Federal 

Election 

Commission 

Annua1Report1995 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

Lee Ann Elliott, Chairman 

John Warren McGarry, Vice Chairman 

Joan D. Aikens, Commissioner 

Danny L. McDonald, Commissioner 

Scott E. Thomas, Commissioner 

Statutory Officers 

John C. Surina, Staff Director 

Lawrence M. Noble, General Counsel 

Lynne A. McFarland, Inspector General 

The Annual Report is prepared by: 

Louise D. Wides, Assistant Staff Director, 

Information Division 

Stephanie Fitzgerald, Editor, Information Division 

Deborah Levenson, Writer, Information Division 

Robert W. Biersack, Supervisory Statistician, 

Data Division 

R. Blake Lange, Chart Design, 

Administrative Division 
FEDERAL ElECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF THE CHAIRMAN 

June 1, 1996 

The President of the United States 

The United States Senate 

The united States House of Representatives 

Dear Mr. President, Senators and Representatives: 

We are pleased to submit for your information the 21st 

Annual Report of the Federal Election Commission, pursuant to 

2 u.s.c. S438(a)(9). The Annual Report 1995 describes the activities 

performed by the Commission in the Iast-cilendar year. The report also includes the legislative recommendations the Commission has 

adopted and transmitted to the President and the Congress for 

consideration. Most of these have been recommended by the 

Commission in previous years •. It is our belief that these 

recommendations, if enacted, would assist the Commission in 

carrying out its responsibilities in a more efficient manner. 

This report documents the rapidly increasing demands on 

Commission resources brought about by record numbers of federal 

candidates and campaign expenditures. Despite new Commission 

initiatives to handle filings, audits,· and enforcement matters 

more efficiently, the Commission remains overwhelmed by a growing enforcement case load and by. massive amounts of data flowing from 

record election activity. 

The current system of reporting requirements and 

contribution prohibitions and limitations, and the resulting audit 

artd enforcement mechanisms required. to administer these 

provisions, are complex. The Commission remains in urgent need of 

additional resources to meet those responsibilities. 

