularly when volunteers have been involved with the 

preparation or distribution of the communication. 

Third, the Commission has devoted considerable 

time to determining whether a given communication 

in fact contains "express advocacy" or "solicitation" 

language. The recommendation here would erase 

this need. 

Most of these problems would be eliminated if the 

language of 2 U.S.C. §441 d were simplified to require a registered committee to display a disclaimer 

notice whenever it communicated to the public, regardless of the purpose of the communication and 

the means of preparing and distributing it. The Commission would no longer have to examine the content 

of communications or the manner in which they were 

disseminated to determine whether a disclaimer was 

required. 

This proposal is not intended to eliminate exemptions for communications appearing in places where 

it is inconvenient or impracticable to display a disclaimer. 

Finally, Congress should change the sponsorship 

identification requirements found in the Federal Communications Act to make them consistent with the 

disclaimer notice requirements found in the FECA. 

Under the Communications Act, federal political 

broadcasts must contain an announcement that they 

were furnished to the licensee, and by whom. See 

FCC and FEC Joint Public Notice, FCC.78-419(June 

19, 1978). In contrast, FECA disclaimer notices focus 

on who authorized and paid for the communication. 

The Communications Act should be revised to ensure that the additional information required by the 

FECA is provided without confusion to licensees and 

political advertisers. In addition, the FECA should be 

amended to require that the disclaimer appear at the 

end of all broadcast communications. 

Fraudulent Solicitation of Funds 

Section: 2 U.S.C. §441 h 

Recommendation: The current §441 h prohibits 

fraudulent misrepresentation such as speaking, writing or acting on behalf of a candidate or committee on 

a matter which is damaging to such candidate or committee. It does not, however, prohibit persons from 

fraudulently soliciting contributions. A provision should 

be added to this section prohibiting persons from 

fraudulently misrepresenting themselves as representatives of candidates or political parties for the purpose of soliciting contributions which are not forwarded to or used by or on behalf of the candidate or 

party. 

Explanation: The Commission has received a number 

of complaints that substantial amounts of money were 

raised fraudulently by persons or committees purporting to act on behalf of candidates. Candidates have 
74 

complained that contributions which people believed 

were going for the benefit of the candidate were diverted for other purposes. Both the candidates and 

the contributors were harmed by such diversion. The 

candidates received less money because people desirous of contributing believed they had already done 

so, and the contributors' funds had been misused in a 

manner in which they did not intend. The Commission 

has been unable to take any action on these matters 

because the statute gives it no authority in this area. 

Public Disclosure 

Computer Filing of Reports (1993) 

Section: 2 U.S.C. §432(g) 

Recommendation: Congress may want to consider 

developing guidelines for when committees should 

file reports via computer technology. For example, 

Congress could require that committees maintaining 

their records on computer make them available to the 

Commission on suitable computer disk, tape or other 

appropriate electronic form. 

Explanation: While some small committees do not 

maintain computerized reporting due to the expense, 

the vast majority facilitate their reporting obligations 

with computers. Direct transfer of these reports to the 

Commission would provide a financial savings to the 

Commission because less staff time would be 

needed to input the campaign finance information. At 

the same time, it would ensure full disclosure. 

Congress should consider, however, that the Clerk 

of the House and the Secretary of the Senate are the 

points of entry for House and Senate reports. Currently, none of the entry points are capable of accepting electronic filings. Should this recommendation be 

adopted, the Clerk of the House and the Secretary of 

the Senate, in addition to the Commission, would be 

required to purchase this technology. Alternatively, 

the Commission would have to be made the point of 

entry for such filers. 

Commission as Sole Point of Entry for Disclosure 

Documents (revised 1993) 

Section: 2 U.S.C. §432(g) 

Recommendation: The Commission recommends that 

it be the sole point of entry for all disclosure documents filed by federal candidates and political committees. This would affect the House and Senate candidate committees only. Under current law, those committees alone file their reports with the Clerk of the 

House and the Secretary of the Senate, respectively, 

who then forward microfilmed copies to the FEC. 

Explanation: The Commission has offered this recommendation for many years. The experience of handling the Year-End Report (filed in January 1992) 

provides an excellent illustration of why a single point 

of entry is desirable. Some 234 reports filed by House 

and Senate candidate committees were mistakenly 

filed with the Federal Election Commission instead of 

with the Clerk of the House and the Secretary of the 

Senate. Consequently, every day, for two weeks 

around the filing deadline, the FEC shipped back to 

the Clerk and the Secretary packages filled with 

House and Senate reports that were filed with the 

FEC in error. The result? Disclosure to the public was 

delayed, and government resources were wasted. 

Moreover, if the FEC received the original report, it 

could use it directly for data entry, as it now uses the 

reports filed by PACs, party committees and Presidential committees. 

Should Congress decide to codify the previous 

recommendation on computerized reports, the Commission should become the sole point of entry to process these reports, avoiding the need for all three 

offices to obtain the technology necessary to accept 

electronic filings. 

We also reiterate here the statement we have 

made in previous years because it remains valid. A 

single point of entry for all disclosure documents filed 

by political committees would eliminate any confusion 

about where candidates and committees are to file 

their reports. It would assist committee treasurers by 

having one office where they would file reports, ad-
75 

dress correspondence and ask questions. At present, 

conflicts may arise when more than one office sends 

out materials, makes requests for additional information and answers questions relating to the interpretation of the law. A single point of entry would also reduce the costs to the federal government of maintaining three different offices, especially in the areas of 

personnel, equipment and data processing. 

The Commission has authority to prepare and publish lists of nonfilers. It is extremely difficult to ascertain who has and who has not filed when reports may 

have been filed at or are in transit between two different offices. Separate points of entry also make it difficult for the Commission to track responses to compliance notices. Many responses and/or amendments 

may not be received by the Commission in a timely 

manner, even though they were sent on time by the 

candidate or committee. The delay in transmittal between two offices sometimes leads the Commission to 

believe that candidates and committees are not in 

compliance. A single point of entry would eliminate 

this confusion. 

Finally, the Commission notes that the report of the 

Institute of Politics of the John F. Kennedy School of 

Government at Harvard University, An Analysis of the 

Impact of the Federal Election Campaign Act, 1972-

78, prepared for the House Administration Committee, 

recommended that all reports be filed directly with the 

Commission (Committee Print, 96th Cong., 1st Sess., 

at 122 (1979)). 

Public Disclosure at State Level 

Section: 2 U.S.C. §439 

Recommendation: Congress should consider relieving 

both political committees (other than candidate committees) and state election offices of the burdens inherent in the current requirement that political committees file copies of their reports with the Secretaries of 

State. One way this could be accomplished is by providing a system whereby the Secretary of State (or 

equivalent state officer) would tie into the Federal 

Election Commission's computerized disclosure data 

base. 

Explanation: At the present time, multicandidate political committees are required to file copies of their reports (or portions thereof) with the Secretary of State 

in each of the states in which they support a candidate. State election offices carry a burden for storing 

and maintaining files of these reports. At the same 

time, political committees are burdened with the responsibility of making multiple copies of their reports 

and mailing them to the Secretaries of State. 

With advances in computer technology, it is now 

possible to facilitate disclosure at the state level without requiring duplicate filing. Instead, state election 

offices would tie into the FEC's computer data base. 

