Federal 

Election 

Commission 

Annual Report 2001 
Federal 

Election 

Commission 

Annual Report 2001 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

David M. Mason, Chairman 

Karl J. Sandstrom, Vice Chairman 

Danny L. McDonald, Commissioner 

Bradley A. Smith, Commissioner 

Scott E. Thomas, Commissioner 

Michael E. Toner, Commissioner 

Statutory Officers 

James A. Pehrkon, Staff Director 

Lawrence H. Norton, General Counsel 

Lynne A. McFarland, Inspector General 

The Annual Report is prepared by: 

Gregory J. Scott, Assistant Staff Director, 

Information Division 

Amy L. Kort, Senior Technical Writer, 

Information Division 

Kathleen K. Miller, Public Affairs Specialist, 

Information Division 

Paul Clark, Statistician, 

Data Division 

Table of Contents 

Introduction 1 

Chapter One 

Keeping the Public Informed 

Public Disclosure 3 

Educational Outreach 6 

Office of Election Administration 7 

Chapter Two 

Interpreting and Enforcing the Law 

Regulations 9 

Advisory Opinions 9 

Enforcement 10 

Administrative Fine Program 11 

Alternative Dispute Resolution Program 13 

Chapter Three 

Legal Issues 

Express Advocacy 15 

Disclaimers 16 

Coordination 17 

Corporate Contributions 18 

Public Access to Enforcement Actions 20 

Party Building Funds 22 

Personal Use of Campaign Funds 23 

National/State Party Status 24 

Soft Money 25 

Chapter Four 

The Commission 

Commissioners 27 

General Counsel 27 

Inspector General 27 

Equal Employment Opportunity 27 

Ethics 27 

Personnel and Labor/Management Relations 28 

The FEC’s Budget 28 

Chapter Five 

Presidential Public Funding 

Shortfall 31 

Update on Presidential Debates Lawsuits 31 

Audits of 2000 Presidential Campaigns 32 

Chapter Six 

Campaign Finance Statistics 33 

Appendices 

1. Biographies of Commissioners 

and Officers 39 

2. Chronology of Events 41 

3. FEC Organization Chart 43 

4. FEC Offices 45 

5. Statistics on Commission Operations 49 

6. 2001 Federal Register Notices 53
 

Table of Charts 

Chapter One 

Keeping the Public Informed 

Chart 1-1: 

Size of Detailed Database by Election Cycle 5 

Chapter Two 

Interpreting and Enforcing the Law 

Chart 2-1: 

Conciliation Agreements by Calendar Year 11 

Chart 2-2: 

Median Civil Penalty by Calendar Year 11 

Chart 2-3: 

Ratio of Active to Inactive Cases by Calendar Year 12 

Chart 2-4: 

Cases Dismissed under EPS 12 

Chart 2-5: 

Average Number of Respondents and

 Enforcement Cases by Calendar Year 12 

Chapter Four 

The Commission 

Chart 4-1: 

Functional Allocation of Budget 28 

Chart 4-2: 

Divisional Allocation 29 

Chapter Six 

Campaign Finance Statistics 

Chart 6-1: 

Number of PACs, 1974-2001 33 

Chart 6-2: 

Receipts of House Candidates for Each 

Year of Election Cycle, 1991-2001 34 

Chart 6-3: 

House Campaign Fundraising in

 Nonelection Years 35 

Chart 6-4: 

Senate Campaign Fundraising in

 Nonelection Years 35 

Chart 6-5: 

Nonelection Year Fundraising by National

 Party Committees: Federal and Nonfederal 

 Accounts 36 

Chart 6-6: 

Sources of National Party Committee: Federal 

 Account Receipts in Nonelection Years 37 

Chart 6-7: 

Sources of National Party Committee:

 Nonfederal Account Receipts in Nonelection 

 Years 38 
1 

Introduction 

In 2001, new programs aimed at enhancing disclosure and compliance dominated the Federal Election 

Commission’s activities. Additionally, in the wake of 

the 2000 Presidential election controversy, the 

Commission’s Office of Election Administration proposed guidelines to help state officials better administer federal elections. 

In the area of disclosure, new regulations went into 

effect on January 1, 2001, requiring mandatory electronic filing for committees that raise or spend more 

than $50,000 in a calendar year. During 2001, the 

Commission successfully received and processed a 

large number of electronically-filed reports, and the 

program received wide praise for significantly increasing the timeliness, scope and amount of campaign 

finance data available to the public. 

The Administrative Fine program and the Alternative Dispute Resolution program, both of which began 

in 2000, continued to improve and streamline the 

agency’s processing of compliance matters, allowing 

the Commission to handle significantly more actions 

than in past years. During 2001, the FEC resolved 

331 matters through the Administrative Fine and Alternative Dispute Resolution programs, and an additional 151 cases were closed as part of the 

Commission’s regular enforcement process. 

Also during 2001, the Commission’s Office of Election Administration (OEA) worked to revise the national Voting Systems Standards. By year’s end, 38 

states had voluntarily adopted the existing standards, 

entirely or in part, to serve as guidelines for election 

officials who select and implement voting systems in 

federal elections. OEA is the only federal office directly involved in providing assistance to state and 

local officials who administer federal elections, and 

the controversy surrounding the Presidential election 

of 2000 highlighted the importance of these standards. 

The material that follows details the Commission’s 

2001 activities. Additional information on most matters can be found in the 2001 issues of the FEC 

newsletter, the Record. 
3 

Chapter One 

Keeping the Public Informed 

The FEC’s public disclosure and educational outreach programs work together to educate the electorate about the various aspects of campaign finance 

law. The Commission makes the financial reports of 

all federal political committees accessible to members 

of the general public, providing an incentive for the 

regulated community to comply with the law. Educational outreach helps committees achieve compliance 

by providing the information necessary to understand 

the requirements of the law. 

As detailed below, new regulations and technical 

innovations went into effect during 2001, further enhancing the Commission’s disclosure and educational 

outreach programs. 

Public Disclosure 

During 2001, the disclosure of the sources and 

amounts of funds spent on federal campaign activity 

continued to be the focus of the Commission’s work. 

The Commission received reports filed by committees, reviewed them to ensure compliance with the 

law, entered the data into the FEC’s computer database and made the reports available to the public 

within 48 hours of receipt. 

Continued advances in computer technology, combined with new regulations that became effective during the year, improved the disclosure process in 2001. 

As detailed below, these changes benefit both the 

public and the regulated community. 

Electronic Filing 

The Commission’s mandatory electronic filing program went into effect on January 1, 2001. Under the 

new rules, committees that raise or spend more than 

$50,000 in a calendar year, or who expect to do so, 

must file their campaign finance reports electronically.1 Committees that are required to file electronically but who instead file on paper are considered 

nonfilers and could be subject to enforcement actions. 

In order to file electronically, committee treasurers 

obtain passwords from the FEC that function as electronic signatures and then use software to fill out the 

reports, which they can send to the Commission via 

Internet connection, modem or floppy disk. The 

FEC’s validation system verifies that the reports meet 

certain criteria and informs the committees of problems that need to be fixed. 

The Commission has encouraged voluntary electronic filing since 1997, and the number of committees 

who have taken advantage of the system has risen 

steadily through the years. In 2000, under the voluntary system, 1,033 committees filed their reports electronically. In July 2001, under the new mandatory 

electronic filing rules, the number jumped to 2,898, 

with 1,135 committees filing electronically for the first 

time. For the year, 94 percent of all non-Senate 

transactions were filed electronically. 

With the July 2001 semi-annual report, the Commission successfully received and processed the first 

full-scale filing of electronic reports under the new 

rules. Images of the reports were quickly available on 

the FEC web site, in compliance with the Act’s requirement that reports filed electronically must appear 

on the Internet not later than 24 hours after receipt. 2 

U.S.C. §434(a)(11)(B). In addition, the Commission 

processed 95 percent of the itemized data, including 

data from paper reports that have to be manually 

entered into the database, within 18 days, 42 days 

faster than the Commission’s initial processing goal. 

In an effort to ease the transition from paper to 

electronic filing, the FEC conducted a variety of outreach programs to inform the regulated community 

about electronic filing. These included a telephone 

hotline, roundtable discussions at the Commission 

and presentations at FEC conferences. 

Election Cycle Reporting 

On January 1, 2001, new regulations took effect 

that require authorized committees of federal candidates to aggregate and report receipts and disbursements on an election-cycle basis rather than on the 

traditional calendar-year basis. 1

 The mandatory electronic filing rules do not apply to 

Senate committees. 
4 Chapter One 

The change to election cycle reporting is intended 

to simplify recordkeeping and the preparation of disclosure reports. Under the old rules, candidate committees monitored contribution limits on a per-election 

basis, but disclosed their financial activity on a calendar-year-to-date basis. Under the new system, committees report all of their receipts and disbursements 

on an election-cycle basis. 11 CFR 104.3. For example, campaigns must itemize a donor’s contributions once they exceed $200 for the election cycle, 

rather than for the calendar year. Likewise, candidate 

committees must itemize disbursements to a person 

once they aggregate in excess of $200 within the 

election cycle. 

Under FEC regulations, an election cycle begins 

the day after the general election for a seat or office 

and ends on the day of the next general election for 

that seat or office. The length of the election cycle, 

thus, depends on the office sought—the election cycle 

is two years for House candidates, six years for Senate candidates and four years for Presidential candidates. The new rules requiring election cycle reporting do not affect PACs or party committees. 

State Filing Waiver Program 

The Commission’s State Filing Waiver program, 

which began in October 1999, continued in 2001 with 

the addition of Arizona and Nevada. The Commission 

has now certified 48 states/territories for the waiver.2 

Under the program, filers whose reports are available 

on the FEC web site need not file duplicate copies of 

their reports in states that provide adequate public 

access to the Commission’s site. During the year, the 

state waiver program won recognition when it was 

designated a semi-finalist in the “Innovations in American Government” award competition sponsored by 

the Ford Foundation and administered by Harvard 

University’s John F. Kennedy School of Government. 

New Disclosure Forms 

In 2001, the Commission issued new disclosure 

forms designed to be processed more quickly through 

the use of optical character recognition (OCR), in 

anticipation of the Commission’s future use of this 

technology. The Commission made updated FEC 

forms 1, 2, 3, 3X, 3P, 6 and 8 available to committees 

filing in 2001. The updated forms require the same 

basic information but are reformatted so that they can 

be electronically read through OCR. The Commission 

plans to update the remaining forms in the near future. 

Imaging and Processing of Data 

The Commission scans all paper reports filed with 

the agency to create digital images of the documents, 

which it then makes accessible to the public in the 

FEC’s Public Records Office and on the 

Commission’s web site. In addition to the digital imaging system, the Commission codes and enters information taken from campaign finance reports into 

the agency’s disclosure database, which contains 

data from 1977 to the present. Information is coded 

so that committees are identified consistently throughout the database. 

The FEC’s Data Division spent much of 2001 developing new database and document management 

systems. These new systems incorporate updated 

equipment and software and will be quicker and more 

user-friendly. New disclosure capabilities stemming 

from these systems will begin to be available Commission-wide, and online, in 2002. 

Public Access to Data 

During 2001, the expanded capabilities of the 

Commission’s web site—www.fec.gov—continued to 

provide the public with wide access to campaign fi2

 As of December 31, 2001, the Commission had certified that the following states and territories qualify for filing 

waivers: Alabama, American Samoa, Arizona, Arkansas, 

California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, 

Missouri, Nebraska, Nevada, New Hampshire, New Jersey, 

New Mexico, New York, North Carolina, North Dakota, 

Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, 

South Carolina, South Dakota, Tennessee, Texas, Utah, 

Vermont, Virginia, Virgin Islands, Washington, West Virginia, Wisconsin and Wyoming. 
Keeping the Public Informed 5 

CHART 1-1 

Size of Detailed Database by Election Cycle 

Year Number of Detailed Entries* 

1990 767,000 

1991 444,000† 

1992 1,400,000 

1993 472,000 

1994 1,364,000 

1995 570,000 

1996 1,887,160 

1997 619,170 

1998 1,652,904 

1999 840,241 

2000 2,390,837 

2001 661,591 

* Figures for even-numbered years reflect the cumulative 

total for each two-year election cycle. 

† The FEC began entering nonfederal account data in 1991. 

nance data. The web site’s enhanced query system 

offers visitors quick access to summary statistical 

information on candidates, PACs and political party 

committees. Visitors can also select to search by 

state, by political party or by candidate status (incumbent, challenger or open-seat) and simply click to 

access detailed lists of individual or PAC contributions. The query system allows visitors to access the 

name and contribution amount of any individual who 

contributed $200 or more to a federal political committee, as well as lists of PACs or party committees that 

contributed to specific candidates. Visitors may also 

view lists of candidates to whom selected PACs and 

parties contributed. 

The Commission’s disclosure database, which 

contains millions of transactions, allows researchers 

flexibility in selecting information. For example, the 

database can instantly produce a profile of a 

committee’s financial activity for each election cycle. 

Researchers can also customize their searches for 

information on contributions by using a variety of elements (e.g., donor’s name, recipient’s name, date, 

amount or geographic location). 

Visitors to the Public Records Office can use personal computers and computer terminals to inspect 

digital images of reports or to access the disclosure 

database and more than 25 different campaign finance indices that organize data in different ways. 

Visitors can also access the FEC’s web site, which 

offers search and retrieval of more than 3 million images of report pages, dating back to 1993, and over 2 

million database entries compiled since 1997. Those 

outside Washington, DC, can access the information 

via the Internet or the Direct Access Program or order 

it using the Commission’s toll-free number. 

The Public Records Office continued to make publicly available copies of all campaign finance reports, 

paper copies of reports from Congressional candidates and Commission documents such as press 

releases, audit reports, closed enforcement cases 

(MURs) and meeting agenda documents. 

Review of Reports 

The Commission’s Reports Analysis Division 

(RAD) reviews all reports to track compliance with the 

law and to ensure that the public record provides a full 

and accurate portrayal of campaign finance activity. 

When reports analysts find that a report contains errors or suggests violations of the law, they send the 

reporting committee a request for additional information (RFAI). The committee treasurer can then make 

additions or corrections to the report, which are added 

to the public record. Apparent violations, however, 

may be referred to the Audit Division for a possible 

audit or to the Office of General Counsel for possible 

enforcement action. 

During 2001, reports analysts reviewed thousands 

of reports and completed their inspection of those 

relating to the 2000 election cycle. With the advent of 

mandatory electronic filing, RAD worked to automate 

its review process and looks forward to utilizing the 

Commission’s new database system, which will be 
6 Chapter One 

available in 2002. RAD also worked closely with the 

Office of Administrative Review to streamline the compliance process for administrative fines and was responsible for making reason-to-believe recommendations to the Commission in all administrative fine 

cases. 

Educational Outreach 

The Commission continued to promote voluntary 

compliance with the law by educating committees 

about the law’s requirements. 