Respectfully, 

~~~ Chairman 
Table of Contents 

Introduction 1 

Chapter One 

Keeping the Public Informed 3 

Public Disclosure 3 

Educational Outreach 5 

National Clearinghouse 

on Election Administration 7 

Chapter Two 

Interpretation and Enforcement 

of the Law 9 

Regulations 9 

Advisory Opinions 9 

Enforcement 10 

Chapter Three 

Legal Issues 13 

Massachusetts Citizens for Life 

Rulemakings 13 

Coordinated Party Expenditures 17 

National Committee Status 17 

Disclaimers 17 

Definition of Member· 18 

Personal Use of Campaign Funds 19 

Major-Purpose Test 20 

Corporate Reimbursement Schemes 21 

Campaign Loans 21 

Earmarking 22 

Constitutionality of Commission 22 

Five-Year Statute of Limitations 23 

Prosecutorial Discretion 24 

Litigation vs. Legislation 24 

Federal Preemption 25 

Chapter Four 

Presidential Public Funding 27 

Shortfall in Fund 27 

Certification of Matching Funds 27 

CD ROM Technology 28 

New Public Funding Regulations 28 

Rulemaking Petition on Electoral 

College Expenditures · 30 

Repayment of Public Funds 30 

Chapter Five 

The Commission 33 

Commissioners 33 

Office of Equal Employment Opportunity 

and Special Programs 33 

Ethics 33 

Inspector General 33 

Computer Upgrade 33 

The FEC's Budget 34 

Chapter Six 

Legislative Recommendations 39

Chapter Seven 

Campaign Finance Statistics 63 

Appendices 75 

1. Biographies of Commissioners 

and Officers 75 

2. Chronology of Events 79

3. FEC Organization Chart 83

4. FEC Offices 85

5. Statistics on Commission Operations 89

6. 1995 Federal Register Notices 93

7. Corporate and Labor

Communications and Facilities 95
1 Introduction 

During its 20th anniversary year, the Commission 

continued to safeguard the integrity of federal 

elections. Established in the wake of the Watergate 

scandal to administer and enforce the Federal 

Election Campaign Act, the Commission marked its 

anniversary by publishing a 40-page report that 

explored key campaign finance issues, trends and 

statistics. Two major rulemakings distinguished the 

anniversary year, as did the agency's response to 

government-wide budget cuts and a shortfall in the 

Presidential Election Campaign Fund. 

Foremost among the Commission's 

accomplishments during 1995 were two new 

rulemakings. The first, precipitated by the Supreme 

Court's 1986 decision in FEC v. Massachusetts 

Citizens for Life, Inc. (MCFL), clarified the meaning of 

"express advocacy"1 and exempted certain nonprofit 

corporations from the ban on corporate expenditures. 

The definition is based on the 1976 landmark case, 

Buckley v. Valeo, and a 1986 court of appeals case, 

FEC v. Furgatch. In Buckley, the Supreme Court gave 

specific examples of words that constitute express 

advocacy. The revised regulatory definition of express 

advocacy continues to treat this explicit wording as 

per se express advocacy. It also incorporates 

language from the Furgatch opinion, which urged 

taking into account all elements of a communication 

and, to a limited degree, the context of external 

events, in determining the existence of express 

advocacy. 

With regard to the exemption for certain nonprofit 

corporations, the MCFL decision permitted certain 

nonprofit corporations, whose only purpose is 

promoting political ideas, to make independent 

expenditures without violating the ban on corporate 

expenditures. The new rules incorporate that decision 

by providing specific criteria for determining which 

corporations qualify for the exemption. 

The other rulemaking clarified the statutory ban on 

candidates' use of excess campaign funds to pay for 

personal expenses.2 The new regulations differentiate 

legitimate campaign and officeholder expenses 

(which may be paid for with campaign funds) from 

personal use expenses, which are those expenses 

that would exist irrespective of campaign or 

officeholder duties. Personal use expenses may not 

be paid for with campaign funds. The new regulations 

also list examples of personal use expenses. 

In the public funding arena, the Commission 

certified initial payments of public matching funds for 

10 eligible 1996 Presidential candidates.3 The total, 

$37.4 million, was the highest amount ever certified 

for January payments. Candidates raised more 

money earlier in their campaigns than their 

predecessors had in past Presidential election cycles 

partly because the primaries were held earlier in 1996 

than in past Presidential election cycles. Earlier 

primaries, coupled with low reserves in the 

Presidential Election Campaign Fund, caused a cash 

flow problem in the Fund. The result was that 

campaigns would receive only 60 percent of their 

January certifications.4 

As the agency prepared for a Presidential election 

cycle, it suffered a 5 percent or $1.4 million rescission 

of its FY 1995 budget. Spending restraints imposed 

earlier in the year, when the FEC feared losing 10 

percent of its budget, cushioned the adverse impact 

of the cut. The net effect of the rescission, however, 

was a reduction in outreach programs and. a program 

designed to expedite work. 

Although shut down in November because of the 

government-wide furlough, the FEC was one of 

several agencies that received their FY 1996 

appropriations later that month. Because the 1996 

appropriation of $26.5 million was only $800,000 

more than the agency's FY 1995 appropriation and 

because Congress earmarked funds for 

computerization, the agency began to reduce its staff 

1 "Express advocacy" refers to a communication that 

expressly advocates the election or defeat of a clearly identified candidate for federal office. 

2 2 U.S. C. §439a. 

3 In 1996, an eleventh candidate, Alan Keyes, also qualified for public matching funds. 

4 By April1996, however, the replenished Fund provided 

candidates with their full entitlement, including sums that 

had been temporarily held back in January through March. 
2 

and severely cut nonpersonnel expenses as it headed 

into the Presidential election cycle. The cuts meant 

further reductions in service and backlogs in agency 

work. 

The chapters that follow document the 

Commission's work during calendar year 1995. 
3 Chapter One 

Keeping the Public Informed 

"Dedicated to keeping the public informed." This 

was the Commission's motto to mark its twentieth 

year. Since its inception, the Commission has provided information to both the general public and the 

regulated community. "Keeping the public informed" 

serves two purposes. It helps to create an educated 

electorate, and it promotes compliance with the campaign finance law. 

Both the public disclosure program and the 