The local press and public could access reports of 

local political committees through a computer hookup 

housed in their state election offices. All parties would 

benefit: political committees would no longer have to 

file duplicate reports with state offices; state offices 

would no longer have to provide storage and maintain 

files; and the FEC could maximize the cost effectiveness of its existing data base and computer system. 

Such a system has already been tested in a pilot 

program and proven inexpensive and effective. Initially, we would propose that candidate committees 

and in-state party committees continue to file their 

reports both in Washington, D.C., and in their home 

states, in response to the high local demand for this 

information. Later, perhaps with improvements in 

information technology, the computerized system 

could embrace these committees as well. 

State Filing for Presidential Candidate 

Committees 

Section: 2 U.S.C. §439 

Recommendation: Congress should consider Clarifying the state filing provisions for Presidential candidate committees to specify which particular parts of 

the reports filed by such committees with the FEC 

should also be filed with states in which the committees make expenditures. Consideration should be 

given to both the benefits and the costs of state disclosure. 
76 

Explanation: Both states and committees have inquired about the specific requirements for Presidential candidate committees when filing reports with the 

states. The statute requires that a copy of the FEC 

reports shall be filed with all states in which a Presidential candidate committee makes expenditures. 

The question has arisen as to whether the full report 

should be filed with the state, or only those portions 

that disclose financial transactions in the state where 

the report is filed. 

The Commission has considered two alternative 

solutions. The first alternative is to have Presidential 

candidate committees file, with each state in which 

they have made expenditures, a copy of the entire 

report filed with the FEC. This alternative enables 

local citizens to examine complete reports filed by 

candidates campaigning in a state. It also avoids 

reporting dilemmas for candidates whose expenditures in one state might influence a primary election 

in another. 

The second alternative is to require that reports 

filed with the states contain all summary pages and 

only those receipts and disbursements schedules 

that show transactions pertaining to the state in 

which a report is filed. This alternative would reduce 

filing and storage burdens on Presidential candidate 

committees and states. It would also make state filing 

requirements for Presidential candidate committees 

similar to those for unauthorized political committees. 

Under this approach, any person still interested in 

obtaining copies of a full report could do so by contacting the Public Disclosure Division of the FEC. 

Agency Funding 

Budget Reimbursement Fund (revised 1993) 

Section: 2 U.S.C. §438 

Recommendation: The Commission recommends 

that Congress establish a reimbursement account for 

the Commission so that expenses incurred in preparing copies of documents, publications and computer 

tapes sold to the public are recovered by the Commission. Similarly, costs awarded to the Commission 

in litigation (e.g., printing, but not civil penalties) and 

payments for Commission expenses incurred in responding to Freedom of Information Act requests 

should be payable to the reimbursement fund. The 

Commission should be able to use such reimbursements to cover its costs for these services, without 

fiscal year limitation, and without a reduction in the 

Commission's appropriation. 

Explanation: At the present time, copies of reports, 

microfilm, and computer tapes are sold to the public 

at the Commission's cost. However, instead of the 

funds being used to reimburse the Commission for its 

expenses in producing the materials, they are credited to the U.S. Treasury. The effect on the Commission of selling materials is thus the same as if the 

materials had been given away. The Commission 

absorbs the entire cost. In FY 1992, in return for services and materials it offered the public, the FEC collected and transferred $143,306 in miscellaneous 

receipts to the Treasury. During the first two months 

of FY 1993, $31,177 was transferred to the Treasury. 

Establishment of a reimbursement fund, into which 

fees for such materials would be paid, would permit 

this money to be applied to further dissemination of 

information. Note, however, that a reimbursement 

fund would not be applied to the distribution of FEC 

informational materials to candidates and registered 

political committees. They would continue to receive 

free publications that help them comply with the federal election laws. 

There should be no restriction on the use of reimbursed funds in a particular year to avoid the possibility of having funds lapse. 

Statutory Gift Acceptance Authority 

Section: 2 U.S.C. §437c 

Recommendation: Congress should give the Commission authority to accept funds and services from private sources to enable the Commission to provide 

guidance and conduct research on election administration and campaign finance issues. 

Explanation: The Commission has been very restricted in the sources of private funds it may accept 
77 

to finance topical research, studies, and joint projects 

with other entities because it does not have statutory 

gift acceptance authority. In view of the Commission's 

expanding role in this area, Congress should consider amending the Act to provide the Commission 

with authority to accept gifts from private sources. 

Permitting the Commission to obtain funding from a 

broader range of private organizations would allow 

the Commission to have more control in structuring 

and conducting these activities and avoid the expenditure of government funds for these activities. If this 

proposal were adopted, however, the Commission 

would not accept funds from organizations that are 

regulated by or have financial relations with the Commission. 

Miscellaneous 

Draft Committees 

Section: 2 U.S.C. §§431 (8)(A)(i) and (9)(A)(i), 

441 a(a)(1) and 441 b(b) 

Recommendation: Congress should consider the 

following amendments to the Act in order to prevent a 

proliferation of "draft" committees and to reaffirm Congressional intent that draft committees are "political 

committees" subject to the Act's provisions. 

1. Bring Funds Raised and Spent for Undeclared 

but Clearly Identified Candidates Within the Act's 

Purview. Section 431 (8)(A)(i) should be amended to 

include in the definition of "contribution" funds contributed by persons "for the purpose of influencing a 

clearly identified individual to seek nomination for 

election or election to Federal office...." Section 

431 (9)(A)(i) should be similarly amended to include 

within the definition of "expenditure" funds expended 

by persons on behalf of such "a clearly identified individual." 

2. Restrict Corporate and Labor Organization Support for Undeclared but Clearly Identified Candidates. 

Section 441 b(b) should be revised to expressly state 

that corporations, labor organizations and national 

banks are prohibited from making contributions or 

expenditures "for the purpose of influencing a clearly 

identified individual to seek nomination for election or 

election..." to federal office. 

3. Limit Contributions to Draft Committees. The 

law should include explicit language stating that no 

person shall make contributions to any committee 

(including a draft committee) established to influence 

the nomination or election of a clearly identified individual for any federal office which, in the aggregate, 

exceed that person's contribution limit, per candidate; 

per election. 

Explanation: These proposed amendments were 

prompted by the decisions of the U.S. Court of Appeals for the District of Columbia Circuit in FEC v. 

Machinists Non-Partisan Political League and FEC v. 

Citizens for Democratic Alternatives in 1980 and the 

U.S. Court of Appeals for the Eleventh Circuit in FEC 

v. Florida for Kennedy Committee. The District of 

Columbia Circuit held that the Act, as amended in 

1979, regulated only the reporting requirements of 

draft committees. The Commission sought review of 

this decision by the Supreme Court, but the Court 

declined to hear the case. Similarly, the Eleventh 

Circuit found that "committees organized to 'draft' a 

person for federal office" are not "political committees" within the Commission's investigative authority. 

The Commission believes that the appeals court 

rulings create a serious imbalance in the election law 

and the political process because a nonauthorized 

group organized to support someone who has not yet 

become a candidate may operate completely outside 

the strictures of the Federal Election Campaign Act. . 