Home Page (www.fec.gov) 

In its sixth year of operation, the Commission’s web 

site continued to offer visitors a variety of resources. 

As in past years, committees could use the web site 

to obtain copies of FEC registration and reporting 

forms and to learn about filing schedules and requirements. Visitors could search for advisory opinions 

(AOs) on the web by using words, phrases or citations 

or by entering the year and AO number, and could 

access a variety of rulemaking documents, including 

Notices of Proposed Rulemaking and final rules. Visitors to the site could also access agency news releases and most FEC publications, including brochures on a variety of topics, the agency’s monthly 

newsletter, the Record, and the campaign guides for 

candidates, parties and PACs. Additionally, the Commission made available on the web site national election results, voter registration and turnout statistics 

and the national mail voter registration form. 

The site averaged approximately 3.2 million hits 

per month in 2001. 

Telephone Assistance 

A committee’s first contact with the Commission is 

often through a telephone call to the agency’s toll-free 

information hotline (800-424-9530). In order to answer 

questions about the law, staff members research relevant advisory opinions and litigation, as needed. 

Additionally, callers can request, at no charge, FEC 

documents, publications and forms. In 2001, the Information Division responded to 28,220 telephone inquiries. 

Faxline 

The Commission’s automated Faxline (202-501-

3413) continued to be a popular method for the public 

to obtain publications or other documents quickly and 

easily. 

During 2001, 648 callers sought information from 

the 24-hour Faxline and received 845 documents. 

Reporting Assistance 

During 2001, reports analysts, assigned to review 

committee reports, were also available to answer 

complex reporting and compliance-related questions 

from committees calling on the toll-free line. 

The Commission continued to encourage timely 

compliance with the law by mailing committees reminders of upcoming reporting deadlines three weeks 

before the due dates. The Record, the Commission’s 

newsletter, and the FEC’s web site also listed reporting schedules and requirements. 

Roundtables 

The FEC continued its roundtable sessions for the 

regulated community. The roundtables, limited to 10-

12 participants per session, featured topics ranging 

from the electronic filing rules to candidate preparations for the next election cycle. 

Conferences 

During 2001, the agency conducted a full program 

of conferences to help candidates and committees 

understand and comply with the law. In Washington, 

DC, the Commission hosted individual conferences 

for corporations, trade associations, labor organizations and membership associations. In addition, the 

agency held a regional conference in Denver for all 

types of committees. 
Keeping the Public Informed 7 

The conferences featured hands-on workshops 

detailing fundamental areas of the law as well as specialized sessions on the Commission’s electronic filing 

program. 

Tours and Visits 

Visitors to the FEC during 2001, including 24 student groups and foreign delegations, listened to presentations about the campaign finance law and, in 

some cases, toured the agency’s Public Records 

office. 

Media Assistance 

The Commission’s Press Office continued to field 

questions from the press and to navigate reporters 

through the FEC’s vast pool of information. Press 

Office staff responded to 8,772 calls and visits from 

media representatives and prepared 116 news releases. Many of these releases alerted reporters to 

new campaign finance data and illustrated the statistics in tables and graphs. 

Publications 

During 2001, the Commission produced a number 

of publications designed to help committees, the 

press and the general public understand the law and 

find information about campaign finance. All of the 

new publications were available both in print and on 

the FEC web site. 

Among the new publications was an updated version of the Campaign Guide for Corporations and 

Labor Organizations. The guide includes descriptions 

of new regulations and features reporting examples 

on the revised FEC disclosure forms. Also during the 

year, the Commission published an updated edition of 

Selected Court Case Abstracts, 1976-February 2001 

(CCA). The CCA is a collection of summaries of court 

cases pertinent to the Federal Election Campaign Act. 

Most of the court case summaries originally appeared 

in the FEC’s monthly newsletter, the Record. 

As in past years, the Commission continued to 

provide more than 10,000 free subscriptions to the 

Record. The newsletter summarizes recent advisory 

opinions, compliance cases, audits, litigation and 

changes in regulations. It also includes graphs and 

charts on campaign finance statistics. 

The Combined Federal/State Disclosure Directory 

2001 directs researchers to federal and state offices 

that provide information on campaign finance, candidates’ personal finances, lobbying, corporate registration, election administration and election results. In 

2001, the disclosure directory was available not only 

in print and on the web, but also on computer disks 

formatted for popular hardware and software. The 

web page version of the Disclosure Directory includes 

hyperlinks to the web sites of state offices and e-mail 

addresses for state officials. 

The FEC also released Federal Elections 2000, a 

197-page publication that provides a historical record 

of federal election results. This volume, the largest 

edition in the Federal Elections series to date, includes a new appendix of comparative Presidential 

general election statistics as well as a new chart that 

shows the general election votes cast for all federal 

races by party. As in past editions, maps and charts 

are included to illustrate and summarize the current 

election results. 

Office of Election Administration 

During 2001, the Office of Election Administration 

(OEA) completed the current update of the Voting 

Systems Standards (VSS). Because of the controversy surrounding the 2000 Presidential election, the 

VSS received a great deal of public and legislative 

interest during the year. First approved in 1990, the 

VSS is a set of guidelines for computer-based voting 

systems that are voluntarily adopted by the states.3 

The VSS include functional criteria, as well as technical requirements, for hardware, software, security, 

quality assurance and documentation. Election administrators on the state and local levels then use 

these criteria to implement and maintain their voting 

3

 As of December 31, 2001, 38 states had either adopted 

the Voting Systems Standards or required testing against 

the VSS before a system could be marketed within their 

boundaries. 
8 Chapter One 

systems. OEA began revising the standards in 1999 

in an effort to incorporate newer technology as well as 

to address the needs of the disabled and changes in 

the voting process. 

In June, the Commission unanimously approved 

the first draft of Volume I: Voting Systems Performance Standards, which details the technical and 

performance capabilities for electronic voting systems. 

The draft was published in the Federal Register for a 

60-day public comment period, and OEA made a 

number of changes to the draft in response to the 

public comments. During this same time period, the 

OEA staff worked to complete the draft of Volume II: 

Voting System Test Standards. This second volume 

provides details of the test process for both indepen-

dent test authorities and vendors of electronic voting 

systems. 

In December, the Commission unanimously ap-

proved both volumes for a final 45-day period of pub-

lic comment. The complete update of the Voting Sys-

tems Standards is scheduled for release in April 2002. 

Also during the year, OEA held its annual Election 

Administration Advisory Panel meeting in Baltimore, 

MD. The meeting featured lectures and discussion on 

contested elections and recounts in 2000 and a re-

view of the findings from the major national election 

reform taskforces. Other agenda items included an 

update on the VSS revisions, an examination of hu-

man interface and voting technology issues and a 

discussion of the future role of the OEA. 

In June, the Commission forwarded to Congress 

OEA’s semi-annual report entitled “Impact of the Na-

tional Voter Registration Act of 1993 on the Adminis-

tration of Elections for Federal Office 1999-2000.” 

The report contained an analysis of the impact of the 

Act and detailed statistical information provided by 

state election offices. The report also listed a variety 

of recommendations for improving the administration 

of the Act. 
9 

Chapter Two 

Interpreting and 

Enforcing the Law 

As part of its mission to administer and enforce the 

Federal Election Campaign Act, the Commission promulgates regulations and issues advisory opinions to 

promote voluntary compliance with the law. The regulations state the law in detail, sometimes incorporating 

interpretations of the law that the Commission made 

in advisory opinions. Advisory opinions, in turn, clarify 

how the statute and regulations apply to real-life situations. 

The agency’s enforcement actions also promote 

compliance by correcting past violations and demonstrating to the regulated community that violations can 

result in civil penalties and remedial action. The addition of the Administrative Fine and the Alternative 

Dispute Resolution programs have increased the 

number of enforcement actions undertaken by the 

agency. 

Regulations 

The rulemaking process generally begins when the 

Commission votes to publish proposed rules in the 

Federal Register and seeks public comment on them. 

The agency may also invite those making written 

comments to testify at a public hearing. The Commission considers the comments and testimony when 

deliberating on the final rules in open meetings. Once 

approved, the text of the final regulations and the 

accompanying Explanation and Justification are published in the Federal Register and sent to the U.S. 

House of Representatives and Senate. The Commission publishes a notice of effective date after the final 

rules have been before Congress for 30 legislative 

days. 

Rulemakings Completed in 2001 

The Commission completed work on the following 

new rules during 2001: 

• Rules extending the Administrative Fine pilot program to reporting periods covering activity through 

December 31, 2003. Took effect December 31, 

2001. 

• Rules making technical corrections to the reporting 

regulations at 11 CFR 104.3. Took effect December 

31, 2001. 

Other Rulemakings in Progress 

In addition to completing the above rules, the Commission took the following regulatory actions: 

• It published a Notice of Proposed Rulemaking 

(NPRM) on the use of loans derived from candidates’ brokerage accounts, credit cards, home equity lines of credit or other lines of credit as long as 

the loans were made under commercially-reasonable terms and were from a source that provides 

such loans in the normal course of business. The 

Commission also received and reviewed public comments on the NPRM. 

• It published an NPRM, received and reviewed comments and considered final rules to clarify independent expenditure reporting deadlines and to allow 

political committees (and other persons) that make 

independent expenditures but do not file electronically to file their 24-hour reports by fax or email. 

• It published an NPRM on the use of the Internet in 

federal elections and received public comments. 

Advisory Opinions 

The Commission responds to questions about how 

the law applies to specific situations by issuing advisory opinions. When the Commission receives a valid 

request for an advisory opinion, it generally has 60 

days to respond. If, however, a candidate’s campaign 

submits a valid request within 60 days before an election, and the request directly relates to that election, 

the Commission must respond within 20 days. The 

Office of General Counsel (OGC) prepares a draft 

opinion, which the Commissioners discuss and vote 

on during an open meeting. A draft opinion must 

receive at least four favorable votes to be approved. 

The Commission issued 17 advisory opinions in 

2001. Of that number, five addressed the issue of 

personal use of campaign funds, four involved national and state party committee status and two examined party building funds. These and other advisory 

opinions from 2001 are discussed in Chapter Three, 

“Legal Issues.” 
10 Chapter Two 

Enforcement 

The Enforcement Process 

The Commission learns of possible election law 

violations in three ways. The first is the agency’s 

monitoring process—potential violations are discovered through a review of a committee’s reports or 

through a Commission audit. The second is the complaint process—anyone may file a sworn complaint 

alleging violations and explaining the basis for the 

allegations. The third is the referral process—possible violations discovered by other agencies are referred to the Commission. 

Each of these can lead the Commission to open a 

Matter Under Review (MUR). Internally-generated 

cases include those discovered through audits and 

reviews of reports as well as those referred to the 

Commission by other government agencies. Externally generated cases spurred by a formal, written 

complaint receive a MUR number once OGC determines that the document satisfies specific criteria for 

a proper complaint. 

The General Counsel recommends whether the 

Commission should find “reason to believe” and open 

an investigation. The Commission may find “reason 

to believe” if a complaint sets forth specific facts that, 

if proven true, would constitute a violation of the Act. 

In reaching a determination, the Commission considers a variety of factors, including the personal knowledge of identified sources of information, statements 

from the respondents and public records supplied by 

other sources. If the Commission finds there is “reason to believe” the respondents have committed a 

violation, it notifies the respondents and begins to 

investigate the matter. The Commission has authority 

to subpoena information and can ask a federal court 

to enforce a subpoena. At the end of an investigation, 

the General Counsel prepares a brief, which states 

the issues involved and recommends whether the 

Commission should find “probable cause to believe” a 

violation has occurred. Respondents may file briefs 

supporting their positions. 

If the Commission finds “probable cause to believe” 

the respondents violated the law, the agency attempts 

to resolve the matter by entering into a conciliation 

agreement with them. (Some MURs, however, are 

conciliated before the “probable cause” stage.) If 

conciliation attempts fail, the agency may file suit in 

district court. A MUR remains confidential until the 

Commission closes the case with respect to all respondents in the matter. 

Enforcement Initiatives 

During 2001, the Commission continued to use a 

prioritization system to focus its limited resources on 

more significant enforcement cases. 

Now in its ninth year of operation, the Enforcement 

Priority System (EPS) has helped the Commission 

manage a heavy caseload involving thousands of 

respondents and complex financial transactions. The 

Commission instituted the system after recognizing 

that the agency lacked sufficient resources to pursue 

all of the enforcement matters that came before it. 

Under the system, the agency uses formal criteria to 

decide which cases to pursue. These criteria include 

the intrinsic seriousness of the alleged violation, the 

apparent impact the alleged violation had on the electoral process, the topicality of the activity and the development of the law and the subject matter. The 

Commission continually reviews the EPS to ensure 

that the agency uses its limited resources to its best 

advantage. 

In addition, during 2001, OGC continued to use a 

computerized system to image documents and create 

a searchable database. Developed with help from a 

support contractor, the system is designed to help 

streamline the investigation of cases that involve large 

collections of documents. 

Also during the year, the OGC staff entered data 

into a computerized case management system designed to help manage and track the agency’s enforcement and litigation cases, as well as projects in 

OGC. OGC hopes eventually to use the system to 

develop an offense profile database that would inform 

Commissioners, policy makers and the public about 

emerging enforcement trends. 
Dollars 

10000 

8000 

6000 

4000 

2000 

0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 

Number of Agreements 

Total Civil Penalty Amount 

Number Thousands of Dollars 

300 2000 

250 

1500 

200 

150 1000 

100 

500 

50 

0 0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 

Interpreting and Enforcing the Law 11 

Administrative Fine Program 

During 2001, the Administrative Fine program 

proved to be a fundamental part of the Commission’s 

effort to promote timely compliance with the law’s 

reporting deadlines. The program began in July 2000 

and was originally mandated to last only through December 31, 2001; but, as part of the FY 2002 appropriations process, Congress extended it to cover reporting periods through December 31, 2003. The 

program allows the Commission to assess civil money 

penalties for violations involving: 

• Failure to file reports on time; 

• Failure to file reports at all; and 

• Failure to file 48-hour notices. 

How the Program Works 

In the past, the FEC handled reporting violations 

under its regular enforcement procedures, as deCHART 2-1 

Conciliation Agreements 

by Calendar Year 

scribed above. The Administrative Fine program 

streamlines the process for these violations. 

All administrative fine actions are initiated in the 

Reports Analysis Division (RAD). RAD monitors all 

committees for possible filing violations and recommends to the Commission those committees that 

appear to be in violation. If the Commission finds 

“reason to believe” (RTB) that a committee violated 

the applicable reporting provisions, RAD provides a 

written notification to the committee and its treasurer 

containing the factual and legal basis of its finding and 

the amount of the proposed civil money penalty. The 

Commission found RTB in 257 instances in 2001. 