agency's educational outreach efforts promote compliance. Public scrutiny of campaign finance records 

encourages the regulated community to comply with 

the law, while educational outreach to the regulated 

community helps promote compliance by fostering 

understanding of the law. The Commission's public 

disclosure and educational outreach programs are 

described below. 

Public Disclosure 

Disclosing the sources and amounts of funds spent 

on federal campaign activity continued to be at the 

heart of the Commission's work during 1995. This 

process is complex, as it involves receiving the reports filed by committees, reviewing them, entering 

the data into the FEC's computer database and making the reports and database available to the public. 

New Legislation: Point of Entry and 

Electronic Filing 

A new law significantly affected the agency's public 

disclosure process, which begins with the campaign 

finance reports filed by political committees, including 

candidate committees, party committees and political 

action committees (PACs). Committees file at least 

two times a year (more frequently in election years). 

Reports are put on the public record within 48 hours 

of the Commission's receipt. 

On December 28, President Clinton signed Public 

Law 104-79, officially changing the point of entry for 

House candidates' reports and allowing for future 

electronic filing. Candidates had previously filed their 

reports with the Clerk of the House, but on January 1 , 

1996, they began filing them with the FEC. (The law 

did not affect the point of entry for reports from Senate candidates.) 

With regard to electronic filing, the new law authorizes the Commission to permit committees to file 

reports by means of computer disk or other electronic 

format on a voluntary basis. Since electronic filing will 

be done on a voluntary basis, some committees will 

choose to continue to file their reports on paper. The 

FEC will also make computerized images of these 

reports. The information from these reports and those 

filed electronically will be entered into the FEC's database, as was done before the new law. Once the FEC 

establishes communications links with the Clerk of the 

House and individual state elections offices, those 

offices will also be able to retrieve computerized images of reports filed with the Commission. 

In September 1995, the Commission began work 

on the electronic filing project when it invited several 

committees to participate in a pilot program. Committees were selected on the basis of their proximity to 

the FEC and the complexity of their reports. Practical 

information gleaned from the study-such as how 

committees maintain records and prepare reportswill help the Commission develop a uniform electronic 

filing system that preserves the rigorous standards of 

the current database and also eases committees' 

transition to the new system. 

See page 35 for information regarding funding of 

electronic filing. 

Review of Reports 

The Commission reviews the reports to make sure 

that they provide full and accurate disclosure of campaign finance activity, thus preserving the integrity of 

the public record. If a report contains errors or suggests violations of the law, the Commission sends the 

committee a request for additional information. The 

committee treasurer can then make additions or corrections to the report. Apparent violations, however, 

may lead to an enforcement action. 

Campaign finance activity increased during 1995 in 

preparation for the 1996 Presidential and Congressional elections. As the number and length of reports 

increased, so did reports analysts' workload. The 

table below compares 1995 figures with those of 

1991, the year prior to the last Presidential elect year. 
4 Chapter One 

CHART 1·1 

Increases in Campaign Data Processed 

1991 1995 Increase* 

Reports Reviewed 34,649 44,390 28% 

Total Pages Reviewed 342,178 556,346 63% 

Average Pages Per 

Report 10 13 27% 

Number of Reports 

Analysts 22 26 17% 

Average Number of 

Reports Per Analyst 1,589 1,744 10% 

* Figures rounded off to nearest whole number 

To handle its burgeoning workload, Reports Analysis staff found new ways to work more efficiently. 

First, they used more computers with imaging capability so that they could view reports at their own desks. 

Second, staff employed refined computer programming tools that helped them identify possible compliance problems more quickly. 

Additionally, changes to Form 3P for Presidential 

committees made it easier for committees to fill out 

their reports and for the Commission to process them. 

Processing Campaign Finance Data 

The Commission codes and enters information 

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. Consistency is crucial to maintaining records of which committees received contributions from individuals and 

which PACs made contributions to a specific candidate. For example, if a PAC's report states that it 

made a contribution to the Smith for Congress committee with a Washington address, staff must determine which candidate committee, among those with 

the same name, the report referred to. 

Maintenance of the database and proper coding is 

especially important as the FEC develops an electronic filing system. The goal of the agency's electronic filing pilot program is to devise a way for filers 

to present information in accordance with the 

database's high standards for clarity and consistency. 

Once this goal is achieved, everyone involved in the 

disclosure process will be able to take full advantage 

of electronic filing. 

As committees' financial activity increases each 

election cycle, the number of entries also increases. 

For example, the number of entries from Presidential 

reports in 1995 was 28 percent higher than in 1991 

(the year prior to the previous Presidential election 

year), and the number of entries from House and 

Senate reports was 21 percent higher in 1995 than in 

1993 (the year prior to the previous Congressional 

election). Chart 1-21ists detailed entries by election 

cycle. 
Keeping the Public Informed 5 

CHART 1·2 

Size of the Detailed Database 

Election Cycle No. of Detailed Entries* 

1985 180,000 

1986 526,000

1987 262,000

1988 698,000 

1989 308,000t

1990 767,000

1991 444,000* 

1992 1,400,000 

1993 472,000

1994 1,364,000

1995 570,000 

* Numbers are cumulative for each two-year election cycle. 

t The entry threshold for individual contributions was dropped from 

$500 to $200 in 1989. 

*Nonfederal account data was first entered in 1991. 

Public Access to Campaign Data 

The Commission's disclosure database, which 

contains millions of transactions, offers researchers 