However, any group organized to support someone 

who has in fact become a candidate is subject to the 

Act's registration and reporting requirements and 

contribution limitations. Therefore, the potential exists 

for funneling large aggregations of money, both corporate and private, into the federal electoral process 

through unlimited contributions made to 

nonauthorized draft committees that support a person who has not yet become a candidate. These 

recommendations seek to avert that possibility. 
79 

Appendix 1 

Biographies of 

Commissioners and 

Officers 

Commissioners 

Joan D. Aikens, Chairman 

April30, 1995 

One of the original members of the Commission, 

Chairman Aikens was first appointed in 1975. Following the reconstitution of the FEC that resulted from the 

Supreme Court's Buckley v. Valeo decision, President 

Ford reappointed her to a five-year term. In 1981, 

President Reagan named Chairman Aikens to complete a term left open because of a resignation and, in 

1983, once again reappointed her to a full six-year 

term. Most recently, Chairman Aikens was reappointed 

by President Bush in 1989. She previously served as 

FEC Chairman in 1978 and 1986. 

Before her 1975 appointment, Chairman Aikens was 

an executive with Lew Hodges Communications, a 

public relations firm in Valley Forge, Pennsylvania. She 

was also a member of the Pennsylvania Republican 

State Committee, president of the Pennsylvania Council of Republican Women and on the board of directors 

of the National Federation of Republican Women. A 

native of Delaware County, Pennsylvania, Chairman 

Aikens has been active in a variety of volunteer organizations and is currently a member of the Commonwealth Board of the Medical College of Pennsylvania. 

She is also a member of the board of directors of 

Ursinus College, where she received her B.A. degree 

and an honorary Doctor of Law degree. 

Scott E. Thomas, Vice Chairman 

April 30, 1997 

Mr. Thomas was appointed to the Commission in 1986 

and reappointed in 1991. He was elected Vice Chairman for 1992 and Chairman for 1993, having earlier 

been Chairman in 1987. He previously served as executive assistant to former Commissioner Thomas E. 

Harris and succeeded him as Commissioner. Joining 

the FEC as a legal intern in 1975, Mr. Thomas eventually became an Assistant General Counsel for Enforcement. 

A Wyoming native, Mr. Thomas graduated from 

Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member of 

the District of Columbia bar. 

Lee Ann Elliott 

April 30, 1993 

President Reagan reappointed Mrs. Elliott to her second term as Commissioner in 1987. She served as 

chairman in 1984 and 1990. Before her first appointment in 1981, Commissioner Elliott was vice president 

of a political consulting firm in Washington, D.C., 

Bishop, Bryant & Associates, Inc. She spent several 

years as associate executive director of the American 

Medical Political Action Committee, having previously 

served as assistant director. Commissioner Elliott was 

also on the board of directors of the American Association of Political Consultants and on the board of the 

Chicago Area Public Affairs Group, of which she is a 

past president. She was also a member of the Public 

Affairs Committee of the U.S. Chamber of Commerce. 

In 1979, she received the Award for Excellence in 

Serving Corporate Public Affairs from the National 

Association of Manufacturers. 

A native of St. Louis, Commissioner Elliott graduated from the University of Illinois. She also completed Northwestern University's Medical Association 

Management Executive Program and is a Certified 

Association Executive. 

Danny L. McDonald 

April 30, 1993 

Now serving his second term as Commissioner, Mr. 

McDonald was first appointed to the Commission in 

1981 and was reappointed in 1987. Before his original 

appointment, he managed 1 0 regulatory divisions as 

the general administrator of the Oklahoma Corporation Commission. He had previously served as secretary of the Tulsa County Election Board and as chief 

clerk of the board. He was also a member of the Advisory Panel to the FEC's National Clearinghouse on 

Election Administration. 

A native of Sand Springs, Oklahoma, Mr. 

McDonald graduated from Oklahoma State University 

and attended the John F. Kennedy School of Government at Harvard University. He served as FEC Chairman in 1983 and 1989. 
80 

Trevor Potter 

April 30, 1997 

Mr. Potter was confirmed by the Senate as a Commissioner in November of 1991. He served as Vice 

Chairman of the Commission's Finance Committee 

and Chairman of its Regulations Task Force during 

1992. He was elected Commission Vice Chairman for 

1993. Before his appointment, Mr. Potter specialized 

in campaign and election law, as a partner, in a 

Washington, D.C. law firm. His previous experience 

in government includes serving as Assistant General 

Counsel at the Federal Communications Commission 

from 1984 to 1985, and as a Department of Justice 

attorney from 1982 to 1984. 

Mr. Potter is a graduate of Harvard College. He 

earned his J.D. degree at the University of Virginia 

School of Law, where he served as Editor-in-Chief of 

the Virginia Journal of International Law and was a 

member of the Order of the Coif. He is currently Vice 

Chairman of the American Bar Association Committee on Election Law, Administrative Law Section. 

Mr. Potter is a resident of Fauquier County, Virginia. 

John Warren McGarry 

April 30, 1995 

First appointed to the Commission in 1978, Commissioner McGarry was reappointed in 1983 and 1989. 

He served as FEC Chairman in 1991, 1985 and 

1981. Before his 1978 Commission appointment, 

Commissioner McGarry served as special counsel on 

elections to the House Administration Committee. He 

previously combined private law practice with service 

as chief counsel to the House Special Committee to 

Investigate Campaign Expenditures, a special committee established by Congress every election year 

through 1972. Before his work with Congress, Commissioner McGarry was the Massachusetts assistant 

attorney general. 

After graduating cum laude from Holy Cross College, Commissioner McGarry did graduate work at 

Boston University and earned a J.D. degree from 

Georgetown University Law School. 

Ex Officio Commissioners 

Donnald K. Anderson 

Mr. Anderson was appointed Clerk of the House of 

Representatives in 1987. Before his appointment, he 

was Majority Floor Manager under Speakers Carl 

Albert and Thomas P. O'Neill, Jr. A native of California, he began his career as a page in the 86th Congress. He was appointed assistant enrolling clerk and 

clerk in the Finance Office by Representative Hale 

Boggs. Speaker John W. McCormack later appointed 

him assistant manager of the Democratic Cloakroom. 

Douglas Patton, attorney and Special Deputy to the 

Clerk of the House, continues to represent Mr. Anderson at the Commission. 

Walter J. Stewart 

Mr. Stewart was appointed Secretary of the Senate in 

1987. He was previously employed by Sonat, Inc., as 

vice president of government affairs. Before that, he 

served as Secretary for the Minority of the U.S. Senate and as executive director of the Senate Steering 

Committee. Other Senate offices held by Mr. Stewart 

include: counsel to the Senate Appropriations Committee; director of legislative affairs for the Majority 

Whip, administrative assistant to the Majority Leader 

for Senate Operations and chief of staff for Senatorial 

and Presidential delegations traveling to China, Russia and the Middle East. A native of Georgia, Mr. 

Stewart graduated from George Washington University and received an LL.B. from American University. 

He is a member of the District of Columbia Bar. 