The respondents have 40 days from the date of the 

RTB finding to either pay the civil money penalty or 

submit to the Commission a written response, with 

supporting documentation, outlining why it believes 

the Commission’s fine and/or penalty is in error. If the 

CHART 2-2 

Median Civil Penalty 

by Calendar Year 
12 Chapter Two 

CHART 2-3 

Ratio of Active to Inactive Cases by Calendar Year 

Active Cases 

Inactive Cases 

1997 1998 1999 2000 2001 

(296 Cases) (189 Cases) (193 Cases) (207 Cases) (197 Cases) 

CHART 2-4 

Cases Dismissed Under EPS 

Stale Cases 

Low-Rated Cases 

250 

200 

150 

100 

50 

0 

1995 1996 1997 1998 1999 2000 2001 

CHART 2-5 

Average Number of Respondents and 

Enforcement Cases by Calendar Year 

Respondents 

Cases 

3000 

2500

2000 

1500 

1000 

500 

0 

1995 1996 1997 1998 1999 2000 2001
Interpreting and Enforcing the Law 13 

committee submits a response to the Office of Administrative Review, RAD forwards its information to that 

office for consideration by an impartial Reviewing 

Officer who was not involved in the original RTB recommendation. 

After reviewing the Commission’s RTB finding and 

the respondent’s written response, the reviewing officer forwards a recommendation to the Commission 

along with all documentation. Respondents have an 

opportunity to respond in writing to the reviewing 

officer’s recommendation. The Commission then 

makes a final determination as to whether the respondent violated the law and, if so, assesses a civil 

money penalty based on the appropriate schedule of 

penalties. 

Should a respondent fail to pay the civil money 

penalty or submit a challenge within the original 40 

days, the Commission will issue a final determination 

with an appropriate civil money penalty. The respondent will then have 30 days after receiving the 

Commission’s final determination to pay the penalty 

or seek judicial review. 

When a respondent fails either to pay the civil 

money penalty or to seek judicial review after the 

Commission makes a final determination, the Commission may transfer the case to the U.S. Department 

of Treasury for collection. Alternatively, the Commission may decide to file suit in the appropriate U.S. 

district court to collect owed civil money penalties 

under 2 U.S.C. §437g(a)(6). 

Calculating Penalties 

Under the program, respondents may face administrative penalties that vary depending on the interaction of several factors: 

• Election sensitivity of the report; 

• Whether the committee is a late filer (and the number of days late) or a nonfiler;1 

• The amount of financial activity in the report; and 

• Prior civil money penalties for reporting violations. 

The Administrative Fine Program in 2001 

During 2001, the Commission publicly released 

300 cases, with total penalties of $484,486. The penalties per case ranged from $79 to $16,000. Also 

during the year, respondents in four cases filed suit 

against the FEC contesting either the Commission’s 

final determination that they violated 2 U.S.C. §434(a) 

by filing the report late or not at all, or the assessment 

of the fine.

 Since the Administrative Fine program began, the 

number of reports filed late has declined in each reporting period. So far, the largest percentage drop in 

the number of late filers occurred with the 2001 June 

monthly report—a drop of 18 percentage points from 

the 1999 June monthly report. The number of 

nonfilers continued to decline as well, with the 2001 

mid-year report showing a 47 percent drop from the 

1999 mid-year report. 

Alternative Dispute Resolution 

Program 

The Commission’s Alternative Dispute Resolution 

(ADR) program also made progress during 2001. The 

program began in October 2000 as a means of encouraging settlements outside the agency’s regular 

enforcement context. Originally a one-year pilot program, the ADR pilot program has been extended for 

an additional year and has contributed to the significant increase in the number of compliance cases that 

the Commission resolved in 2001. 

Overview of the ADR Process 

The ADR program aims to bring complaints and 

Title 2 audit referrals to resolution expeditiously 

through both direct and, when necessary, mediated 

negotiations between the parties. The speed with 

which each case is settled is contingent upon: 

• The willingness of respondents to engage and cooperate in the process; 

• The complexity of the case in question; and 

• The availability of resources. 1

 A committee is a “nonfiler” if it files its report beyond a 

certain deadline or fails to file at all. 
14 Chapter Two 

Taking these contingencies into account, the ADR 

office’s goal is to process a complaint or Title 2 audit 

referral within five months of its referral. 

After OGC makes an initial determination that a 

case is suitable for the ADR program, it refers the 

matter to the ADR office. On some occasions, the 

Commission itself may also refer a case to the office. 

The office then evaluates the case to determine 

whether it meets the requirements for the ADR program. In order to have a case considered for treatment within the ADR program, the respondent must: 

• Express a willingness to engage in the ADR process; 

• Agree to set aside the statute of limitations while the 

complaint is pending in the ADR office; and 

• Agree to participate in bilateral negotiations and, if 

necessary, mediation. 

After the Commission concurs that the case can be 

dealt with through ADR procedures, the ADR office 

notifies the respondent and forwards an agreement to 

engage in bilateral negotiations and/or mediation. 

The ADR Process 

Bilateral Negotiations. The bilateral negotiations 

phase involves direct negotiations between the respondent and a representative from the ADR office. 

Any resolution reached in negotiations is submitted to 

the Commission for final approval. If a resolution is 

not reached in bilateral negotiations, the case may 

proceed, by mutual agreement, to mediation. 

Mediation. The mediation phase begins with the 

selection of a mediator agreed upon by the respondents and the ADR representative. Under the pilot 

program, the Commission pays for all mediation 

costs, unless the respondents choose to share the 

costs with the ADR office. 

The mediator meets with the parties both jointly 

and separately, as needed. Information disclosed in 

mediation remains strictly confidential. Information 

discussed in closed “caucus” meetings between the 

mediator and a single party cannot be shared with the 

other party unless that party has given the mediator 

express permission to do so. Nor can such information be used in a later enforcement proceeding, 

should one take place. In those instances when no 

agreement is reached, the case is returned to OGC 

for processing. If an agreement is reached in mediation, the ADR office sends the agreement to the Commission for approval. 

All approved agreements are a matter of public 

record, but settlements cannot serve as precedents 

for the settlement of future cases. 

ADR in 2001 

During 2001, the ADR office dealt with a variety of 

violations, the majority of which involved contributions 

or expenditures from prohibited sources and the failure to comply with reporting requirements or contribution limits. During the year, 40 cases were assigned 

to the ADR office and 87.5 percent of the respondents 

involved chose to participate in the program. By 

year’s end, the office had resolved a total of 29 cases, 

resulting in 48 separate negotiated settlement agreements. Of these cases, 76 percent arose from complaints filed with the Commission. The ADR office 

concluded the cases in an average of 117 days of 

their assignment to the office, but aims to further expedite the process in order to meet its goal of resolving cases within 77 days. Forty-three percent of the 

negotiated settlement agreements included civil penalties, but the ADR office also emphasized non-monetary terms of settlement that would encourage corrective action. For example, almost two-thirds of the 

agreements that were approved by the Commission 

called for respondents to attend an FEC conference 

or briefing or to work with staff to learn how to correct 

their errors. 

None of the ADR cases resolved during 2001 

reached the mediation stage, but the Commission is 

prepared to call upon FEC-trained mediators should a 

matter remain unresolved or raise issues that would 

require mediation. 
15 

Chapter Three 

Legal Issues 

As the independent regulatory agency responsible 

for administering and enforcing the Federal Election 

Campaign Act (the Act), the Federal Election Commission promulgates regulations explaining the Act’s 

requirements and issues advisory opinions that apply 

the law to specific situations. The Commission also 

has jurisdiction over the civil enforcement of the Act. 

This chapter examines major legal issues confronting 

the Commission during 2001 as it considered regulations, advisory opinions, litigation and enforcement 

actions. 

Express Advocacy 

The FEC’s regulatory definition of express advocacy continued to receive attention in the courts and 

at the Commission during 2001. To understand the 

issue, it is necessary to examine earlier court decisions. In FEC v. Massachusetts Citizens for Life 

(MCFL) (479 U.S. 238 (1986)), the Supreme Court, 

citing First Amendment concerns, held that the Act’s 

ban on corporate and labor organization independent 

expenditures could only be constitutionally applied in 

instances where the money was used to expressly 

advocate the election or defeat of a clearly identified 

candidate for federal office. In response to this decision, in 1995 the Commission prescribed a new regulatory definition of express advocacy. 11 CFR 100.22. 

The definition was based largely on two court opinions: the Supreme Court’s opinion in Buckley v. Valeo 

and the Ninth Circuit Court of Appeals opinion in FEC 

v. Furgatch. 

Paragraph (a) of the definition in section 100.22 

includes examples of phrases that constitute express 

advocacy that were listed in the Buckley opinion—the 

“explicit words of advocacy of election or defeat”: 

“vote for,” “elect,” “support,” “cast your ballot for,” 

“vote against,” “defeat,” “reject.” 

Paragraph (b) of section 100.22—often referred to 

as the “only reasonable interpretation” test—is largely 

based, inter alia, on the Furgatch decision. There, the 

court of appeals held that language may be said to 

expressly advocate a candidate’s election or defeat if, 

when taken in context and with limited reference to 

external events, it can have no other reasonable interpretation. 

Since the Commission promulgated this definition, 

it has faced several legal challenges, virtually all of 

which have focused on paragraph (b) of the definition, 

the “reasonable person test.”1 During 2001, one circuit court examined paragraph (b) of the FEC’s express advocacy definition. 

Virginia Society for Human Life, Inc. (VSHL) v. 

FEC 

On September 17, 2001, the U.S. Court of Appeals 

for the Fourth Circuit affirmed a district court decision 

that 11 CFR 100.22(b) is unconstitutional. The appeals court, however, found that the district court’s 

injunction, which had prohibited the FEC from enforcing the regulation against any party throughout the 

country, was too broad. Instead, the appeals court 

limited the injunction to bar the FEC from enforcing 

the regulation against the Virginia Society for Human 

Life, Inc. (VSHL). The appeals court also rejected the 

VSHL’s cross-appeal, which asked the court to require the FEC to repeal the regulation. The appeals 

court found that ruling 11 CFR 100.22(b) unconstitutional and barring the FEC from enforcing the regulation against the VSHL gave the VSHL complete relief. 

On January 4, 2000, the U.S. District Court for the 

Eastern District of Virginia had issued an injunction 

prohibiting the FEC from enforcing 11 CFR 100.22(b) 

“against the VSHL or against any other party in the 

United States of America.” The district court had concluded that the regulation at 100.22(b) was unconstitutional because the Buckley court defined express 

advocacy as “communications that in express terms 

1

 Three federal courts have found invalid 11 CFR 

100.22(b), the FEC regulation containing the “only reasonable interpretation” test: Maine Right to Life Committee v. 

FEC (1st Circuit Court of Appeals, 1996); Right to Life of 

Dutchess County v. FEC (NY district court, 1998); and Virginia Society for Human Life, Inc. v. FEC (4th Circuit Court 

of Appeals, 2001). See also, FEC v. Christian Action Network (4th Circuit Court of Appeals, 1996) and Iowa Right to 

Life Committee, Inc. v. Williams (8th Circuit Court of Appeals, 1999). But see FEC v. Furgatch (9th Circuit Court of 

Appeals, 1987) upon which 100.22(b) was based. 
 

16 Chapter Three 

advocate the election or defeat of a clearly identified 

candidate for federal office.” The court found that by 

allowing the FEC to regulate advocacy based upon 

the understanding of the audience rather than the 

actual message of the advocate, the regulation at 

100.22(b) failed the Buckley test. Moreover, the district court had concluded that the regulation empowered the FEC to regulate issue advocacy, which was 

“clearly forbidden by Buckley.” 

Relying on Buckley, the appeals court agreed with 

the district court that the regulation violates the First 

Amendment and is unconstitutional because it “shifts 

the focus of the express advocacy determination 

away from the words themselves to the overall impressions of the hypothetical, reasonable listener or 

viewer.” 

The appeals court also found that the district court 

had abused its discretion by issuing a nationwide 

injunction against the FEC’s enforcement of the regulation. The appeals court found that a nationwide injunction: 

• Exceeded what was necessary to give full relief to 

the VSHL because an injunction covering the VSHL 

alone adequately protected it from prosecution; 

• Precluded other circuits from ruling on the constitutionality of the regulation and deprived the FEC of 

the opportunity to argue its case in other courts of 

appeals; 

• Conflicted with the principle that a federal court of 

appeals’ decision is only binding within its circuit; 

and 

• Deprived the Supreme Court of the benefit of decisions from several courts of appeals. 

The appeals court remanded the case to the district 

court in order to have the injunction amended so that 

its protection is limited to the VSHL. 

Disclaimers 

Disclaimers in public political advertising also received some attention during the year. The Act states 

that, whenever a person makes an expenditure to 

expressly advocate the election or defeat of a clearly 

identified candidate, or to solicit contributions, the 

communication must disclose both the name of the 

person who paid for the communication and whether 

the communication was authorized by any candidate 

or candidate’s committee. 2 U.S.C. §441d(a). In 

2001, one court addressed the constitutionality of this 

provision. 

FEC v. Public Citizen, Inc., et al 

On October 10, 2001, the U.S. Court of Appeals for 

the Eleventh Circuit upheld the constitutionality of 2 

U.S.C. §441d(a) against a challenge by Public Citizen, Inc.’s separate segregated fund, Public Citizen’s 

Fund for a Clean Congress (the Fund), which had 

claimed the provision could not constitutionally be 

applied to express advocacy communications. The 

Fund had paid for television advertisements and flyers 

that had expressly advocated the defeat of a candidate in a primary election and had failed to include 

disclaimers stating that they had not been authorized 

by any candidate or candidate’s committee. This 

ruling reversed the decision by the U.S. District Court 

for the Northern District of Georgia, which had 

granted summary judgment to the defendants in September 1999. 

The district court had found that the disclaimer 

stating that the communications were paid for by the 

Fund, combined with the Fund’s disclosure reports to 

the FEC, rendered the candidate authorization statement unnecessary. The district court had therefore 

ruled that the statute violated the First Amendment 

because it was broader than necessary to achieve its 

goal. 

The appeals court disagreed and held that 2 U.S.C. 

§441d(a) was narrowly tailored to serve the overriding 

governmental interest in protecting the integrity of the 

electoral process by assisting the voters in evaluating 

the candidates. This task was accomplished by immediately informing the voters whether a political 

advertisement was attributable to a candidate or to 

other persons, including the candidate’s supporters. 

In addition, the statute applied only to candidate elections and was limited to communications that ex-
Legal Issues 17 

pressly advocated the election or defeat of a clearly 

identified candidate. As a result, the court found that 

the disclaimer requirements in 2 U.S.C. §441d(a) did 

not “impermissibly infringe on Public Citizen’s First 

Amendment rights to free speech.”2 

Coordination 

During 2001, new regulations took effect defining 

coordinated expenditures with candidates and party 

committees. In addition, the U.S. Supreme Court 

upheld the constitutionality of the coordinated party 

expenditure limits at 2 U.S.C. §441a(d)(3) in FEC v. 