the power of the computer to search for and select 

information in a flexible way. For example, the database can instantly produce a profile of a committee's 

financial activity for each election cycle. As another 

example, researchers can 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). 

During 1995, members of the public had access to 

this data in a number of ways. Visitors to the Public 

Records Office used computer terminals to access 

the disclosure database and more than 25 different 

campaign finance indices that organize the data in 

different ways. Those outside Washington, DC, could 

order such information using the Commission's tollfree number. 

Visitors could also inspect images of committee 

reports on the two-year-old electronic imaging system 

installed on the personal computers in the Public 

Records Office. Available for viewing were reports 

filed by Presidential committees, party committees 

and PACs from 1993 through 1995. In 1995, for the 

first time, the system included a graphics program to 

present new statistics. 

The Public Records Office continued to make available microfilmed copies of all campaign finance reports, paper copies of reports from 1996 Congressional candidates and Commission documents such 

as press releases, audit reports, closed enforcement 

cases (MURs) and agenda documents. 

The FEC also continued to offer on-line computer 

access to the disclosure database to 1 ,075 subscribers to the ten-year-old Direct Access Program (DAP) 

for a small fee. Subscribers included journalists, political scientists, campaign workers and other interested 

citizens. DAP saved time and money for the Commission because providing information on-line is more 

efficient than processing phone orders for data. Our" 

ing 1995; the Commission's State Access Program 

gave 29 state election offices free access to the database. In return, state offices helped the Commission 

track candidate committees that had failed to file copies of their FEC reports with the appropriate state, as 

required under federal law. 

Also new was the Commission's arrival on the Internet. Data Division staff developed mechanisms that 

enabled the FEC to provide large quantities of campaign finance information about committees over the 

Internet. Additionally, the Data Division began work 

on an FEC home page on the World Wide Web. The 

Commission anticipated putting on the Web various 

publications on the campaign finance law, Clearinghouse documents, recent press releases and statistical summaries. It also planned to include descriptions 

of how to use FEC services, statistical overviews of 

election cycles and links to the Internet site for file 

download. 

Educational· Outreach 

During 1995, the Commission maintained its commitment to educating committees about the law's 

requirements, thereby helping them avoid violations. 

A budget rescission, however, forced the agency to 

scale back some of its outreach efforts. 
6 Chapter One 

Telephone Assistance 

A committee's first contact with the Commission is 

often a telephone call to the agency's toll-free information hotline. In answering questions about the law, 

staff will research relevant advisory opinions and 

litigation, as needed. Callers receive, at no charge, 

FEC documents, publications and forms. In 1995, the 

Information Division responded to 17,456 callers with 

compliance questions. 

Flashfax 

When committees need a publication or other 

document-including informational brochures, texts 

of regulations, reporting forms, and texts of advisory 

opinions-they can call the agency's automated 

"Fiashfax" system at any time and quickly receive the 

information by fax. Use of this free service grew rapidly in 1995 as 6,621 callers sought information and 

received 1 0,328 documents. 

Reporting Assistance 

During 1995, 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, also published reporting schedules and 

requirements. 

Assistance to Presidential Campaigns 

FEC auditors assigned to Presidential committees 

helped them understand the requirements of the public funding law. The Commission also publishes handbooks and manuals for these committees. 

Conferences 

The Commission conducted two regional conferences in San Antonio and San Francisco to help the 

regulated community prepare for the 1996 elections. 

Conference participants attended workshops for candidate committees, party committees and corporate 

and labor PACs and their sponsoring organizations. 

Also held in Washington was a conference specifically 

designed for corporations and labor unions. 

Due to a budget rescission, however, the agency 

was no longer able to continue an informal outreach 

program whereby one or two staff members met with 

candidates, parties and PACs in different cities. (See 

discussion of the FEC's fiscal year 1995 budget, page 

34.) 

Tours and VIsits 

Visitors to the FEC during 1995, including 21 student groups and 32 foreign delegations, listened to 

presentations about the campaign finance law and 

toured the agency's Public Records office. Additionally, staff gave tours to participants in September's 

Conference on Governmental Ethics Laws, which was 

hosted by the FEC and the Office of Government 

Ethics. · 

Media Assistance 

The Commission's Press Office continued to field 

questions from the press and navigate reporters 

through the FEC's vast pool of information. Press 

Office staff answered 13,844 calls from media representatives and prepared 147 news releases. These 

releases alerted reporters to new campaign finance 

data, illustrating the statistics in tables and graphs. 

Publications 

To mark its 20th anniversary, the FEC, in June 

1995, issued the Twenty Year Report. The report was 

not so much a chronicle of the FEC's history as a 

current snapshot of the agency, exploring recent 

events, issues, trends and statistics related to campaign finance. The report covered the continuing debate over campaign finance reform and the growing 

costs of campaigning. It also analyzed key issues 

before the Commission, including soft money and 

express advocacy. 

A completely revised edition of Federal and State 

Campaign Finance Laws explains rules on federal 

preemption of state laws and rules on supporting 

nonfederal and federal candidates. 

During 1995, the Commission additionally published several documents to help committees, the 
Keeping the Public Informed 7 

, press and the general public find information about 

campaign finance. 

The Combined FederaVState Disclosure Directory 

1995 directs researchers to federal and state offices 

that have information from reports on campaign finance, candidates' personal finances, lobbying, corporate registration and election results. The 1995 