David G. Gartner, attorney and Special Deputy to 

the Secretary of the Senate, represented Mr. Stewart 

at the Commission in 1992.1 

10n January 5, 1993, Wyche Fowler was appointed 

Special Deputy to the Secretary of the Senate. 
81 

Statutory Officers 

John C. Surina, Staff Director 

Before joining the Commission in 1983, Mr. Surina 

was assistant managing director of the Interstate 

Commerce Commission, where he was detailed to 

the "Reform 88" program at the Office of Management and Budget. In that role, he worked on projects 

to reform administrative management within the federal government. He was also an expert-consultant to 

the Office of Control and Operations, EOP-Cost of 

Living Council-Pay Board and on the technical staff 

of the Computer Sciences Corporation. During his 

Army service, Mr. Surina was executive officer of the 

Special Security Office, where he supported senior 

U.S. delegates to NATO's civil headquarters in Brussels. Mr. Surina served as 1991 chairman of the 

Council on Government and Ethics Laws (GOGEL). 

A native of Alexandria, Virginia, Mr. Surina holds a 

degree in Foreign Service from Georgetown University. He also attended East Carolina University and 

American University. 

Lawrence M. Noble, General Counsel 

Mr. Noble became General Counsel in 1987, after 

serving as Acting General Counsel. He joined the 

Commission in 1977, becoming the Deputy General 

Counsel in 1983. He previously served as Assistant 

General Counsel for Litigation and as a litigation attorney. Before his FEC service, he was an attorney 

with the Aviation Consumers Action Project. 

A native of New York, Mr. Noble holds a degree in 

Political Science from Syracuse University and a J.D. 

degree from the National Law Center at George 

Washington University. He is a member of the bars 

for the U.S. Supreme Court, the U.S. Court of Appeals for the D.C. Circuit and the District of Columbia. He is also a member of the American and District 

of Columbia Bar Associations. 

Lynne McFarland, Inspector General 

Ms. McFarland became the FEC's first permanent 

Inspector General in February 1990. She came to the 

Commission in 1976, first as a reports analyst and 

then as a program analyst in the Office of Planning 

and Management. 

A Maryland native, Ms. McFarland holds a sociology degree from Frostburg State College and is a 

member of the Institute of Internal Auditors. 
83 

Appendix 2 

Chronology of Events, 1992 

January 

1- Chairman Joan D. Aikens and Vice Chairman 

Scott E. Thomas begin one-year terms as 

officers. 

3- In Press Conference, Chairman Aikens 

makes announcement about shortfall in Presidential Election Campaign Fund. 

- FEC introduces checkoff education ads and 

special checkoff 800-number. 

15- FEC's repeal of regulations on honoraria (reflecting Congressional repeal of 2 U.S.C. 

§441 i) becomes effective. 

20- FEC releases 1991 year-end PAC statistics. 

27- FEC declares Patrick J. Buchanan eligible to 

receive matching funds. 

- FEC holds nonconnected committee conference in Washington, DC. 

- FEC publishes Legal History of the Presidential Election Campaign Fund Act. 

31-1991 year-end report due. 

- FEC approves 1992 edition of the Financial 

Control and Compliance Manual for Presidential Primary Candidates Receiving Public 

Financing. 

February 

5- FEC announces changes to "Computerized 

Magnetic Media Requirements for Title 26 

Candidates/Committees Receiving Federal 

Funding." 

6- FEC makes final repayment determination on 

Dole for President Committee, Inc. (1988 

primary committee). 

12- FEC announces 1992 Presidential spending 

limits. 

24- FEC releases final audit report on George 

Bush for President, Inc. (1988 primary committee). 

26- Vice Chairman Thomas testifies on FEC's FY 

1993 budget request before the House Subcommittee on Elections, Committee on House 

Administration. 

27- FEC makes final determination denying 

matching funds to Lyndon H. LaRouche, Jr., 

for his 1992 Presidential campaign. 

March 

1- FEC publishes 1992 coordinated party expenditure limits. 

- FEC announces computer access to advisory 

opinions and court cases through Direct Access Program. 

- FEC publishes Combined Federal/State Disclosure Directory. 

23-24- FEC conducts Regional Conference in Los 

Angeles. 

26- FEC approves final audit report on Americans 

for Robertson, Inc. (1988 primary committee). 

April 

1- FEC announces new procedures for auditing 

1992 Presidential elections. 

2- FEC's new regulations on bank loans and 

lines of credit become effective. 

3- In a press conference, FEC Chairman Joan 

Aikens predicts 1996 shortfall in Presidential 

Election Campaign Fund unless Congress 

acts. 

- Chairman Aikens discusses tax checkoff on 

Larry King's radio program. 

- FEC sends legislative recommendations to 

Congress. 

7- In Freedom Republicans v. FEC, U.S. District 

Court for DC remands case to the FEC to 

begin rulemaking proceedings. 

9- FEC approves final audit report on Jesse 

Jackson for President '88 Committee. 

15- Quarterly report due. 

24- FEC's National Clearinghouse on Election 

Administration publishes Campaign Finance 

Law '92, a compilation of state campaign 

finance laws. 

30- FEC 2-day Regional Conference begins in 

Orlando, FL. 

May 

1- National Clearinghouse on Election Administration publishes Essays in Elections 1: The 

Electoral College. 

10- FEC releases campaign finance statistics on 

1992 candidates. 
84 

14- FEC declares Larry Agran eligible for matching funds. 

15- FEC publishes completely revised edition of 

Campaign Guide for Corporations and Labor 

Organizations. 

17- FEC releases campaign finance statistics on 

national party committees. 

21- FEC approves final repayment determination 

for Gephardt for President Committee, Inc. 

(1988 primary). 

21-22- FEC holds Corporate/Labor Conference in 

Washington, DC. 

June 

1-FEC publishes Annual Report 1991. 

7- FEC issues press release detailing PAC contributions to Congressional candidates 

through March 31, 1992. 

12-In FEC v. National Republican Senatorial 

Committee, U.S. Court of Appeals for the 

District of Columbia reverses the district 

court's judgment. 

18- Revised allocation regulations become effective. 

25- FEC denies petition to withhold public funding 

from Clinton campaign. 

July 

1o- U.S. Court of Appeals for the District of Columbia, sitting en bane, upholds constitutionality of 2 U.S.C. §438(a)(4)("sale or use" provision) in FEC v. International Funding Institute. 

- FEC releases "PACRONYMS" (guide to 

names of federal PACs). 

13-16- Democratic National Convention meets in 

New York, NY. 

15- Quarterly report due. 

17- FEC certifies $55.24 million payment of public 

funds to the Clinton/Gore campaign. 

23- FEC releases mid-year 1992 PAC count. 

29- FEC publishes Notice of Proposed Rulemaking on draft regulations governing communications by corporations and labor organizations (MCFL rulemaking). 

31- FEC issues final repayment determination for 

Jack Kemp for President Committee, Inc. 

(1988 primary). 

August 

1- Chairman Aikens sends letters to Presidential campaigns emphasizing the need to obtain and disclose contributor information. 

- Chairman Aikens writes the recipients of 

public funding to explain two new policy decisions: (1) Committees will be required to pay 

excessive and prohibited contributions to the 

U.S. Treasury, and (2) the FEC will expand 

its use of statistical sampling in FEC audits. 

5- FEC releases statistical summaries of political party activity, including disclosure of nonfederal accounts of national party committees. 

__;, In open hearing, Sen. Paul Simon's 1988 

Presidential Campaign urges FEC to reduce 

repayment due U.S. Treasury. 

17-20- Republican National Convention meets in 

Houston, TX. 