Colorado Republican Federal Campaign Committee. 

121 S.Ct. 2351. 

Regulations 

The Commission’s new rules on coordination of 

general public political communications with candidates and party committees became effective on May 

9, 2001.3 

The new rules define what is meant by “coordinated expenditures” through the addition of new section 11 CFR 100.23. Expenditures that are coordinated with a candidate or a party are considered inkind contributions, subject to the limits, prohibitions 

and reporting requirements of the Act. 

Under 11 CFR 100.23(c), an expenditure for a general public political communication is considered to be 

coordinated with a candidate or party committee if the 

communication is paid for by any person other than 

the candidate’s authorized committee or a party committee and is created, produced or distributed: 

• At the request or suggestion of the candidate, the 

candidate’s authorized committee, a party committee 

or their agents; 

• After one of these persons or parties has exercised 

control or decision-making authority over the content, timing, location, mode, intended audience, vol2

 On January 22, 2002, the Court of Appeals for the 

Eleventh Circuit summarily denied Public Citizen’s petitions 

for rehearing and rehearing en banc. 

3

 Congress repealed these rules as part of the Bipartisan 

Campaign Reform Act, effective November 6, 2002. 

ume of distribution or frequency of placement of that 

communication; or 

• After substantial discussion or negotiation4 between 

the purchaser, creator, producer or distributor of the 

communication and the candidate, the candidate 

committee, the party committee or their agents that 

results in collaboration or agreement about the content, timing, location, mode, intended audience, volume of distribution or frequency of placement of the 

communication. 

In addition, the definition of “independent expenditure” at 11 CFR 109.1 was revised to conform with the 

new coordination rules at 11 CFR 100.23. 

FEC v. Colorado Republican Federal Campaign 

Committee (Colorado II) 

On June 25, 2001, the U.S. Supreme Court overruled the U.S. Court of Appeals for the 10th Circuit and 

held that the coordinated party expenditure limits at 2 

U.S.C. §441a(d)(3) are constitutional. The Court ruled 

that party coordinated expenditures, unlike party expenditures made independently of any candidate or 

campaign, may be restricted to “minimize circumvention of [individual] contribution limits.” 

The case involved $15,000 worth of expenditures 

the Colorado Republican Party (the Party) made in 

1986 for advertisements critical of Democratic Senate 

candidate Timothy Wirth. The Commission argued 

that those ads contained an “electioneering message” 

relating to a clearly identified candidate, and represented coordinated expenditures by the Party. The 

Commission further maintained that these expenditures, when aggregated with previous expenditures by 

the Party, exceeded the statutory limits of §441(a)(d). 

The Party contended that the ads were not coordinated with any candidate and did not contain express 

advocacy, and thus they were not subject to the 

4

 Under 11 CFR 100.23(c)(2)(iii), substantial discussion 

or negotiation may include one or more meetings, conversations or conferences about the value or importance of a 

communication for a particular election. The Commission 

clarified that whether these discussions or negotiations 

qualify as “substantial” depends upon their substance rather 

than upon their frequency. 
18 Chapter Three 

441a(d) limits. The Party further argued that the 

441a(d) limits violated its First Amendment rights. 

Colorado I. The U.S. Supreme Court agreed to 

hear the case principally to resolve the constitutional 

question. In its June 26, 1996, plurality decision, the 

Court concluded that the Party’s expenditures had not 

been coordinated with a candidate, and were instead 

independent. The Court also concluded that the 

441a(d) limits were unconstitutional as applied to 

political parties’ independent spending. The Court did 

not rule on the constitutionality of the limits on coordinated party expenditures, but instead remanded the 

case to the district court for further proceedings on 

that issue. 

Colorado II. On February 23, 1999, the district 

court ruled that the coordinated party expenditure 

limits were unconstitutional. The court concluded the 

FEC had failed to offer evidence that there was a 

compelling need for limits on coordinated party expenditures. In its opinion, the court equated coordinated party expenditures with a candidate’s own campaign expenditures which, based on the Supreme 

Court’s ruling in Buckley v. Valeo, cannot be limited. 

The FEC appealed this decision to the Court of Appeals for the 10th Circuit, which affirmed the district 

court’s decision on May 5, 2000. The FEC then appealed to the U. S. Supreme Court. 

The Supreme Court upheld the constitutionality of 

coordinated party expenditure limits. In doing so, the 

Court: 

• Rejected the Party’s argument that unrestricted coordinated spending was essential to the nature of 

parties, finding that parties have functioned effectively during the previous three decades, during 

which the coordinated expenditure limits were in 

place; 

• Rejected the Party’s argument that parties primarily 

acted to elect particular candidates, finding that “parties are [also] necessarily the instrument of contributors . . . whose object is not to support the party’s 

message or to elect party candidates, but rather to 

support a specific candidate for the sake of a position on one, narrow issue, or even to support any 

candidate who will be obliged to contributors;” 

• Found that a party was not in a unique position visà-vis other political spenders, such as wealthy individuals, PACs and media executives, all of whom 

could coordinate expenditures with a candidate’s 

campaign. Instead, precisely because political parties could efficiently amplify their members’ power 

through aggregating contributions and broadcasting 

messages, they were in a position to be used to 

circumvent contribution limits. 

Corporate Contributions 

The Act prohibits corporations and labor organizations from using their treasury funds to make contributions or expenditures in connection with federal elections. 2 U.S.C. §441b. However, based on the Supreme Court’s decision in FEC v. Massachusetts Citizens for Life (MCFL), Commission regulations at 11 

CFR 114.10 provide that certain “qualified nonprofit 

corporations” may be exempt from the prohibition on 

corporate independent expenditures. To be considered a “qualified nonprofit corporation,” a corporation 

must meet the following criteria: 

• Its only express purpose is to promote political ideas 

and it does not engage in business activities; 

• It does not have shareholders or other persons who 

have a claim on its assets or earnings, or who have 

other disincentives to disassociate themselves from 

the organization; and 

• It was not established by a business corporation or 

labor union and has a policy of not accepting donations from such entities. 

During 2001, two court cases challenged the constitutionality of that ban and related provisions of FEC 

regulations. 

Beaumont, et al v. FEC 

On January 24, 2001, the United States District 

Court for the Eastern District of North Carolina found 

that provisions of the Act and Commission regulations 

prohibiting corporate contributions and expenditures 

were unconstitutional as applied to North Carolina 

Right to Life, Inc. (NCRL), a qualified nonprofit corpo-
Legal Issues 19 

ration. The court found that the statute and regulations infringed on NCRL’s First Amendment rights 

without a compelling state interest. As a result, the 

court permanently enjoined the Commission from 

relying on, enforcing or prosecuting violations of 2 

U.S.C. §441b and 11 CFR 114.2(b) and 114.10—or 

any other parts of the Act whose restrictions flow from 

these provisions—against the plaintiffs. 

The court did not find, however, that 2 U.S.C. 

§441b and its implementing regulations were unconstitutional on their face. In order to find a statute facially unconstitutional, rather than merely invalid as 

applied to a specific case, the court must find that its 

constitutional infringements are “substantial” in relation to its legitimate uses. The plaintiffs submitted a 

list of nonprofit, tax-exempt corporations to prove that 

the statute’s unconstitutional infringement was “substantial” in that it reached “hundreds, if not thousands, 

of constitutionally protected ideological corporations.” 

The court, however, ruled that the plaintiffs had failed 

to show that the statute’s constitutional infringements 

were substantial in relation to their “plainly legitimate 

sweep.” The court said, “In light of these numbers [4.5 

million for-profit corporations] and the importance of 

the statute’s ‘plainly legitimate’ purpose of regulating 

for-profit corporations, its inadvertent infringement on 

the rights of ‘hundreds if not thousands’ does not appear ‘substantial’ . . . .” The court concluded that the 

constitutionality of the statute should be considered 

on a case-by-case basis.5 

FEC v. NRA 

On June 29, 2001, the U.S. Court of Appeals for 

the District of Columbia Circuit ruled that the National 

Rifle Association (NRA) and its lobbying organization, 

the NRA American Institute for Legal Action (ILA), 

violated the Act’s ban on corporate contributions and 

expenditures during the 1978 and 1982 election 

cycles. 2 U.S.C. §441b(a). While the district court had 

ruled that the NRA also violated the ban in 1980, the 

appellate court determined that during 1980 the NRA 

qualified for the MCFL exemption from the ban. As a 

result, the appeals court remanded the case to the 

lower court in order to have civil penalties calculated 

based on the 1978 and 1982 violations alone. 

During the 1978, 1980 and 1982 election cycles, 

the NRA paid $37,833 for expenses incurred by its 

separate segregated fund, the Political Victory Fund 

(the Fund), for federal election activity, including payments for newspaper advertisements, direct mailings 

and other materials that supported or opposed individual candidates. The Fund then distributed these 

materials and later reimbursed the NRA for the expenses; the Fund reported the disbursements as independent expenditures on its FEC disclosure reports. 

In 1985, the Commission filed a civil suit against 

the NRA, the ILA and the Fund, claiming that they had 

violated the Act’s prohibition on corporate contributions and expenditures. In response, the NRA argued 

that its payments on behalf of the Fund were for that 

committee’s administrative expenses and, thus, permissible under the Act.6

 The NRA also challenged the 

constitutionality of the Act as applied to its activities, 

arguing that the organization should qualify for the 

MCFL exemption. 

The district court had rejected the NRA’s argument 

that its payments to the Fund were merely for administrative expenses. The court had also concluded that 

the NRA, unlike MCFL, did not qualify for the exemption from the Act’s prohibition on corporate independent expenditures. 

The appeals court similarly rejected the NRA’s 

argument that its payments were administrative expenses and deferred to the Commission’s interpretation of the definition of administrative expenses at 11 

CFR 114.1(b), which allows corporations to cover only 

the overhead and start-up costs of their political action 

committees. The court also deferred to the 

Commission’s interpretation that 11 CFR 114.9(c) 

does not allow a separate segregated fund to reimburse its connected organization for the use of facili5

 On January 25, 2002, the U.S. Court of Appeals for the 

Fourth Circuit affirmed the district court’s decision that 

NCRL is exempt from 2 U.S.C. §441(b)’s prohibition on 

corporate contributions. 

6

 Section 441b(b)(2)(C) permits a corporation acting as 

the connected organization of a political action committee to 

pay for the committee’s “establishment, administration, and 

solicitation of contributions.” 
20 Chapter Three 

ties to produce materials in connection with a federal 

election.7 Finally, the court held that the NRA’s payments to its employees who were working for the 

Fund on candidates’ campaigns were prohibited corporate contributions to the Fund. In reaching this 

conclusion, the court relied in part on a Commission 

advisory opinion. The court held that the agency’s 

advisory opinions are entitled to full deference because they “not only reflect the Commission’s considered judgment made pursuant to congressionally 

delegated lawmaking power, but [they] also have 

binding legal effect.” 

In considering whether the NRA qualified for the 

MCFL exemption, the court stated that to distinguish 

the NRA from the kinds of corporations exempted by 

the Supreme Court in MCFL, “the Commission must 

demonstrate that the NRA’s political activities threaten 

to distort the electoral process through the use of 

resources that, as MCFL put it, reflect the 

organization’s ‘success in the economic marketplace’ 

rather than the ‘power of its ideas.’” The court found 

that, although the NRA sponsors seemingly non-political activities and services such as firearms competitions, training classes, accident insurance and magazines, these activities were not so distinct from its 

political activities that members who disagreed with 

the political activities would still participate in the nonpolitical activities. The court concluded that the Commission had “failed to demonstrate that the NRA resembles a business firm more closely than a voluntary

association.” 

The court found, however, that the large amount of 

corporate contributions that the NRA received in 1978 

and 1982 was substantial enough to risk turning it into 

a “potential conduit for the corporate funding of political activity,” and that there was no constitutional barrier to applying the Act’s prohibitions to the NRA during those two years. In 1980, the NRA received only 

$1,000 in corporate contributions, and the court ruled 

that the NRA qualified for MCFL exemption during 

that year. 

Public Access to Enforcement 

Actions 

The Act requires that all notifications and investigations undertaken by the Commission remain confidential, unless the parties involved waive their right to 

confidentiality in writing. 2 U.S.C. §437g(a)(4)(B). 

When investigations have been concluded, however, 

the Commission has made files available to the public 

through the FEC’s Press Office and Public Records 

Office. 

Occasionally, cases that the Commission pursues 

result in litigation in the federal courts. Despite the 

Act’s confidentiality provision regarding Commission 

investigations, the public, as a general rule, has a 

right of access to all court documents. As a result, for 

the past 20 years the Commission has followed a 

policy of litigating cases on the public record rather 

than under seal when enforcing its administrative 

subpoenas. 

On January 26, 2001, the United States Court of 

Appeals for the District of Columbia Circuit ruled, in In 

re: Sealed Case, 237 F.3d 657, that the Act requires 

subpoena enforcement actions filed during an enforcement investigation to be litigated under seal. 2 

U.S.C. §437g(a)(12). The Commission decided not to 

seek further review in this case and, on February 15, 

2001, issued a statement clarifying its subpoena enforcement policy. In part, the statement read: 

The Commission has decided not to seek review of 

the DC Circuit’s ruling, which is the first appellate 

decision on this issue. The Commission intends to 

follow this ruling in all subpoena enforcement filings, 

in all judicial circuits, unless directed otherwise. 

The DC Circuit’s concern that filing subpoena enforcement actions in public might reflect some partisan motivation on the Commission’s part is not supported by the record. For 20 years the Commission 

followed its policy consistently, regardless of the political party or beliefs of the person being investigated, 

as examination of subpoena actions filed by the 

agency shows. 

By law subpoena enforcement actions never are 

7

 Under that provision, employees must reimburse the filed in court without a majority vote of the six Comcorporation, within a commercially reasonable time, for the 

usual market price for producing the materials. 
Legal Issues 21 

missioners, no more than three of whom may be from 

any one party. That procedure was followed in this 

case, without regard to politics. 

While respectfully adhering to the holding of the DC 

Circuit, the Commission hopes this statement will 

assure the public of the agency’s commitment to fair 

and impartial administration of the campaign finance 

laws. 

AFL-CIO & DNC v. FEC 

In another enforcement disclosure case, on December 19, 2001, the U.S. District Court for the District of Columbia found that the FEC’s decision to 

disclose documents obtained during an investigation 

of the plaintiffs was arbitrary, capricious and contrary 

to law. The court ruled that the confidentiality provision of the Act and an FEC regulation prohibit the 

Commission from making public the investigatory files 

of matters under review (MURs). The court also found 

that the Commission is required to redact names and 

other individual identifying information from the files 

prior to release under the Freedom of Information Act 

(FOIA). 