directory was made available on computer disks formatted for popular hardware and software. 

The Commission also published a new edition of 

Pacronyms, an alphabetical list of acronyms, abbreviations, common names and locations of federal 

PACs. The publication lists PACs' connected, sponsoring or affiliated organizations and helps researchers identify PACs not readily identifiable in their reports and statements on file with the Commission. 

Federal Elections 94: Election Results for the U.S. 

Senate and U.S. House of Representatives, a free 

publication, became the seventh in a series of reports 

on official results of House and Senate elections. The 

compilation lists the general election result for every 

House and Senate race and, for the first time, includes primary and runoff election results. The publication also contains maps showing, for example, Republican gains in the House by state and the makeup 

of the 1994 Senate class by candidate type (incumbent, challenger or open seat). 

During 1995, the Commission also provided 11 ,755 

free subscriptions to its award-winning monthly newsletter, the Record. The newsletter summarizes recent 

advisory opinions, litigation, changes in regulations, 

audit reports and compliance cases. It also includes 

graphs and charts on campaign finance statistics. 

National Clearinghouse on Election 

Administration 

The Clearinghouse responded to inquiries from 

state and local election officials, published research, 

answered questions from the public and briefed foreign delegations on the U.S. election process. 

The office helped states implement the National 

Voter Registration Act of 1993 (NVRA), also known as 

the "motor voter'' law. NVRA, which became effective 

in most states at the beginning of 1995, requires 

states to allow voters to register at state offices handling motor vehicle registration, state welfare and 

disability benefits and at armed forces recruiting offices. The Clearinghouse also submitted to Congress 

the required report on the impact of NVRA on the 

administration of federal elections and the measures 

states took to implement the law. 1 

Additionally, the Clearinghouse published the National Voter Registration Form as required by the law. 

Working with a contractor, the Clearinghouse translated the form into Vietnamese, Chinese, Japanese, 

Tagalog and Spanish in accordance with the minority 

language provisions of the Voting Rights Act. Staff 

also assisted various publishers and organizations 

who wished to include copies of the form in their publications or use them in voter registration drives. lOG 

Books, for example, inserted a copy of the national 

form in their recently released reference work, Politics 

for Dummies. 

The Clearinghouse also released several other 

publications, including updates to the Ballot Access 

volumes for congressional candidates, Presidential 

candidates and political parties. Additionally, the 

Clearinghouse added three new titles to its Innovations in Election Administration series. The new volumes discussed ballot security and accountability, allmail ballot elections and the electronic submission of 

election materials. Finally, the Clearinghouse published the 1995 edition of the Election Directory. 

An agency-wide budget rescission of 5 percent 

affected research, education and outreach and forced 

the Clearinghouse to cancel its annual Advisory Panel 

meeting. Instead, it held a much smaller meeting in 

Washington, DC, for the purpose of discussing how 

the Clearinghouse might prioritize activities and become more efficient given budgetary constraints. 

Finally, the Clearinghouse was FEC host for Shinji 

Hirai, deputy director of the office that administers 

Japanese elections. While at the FEC, he researched 

the administration of the U.S. electoral system. 

1 On January 22, 1996, the U.S. Supreme Court refused 

to hear a challenge to the constitutionality of NVRA from the 

State of California. California had appealed to the Supreme 

Court after the United States Circuit Court of Appeals for the 

9th District upheld the law in Wilson v. United States. 
9 Chapter Two 

Interpretation and 

Enforcement of the Law 

One of the ways the Commission promotes voluntary compliance with the campaign finance law is by 

explaining and clarifying the law through regulations 

and advisory opinions. FEC regulations explain the 

law in detail, often incorporating conclusions reached 

in previous advisory opinions. Advisory opinions, in 

turn, explain how the statute and regulations apply to 

real-life situations. In 1995, for example, several advisory opinions dealt with questions concerning the new 

rules on the personal use of campaign funds~ 

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. 

Regulations 

During 1995, the Commission adopted new 

rules and revised existing regulations in four major 

areas. (Three other technical rulemakings were also 

adopted.) The rulemaking process generally begins 

when the Commission votes to seek public comment 

on proposed rules by publishing the rules in the 

Federal Register. The agency may also invite those 

making written comments to testify at a public hearing. The Commission considers all comments when 

deliberating on the final rules in open meetings. Once 

approved, the text of the final regulations and the 

explanation and justification are published in the 

Federal Register and sent to the U.S. House and 

Senate. The Commission publishes a notice of 

effective date after the final rules have been before 

Congress for 30 legislative days. 

In 1995, the agency adopted a "direct final rule 

procedure"-a timesaving measure that allows the 

Commission to skip the "proposed" phase of a rulemaking and proceed directly to a "final rule with 

request for comments." The procedure is used when 

the Commission anticipates no adverse public comments. The agency used this shortcut in 1995 to 

repeal three obsolete regulations. 

Rulemaklngs Completed In 1995 

New and revised rules in the following areas became effective in 1995: 

• Use of disclaimers (see page 17); 

• New definition of express advocacy and qualified 

nonprofit corporations based on the Supreme 

Court's ruling in Massachusetts Citizens for Life v. 

FEC (MCFL) (see page 13); 

• Personal use of excess campaign funds (see page 

19); 

• Regulations governing publicly funded Presidential 

campaigns (see page 28); 

• Correcting amendments to regulations governing 

Presidential campaigns; 

• Rules for the FEC Inspector General regarding the 

Privacy Act of 1974; and 

• Repeal of obsolete regulations. 

Other Rulemaklngs in Process 