21- FEC certifies $55.24 million payment of public funds to Bush/Quayle campaign. 

September 

4- New rules on rulemaking petition procedures 

become effective. 

15- FEC issues press release on PAC activity for 

first 18 months of cycle. 

17- FEC makes final determination that the 

LaRouche Democratic Campaign repay 

$151,260 in federal funds for 1988 campaign. 

21- FEC finds that the Natural Law Party of the 

U.S. qualifies as a national party committee. 

October 

1- FEC publishes 1992 Presidential Primary 

Results. 

14-15- FEC holds public hearing on MCFL rulemaking. 

15- Quarterly report due. 

- FEC declares John Hagelin of the Natural 

Law Party eligible for matching funds. 
85 

22- Pre-general election report due. - FEC denies extension of time for repayment 

by Gephardt 1988 Committee. 

27- FEC issues data on national party committee 

activity through mid-October. 

28- In open hearing, Jesse Jackson's 1988 Presidential Campaign urges FEC to reduce repayment due U.S. Treasury. 

November 

3- General Election. - NY holds Special General Election to fill vacancy in 8th CD. - NC holds Special General Election to fill vacancy in 1st CD. 

4- Revised regulations on use of candidate's 

name become effective. 

17- FEC finds that Clinton/Gore Campaign Committee may accept temporary $1 million loan 

from its compliance fund, subject to certain 

conditions. 

24- GA holds Senate Runoff Election. 

30- U.S. Supreme Court refuses to review court 

of appeals decision upholding the constitutionality of the "sale or use" restriction. 

December 

1- FEC publishes Revised Record Supplement 

on Allocation. 

2- In open hearing, Pat Robertson's 1988 Presidential campaign urges the FEC to reduce its 

repayments to the U.S. Treasury. 

3- Post-general election report due. 

4- ND holds Special Senate Election. 

9- Commission establishes interim rules on ex 

parte communications. 

- FEC holds public hearing on proposed revisions to definition of "member." 

1o- FEC decides to take no further action on rulemaking procedure on transfers between federal campaigns. 

14-At press briefing, Chairman Joan D. Aikens 

and FEC staff present statistics on 1992 

Presidential race. 

15- FEC elects Scott E. Thomas and Trevor Potter as 1993 Chairman and Vice Chairman. 
The Commissioners 

Joan D. Aikens, Chairman1 

Scott E. Thomas, Vice Chairman2 

Lee Ann Elliott, Commissioner 

Danny L. McDonald, Commissioner 

John Warren McGarry, Commissioner 

Trevor Potter, Commissioner 

Walter J. Stewart, Ex Officio/Senate 

Donnald K. Anderson, Ex Officio/House 

I I I 

General Counsel 1-- Staff Director Inspector General 

Public Funding 

Ethics and 

Special Projects 

Policy3 

Enforcement 

Litigation 

-

-

~ 

----

Deputy Staff Director 

for Management 

Administration 1-

Data Systems 

Development - Planning and 

Management -

~ 

--

-

-

Audit 

Clearinghouse 

Information 

Services 

Public 

Disclosure 

Reports 

Analysis 

-

-

-

-

-

Commission 

Secretary 

Congressional 

Affairs 

Equal Employment 

Opportunity 

Personnel 

Labor/Management 

Press Office 

87 

Appendix 3 

FEC Organization Chart 

-- 1Scott E. Thomas was elected 1993 Cha1rman. 

2"frevor Potter was elected 1993 Vice Chairman. 

3Policy covers regulations, advisory opinions, legal review and administrative law. 
89 

Appendix 4 

FEC Offices 

This appendix briefly describes the offices within the 

Commission, located at 999 E Street, NW, Washington, D.C. 20463. The offices are listed alphabetically, 

with local telephone numbers given for offices that 

provide services to the public. Commission offices can 

also be reached toll-free on 800-424-9530 and locally 

on 202-219-3440. 

Administration 

The Administration Division is the Commission's 

"housekeeping" unit and is responsible for accounting, 

procurement and contracting, space management, 

payroll, travel and supplies. In addition, several support functions are centralized in the office such as 

printing, document reproduction and mail services. 

The division also handles records management, inventory control and building security and maintenance. 

Audit 

Many of the Audit Division's responsibilities concern 

the Presidential public funding program. The division 

evaluates the matching fund submissions of Presidential primary candidates and determines the amount of 

contributions that may be matched with federal funds. 

As required by law, the division audits all public funding recipients. 

In addition, the division audits those committees 

which, according to FEC determinations, have not met 

the threshold requirements for substantial compliance 

with the law. Audit Division resources are also used in 

the Commission's investigations of complaints. 

Clearinghouse 

The National Clearinghouse on Election Administration, located on the seventh floor, assists state and 

local election officials by responding to inquiries, publishing research and conducting workshops on all matters related to election administration. Additionally, the 

Clearinghouse answers questions from the public and 

briefs foreign delegations on the U.S. election process. 

Local phone: 202-219-3670. 

Commission Secretary 

The Secretary to the Commission handles all administrative matters relating to Commission meetings, including agenda documents, Sunshine Act notices, 

minutes and certification of Commission votes. The 

office also circulates and tracks numerous materials 

not related to meetings, and records the Commissioners' tally votes on these matters. 

Commissioners 

The six Commissioners-three Democrats and three 

Republicans-are appointed by the President and 

confirmed by the Senate. Two ex officio Commissioners, the Secretary of the Senate and the Clerk of the 

House of Representatives, are nonvoting members. 

They appoint special deputies to represent them at 

the Commission. 

The six voting Commissioners serve full time and 

are responsible for administering and enforcing the 

Federal Election Campaign Act. They generally meet 

twice a week, once in closed session to discuss matters that, by law, must remain confidential, and once 

in a meeting open to the public. At these meetings, 

they formulate policy and vote on significant legal and 

administrative matters. 

Congressional, Legislative and Intergovernmental 

Affairs 

This office serves as primary liaison with Congress 

and Executive Branch agencies. The office is responsible for keeping Members of Congress informed 

about Commission decisions and, in turn, for keeping 

the agency up to date on legislative developments. 

Localphone:219-4136. 

Data Systems Development 

This division provides computer support for the entire 

Commission. Its responsibilities are divided into two 

general areas. 

In the area of campaign finance disclosure, the 

Data Systems Development Division enters into the 

FEC data base information from all reports filed by 

political committees and other entities. The division is 

also responsible for the computer programs that sort 

and organize campaign finance data into indexes. 
90 

These indexes permit a detailed analysis of campaign 

finance activity and, additionally, provide a tool for 

monitoring contribution limitations. The division publishes the Reports on Financial Activity series of periodic studies on campaign finance and generates statistics for other publications. Finally, the division administers the Commission's Direct Access Program, 

which provides on-line access to FEC information to 

people and organizations throughout the U.S. 

The division also provides internal computer support for the agency's automation system (VAX) and for 

administrative functions such as management information, document tracking, personnel and payroll systems. 

Equal Employment Opportunity Program (EEOP) 

The EEOP office advises the Commission on the prevention of discriminatory practices. The EEO Officer 

manages the Commission's Equal Employment Opportunity Program and develops plans to improve the 

Commission's equal employment opportunities. The 

office is also responsible for administering the discrimination complaint system; overseeing the Special Emphasis Program; training Commission staff on the EEO 

Program; and reporting on the status of Commission's 

EEO Program. 