The Commission had previously found reason to 

believe that the plaintiffs violated the Act during the 

1995-96 election cycle (MURs 4291, et al.). At the 

conclusion of its investigation, the Commission voted 

to take no further action on MURs 4291, et al. and to 

close the files. In keeping with its long-standing practice of disclosing the investigatory record once a MUR 

is closed, the Commission planned to make public a 

portion of the investigatory file. 11 CFR 5.4(a)(3) and 

(4). 

The plaintiffs claimed that public disclosure of the 

files would cause irreparable injury by revealing confidential information to their political opponents, the 

media and the public, and by chilling the plaintiffs’ 

future efforts to engage in political activities. The 

plaintiffs asked the Commission not to make the 

documents public. The Commission denied their requests, and the AFL-CIO and DNC filed suit. On July 

17, 2001, the U.S. District Court for the District of 

Columbia granted the plaintiffs’ request for a preliminary injunction barring the Commission from publicly 

releasing certain documents relating to the investigation until the court made a final decision in this case. 

The plaintiffs requested summary judgment from 

the court, arguing that disclosure of the documents 

would violate the confidentiality provision of the Act, 

which states that: 

“Any notification or investigation made under [the 

enforcement] section shall not be made public by the 

Commission or by any person without the written consent of the person receiving such notification or the 

person with respect to whom such investigation is 

made.” 2 U.S.C. §437g(a)(12)(A). 

The plaintiffs further claimed that publicizing the 

MUR documents would violate: 

• FOIA exemptions at 5 U.S.C. §552(b)(3) and (7)(C); 

• The Privacy Act (5 U.S.C. §522a(b)); and 

• The First Amendment. 

The Commission argued that the Act only protects 

the confidentiality of ongoing investigations. Once a 

MUR is closed, the Act requires the Commission to 

make public the conciliation agreement or the 

Commission’s determination that the Act has not been 

violated. 2 U.S.C. §437g(a)(4)(B)(ii). The Commission 

asserted that the Act’s confidentiality provision was 

intended to protect a MUR respondent from disclosure of the fact that the respondent is under investigation. When the Commission makes public its MUR 

determination, it also reveals the fact that the respondent has been investigated, leaving nothing to be 

protected by the confidentiality provision. 

The court, however, concluded that the plain language of the Act barred the Commission from publicizing investigative materials and, thus, that the 

Commission’s interpretation of the statute ran counter 

to congressional intent. 2 U.S.C. §437g(a)(12)(A). 

The court explained that, “Had Congress intended 

§437g(a)(12)(A) to expire upon the conclusion of an 

FEC investigation, it certainly knew how to draft language to accomplish that goal.” The court found that 

the Act’s provision requiring that MUR determinations 

be made public was a limited exception to the Act’s 

confidentiality provision, not a directive to end the 

protection of that provision. 2 U.S.C. 

§437g(a)(4)(b)(ii). Moreover, the court concluded that 
22 Chapter Three 

publication of the materials would violate one of the 

Commission’s regulations that implements the Act’s 

confidentiality provision. 11 CFR 111.21(a). 

The plaintiffs also claimed that publicizing the MUR 

documents would violate certain FOIA exemptions. 

FOIA exemption 7(C) protects information compiled 

for law enforcement purposes that, if released, could 

reasonably be expected to constitute an unwarranted 

invasion of personal privacy. 5 U.S.C. §552(b)(7)(C). 

The plaintiffs claimed that this exemption protected 

the identities and personal information of all individuals named in the investigative files. The Commission 

argued in response that: 

• Individuals named in the files had a diminished expectation of privacy resulting from the Act’s reporting 

requirements, its administrative enforcement procedures, the Commission’s public disclosure regulations and the potential for enforcement cases to be 

litigated in federal district court (2 U.S.C. 437g(a)(6) 

and (8)); 

• The public interest in the disclosure of the results of 

any FEC enforcement investigation outweighed the 

privacy interest of the named individuals; and 

• Much of the information contained in the files was 

already in the public domain and could thus be disclosed despite the FOIA exemption. 

The court rejected the Commission’s claims concerning the public interest and individuals’ expectations of privacy because the District of Columbia Circuit has established a categorical rule that an agency 

must exempt from disclosure the names and identifying information of individuals appearing in an 8 agency’s law enforcement files. Moreover, the court 

found that the Commission had failed to show that the 

majority of the names of individuals contained in the 

materials were already in the public domain. 

The court, having found that disclosure would violate the Act and Commission regulations, as well as 

8

 Citing the DC Circuit, the court held that this rule applies unless that information is necessary to confirm or 

refute compelling evidence that the agency engaged in 

illegal activity. 

FOIA exemption 7(C), did not reach the merits of the 

plaintiffs’ First Amendment or Privacy Act claims. The 

court granted the plaintiffs’ motion for summary judgment in this case and denied the Commission’s motion for summary judgment.9 

Party Building Funds 

Under the Act and Commission regulations, funds 

given or loaned to a national or state party committee 

are not contributions if they are specifically designated to defray the costs incurred for the construction 

or purchase of an office facility. However, the facility 

must not be acquired for the purpose of influencing 

any particular election of a federal candidate. 2 

U.S.C. §431 (8)(B)(viii); 11 CFR 100.7(b)(12), 

100.8(b)(13), and 114.1(a)(2)(ix). In the past, the 

Commission has permitted party committees to accept corporate and labor union donations to office 

building funds. In 2001, the FEC issued two advisory 

opinions on this topic. 

Advisory Opinions 

Use of Building Funds for Expenses. In AO 

2001-1, the Commission determined that the North 

Carolina Democratic Party (the Party) could use its 

office building fund to pay for construction management expenses and architectural fees because they 

were directly related to the restoration and renovation 

of the Party’s headquarters. The Commission noted 

that the architectural fees qualified as “capital expenditures” under the Internal Revenue Code. In addition, the Party could use its office building fund to pay 

the salary and other expenses of an employee whose 

9

 On February 15, 2002, the Commission appealed this 

case to the U.S. Court of Appeals for the District of Columbia Circuit. 
Legal Issues 23 

sole responsibility was to raise money for the office 

building fund. These expenses did not have to be 

allocated because the fundraising was solely for the 

office building fund.10 

In a related opinion, AO 2001-12, the Commission 

concluded that the Democratic Party of Wisconsin 

(the DPW) could accept corporate donations to a 

building fund for the purchase, renovation or construction of a headquarters facility, despite state laws prohibiting such donations. The party could also use 

these funds to finance capital improvements to its 

facility, as defined by the Internal Revenue Code, and 

to pay the salary of an employee whose sole responsibility was to raise money for the building fund. The 

DPW could not, however, use the fund to pay off the 

balance of the lease on its current building because 

such an expense does not fall under the building fund 

exemption. 

Personal Use of Campaign Funds 

A federal candidate and the candidate’s committee 

may use excess campaign funds for any lawful purpose but may not convert these funds to the personal 

use of the candidate or any other person. 2 U.S.C. 

§439a and 11 CFR 113.2(d). The personal use ban 

applies to expenses that would exist irrespective of 

the candidate’s campaign or officeholder duties, and 

the regulations list specific uses of campaign funds 

that are considered automatic personal use expenses. For situations that fall outside of those listed, 

the Commission determines whether or not an expense constitutes personal use on a case-by-case 

basis. There were five such cases in 2001. 

Advisory Opinions 

Donations to Legal Defense Fund of Member of 

Congress. In AO 2000-40, the Commission ruled 

that various members of Congress, including Representative Jim McDermott, could donate excess campaign funds from their respective authorized committees to Rep. McDermott’s legal defense fund, the Jim 

McDermott Legal Expense Trust (the Trust). The 

Trust was established to pay the expenses of a civil 

lawsuit that resulted from Rep. McDermott’s activities 

as a congressman; thus, the Trust did not exist irrespective of his, or his colleagues’, duties as federal 

officeholders. Donations to the Trust by Rep. 

McDermott or other members of Congress did not 

constitute personal use of campaign funds under the 

Act and were not considered contributions as long as 

the funds in the Trust were used lawfully and kept 

separate from any other campaign or personal accounts. 

Purchase of an Automobile for Campaign Staff. 

In AO 2001-3, the FEC allowed the primary campaign 

committee for Congressman Gregory Meeks, Meeks 

for Congress (the Committee), to use campaign funds 

to purchase an automobile that would be used primarily for campaign purposes. Unreimbursed 

noncampaign use of the vehicle could only be of a de 

minimus amount to comply with the ban on personal 

use. The Committee’s intention to use the automobile 

five percent of the time for noncampaign activity was 

ruled to be de minimus by the FEC. The Committee 

was expected to keep a mileage log, updated with 

each use of the car, to document the campaign and 

noncampaign use. This log would allow the Committee to comply with the recordkeeping requirements for 

committee reports. 

Purchase of Candidate’s Autobiography for 

Distribution to Contributors. In AO 2001-8, the 

Commission determined that Senator Arlen Specter’s 

principal campaign committee, Citizens for Arlen 

Specter (the Committee), could use campaign funds 

to purchase copies of the Senator’s autobiography for 

distribution only to campaign contributors. To assure 

no improper personal use, Senator Specter was precluded from receiving any royalties as a result of the 

Committee’s purchase; instead, the royalties would be 

10 When one fundraising program or event is held to 

collect funds that will be used to influence both federal and 

nonfederal elections, the sponsoring committee must allocate the direct costs of the activity between its federal and 

nonfederal accounts using the “funds received” allocation 

method. Under this method, the costs are allocated according to the ratio of federal funds received to total receipts for 

the program or event. 11 CFR 106.5(f). 
 

24 Chapter Three 

given to charity. In addition, in order to avoid a prohibited corporate contribution from the publisher, the 

Committee was required to pay the usual and normal 

bulk rate that publishers would charge large purchasers. 

Former Candidate’s Use of Campaign Funds to 

Pay Consulting Expenses Related to Media Inquiries. In AO 2001-9, the Commission ruled that former 

Senator J. Robert Kerrey could use funds from his 

principal campaign committee, Kerrey for U.S. Senate 

(the Committee), to pay the costs of retaining a consulting firm to respond to media inquiries concerning 

an incident during his military service in the Vietnam 

War. The media first began investigating his military 

activities when Mr. Kerrey was still in the Senate and 

continued when he was a potential presidential candidate. The Commission found that these inquiries 

were motivated by a desire to present important information about his fitness as a federal candidate and 

officeholder. Thus, the Committee’s payment of consulting expenses did not violate the ban on personal 

use because the media interest that the public relations firm responded to would not have occurred if Mr. 

Kerrey had not been a prominent Senator and federal 

candidate. The Commission noted, however, that Mr. 

Kerrey’s situation was unique and that the opinion did 

not establish any general rule regarding the use of 

campaign funds by former candidates or officeholders 

to pay for public relations expenses. 

Committee’s Employment of Candidate’s Wife. 

In AO 2001-10, the Commission found that Jesse L. 

Jackson, Jr.’s principal campaign committee, Jesse L. 

Jackson, Jr. for Congress (the Committee), could hire 

Congressman Jackson’s wife as a paid consultant. In 

order not to violate the ban on personal use of campaign funds, the Committee had to employ Ms. Jackson on the same terms that a campaign would normally use to employ a consultant and pay her no 

more than the fair market value for bona fide campaign services she provided to the Committee. 

National/State Party Status 

The Commission issued three advisory opinions in 

2001 that addressed state party committee status and 

one that addressed national party committee status. 

These designations are important because the Act 

grants qualified state and national party committees 

certain spending rights not available to other types of 

committees. A state or national party, for example, 

may make coordinated party expenditures in support 

of its general election nominees, and may authorize 

qualified local party committees to spend against its 

coordinated expenditure limit. 2 U.S.C. §441a(d), 11 

CFR 110.7(a)(4). In addition, state party committees 

may spend unlimited amounts for certain activities 

that benefit federal candidates but are not considered 

contributions. These “exempt activities” include preparing and distributing slate cards, sample ballots and 

campaign materials, and conducting voter drives on 

behalf of the party’s Presidential and Vice Presidential 

nominees. 

State Party Status 

Under the Act and Commission regulations, a state 

committee is defined as an organization which, by 

virtue of the bylaws of a political party, is responsible 

for the day-to-day operations of the party at the state 

level, as determined by the Commission. 2 U.S.C. 

§431(15); 11 CFR 100.14(a). In order to achieve 

state committee status under Commission regulations, an organization must meet two requirements. It 

must have:

 • Bylaws or a similar document that “delineates activities commensurate with the day-to-day operation” of 

a party at a state level; and 

• Ballot access for at least one federal candidate who 

has qualified as a candidate under Commission 

regulations.11 

11 An individual becomes a candidate for the purposes of 

the Act and Commission regulations once he or she receives contributions or makes expenditures aggregating in 

excess of $5,000. 2 U.S.C. §441a(d); 11 CFR 100.3(a). 
 

Legal Issues 25 

During 2001, the Commission applied these criteria 

to determine that the United Citizens Party of South 

Carolina (AO 2000-27), the Green Party of Kentucky 

(AO 2001-02) and the Green Party of Maryland (AO 

2001-6) satisfied the requirements for state party status. 

National Party Status 

The Act and Commission regulations define a national party committee as an organization which, by 

virtue of the bylaws of a political party, is responsible 

for the day-to-day operation of the party at the national level, as determined by the Commission. 2 

U.S.C. §431(14); 11 CFR 100.13. Before an organization can become a national party committee, it must 

qualify as a political party under the Act.12 In order to 

determine whether a political party qualifies as national party committee, the Commission looks to a 

variety of factors to assess the party’s activity on the 

national level. A party can demonstrate that it operates at the national level by: 

• Nominating candidates for various federal offices in 

numerous states; 

• Engaging in activities, such as voter registration, on 

an ongoing basis rather than with respect to a particular election; 

• Publicizing nationwide issues of importance to the 

party and its followers; 

• Holding a national convention; 

• Setting up a national office; and 

• Establishing state affiliates. 

During 2001, the Commission determined that the 

Green Party met the above criteria to qualify as a 

national party committee (AO 2001-13). 

Soft Money 

The role of soft money—funds raised and/or spent 

outside the limitations and prohibitions of the Act that 

may be permissible under various state laws—continued to receive attention during the year. When com12 The Act defines a political party as any organization 

that nominates a candidate for election to any federal office 

whose name appears on the election ballot as the candidate 

of such organization. 2 U.S.C. §431(16). 

mittees have both a federal, hard money account and 

a nonfederal, soft money account, they are required 

to allocate expenses between the two accounts in 

certain situations. Two advisory opinions in 2001 

addressed the issue of allocation and the transferring 

of funds between federal and nonfederal accounts. 

Advisory Opinions 

Late Transfer from Nonfederal to Federal Account of State Party Committee. In AO 2001-11, 

the Commission ruled that, in order to resolve an apparent bank account transfer problem, the Democratic 

Party of Virginia (the Party) could make a one-time 

transfer from its nonfederal account to its federal account outside the normal 70-day window for such 

transfers. 11 CFR 106.5(g)(2)(ii). Commission regulations require that a state party committee with separate federal and nonfederal accounts pay the expenses of mixed federal and nonfederal activities, 

including administrative expenses, from its federal 

account or a separate allocation account. 11 CFR 

106.5(g)(1). The committee may transfer funds from 

its nonfederal account to its federal account solely to 

cover the nonfederal share of the allocable expense. 