In addition to completing the above rules, the Commission also: 

• Reached agreement on rules addressing electionrelated activities of corporations and labor organizations (see page 16); and 

• Declined to initiate a rulemaking to address whether 

Presidential candidate receipts and disbursements 

regarding the Electoral College process are governed by the Act (see page 30). 

Advisory Opinions 

The Commission's advisory opinions clarify the law 

for people with questions about how the law applies to 

specific situations set forth in their advisory opinion 

requests. When the Commission receives such a 

request, it generally has 60 days to respond. The 

Office of General Counsel prepares a draft opinion, 

which the Commissioners discuss and vote upon 

during an open meeting. A draft opinion must receive 

at least four favorable votes to be approved. 

The Commission issued 43 advisory opinions in 

1995. Of that number, 9 dealt with membership issues, 8 dealt with application of new personal use 

rules and 5 dealt with issues related to using computers and other technology in campaign fundraising. 

Several 1995 advisory opinions are discussed in 

Chapter Three, "Legal Issues." 
10 Chapter Two 

Enforcement 

The Enforcement Process 

Possible violations of the law are usually brought 

to the Commission's attention 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 complaint alleging violations and explaining the 

basis of the allegations. The third is the referral 

process-possible violations discovered by other 

agencies are referred to the Commission. 

Each of these can lead to the opening of a 

Matter Under Review (MUR). Internally generated 

cases include those discovered through audits and 

reviews of reports and those referred to the Commission by other government agencies. Externally 

generated cases spurred by a formal, written complaint receive a MUR number once the Office of 

General Counsel determines whether the document 

satisfies specific criteria for a proper complaint. 

The General Counsel recommends whether there 

is "reason to believe" the respondents have committed a violation. If the Commission finds there is "reason to believe," it sends letters of notification to the 

respondents and investigates 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 and releases the information 

to the public. 

Details of some enforcement cases released to the 

public are mentioned in Chapter Three, "Legalissues." 

Prioritization 

The Commission continued during 1995 to use a 

comprehensive system of case management, called 

the "prioritization system," to focus its limited resources on more significant cases. 

The Commission adopted the system in 1993 to 

manage a heavy caseload involving thousands of 

respondents and complex financial transactions. The 

Commission believed it would never have enough 

resources to pursue all enforcement matters, so it 

adopted formal criteria to decide which cases to pursue. Among those criteria are: the presence of knowing and willful intent, the apparent impact the alleged 

violation had on the electoral process, the amount of 

money involved, the age and timing of the viola~ion, 

and whether a particular legal area needs spec1al 

attention. 

In 1995, the FEC focused on four areas of enforcement: corporate facilitation, earmarking schemes, 

failure to report transactions and campaign involvement in purported independent expenditures. 

Civil Penalties 

The Commission continued to impose high civil 

penalties for serious violations of the law. In 1995, 

penalties from conciliation agreements totaled 

$1,339,300. 

The first graph in Chart 2-1 (page 11) compares 

civil penalties negotiated in 1995 conciliation agreements with those of previous years. In the second 

graph, the median of civil penalties negotiated in 1~95 

is compared with the median civil penalties of previous years. 
11 

Conciliation Agreeements 

by Calendar Year 

- Number of Agreements 

---Total Civil Penalty Amount 

Number Thousands of Dollars 

300 2,000 

250 

1,500 

150 1,000 

100 

500 

50 

Interpretation and Enforcement of the Law 

CHART2·1 

Enforcement Statistics 

Median Civil Penalties 

by Calendar Year 

Dollars 

8,000.----------------

2,0001------------1----

1,0001:=::;;;;;;;;;;;;;;;;;;;;;;;;;;;;.;;;;,_.-_,____ 

0~--------------------------- 86 87 88 89 90 91 92 93 94 95 

7,000 !-------------~-~---

6,0001--------------1--

5,000 1-------------#---
13 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 1995 as it considered regulations, advisory opinions and enforcement actions. 

Massachusetts Citizens for Life 

Rulemakings 

On June 28, 1995, the Commission approved new 

rules, which were precipitated by the Supreme 

Court's decision in FEC v. Massachusetts Citizens 

for Life, Inc. (MCFL). 479 U.S. 238 {1986). In that 

decision, the Supreme Court ruled that communications must contain express advocacy1 in order to be 

subject to the prohibition on corporate or union independent expenditures2 at 2 U.S.C. §441 b. The Court 

also ruled that the §441 b prohibition impinged upon 

the First Amendment rights of certain nonprofit corporations formed to promote political ideas by precluding them from expressly advocating the election or 

defeat of clearly identified candidates through independent expenditures. 

Subsequently, the Commission undertook a rulemaking to implement this decision. The rules update 

what constitutes "express advocacy" in a revised 

definition {11 CFR 100.22) and also exempt "qualified 

nonprofit corporations" from the ban on corporate 

independent expenditures {11 CFR 114.10). The 

new rules became effective on October 5, 1995. 

In a second MCFL rulemaking approved in December 1995, the Commission modified the regulations on communications and other election-related 

1 "Express advocacy" refers to a communication that 

expressly advocates the election or defeat of a clearly 

identified candidate for federal office. 

2 Independent expenditures are expenditures made 

without coordination with a candidate's campaign for a 

communication which expressly advocates the election or 

defeat of a clearly identified candidate for federal office. 

activities by corporations and labor organizations to 

conform with MCFL and later court decisions. 

Express Advocacy Regulations 

Because, under MCFL, the definition of express 

advocacy is applied to a new category of communications, the Commission revised the definition of the 

term.3 

In the 1976 landmark case, Buckley v. Valeo, the 

Supreme Court gave specific examples of words that 

constitute express advocacy, for example, ''vote for," 

"elect," "support," ''vote against," "defeaf' and "reject." 