General Counsel 

The General Counsel directs the agency's enforcement activities and represents and advises the Commission in any legal actions brought against it and 

serves as the Designated Agency Ethics Official. The 

Office of General Counsel handles all civil litigation, 

including several cases that have come before the 

Supreme Court. The office also drafts, for Commission 

consideration, advisory opinions and regulations as 

well as other legal memoranda interpreting the federal 

campaign finance law. 

Information Services 

In an effort to promote voluntary compliance with the 

law, the Information Services Division provides technical assistance to candidates, committees and others 

involved in elections. Responding to phone and written 

inquiries, members of the staff conduct research 

based on the statute, FEC regulations, advisory opinions and court cases. Staff also direct workshops on 

the law and produce guides, pamphlets and videos on 

how to comply with the law. Located on the second 

floor, the division is open to the public. Local phone: 

219-3420; toll-free phone: 800-424-9530. 

Inspector General 

The FEC's Inspector General (IG) has two major responsibilities: to conduct internal audits and investigations to detect fraud, waste and abuse within the 

agency and to improve the economy and effectiveness of agency operations. The IG files reports notifying Congress of any serious problems or deficiencies 

in agency operations and of any corrective steps 

taken by the agency. 

Law Library 

The Commission law library, part of the Office of General Counsel, is located on the eighth floor and is 

open to the public. The collection includes basic legal 

research tools and materials dealing with political 

campaign finance, corporate and labor political activity and campaign finance reform. The library staff 

prepares indices to advisory opinions and Matters 

Under Review (MURs) as well as a Campaign 

Finance and Federal Election Law Bibliography, all 

available for purchase in the Public Records Office. 

Localphone:219-3312. 

Personnel and Labor/Management Relations 

This office handles employment, position classification, training and employee benefits. It also provides 

policy guidance on awards and discipline matters and 

administers a comprehensive labor relations program 

including contract negotiations and resolution of disputes before third parties. 

Planning and Management 

This office develops the Commission's budget and, 

each fiscal year, prepares a management plan determining the allocation and use of resources throughout 

the agency. Planning and Management monitors adherence to the plan, providing monthly reports measuring the progress of each division in achieving the 

plan's objectives. 
91 

Press Office 

Staff of the Press Office are the Commission's official media spokespersons. In addition to publicizing 

Commission actions and releasing statistics on campaign finance, they respond to all questions from 

representatives of the print and broadcast media. 

Located on the first floor, the office also handles 

requests under the Freedom of Information Act. 

Localphone:219-4155. 

Public Records 

Staff from the Public Records Office provide information on the campaign finance activities of political 

committees and candidates involved in federal elections. Located on the first floor, the office is a library 

facility with ample work space and a knowledgeable 

staff to help researchers locate documents and computer data. The FEC encourages the public to review 

the many resources available, including committee 

reports, computer indexes, advisory opinions and 

closed MURs. Local phone: 219-4140. 

Reports Analysis 

Reports analysts assist committee officials in complying with reporting requirements and conduct detailed examinations of the campaign finance reports 

filed by political committees. If an error, omission or 

prohibited activity (e.g., an excessive contribution) is 

discovered in the course of reviewing a report, the 

analyst sends the committee a letter which requests 

that the committee either amend its reports or provide further information concerning a particular problem. By sending these letters (requests for additional 

information, or RFAis), the Commission seeks to 

ensure full disclosure and to encourage the committee's voluntary compliance with the law. Analysts 

also provide frequent telephone assistance to committee officials and encourage them to call the division with reporting questions or compliance problems. Local phone: 219-3580. 

Staff Director and Deputy Staff Director 

The Staff Director appoints staff, with the approval of 

the Commission, and implements Commission 

policy. The Staff Director oversees the 

Commission's public disclosure activities, outreach 

efforts, review of reports and the audit program, as 

well as the administration of the agency. 

The Deputy Staff Director has broad responsibility 

for assisting in this supervision, particularly in the 

areas of budget, administration and computer systems. 
93 

Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

1992 

Filers 

Terminated 

as of 

12/31/92 

Continuing 

Fliers as of 

12/31/92 

Number of 

Reports and 

Statements 

In 1992 

Gross Receipts 

In 1992 

Gross 

Expenditures in 

1992 

Presidential Candidate 

Committees 460 43 417 1,207 $327,843,470 $326,068,405 

Senate Candidate Committees 708 97 611 2,554 $201,881,181 $250,037,642 

House Candidate Committees 3,836 854 2,982 16,380 $322,278,928 $366,097,514 

Party Committees 628 83 545 3,802 $432,668,685 $558,634,461 

Federal Party Committees 

Reported Nonfederal Party 

591 508 3,486 $311 ,078,086 $319,332,697 

Activity 37 37 316 $121 ,590,599 $119,650,882 

Delegate Committees 81 1 80 12 $265,466 $265,464 

Nonparty Committees 4,781 586 4,195 31,761 $218,655,715 $261 ,861 ,285 

Labor committees 376 29 347 2,913 $46,420,860 $61 ,423,900 

Corporate committees 1,956 221 1,735 14,911 $57,407,893 $69,486,272 

Membership, trade and other 

committees 2,449 336 2,113 13,937 $114,826,962 $130,951,113 

Communication Cost Filers 201 0 201 122 N/A $7,749,308 

Independent Expenditures by 

Persons Other Than 

Political Committees 

308 29 279 308 N/A $1,096,115 

*Figure includes: (1) the disclosed activity of nonfederal national party committees and (2) transfers of nonfederal funds 

to the federal accounts of state and local party committees for allocated expenses. 
94 

Divisional Statistics for Calendar Year 1992 

Total 

Reports Analysis Division 

Documents processed 76,788 

Reports reviewed 35,614 

Telephone assistance and meetings 10,Q78 

Requests for additional information (RFAis) 6,638 

Second RFAis 3,453 

Data coding and entry of RFAis and 

miscellaneous documents 14,913 

Compliance matters referred to Office 

of General Counsel or Audit Division 69 

Data Systems Development Division 

Documents receiving Pass I coding· 68,909 

Documents receiving Pass Ill coding· 42,167 

Documents receiving Pass I entry 71,073 

Documents receiving Pass Ill entry 41,927 

Transactions receiving Pass Ill entry 

• In-house 68,139 

• Contract 782,044 

Public Records Office 

Campaign finance material processed 

(total pages) 1,893,887 

Requests for campaign finance reports 12,771 

Visitors 15,360 

Total people served 28,131 

Information telephone calls 20,393 

Computer printouts provided 82,234 

Total income (transmitted to 

U.S. Treasury) $128,144 

Cumulative total pages of documents 

available for review 10,839,245 

Contacts with state election offices 2,928 

Notices of failure to file with state 

election offices 538 

*Computer coding and entry of campaign finance information occur in two phases. In the first phase, Pass I, 

summary information is coded and entered into the computer within 48 hours of the Commission's receipt of the 

report. During the second phase, Pass Ill, itemized information is coded and entered. 