To prevent a prohibited contribution, such a transfer 

must be made no more than 10 days before, and no 

more than 60 days after, the payments for the allocable expense. 11 CFR 106.5 (g)(2)(ii). 

The problem in this case arose when the Party’s 

written request for a transfer from its nonfederal to its 

federal account was not processed by the bank. Because the Party made the request in a timely manner 

and because of the Party’s lack of control over the 

means of transfer, the Commission ruled that it could 

have the transfer made from its nonfederal to its federal account within 15 days of receipt of the advisory 

opinion. 

Allocation of Payments for Employee’s Salary, 

Benefits and Cell Phone Usage. In AO 2001-14, 

the Commission determined that the Los Angeles 

County Democratic Central Committee (the Committee) could use a combination of allocation ratios to 

allocate monthly payments for the salary, benefits and 

cell phone usage of an employee who managed media relations for the committee and organized multiple 
26 Chapter Three 

fundraising events and projects. Normally, administrative expenses such as salary are allocated according 

to a “ballot composition method,” while fundraising 

expenses are allocated using a “funds received 

method”—the ratio of funds received by the federal 

account to the total receipts for the event or program. 

11 CFR 106.5(d). Because the employee’s activities 

encompassed both administrative and fundraising 

expenses, the Committee was allowed to use a combination of both to arrive at the ratio to be used for 

allocation. 
27 

Chapter Four 

The Commission 

Commissioners 

During 2001, Danny L. McDonald served as Chairman of the Commission and David M. Mason as its 

Vice Chairman. On December 13, 2001, the Commission elected Mr. Mason to be its Chairman and Commissioner Karl J. Sandstrom to be its Vice Chairman 

in 2002. For biographies of the Commissioners and 

statutory officers, see Appendix 1. 

General Counsel 

On August 20, 2001, the Commission appointed 

Lawrence H. Norton as the FEC’s new General Counsel. Mr. Norton previously served as an Assistant 

Director at the Federal Trade Commission and, since 

1996, as the Associate Director of the Division of Enforcement at the Commodity Futures Trading Commission. He began his duties as General Counsel on 

September 17, 2001. 

Mr. Norton replaces Lawrence M. Noble, who 

served as General Counsel from 1987 through 2000. 

From January 1 through September 16, 2001, Lois G. 

Lerner served as the FEC’s Acting General Counsel. 

Inspector General 

Under the Inspector General Act, the Commission’s 

Office of the Inspector General (OIG) is authorized to 

conduct audits and investigations of FEC programs to 

find waste, fraud and abuse and to promote economy, 

effectiveness and efficiency within the Commission. 

During 2001, the OIG conducted inspections and 

suggested improvements in a variety of areas, particularly regarding the Commission’s web site privacy 

practices, the use of the Westlaw database service 

and compliance with the Federal Managers’ Financial 

Integrity Act. 

The OIG also responded to Congressional requests for information on recovery auditing and on the 

requirements of the Omnibus Consolidated Appropriation Act. In addition, the OIG conducted four unannounced quarterly cash counts of the FEC imprest 

fund.1 

Equal Employment Opportunity 

The FEC’s Office of Equal Employment Opportunity (EEO) continued its leadership in the area of Alternative Dispute Resolution (ADR) during 2001. 

Jointly administered by the EEO Director, Personnel 

Director and three EEO Counselors, the ADR program, or Early Intervention Program, works to resolve 

employee concerns that might otherwise result in 

formal EEO complaints. Employees participating in 

the program voluntarily agree to meet with the EEO 

Director or Personnel Director, an EEO Counselor 

and/or the party allegedly responsible for the discrimination or wrongdoing. If attempts to resolve the dispute through ADR fail, the employee may proceed 

with EEO counseling and may file a formal EEO complaint or grievance. In the next year, the office plans 

to issue an EEO Handbook on ADR, and another on 

Reasonable Accommodations. 

During 2001, no formal complaints were brought 

before the EEO Director. As a result of this accomplishment, the Commission has informally resolved 

100 percent of the complaints that employees have 

voluntarily brought to the EEO office since March 1994. 

During the year, the EEO office honored three departing FEC managers, Louise Wides, Lois Lerner 

and Kim Leslie Bright, with the Commission’s Award 

for Excellence in Equal Employment Opportunity and 

Cultural Diversity. In addition, the office held a special 

recognition ceremony in February 2001 to honor six 

women leaders in the Commission. Another ceremony 

in June recognized six senior managers at the FEC. 

Ethics 

Staff members in the General Counsel’s office 

serve as the Commission’s ethics officials and admin1

 Effective October 1, 2001, federal agencies are no 

longer required to maintain imprest funds. 
28 Chapter Four 

ister the Ethics in Government Act program. During 

2001, the staff provided ethics orientation to all new 

employees and annual ethics briefings to all employees required to file public and confidential financial 

disclosure reports. Staff also administered the financial disclosure report system, which helps ensure that 

employees remain impartial in the performance of 

their official duties. In addition, ethics staff provided 

guidance to employees on the Standards of Ethical 

Conduct for Employees of the Executive Branch. Finally, the staff submitted required reports to the Office 

of Government Ethics, including the annual agency 

ethics program report, financial disclosure reports filed 

by presidential candidates and travel payment reports. 

Personnel and Labor/Management 

Relations 

The Personnel Office provides policy guidance and 

operational support to FEC managers and staff in the 

area of human resources. During 2001, the Personnel Office developed agency policy for the administration of numerous federal leave programs, provided 

training for senior management in a variety of areas 

and implemented new procedures for the timely administration of security and background investigations 

for new employees. In addition, the Personnel Office 

recruited and hired over 70 new employees during the 

year and represented the Commission as chief negotiator in contract negotiations with the union. 

FEC’s Budget 

Fiscal Year 2001 

The Commission received a $40.41 million FY 2001 

appropriation, supporting a total FTE level of 357. 

Fiscal Year 2002 

In the spring of 2001, the Commission sent its FY 

2002 budget proposal to Congress and the Office of 

Management and Budget. The Commission requested $47.67 million and 375 FTE for FY 2002, a 

17.9 percent increase and 18 additional personnel 

over FY 2001. In testimony before the House Appropriations Subcommittee on Treasury, Postal Service 

and General Government, Vice-Chairman David Mason noted that the increase was needed to expand 

the Commission’s Office of Election Administration 

and to support recently-developed programs, such as 

those regarding mandatory electronic filing, administrative fines, state filing waivers and alternative dispute resolution. 

In the end, the Commission received a $43.69 million FY 2002 appropriation and 362 FTE. This appropriation represented the FEC’s Current Services request, adjusted to cover the full cost of the final government-wide cost-of-livingadjustment (COLA) for 

federal pay. It also provided for the five additional 

FTE the Commission requested to complete, maintain 

and enhance its programs. 

Budget Allocation: FYs 2001 and 2002 

Budget allocation comparisons for FYs 2001 and 

2002 appear in the table and charts that follow. 

CHART 4-1 

Functional Allocation of Budget 

FY 2001 FY 2002 

Personnel $27,332,679 30,220,000 

Travel/Transportation 376,311 560,500 

Space Rental 3,600,509 3,782,500 

Phones/Postage 413,940 455,000 

Printing 265,860 377,000 

Training/Tuition 150,664 335,000 

Depositions/Transcripts 53,000 80,000 

Contracts/Services 2,104,061 2,594,000 

Equipment Rental/Maint 375,029 1,114,500 

Software/Hardware 2,505,375 1,382,000 

Federal Agency Service 335,640 350,500 

Supplies 346,969 378,000 

Publications 439,235 509,500 

Equipment Purchases 1,939,020 1,337,000 

Other 127,166 213,500 

Total $40,410,900 43,689,000 
FY 2001 Actual 

FY 2002 Projected 

The Commission 29 

CHART 4-2 

Divisional Allocation 

Percent 

Allocation of Budget 0 5 10 15 20 25 30 35

Commissioners� 

Inspector General� 

Staff Director� 

Administration� 

Audit� 

Information� 

Office of Election Administration� 

Office of General Counsel� 

Data Systems Development� 

Public Disclosure Division� 

Reports Analysis Division� 

ADP/Electronic Filing 

Percent 

0 5 10 15 20 25 30 35 Allocation of Staff 

Commissioners� 

Inspector General� 

Staff Director� 

Administration� 

Audit� 

Information� 

Office of Election Administration� 

Office of General Counsel� 

Data Systems Development� 

Public Disclosure Division� 

Reports Analysis Division� 

ADP/Electronic Filing 
31 

Chapter Five 

Presidential Public Funding 

Public funding has been a key part of the Presidential election system since 1976. The program is 

funded by the $3 tax checkoff and administered by 

the Federal Election Commission. Through the public 

funding program, the federal government provides 

matching funds to qualified candidates for their primary campaigns and offers federal funds to major and 

minor parties for Presidential nominating conventions 

as well as to qualified Presidential nominees for their 

general election campaigns. 

Shortfall 

During 2001, the Commission warned of a significant shortfall in the Presidential Election Campaign 

Fund for the 2004 Presidential elections. The forecast was based on several factors, including the fact 

that payments from the Fund are adjusted for inflation 

but Fund receipts are not, and taxpayer participation 

in the tax checkoff program has remained low. Preliminary FEC staff projections indicate that the balance in the Fund in January 2004 will be approximately $4.6 million, while demand is estimated to be 

between $23.9 and 36.2 million. Based on these 

estimates, candidates will receive approximately 13 to 

19 cents on the dollar with the first payment. While 

these are unofficial projections that are subject to 

change, they suggest that the shortfall will extend until 

May 2004 and may last as long as April 2005. 

For several years, the Commission has urged Congress to help alleviate the shortfall problem. Revising 

the “set aside” of general election funds and increasing and indexing the checkoff amount are possible 

solutions. 

Update on Presidential Debates 

Lawsuits 

Under FEC regulations, certain nonprofit corporations may stage or sponsor candidate debates, exempt from the prohibition against corporate contributions, so long as the corporations follow specific rules 

(“safe harbor”). For example, the debates must be 

between at least two candidates and must be staged 

so as not to promote or advance one candidate over 

another. A debate sponsor must also use “pre-established objective criteria” for choosing which candidates will participate. 11 CFR 110.13. During the 

2000 campaign, several lawsuits were filed challenging these debate regulations. In 2001, two of these 

cases were resolved. 

Nader v. FEC 

On April 30, 2001, the U.S. Supreme Court denied 

the plaintiffs’ petition for a writ of certiorari to review a 

decision by the U.S. Court of Appeals for the First 

Circuit upholding the FEC’s debate regulations. Petitioners had asked for the debate regulations to be set 

aside, arguing that the regulations were in excess of 

the FEC’s statutory authority under the Federal Election Campaign Act (the Act) because they allowed 

corporations to help stage and fund debates that excluded independent and ballot-qualified third party 

candidates. This case was originally filed as Becker 

v. FEC. 

Committee for a Unified Independent Party v. FEC 

On October 10, 2001, the U.S. District Court for the 

Southern District of New York granted the 

Commission’s motion to dismiss this case, finding that 

the Committee for a Unified Independent Party, Inc., 

along with the political parties and individuals who 

filed suit (collectively the plaintiffs), lacked standing to 

challenge the Commission’s debate regulations. The 

plaintiffs had asked the court to find that the FEC’s 

debate regulations were not authorized by the Act and 

violated the First and Fifth Amendments because they 

allowed corporate sponsorship. The court found that 

the plaintiffs lacked standing because they either 

were not injured as a result of the regulations or could 

not trace their injury directly to the regulations. Having found that the plaintiffs lacked standing, the court 

ordered the case closed without considering the merits of plaintiffs’ claims. 
32 Chapter Five 

Audits of 2000 Presidential 

Campaigns 

During 2001, the Audit Division completed preliminary audit reports for four of the ten publicly-funded 

primary candidates who ran in 2000, as well as for 

two host committees and two convention committees. 

By the end of the year, the Commission had approved 

all of these preliminary audit reports as well as the 

audit report for one of the host committees. 
33 

Chapter 6 

Campaign Finance Statistics 

CHART 6-1 

Number of PACs, 1974-2001 

2000 

1500 

1000 

500 

0 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 

Corporate 

Nonconnected 

Trade/Membership/Health 

Labor 

Other 
34 Chapter Six 

CHART 6-2 

Receipts of House Candidates for Each Year 

of Election Cycle, 1991-2001 

Election Year 

Off-Election Year 

200 

Millions of Dollars 

150 

100 

50 

0 

92 94 96 98 00 01 92 94 96 98 00 01 92 94 96 98 00 01 92 94 96 98 00 01 92 94 96 98 00 01 92 94 96 98 00 01 

Democrats Republicans Democrats Republicans Democrats Republicans 

Incumbents Challengers Open Seat Candidates 
CHART 6-3 

House Campaign Fundraising in 

Nonelection Years 

Receipts from Other Sources 

Receipts from PACs 

Receipts from Individuals 

Millions of Dollars 

200 

150 

100 

50 

0 1991 1993 1995 1997 1999 2001 

CHART 6-4 

Senate Campaign Fundraising in 

Nonelection Years 

Receipts from Other Sources 

Receipts from PACs 

Receipts from Individuals 

Millions of Dollars 

120 

100 

80 

60 

40 

20 

0 1991 1993 1995 1997 1999 2001 

Campaign Finance Statistics 35 
CHART 6-5 

Nonelection Year Fundraising by National Party 

Committees: Federal and Nonfederal Accounts 

Federal Dollars 

Nonfederal Dollars 

36 Chapter Six 

Republican National Committee 

Millions of Dollars 

0 

10 

20 

30 

40 

50 

60 

70 

1993 1995 1997 1999 2001 

Democratic National Committee 

Millions of Dollars 

0 

10 

20 

30 

40 

50 

1993 1995 1997 1999 2001 
CHART 6-6 

Sources of National Party Committee: 

Federal Account Receipts in Nonelection 

Years 

1993 

1995 

1997 

1999 

2001 

50 

Republican National Committee 

Millions of Dollars 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

Individuals Individuals PACs Other 

Less Than $200 

$200 or More

Democratic National Committee 

Millions of Dollars 

50 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

Individuals Individuals PACs Other 

Less Than $200 

 $200 or More 

Campaign Finance Statistics 37 
CHART 6-7 

Sources of National Party Committee: 

Nonfederal Account Receipts 

in Nonelection Years 

1993 

1995 

1997 

1999 

2001 

Republican National Committee 

Millions of Dollars 

35 

30 

25 

20 

15 

10 

5 

0 

Corporate Individuals Other 

38 Chapter Six 

Democratic National Committee 

Millions of Dollars 

35 

30 

25 

20 

15 

10 

5 

0 

Corporate Labor Individuals PACs Other 
39 

Appendix 1 

Biographies of 

Commissioners 

and Officers 

Commissioners 

Danny L. McDonald, Chairman 

April 30, 20051 

Now serving his fourth term as Commissioner, 

Danny McDonald was first appointed to the Commission in 1981 and was reappointed in 1987, 1994 and 

2000. Before his original appointment, he managed 

10 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, 1989, 1995 and 2001. 