424 U.S. 1, 44 n. 52 {1976). The FEC's revised definition of express advocacy {11 CFR 100.22) continues to 

treat this type of explicit wording as per se {automatic) 

express advocacy. 

The FEC's definition also incorporates a 1986 court 

of appeals opinion on express advocacy, FEC v. 

Furgatch, by taking the approach that, in the absence 

3 Section 100.22 reads as follows: 

Expressly advocating means any communication that-

(a) Uses phrases such as "vote for the President, • "reelect 

your Congressman," "support the Democratic nominee," 

"cast your ballot for the Republican challenger for U.S. Senate in Georgia," "Smith for Congress," "Bill McKay in '94," 

''vote Pro-Life," or "vote Pro-Choice" accompanied by a listing of clearly identified candidates described as Pro-Life or 

Pro-Choice, ''vote against Old Hickory," "defeat" accompanied by a picture of one or more candidates(s), "reject the 

incumbent," or communications of campaign slogan(s) or 

individual word(s), which in context can have no other reasonable meaning than to urge the election or defeat of one 

or more clearly identified candidate(s), such as posters, 

bumper stickers, advertisements, etc. which say "Nixon's the 

One," "Carter in '76," "Reagan/Bush" or "Mondale!"; or 

(b) When taken as a whole and with limited reference to 

external events, such as the proximity to the election, could 

only be interpreted by a reasonable person as containing 

advocacy of the election or defeat of one or more clearly 

identified candidate(s) because---

(1) The electoral portion of the communication is unmistakable, unambiguous, and suggestive of only one meaning; 

and 

(2) Reasonable minds could not differ as to whether it 

encourages actions to elect or defeat one or more clearly 

identified candidate(s) or encourages some other kind of 

action. 
14 Chapter Three 

of the per se words, express advocacy can be determined by viewing all elements of a communication 

collectively and, to a limited degree, in the context of 

external events. Express advocacy exists when a 

communication is found to contain a message that 

unmistakably urges the election or defeat of one or 

more clearly identified federal candidates. The focus, 

it should be noted, is on the audience's reasonable 

interpretation of the message and not on the sender's 

intent. For example, in the absence of per se advocacy language, a communication that comments on a 

candidate's character, qualifications or accomplishments may be considered express advocacy if, in 

context, it has no other reasonable meaning than to 

encourage the election or defeat of the candidate. 

Express Advocacy Litigation 

During 1995, the definition of express advocacy 

was also an issue in two court cases. One case challenged the new definition, while the other ended with 

a court decision emphasizing the importance of wording over the communication as a whole. 

Maine Right to Life Committee v. FEC. The Maine 

Right to Life Committee (MRLC), a nonprofit membership corporation established for the purpose of advocating pro-life stances, asked the U.S. District Court, 

District of Maine, to declare part of the new express 

advocacy definition unconstitutional. 

MRLC claimed that the express advocacy regulations conflicted with the Supreme Court's ruling in 

Buckley v. Valeo. Among other arguments, MRLC 

claimed that FEC regulations looked to the communication "as a whole" to determine the presence of express advocacy, while Buckley looked only to the 

presence of explicit "advocacy'' wording. MRLC also 

contended that the regulations did not draw a distinct 

line between what the FEC would deem legal in a 

corporate communication, and what it would consider 

a prohibited corporate expenditure containing express 

advocacy, thus chilling free speech. 

MRLC filed suit on November 22, 1995; the case 

was still pending at the end of 1995.4 

FEC v. Christian Action Network. The U.S. District 

Court for the Western District of Virginia also relied on 

Buckley and subsequent court decisions in examining 

newspaper and television ads paid for by the Christian Action Network (CAN), a corporation. The ads, 

which were run during the weeks preceding the November 1992 Presidential election, focused on Presidential candidate Bill Clinton and Vice Presidential 

candidate AI Gore, using gay rights images to portray 

them negatively. The district court stated that courts 

since Buckley "have adopted a strict interpretation of 

the 'express advocacy' standard" and have generally 

been "disinclined to entertain arguments ... that focus on anything other than the actual language used 

in an advertisement." Focusing on the words of the 

ads, the court found no explicit call for electoral action 

and, on June 28, 1995, ruled that the ads did not contain express advocacy, as the FEC had alleged. 

The FEC had relied upon FEC v. Furgatch to argue 

that, in addition to wording, the timing and context of 

the ads had to be considered in determining the presence of express advocacy. The FEC had also relied 

upon the explicit imagery in the ads, and had argued 

that the ads had to be viewed collectively. Based on 

those considerations, the FEC had concluded that the 

ads contained express advocacy and that CAN had 

therefore violated the ban on corporate expenditures. 

The court recognized the validity of Furgatch but 

determined that the Furgatch court had said that timing and context were peripheral to the words themselves and should be given limited weight when determining whether an ad contains express advocacy.5 

4 On February 13, 1996, the U.S. District Court, District of 

Maine, granted the plaintiffs a declaratory judgment that 

paragraph (b) of the new express advocacy definition at 11 

CFR 1 00.22 is beyond the Commission's statutory authority. 

The court agreed with the FEC that the regulations come 

from the Furgatch decision, but found that paragraph (b) of 

the Commission's definition was contrary to the express 

advocacy requirement set forth in Buckley and MCFL, as 

interpreted by the First Circuit in Faucher v. FEC. 

5 The FEC appealed this decision on August 25, 1995. 
Legal Issues 15 

Regulations on Qualified Nonprofit Corporations 

As previously explained, the Supreme Court's 

MCFL decision permits certain nonprofit corporations 

to make independent expenditures without violating 

the ban on corporate expenditures (2 U.S.C. §441 b). 

The Court found that MCFL, a nonprofit corporation, 

had several characteristics that made it "more akin to 

voluntary political associations than business firms." 

Under the new rules, which closely follow this decision and the 1990 Supreme Court decision in Austin 