Total 

Administrative Division 

Contracting and procurement transactions 2,700 

Pieces of outgoing mail processed 94,459 

Publications prepared for print 42 

Pages of photocopying 10,656,198 

Information Services Division 

Telephone inquiries 118,050 

Information letters 135 

Distribution of FEC materials 15,609 

Prior notices (sent to inform filers 

of reporting deadlines) 50,668 

Other mailings 22,156 

Visitors 174 

Public appearances by Commissioners 

and staff 116 

State workshops 4 

Publications 29 

Press Office 

Press releases 190 

Telephone inquiries from press 22,464 

Visitors to Press Office 3,554 

Freedom of Information Act 

(FOIA) requests 641 

Fees for materials requested under FOIA $106,283 

Clearinghouse on Election Administration 

Telephone inquiries 8,025 

Information letters 85 

Visitors 83 

Publications 8 

Foreign Briefings 62 
95 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1992 7 

Requests received 44 

Issued 39 

Requests closed or withdrawn 8 

Pending at end of 1992 4 

Compliance cases (MURs) 

Pending at beginning of 1992 198 

Opened 260 

Closed 129 

Pending at end of 1992 329 

Litigation 

Cases pending at beginning of 1992 46 

Cases opened 20 

Cases closed 26 

Cases pending at end of 1992 40 

Cases won 17 

Cases lost 

Cases voluntarily dismissed 6 

Cases dismissed as moot 2 

Law Library 

Telephone inquiries 1,871 

Visitors served 896 

Audits Completed by Audit Division, 1975-1992 

Presidential 75 

Presidential Joint Fundraising 10 

Senate 15 

House 127 

Party (National) 46 

Party (Other) 111 

Nonparty (PACs) 73 

Total 457 
97 

Appendix 6 

1992 Federal Register 

Notices 

1992-1 

11 CFR Parts 100,110,114: Honoraria; Final Rule 

and Technical Amendments (57 FR 1640, January 

15, 1992) 

1992-2 

Computerized Magnetic Media Requirements for 

Presidential Primary and General Election Commit~ 

tees; Announcement of Changes (57 FR 4453, Feb~ 

ruary 5, 1992) 

1992-3 

11 CFR Parts 9034, 9036 and 9037: Matching Fund 

Submission and Certification Procedures for Presi~ 

dential Primary Candidates; Final Rules; Correction 

to Announcement of Effective Date (from November 

6 to November 7, 1991) (57 FR 6665, February 27, 

1992) 

1992-4 

11 CFR Part 106: Allocation of Federal and Nonfed~ 

eral Expenses; Final Rule; Transmittal to Congress 

(57 FR 8990, March 13, 1992; Corrections, 57 FR 

11137, April1, 1992) 

1992-5 

11 CFR Parts 100 and 104: Loans From Lending 

Institutions to Candidates and Political Committees; 

Final Rule; Announcement of April 2 Effective Date 

(57 FR 11262, April 2, 1992) 

1992-6 

11 CFR Parts 102 and 110: Special Fundraising 

Projects by Political Committees: Notice of Proposed 

Rulemaking (57 FR 13056, April 15, 1992) 

1992-7 

11 CFR Part 11 0: Transfers of Funds from State to 

Federal Campaigns: Notice of Proposed Rulemaking 

(57 FR 13054, April 15, 1992) 

1992-8 

11 CFR Part 200: Administrative Regulations (Petitions for Rulemaking): Notice of Proposed Rulemaking (57 FR 20430, May 13, 1992) 

1992-9 

11 CFR Part 106: Allocation of Joint Federal and 

Nonfederal Expenses; Final Rule: Announcement of 

Effective Date (57 FR 27146, June 18, 1992) 

1992-10 

11 CFR Part 1 02: Special Fundraising Projects and 

Other Use of Candidate Names by Unauthorized 

Committees: Final Rule; Transmittal of Regulations to 

Congress (57 FR 31424, July 15, 1992) 

1992-11 

11 CFR Parts 109, 11 0 and 114: Independent Expenditures; Corporate and Labor Organization Expenditures: Notice of Proposed Rulemaking (57 FR 33548, 

July 29, 1992) 

1992-12 

11 CFR Part 200: Administrative Regulations (Rulemaking Petitions): Final Rule (57 FR 34508, August 

5, 1992) 

1992-13 

11 CFR Part 11 0: Transfers of Funds from State to 

Federal Campaigns: Final Rules and Transmittal of 

Regulations to Congress (57 FR 36344, August 12, 

1992) 

1992-14 

11 CFR Part 11 0: Transfers of Funds Between Federal Campaign Committees: Notice of Proposed 

Rulemaking (57 FR 36023, August 12, 1992) 

1992-15 

11 CFR Part 104: Recordkeeping and Reporting by 

Political Committees: Best Efforts; Notice of Proposed Rulemaking (57 FR 44137, September 24, 

1992) 

1992-16 

11 CFR Parts 109, 11 0 and 114: Change in MCFL 

Public Hearing Time (57 FR 45009, September 30, 

1992) 
98 

1992-17 

Filing Dates for the New York Special Election (57 

FR 45793, October 5, 1992) 

1992-18: Filing Dates for the North Carolina Special 

Election (57 FR 45792, October 5, 1992) 

1992-19 

11 CFR Parts 1 00 and 114: Definition of "Member" of 

a Membership Organization; Notice of Proposed 

Rulemaking (57 FR 46346, October 8, 1992) 

1992-20 

11 CFR Part 102: Special Fundraising Projects and 

Other Use of Candidate Names by Unauthorized 

Committees; Announcement of Effective Date (57 FR 

47258, October 15, 1992) 

1992-21 

Filing Dates for the North Dakota Special Election (57 

FR 47661, October 19, 1992) 

1992-22 

11 CFR Parts 1 00 and 114: Definition of "Member" of 

Membership Association: Change of Public Hearing 

Time (57 FR 56867, December 1, 1992) 

1992-23 

11 CFR Part 201: Ex Parte Communications; Interim 

Rules with Request for Comments (57 FR 58133, 

December 9, 1992) 
99 Appendix 7 

Revisions to Allocation 

Regulations 

Revisions to the Commission's regulations on the 

allocation of federal and nonfederal expenses became effective on June 18, 1992. The revisions and 

their explanation and justification appeared in the 

March 13, 1992 Federal Register (57 FR 8990). 

The changes are summarized below. Although the 

ballot ratio section applies only to state and local 

party committees, the other sections apply to all committees subject to the allocation rules, including separate segregated funds and nonconnected committees. For more infomation about allocation issues, 

see the Revised Supplement on Allocation, published 

in December 1992. 

Changes to Ballot Composition 

Ratios of State and Local Party 

Committees1 

New Nonfederal Point 

Under the revised regulations, all state and local 

party committees were permitted to include an additional nonfederal point in their ballot composition 

ratios. 11 CFR 106.5(d)(1 )(ii). 

Point for Partisan Local Office 

A second change applies only to state and local party 

committees located in states where statewide officers 

are elected in even years while local officers are 

elected only in odd years. Under the former rules, 

party committees in this situation could not include 

any points for partisan local offices. The new rules, 

based on Advisory Opinion 1991-25, now authorize 

committees to include nonfederal point(s) in their 

ratios if partisan local candidates are expected on the 

ballot "in any regularly scheduled election during the 

two-year Congressional cycle." 11 CFR 106.5(d) 

(1 )(ii). (Note that state party committees may add 

only one nonfederal point for local offices on the ballot, while local party committees may add a maximum 

of two points.) 