David M. Mason, Vice-Chairman 

April 30, 2003 

David Mason was nominated to the Commission by 

President Clinton on March 4, 1998, and confirmed by 

the U.S. Senate on July 30, 1998. Prior to his appointment, Mr. Mason served as Senior Fellow, Congressional Studies, at the Heritage Foundation. He joined 

Heritage in 1990 as Director of Executive Branch 

Liaison. In 1995 he became Vice President, Government Relations, and in 1997 Mr. Mason was designated Senior Fellow with a focus on research, writing 

and commentary on Congress and national politics. 

Prior to his work at the Heritage Foundation, Commissioner Mason served as Deputy Assistant Secretary of Defense and served on the staffs of Senator 

John Warner, Representative Tom Bliley and thenHouse Republican Whip Trent Lott. He worked in 

numerous Congressional, Senate, Gubernatorial and 

Presidential campaigns, and was himself the Republican nominee for the Virginia House of Delegates in 

the 48th District in 1982. 

Commissioner Mason attended Lynchburg College 

in Virginia and graduated cum laude from Claremont 

McKenna College in California. He is active in political 

and community affairs at both the local and national 

level. He and his wife reside in Lovettsville, Virginia, 

with their six children. 

Karl J. Sandstrom, Commissioner 

April 30, 2001 

Karl Sandstrom was nominated to the Commission 

by President Clinton on July 13, 1998 and confirmed 

by the U.S. Senate on July 30, 1998. Prior to his appointment, Commissioner Sandstrom served as 

Chairman of the Administrative Review Board at the 

Department of Labor. From 1988 to 1992 he was Staff 

Director of the House Subcommittee on Elections, 

during which time he also served as the Staff Director 

of the Speaker of the House’s Task Force on Electoral Reform. From 1979 to 1988, Commissioner 

Sandstrom served as the Deputy Chief Counsel to the 

House Administration Committee of the House of 

Representatives. In addition, he has taught public 

policy as an Adjunct Professor at American University. 

Commissioner Sandstrom received a B.A. degree 

from the University of Washington, a J.D. degree from 

George Washington University and a Masters of the 

Law of Taxation from Georgetown University Law 

Center. 

Bradley A. Smith 

April 30, 2005 

Bradley Smith was nominated to the Commission 

by President Clinton on February 9, 2000, and confirmed by the U.S. Senate on May 24, 2000. Prior to 

his appointment, Commissioner Smith was Professor 

of Law at Capital University Law School in Columbus, 

Ohio, where he taught Election Law, Comparative 

Election Law, Jurisprudence, Law & Economics and 

Civil Procedure. 

Prior to joining the faculty at Capital in 1993, he 

had practiced with the Columbus law firm of Vorys, 

Sater, Seymour & Pease, served as United States 

Vice Consul in Guayaquil, Ecuador, worked as a consultant in the health care field and served as General 

1

 Term expiration date. 
40 Appendices 

Manager of the Small Business Association of Michigan, a position in which his responsibilities included 

management of the organization’s political action 

committee. 

Commissioner Smith received his B.A. cum laude 

from Kalamazoo College in Kalamazoo, Michigan, 

and his J.D. cum laude from Harvard Law School. 

Scott E. Thomas, Commissioner 

April 30, 2003 

Scott Thomas was appointed to the Commission in 

1986 and reappointed in 1991 and 1998. He served 

as acting Chairman during the last four months of 

1998, and as Chairman throughout 1999. He previously served as Chairman in 1987 and 1993. Prior to 

serving as a Commissioner, Mr. Thomas was the 

executive assistant to former Commissioner Thomas 

E. Harris. He originally joined the FEC as a legal intern in 1975 and later 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 and U.S. Supreme Court 

bars. 

Darryl R. Wold, Commissioner 

April 30, 2001 

Darryl Wold was nominated to the Commission by 

President Clinton on November 5, 1997, and confirmed by the U.S. Senate on July 30, 1998. Prior to 

his appointment, Commissioner Wold had been in 

private law practice in Orange County, California, 

since 1974. In addition to his own practice, he was 

counsel to Reed and Davidson, a California law firm, 

for election law litigation and enforcement defense 

matters. Mr. Wold’s practice included representing 

candidates, ballot measure committees, political action committees and others with responsibilities under 

federal, state and local election laws. Mr. Wold’s 

business practice emphasized business litigation and 

counseling closely-held companies. 

Commissioner Wold graduated cum laude from 

Claremont McKenna College in California and earned 

an LL.B. from Stanford University. He is a member of 

the California and U.S. Supreme Court bars. 

Statutory Officers 

James A. Pehrkon, Staff Director 

James Pehrkon became Staff Director on April 14, 

1999, after serving as Acting Staff Director for eight 

months. Prior to that, Mr. Pehrkon served 18 years as 

the Commission’s Deputy Staff Director with responsibilities for managing the FEC’s budget, administration 

and computer systems. Among the agency’s first employees, Mr. Pehrkon is credited with setting up the 

FEC’s data processing department and establishing 

the Data Systems Development Division. He directed 

the data division before assuming his duties as 

Deputy Staff Director. 

An Austin, TX, native, Mr. Pehrkon received an 

undergraduate degree from Harvard University and 

did graduate work in foreign affairs at Georgetown 

University. 

Lawrence H. Norton, General Counsel 

Lawrence Norton became General Counsel of the 

FEC on September 17, 2001. Prior to joining the 

Commission, Mr. Norton served as an Associate 

Director at the Commodity Futures Trading 

Commission for five years. He also worked as an 

Assistant Director at the Federal Trade Commission 

and as an Assistant Attorney General in the Maryland 

Attorney General’s office. 

Mr. Norton graduated Order of the Coif from the 

University of Maryland School of Law. 

Lynne A. McFarland, Inspector General 

Lynne McFarland became the FEC’s first permanent Inspector General in February 1990. She came 

to the Commission in 1976, first as a reports analyst. 

Later, she worked 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. 
 

41 Appendix 2 

Chronology of Events 

January 

1 — Chairman Danny L. McDonald and Vice 

Chairman David M. Mason begin their oneyear terms of office.

 1 — Mandatory electronic filing requirements take 

effect.

 1 — Election cycle reporting requirements take 

effect.

 2 — Lois G. Lerner designated Acting General 

Counsel. 

10 — FEC conducts monthly roundtable on “New 

Electronic Filing Rules and FEC Forms for 

PACs.”

 25 — FEC issues semiannual PAC count. 

26 — U.S. Court of Appeals rules that subpoena 

enforcement actions filed during an enforcement investigation must be litigated 

under seal (In re: Sealed Case). 

31 — 2000 year-end report due. 

February

 1 — FEC appoints two new members to the 2001 

Advisory Panel of the Office of Election Administration.

 2 — Commission requests supplemental funding 

of $3 million from Congress for enhancement to FEC’s Office of Election Administration.

 7 — FEC conducts monthly roundtable on “Candidate Preparations for the Next Election 

Cycle.”

 23 — FEC submits two priority legislative recommendations to Congress and the President. 

March

 1 — Commission approves Advance Notice of 

Proposed Rulemaking on the definition of 

“political committee.”

 2 — FEC submits 32 additional recommendations 

for legislative action to Congress and the 

President.

 7 — FEC conducts monthly roundtable on “New 

Electronic Filing Rules and FEC

 Forms for PACs.” 

29 — FEC submits $47.67 million FY 2002 budget 

request to Congress. 

April

 4-6 — FEC holds conference for corporations in

 Washington, DC.

 9-11 — FEC holds conference for trade associations in Washington, DC.

 30 — Commission certifies one additional state for 

paper-filing waiver. 

May

 1 — FEC publishes Combined Federal/State 

Disclosure and Election Directory 2001.

 3 — Commission approves Notice of Proposed 

Rulemaking on reporting of independent 

expenditures and last-minute contributions.

 4-5 — Office of Election Administration’s Advisory 

Panel meets in Baltimore.

 9 — Rules on coordination of general public 

political communications with candidates 

and party committees take effect.

 15 — Pennsylvania holds special election to fill 

House seat.

 29 — Vice Chairman David Mason testifies before 

House Appropriations subcommittee on 

$47.67 million FY 2002 budget request. 

June

 1 — FEC issues Annual Report 2000.

 5 — California holds special election to fill House 

seat. 

11-13 — FEC holds conference for labor and membership organizations.

 19 — Virginia holds special election to fill House 

seat.

 21 — Commission approves report on the National Voter Registration Act—the “motor 

voter” law.

 25 — U.S. Supreme Court upholds constitutionality of coordinated party expenditure limits 

(FEC v. Colorado Republican Federal Campaign Committee).

 30 — FEC publishes updated Campaign Guide for 

Corporations and Labor Organizations. 
42 Appendices 

July

 15 — FEC publishes Federal Elections 2000.

 19 — Commission approves Notice of Proposed 

Rulemaking on brokerage loans and lines 

of credit.

 24 — Florida holds special election to fill House 

seat.

 31 — Semi-annual report due. 

August

 20 — Commission names Lawrence H. Norton 

new General Counsel.

 21 — FEC issues semiannual PAC count.

 31 — Commission appoints Robert J. Costa to be 

agency’s first Deputy Staff Director for Audit 

and Review. 

September

 17 — U.S. Court of Appeals rules that the definition of “express advocacy” at 11 CFR 

100.22(b) is unconstitutional (Virginia Society for Human Life v. FEC).

 27 — Commission approves Notice of Proposed 

Rulemaking seeking comments on proposed regulations concerning use of the 

Internet for campaign-related activities. 

October

 2-4 — FEC holds regional conference in Denver, 

CO.

 3 — FEC issues Notice of Proposed Rulemaking 

on the use of the Internet in federal elections.

 16 — Massachusetts holds special election to fill 

House seat. 

November

 12 — President Bush signs FY 2002 appropriations bill, extending the Administrative Fine 

program to cover reporting periods through 

December 31, 2003.

 20 — Arkansas holds special election to fill House 

seat. 

December

 13 — Commission elects David M. Mason Chairman and Karl J. Sandstrom Vice Chairman 

for 2002.

 13 — Commission approves for public comment 

two volumes of Voting Systems Standards.

 18 — South Carolina holds special election to fill 

House seat.

 19 — District court rules that FEC cannot publicly 

disclose documents obtained during enforcement actions (AFL-CIO and DNC v. 

FEC). 
General Counsel

 Lawrence H. Nor ton 

Public Financing, 

Ethics and 

Special Projects 

Deputy Staff Director 

for Management 

Data Systems 

Development 

Planning and 

Management 

Administration Equal Employment 

Opportunity 

Commission 

Secretary 

Public 

Disclosure 

Audit 

Inspector General 

Lynne McFarland 

Staff Director 

James A. Pehrkon 

Information 

Congressional 

Affairs 

Personnel 

Labor/Management 

Press Office 

Policy 3 

Reports 

Analysis 

Litigation 

Enforcement 

The Commissioners 

1

 David M. Mason was elected 2002 Chairman. 

Administrative 

Review 

Alternative Dispute 

Resolution 

Election 

Administration 

Deputy Staff Director 

for Audit & Review 

Danny L. McDonald, Chairman1 

David M. Mason, Vice Chairman2 

Darryl R. Wold, Commissioner 

Karl J. Sandstrom, Commissioner 

Bradley A. Smith, Commissioner 

Scott E. Thomas, Commissioner 

2 Karl J. Sandstrom was elected 2002 Vice Chairman. 

3 Policy covers regulations, advisory opinions, legal review and administrative law. 

43 

Appendix 3 

FEC Organization Chart 
45 

Appendix 4 

FEC Offices 

This appendix briefly describes the offices within 

the Commission, located at 999 E Street, NW, Washington, DC 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 at 800-424-9530 

and locally at 202-694-1100. 

Administration 

The Administration Division consists of a Finance 

Office and an Administration Office. The Finance Office administers the agency’s accounting and payroll 

programs. The Administration Office is responsible for 

procurement, contracting, space management, 

records management, telecommunications, building 

security and maintenance. In addition, the office 

handles printing, document reproduction and mail 

services. 

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 

that, 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. 

Commission Secretary 

The Commission Secretary is responsible for all 

administrative matters relating to Commission meetings, as well as Commission votes taken outside of 

the meetings. This includes preparing meeting agendas, agenda documents, Sunshine Act notices, meeting minutes and vote certifications. 

The Secretary also logs, circulates and tracks numerous materials not related to Commission meetings, and records the Commissioners’ votes on these 

matters. All matters on which a vote is taken are entered into the Secretary’s database. 

Commissioners 

The six Commissioners—no more than three of 

whom may represent the same political party—are 

appointed by the President and confirmed by the Senate. 

The 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. 

Local phone: 202-694-1006; toll-free 800-424-9530. 

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 information into the FEC database 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. 

These indexes permit a detailed analysis of campaign finance activity and provide a tool for monitoring 
46 Appendices 

contribution limits. The indexes are available online 

through the Data Access Program (DAP), a subscriber service managed by the division. The division 

also publishes the Reports on Financial Activity series 

of periodic studies on campaign finance and generates statistics for other publications. 

Among its duties related to internal operations, the 

division provides computer support for the agency’s 

automation systems and for administrative functions 

such as management information, document tracking, 

personnel and payroll systems as well as the MUR 

prioritization system. 

Local phone: 202-694-1250; toll-free phone: 800-

424-9530. 

Equal Employment Opportunity 

(EEO) and Special Programs 

The EEO Office advises the Commission on the 

prevention of discriminatory practices and manages 

the agency’s EEO Program. 

The office is also responsible for developing a Special Emphasis Program tailored to the training and 

advancement needs of women, minorities, veterans, 

special populations and disabled employees. In addition, the EEO office recommends affirmative action 

recruitment, hiring and career advancement. The 

office encourages the informal resolution of complaints during the counseling stage. 

Additionally, the office develops and manages a 

variety of agency-wide special projects. These include 

the Combined Federal Campaign, the U.S. Savings 

Bonds Drive and workshops intended to improve employees’ personal and professional lives. 

General Counsel 

The General Counsel’s office consists of four divisions. The Policy division drafts, for Commission 

consideration, advisory opinions and regulations as 

well as other legal memoranda interpreting the federal 

campaign finance law. The Enforcement division 

investigates alleged violations of the law, negotiates 

conciliation agreements and recommends penalties 

for committees that have not met their compliance 

requirements. The Litigation division handles all civil 

litigation, including Title 26 cases that come before 

the Supreme Court, and represents and advises the 

Commission in any legal actions brought before it. 