Changes That Apply to All 

Committees 

Window for Transfers from Nonfederal Account 

Committees now have a 70-day window (expanded 

from 40 days) to transfer funds from the nonfederal 

account to the federal account to pay for the nonfederal share of a joint expense. (The window begins 1 0 

days before the federal account pays the vendor and 

ends 60 days after the payment.) 11 CFR 

1 06.5(g)(2)(ii)(B) and 1 06.6(e)(2)(ii)(B). In addition, 

committees now have a 60-day period following a 

fundraising program or event to adjust the fundraising 

ratio and to transfer funds between the federal and 

nonfederal accounts to reflect the revised allocation. 

(When reporting these adjustment transfers, committees must enter the date of the event, a new requirement.) 11 CFR 1 06.5(f) and 1 06.6(d). 

1Using a revised ballot composition ratio based on the 

new rules, state and local party committees had the opportunity to reallocate their administrative and generic voter 

drive expenses paid since January 1, 1991. However, 

committees had only until July 12, 1992, to make the retroactive reallocations and the corresponding transfers from 

their nonfederal accounts to their federal accounts. 
101 

Appendix 8 

Rules on Bank Loans to 

Political Committees 

New regulations on bank loans and lines of credit 

became effective April 2, 1992. The rules apply to all 

lines of credit established on or after the effective 

date and to all loans whose proceeds were disbursed 

by the bank on or after that date. The loans and lines 

of credit must be reported on new loan forms: 

Schedule C-1 and, for Presidential committees 

Schedule C-P-1 . ' 

The revisions provide guidance on when a loan 

from a lending institution is made "on a basis which 

assures repayment." They additionally clarify that 

lines of credit are subject to the same requirements 

as other bank loans. Moreover, the revised rules 

focus on the restructuring, rather than the settlement, 

of bank loans and consider each restructuring a new 

loan. 

The final rules and their explanation and justification were published in the Federal Register on December 27, 1991 (56 FR 67118). 

Regulations That Remain 

Unchanged 

The regulations at 11 CFR 100.7(b)(11) and 

1 00.8(b)(12) apply to loans from lending institutions 

~uch as sta~e or federally chartered banks, federally 

msured savmgs and loan associations and federally 

insured credit unions. 

Under those rules, which are based on 2 U.S.C. 

§431 (8)(B)(vii), a loan from a lending institution is 

permissible if it is made in accordance with applicable banking laws and in the ordinary course of 

business. The regulations define when a loan is 

made in the ordinary course of business: (1) the loan 

bears the usual and customary interest rate of the 

lending institution for the category of loan involved; 

(2) it is evidenced by a written instrument; (3) it is 

subject to a due date or amortization schedule; and 

(4) it is made on a basis which assures repayment. 

The revised rules clarify this fourth condition. 

New Rules: Methods of Assuring 

Repayment 

Under sections 1 00.7(b)(11 )(i) and (ii) and 

1 00.8(b)(12)(i) and (ii), a loan is made on a basis 

which assures repayment if it is obtained under either 

of two authorized methods or a combination of the 

two. 

Method 1 : Traditional Collateral, Cosigners 

A loan is made on a basis which assures repayment 

if it is obtained using traditional types of collateral 

and/or secondary sources of repayment such as 

guarantors or cosigners. 11 CFR 100.7(b)(11 )(i)(A) 

and 1 00.8(b)(12)(i)(A). 

Examples of traditional sources of collateral include: ownership in real estate, personal property, 

goods, negotiable instruments, certificates of deposit, 

chattel papers, stocks, accounts receivable and cash 

on deposit. For a loan to be made on a basis which 

assures repayment, the recipient candidate or politi­

~al committee must document that the lending institution has a perfected security interest in the collateral. 

(This means that the lender has taken the legal steps 

necessary to protect its interest in the collateral.) 

Moreover, the fair market value of the collateral on 

the date of the loan must equal or exceed the amount 

of the loan and any senior liens. 

With respect to secondary sources, an endorsement or guarantee of a loan is considered a contribution by the endorser or guarantor and is thus subject 

to the law's prohibitions and limits on contributions. 

Method 2: Future Receipts 

Under 11 CFR 100.7(b)(11 )(i)(B) and 1 00.8(b)(12) 

(i)(B), a loan is also considered to be made on a basis which assures repayment if it is obtained using 

future receipts as collateral, such as anticipated contributions, interest income and, in the case of Presidential candidates, public financing payments. The 

loan may not exceed a reasonable estimate of anticipated receipts based on documentation provided by 

the borrower candidate or committee to the lender 

(e.g., cash flow charts, financial plans). 
102 

The borrower must also provide the lender with a 

written agreement in which the borrower pledges future funds as collateral and promises to deposit 

pledged funds in a separate account for the repayments. If public financing payments are pledged, the 

candidate or committee must authorize the U.S. Secretary of the Treasury to deposit the payments directly 

into the account. The account may be established at 

the lending institution or at another institution that 

meets the campaign depository requirements of 11 

CFR 103.2. In the latter case, the lender must have 

access to the account, and the other institution must 

be notified of this assignment. The lender and borrower are free to structure the account in any manner 

consistent with the repayment terms. 

For example, under a loan agreement, the borrower may agree to repay $50,000 of a $100,000 loan 

using future receipts at a rate of $10,000 a month for 

five months. The borrower must demonstrate that 

$10,000 will be available in the account at the time 

each payment falls due. Any additional funds deposited in the account for any reason (e.g., public funding 

payments) may be withdrawn and used for other purposes. Moreover, if any part of the loan is repaid from 

another source, that amount may be withdrawn from 

the repayment account. 

Assurance Criteria Not Met 

When a loan is not obtained under the authorized 

methods discussed above, the Commission will consider the totality of the circumstances in determining 

whether the loan was made on a basis which assures 

repayment. 11 CFR 100.7(b)(11 )(iii) and 

1 00.8(b)(12)(iii). 

New Reporting Rules and Forms 

New reporting rules at 11 CFR 1 04.3(d)(1) through 

(d)(3) require additional information on bank loans to · 

show whether or not a loan or line of credit was made 

on a basis which assures repayment. The committee 

discloses this information on new Schedule C-1 or CP-1, which supplements Schedules C and Schedule 

C-P. (The "P" indicates that the form is used by Presidential committees.) A Schedule C-1 or C-P-1 must 

be filed with the next due report for each bank loan 

obtained or line of credit established during the reporting period. A committee must additionally file a 

new schedule each time the terms of a loan or line of 

credit are restructured and each time a draw is made 

on a line of credit. 

The new schedule requires a committee to provide 

the following: 

·A copy of the lending agreement (either the original 

agreement or the restructured agreement); 

• Information as to the basis on which the loan was 

obtained or line of credit was established, and, if it 

was not obtained or established under one of the 

authorized methods, a statement demonstrating 

that it was nevertheless made on a basis which 

assures repayment; and 

• Certification from the lender that the information 

reported by the committee is correct; that the terms 

of the loan or line of credit do not favor the committee over other borrowers; and that the bank is 

aware of, and has complied with, FEC regulations 

on bank loans.