The Public Funding, Ethics and Special Projects division monitors the public funding of Presidential candidates and serves as the ethics officials for the 

agency. 

Information 

In an effort to promote voluntary compliance with 

the law, the Information Division provides technical 

assistance to candidates, committees and others 

involved in elections through the Internet, letters, 

phone conversations, publications and conferences. 

Responding to phone and written inquiries, members 

of the staff provide information on the statute, FEC 

regulations, advisory opinions and court cases. Staff 

also lead 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: 202-694-1100; toll-free 

phone: 800-424-9530 (press 1, then 3 on a touchtone phone). 

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 is required to report its activities to Congress on a semiannual basis. 

These reports may include descriptions of any serious 

problems or deficiencies in agency operations as well 

as corrective steps taken by the agency. 

Law Library 

The Commission law library, a government document depository, is located on the eighth floor and is 

open to the public. The library contains a basic refer-
Appendices 47 

ence collection, which includes materials on campaign finance reform, election law and current political 

activity. Visitors to the law library may use its computers to access the Internet and FEC databases. FEC 

advisory opinions and computer indices of enforcement proceedings (MURs) may be searched in the 

law library or the Public Disclosure Division. Local 

phone: 202-694-1600; toll-free: 800-424-9530. 

Office of Administrative Review 

The Office of Administrative Review (OAR) was 

established in 2000 after statutory amendments permitted the Commission to impose civil money penalties for violations of certain reporting requirements. 

Under the program, if the Commission finds “reason 

to believe” (RTB) that a committee failed to file a required report or notice, or filed it late, it will notify the 

committee of its finding and the amount of the proposed civil money penalty. Within 40 days, the committee may challenge the RTB finding. OAR reviews 

these challenges and may recommend that the Commission uphold the RTB finding and civil money penalty, uphold the RTB finding but modify or waive the 

civil money penalty, determine that no violation occurred or terminate its proceedings. OAR also serves 

as the Commission’s liaison with the U.S. Department 

of the Treasury on debt collection matters involving 

unpaid civil money penalties under this program. 

Office of Alternative Dispute 

Resolution 

The FEC established the Alternative Dispute Resolution (ADR) office to provide parties in enforcement 

actions with an alternative method for resolving complaints that have been filed against them or for addressing issues identified in the course of an FEC 

audit. The pilot program is designed to promote compliance with the federal campaign finance law and 

Commission regulations, and to reduce the cost of 

processing complaints by encouraging settlements 

outside the agency’s normal enforcement track. 

Office of Election Administration 

The Office of Election Administration (OEA) assists 

state and local election officials by responding to inquiries, publishing research and conducting workshops on all matters related to election administration. 

Additionally, OEA answers questions from the public 

and briefs foreign delegations on the U.S. election 

process, including voter registration and voting statistics. 

Local phone: 202-694-1095; toll-free phone: 800-

424-9530 (press 4 on a touch-tone phone). 

Personnel and Labor/Management 

Relations 

The Personnel Office provides policy guidance and 

operational support to managers and staff in a variety 

of human resource management areas, including 

position classification, training, job advertising, recruitment and employment. The office also processes 

personnel actions such as step increases, promotions 

and leave administration. In addition, the office performs personnel records maintenance and offers employee assistance program counseling. Finally, the 

Personnel office administers the Commission’s labormanagement relations program and provides a comprehensive package of employee benefits, wellness 

and family-friendly programs. 

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 and provides monthly reports 

measuring the progress of each division in achieving 

the plan’s objectives. 

Press Office 

Staff in the Press Office are the Commission’s official media spokespersons. In addition to publicizing 
48 Appendices 

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. Local 

phone: 202-694-1220; toll-free 800-424-9530 (press 1 

on a touch-tone phone). 

Public Disclosure 

The Public Disclosure Division processes incoming 

campaign finance reports from federal political committees and makes the reports available to the public. 

Located on the first floor, the division’s Public 

Records Office has a library with ample work space 

and knowledgeable staff to help researchers locate 

documents and computer data. The FEC encourages 

the public to review the many resources available, 

which include computer indexes, advisory opinions 

and closed MURs. 

The division’s Processing Office receives incoming 

reports and processes them into formats that can be 

easily retrieved. These formats include paper, microfilm and digital computer images that can be easily 

accessed from terminals in the Public Records Office 

and those of agency staff. 

The Public Disclosure Division also manages 

Faxline, an automated faxing service for ordering FEC 

documents, forms and publications, available 24 

hours a day, 7 days a week. 

Local phone: 202-694-1120; toll-free phone: 800-

424-9530 (press 3 on a touch-tone phone); Faxline: 

202-501-3413. 

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 (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: 202-694-1130; toll-free phone 

800-424-9530 (press 2 on a touch-tone phone). 

Staff Director and Deputy Staff 

Directors 

The Staff Director is responsible for appointing 

staff, with Commission approval, and for implementing 

agency policy. The Staff Director monitors the administration of the agency by overseeing the 

Commission’s public disclosure activities, audit program, outreach efforts and review of reports. 

Two Deputy Staff Directors assist in this supervision, one in the areas of budget, administration and 

computer systems and the other in the areas of audit 

and review. 
49 

Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

2001 

Filers 

Terminated 

as of 

12/31/01 

Continuing 

Filers as of 

12/31/01 

Number of 

Reports and 

Statements 

in 2001 

Gross Receipts 

in 2001 

(dollars) 

Gross 

Expenditures 

in 2001 

(dollars) 

Presidential Candidate 

Committees 237 34 203 320 11,008,246 19,049,688 

Senate Candidate Committees 481 95 386 830 130,111,665 60,087,365 

House Candidate Committees 2,080 368 1,712 3,918 204,687,190 119,534,069 

Party Committees 684 83 601 1,354 600,497,333 529,810,918 

Federal Party Committees 

Reported Nonfederal

515 80 435 1,354 441,295,570 407,938,142 

Party Activity 169 3 166 0 159,201,763 121,872,776 

Delegate Committees 8 4 4 41 15,066 21,199 

Nonparty Committees 4,207 316 3,891 3,933 313,317,719 244,552,878 

Labor Committees 323 7 316 315 76,387,511 56,988,612 

Corporate Committees 

Membership, Trade and

1,632 124 1,508 1,572 90,969,390 70,418,226 

Other Committees 2,252 1 8 5 2,067 2,046 145,960,818 117,146,040 

Communication Cost Filers 271 1 270 34 0 160,202 

Independent Expenditures by 

Persons Other Than 

Political Committees 

309 24 285 53 21,537 279,494 
50 Appendices 

Divisional Statistics for Calendar Year 2001 

Total 

Reports Analysis Division 

Documents processed 38,692 

Reports reviewed 50,880 

Telephone assistance and meetings 10,937 

Requests for additional information (RFAIs) 8,862 

Second RFAIs 4,154 

Data coding and entry of RFAIs and 

miscellaneous documents 19,758 

Compliance matters referred to Office 

of General Counsel or Audit Division 68 

Data Systems Development Division * 

Documents receiving Pass I coding 24,511 

Documents receiving Pass III coding 37,477 

Documents receiving Pass I entry 39,020 

Documents receiving Pass III entry 15,456 

Transactions receiving Pass III entry 

• In-house 475,830 

• Contract 280,984 

Public Records Office 

Campaign finance material processed 

(total pages) 1,259,277 

Cumulative total pages of documents 

available for review 18,997,981 

Requests for campaign finance reports 4,507 

Visitors 7,001 

Total people served 20,929 

Information telephone calls 9,161 

Computer printouts provided 27,404 

Faxline requests 648 

Total income (transmitted to U.S. Treasury) $14,870 

Contacts with state election offices 3,848 

Notices of failure to file with state 

election offices 14 

Total 

Administrative Division 

Contracting and procurement transactions 1,034 

Publications prepared for print 38 

Pages of photocopying 14,500,000 

Information Division 

Telephone inquiries 28,220 

Information letters 56 

Distribution of FEC materials 5,063 

Prior notices (sent to inform filers 

of reporting deadlines) 16,647 

Other mailings 39,635 

Visitors 77 

Public appearances by Commissioners 

and staff 97 

Roundtable workshops 3 

Publications 37 

Press Office 

News releases 116 

Telephone inquiries from press 7,790 

Visitors 982 

Freedom of Information Act 

(FOIA) requests 28 

Fees for materials requested under FOIA 

(transmitted to U.S. Treasury) 0 

Office of Election Administration 

Telephone inquiries 4,069 

National surveys conducted 5 

Individual research requests 407 

Materials distributed * 4,785 

Election presentations/conferences 21 

Foreign briefings 70 

Publications 10 

* 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 

III, itemized information is coded and entered. 

* Figure includes National Voter Registration Act materials. 
Appendices 51 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 2001 

Requests received 

Issued 

3 

20 

17 

Not issued * 1 

Pending at end of 2001 

Compliance cases † 

Pending at beginning of 2001 

Opened 

Closed 

5 

230 

87 

151 

Pending at end of 2001 

Litigation 

Cases pending at beginning of 2001 

Cases opened 

Cases closed 

166 

36 

17 

18 

Cases pending at end of 2001 

Cases won 

35 

15 

Cases lost 1 

Cases won/lost 

Miscellaneous Cases‡ 

0 

2 

Law Library

 Telephone inquiries

 Visitors 

881 

673 

* One advisory opinion request was withdrawn by the requester. 

† In annual reports previous to 1994, the category “compliance 

cases” included only Matters Under Review (MURs). As a result of 

the Enforcement Priority System (EPS), the category has been 

expanded to include internally-generated matters in which the 

Commission has not yet made reason to believe findings. 

‡ One case was voluntarily withdrawn by the plaintiff prior to a 

dispositive motion, and one case was litigated by the Department of 

Justice on behalf of many federal agency defendants, in which the 

Commission was a nominal party. 

Audit Reports Publicly Released 

Year Title 2 * Title 26 † Total 

1976 3 1 4 

1977 6 6 12 

1978 98 ‡ 10 108 

1979 75 ‡ 9 84 

1980 48 ‡ 11 59 

1981 27 ‡ 13 40 

1982 19 1 20 

1983 22 0 22 

1984 15 2 17 

1985 4 9 13 

1986 10 4 14 

1987 12 4 16 

1988 8 0 8 

1989 2 7 9 

1990 1 6 7 

1991 5 8 13 

1992 9 3 12 

1993 10 2 12 

1994 5 17 22 

1995 12 0 12 

1996 23 0 23 

1997 7 6 13 

1998 5 7 12 

1999 20 7 27 

2000 14 0 14 

2001 15 1 16 

Total 47 5 13 4 60 9 

* Audits for cause: The FEC may audit any registered

political committee: 1) whose reports do not substantially comply

with the law; or 2) if the FEC has found reason to believe that the

committee has committed a violation. 2 U.S.C. §§438(b) and

437g(a)(2). † Title 26 audits: The Commission must give priority to these

mandatory audits of publicly funded committees. ‡ Random audits: Most of these audits were performed under 

the Commission’s random audit policy (pursuant to the former 2 

U.S.C. §438(a)(8)). The authorization for random audits was repealed by Congress in 1979. 
52 Appendices 

Audits Completed by Audit Division, 1975 – 2001 

Total 

Presidential 113 

Presidential Joint Fundraising 12 

Senate 24 

House 172 

Party (National) 47 

Party (Other) 157 

Nonparty (PACs) 84 

Total 60 9 

Status of Audits, 2001 

Pending Opened Closed Pending 

at Beginning at End 

of Year of Year 

Presidential 10 8 1 17 

Presidential Joint Fundraising 0 0 0 0 

Senate 1 3 1 3 

House 0 16 4 

Party (National) 0 0 0 0 

Party (Other) 12 0 10 2 

Nonparty (PACs) 0 0 0 0 

Total 23 27 16 34 

12 
53 

Appendix 6 

2001 Federal Register 

Notices 

2001-1 

Notice of Filing Dates for the California Special Election in the 32nd Congressional District (66 FR 7763, 

January 25, 2001) 

2001-2 

Notice of Filing Dates for the Pennsylvania Special 

Election in the 9th Congressional District (66 FR 

11031, February 21, 2001) 

2001-3 

Definition of Political Committee; Advance Notice of 

Proposed Rulemaking (66 FR 13681, March 7, 2001) 

2001-4 

Notice of Filing Dates for the Virginia Special Election 

in the 4th Congressional District (66 FR 21383, April 

30, 2001) 

2001-5 

General Public Political Communications Coordinated 

with Candidates and Party Committees; Independent 

Expenditures; Announcement of Effective Date (66 

FR 23537, May 9, 2001) 

2001-6 

Independent Expenditure Reporting; Notice of Proposed Rulemaking (66 FR 23628, May 9, 2001) 

2001-7 

Notice of Filing Dates for the Florida Special Election 

in the 1st Congressional District (66 FR 31237, June 

11, 2001) 

2001-8 

Notice of Filing Dates for Massachusetts Special Election in the 9th Congressional District (66 FR 33962, 

June 26, 2001) 

2001-9 

Voluntary Standards for Computerized Voting Systems; Notice with Request for Comments (66 FR 

35978, July 10, 2001) 

2001-10 

Brokerage Loans and Line of Credit; Notice of Proposed Rulemaking (66 FR 38576, July 25, 2001) 

2001-11 

Notice of Filing Dates for the Arkansas Special Election in the 3rd Congressional District (66 FR 43868, 

August 21, 2001) 

2001-12 

Notice of Filing Dates for the South Carolina Special 

Election in the 2nd Congressional District (66 FR 

46635, September 6, 2001) 

2000-13 

Brokerage Loans and Lines of Credit; Cancellation of 

Public Hearing (66 FR 47120, September 11, 2001) 

2001-14 

The Internet and Federal Elections; Candidate-Related Materials on Websites of Individuals, Corporations and Labor Organizations; Notice of Proposed 

Rulemaking (66 FR 50358, October 3, 2001) 

2001-15 

Request for Comment on Draft Statement of Policy 

Regarding Party Committee Transfers of Nonfederal 

Funds for Payment of Allocable Expenses (66 FR 

56247, November 7, 2001) 

2001-16 

Notice of Filing Dates for the Oklahoma Special Election in the 1st Congressional District (66 FR 56824, 

November 13, 2001) 

2001-17 

Final Rule on Technical Amendments to Election 

Cycle Reporting (66 FR 59679, November 30, 2001) 

2001-18 

Final Rule on Extension to Administrative Fines (66 

FR 59680, November 30, 2001) 
54 Appendices 

2001-19 

Voluntary Standards for Computerized Voting Systems (66 FR 65708, December 20, 2001) 

2001-20 

Notice of Disposition Regarding Party Committee 

Transfers of Nonfederal Funds for Payment of Allocable Expenses (66 FR 66813, December 27, 2001)