v. Michigan Chamber of Commerce (494 U.S. 652, 

(1990)), a nonprofit corporation is qualified to make 

independent expenditures only if it meets all of the 

criteria described below. The corporation must be a 

social welfare organization under the Internal Revenue Code, whose only purpose is the promotion of 

political ideas. It may not engage in business activities, be established by a business corporation or labor 

union, or accept donations from such organizations. 

No shareholders or other affiliated persons may have 

a claim on the corporation's assets or earnings or 

receive some benefit that is a disincentive for them to 

disassociate themselves from the organization (for 

example, credit cards, insurance policies, savings 

plans, education or business information). 

For reporting purposes, qualified nonprofit corporations are treated like individuals and must abide by 

the reporting requirements pertaining to independent 

expenditures in excess of $2506 and by the disclaimer 

regulations pertaining to the making of all express 

advocacy communications through general public 

political advertising. 

Additionally, the rules confer two new responsibilities on qualified nonprofit organizations. First, the 

corporation must certify on a report to the FEC that it 

meets the criteria for qualified nonprofit corporations 

upon making its first independent expenditure. Second, the corporation must include language in its solicitations informing donors that their contributions 

may be used for political purposes, including the support or opposition of federal candidates. 

Litigation on Qualified Nonprofits 

During 1995, the MCFL ruling on nonprofit organizations and the new regulations stemming from that 

decision were at issue in two court cases involving 

nonprofit, tax-exempt membership corporations advocating pro-life stances. In one case, a plaintiff corporation that did not meet the criteria for a "qualified 

nonprofit corporation" challenged the new regulations 

and maintained that they exceeded the agency's 

statutory authority. In the other case, an appeals court 

decision held that a corporation met the criteria for 

"qualified nonprofit corporation" even though it had no 

policy against accepting donations from business 

corporations. 

Minnesota Citizens Concerned for Life, et a/. v. 

FEC, eta/. On December 13, 1995, plaintiffs asked 

the U.S. District Court for the District of Minnesota to 

find that the regulations which govern "qualified nonprofit corporations" exceeded the agency's statutory 

authority and violated MCCL's constitutional rights. 

MCCL did not meet the criteria for qualifying as a 

qualified nonprofit corporation because it accepted 

corporate contributions, engaged in business activities, offered its members credit cards and was involved in charitable causes in addition to its promotion 

of pro-life stances. Consequently, MCCL claimed it 

could not make independent expenditures without the 

risk of entering into an enforcement matter with the 

FEC. MCCL maintained that the regulation infringed 

on its First Amendment rights because its restriction 

on speech was not narrowly tailored to serve the 

government's overriding interest-to safeguard 

against corruption in the electoral process. 

MCCL also argued that two of the regulation's requirements exceeded the agency's authority and allegedly forced qualified nonprofit corporations to misrepresent themselves as political committees. The 

first is the requirement that nonprofit corporations 

making independent expenditures submit to the FEC 

a letter certifying that they meet the criteria for qualified nonprofit organizations. The second requirement 

is that the organization place disclaimers on solicita6 In MCFL, the Supreme Court ruled that a qualified 

nonprofit organization that makes extensive independent 

expenditures may have adopted campaign activity as its 

major purpose, causing the corporation to become a political committee subject to further reporting requirements. 
16 Chapter Three 

tions informing potential donors that their donations 

may be used for political purposes. 

FEC v. Survival Education Fund. In this case, decided on September 12, 1995 (before the new rules 

became effective}, the U.S. Court of Appeals for the 

Second Circuit held that SEF met the MCFL criteria 

and therefore was allowed to make independent expenditures even though it did not have a policy 

against accepting donations from business corporations and had in fact accepted such donations. The 

FEC had argued that such a policy was a required 

element under MCFL, but the appellate court said that 

the core concern of the MCFL court was the amount 

of corporate funding a nonprofit received rather than 

the existence of a policy against accepting such donations. The court concluded that it was enough that 

SEF did not receive a significant amount of business 

donations. 

The SEF decision (Second Circuit} and the conclusion reached in Day v. Holahan (U.S. Court of Appeals for the Eighth Circuit} contradicted the position 

taken in FEC rules on the "no corporate donations" 

issue. However, the agency believed that its rules 

correctly interpreted the Supreme Court's decisions 

on nonprofit corporations in MCFL and Austin v. 

Michigan State Chamber of Commerce, which have 

national applicability. The agency did not believe that 

the SEF and Day opinions should dictate the FEC's 

interpretation of MCFL and Austin for the entire country. 

Corporate and Labor Organization 

Communications and Facilities7 

In December, the Commission sent to Congress 

new regulations on corporate and labor communications and the use of corporate/labor facilities and resources.8 These new and revised rules, which represented the second part of the Commission's MCFL 

rulemaking, reflect recent judicial and Commission 

interpretations of 2 U.S.C. §441 b. This section of the 

law prohibits corporations (including incorporated 

membership organizations} and labor organizations 

from using treasury funds to make contributions or 

expenditures in connection with federal elections. 

The new rules modify FEC regulations in five significant ways: 

• They substitute a new "express advocacy" standard 

for the partisan/nonpartisan standard that previously 

determined which communications must be limited 

to the restricted class9 ; 

• They offer specific examples of how this new standard would apply to communications by corporations 

and labor organizations; 

• They clarify that coordination between a corporation 

(or labor organization} and a candidate generally 

results in an illegal contribution to the candidate; 

• They provide guidelines on the permissible uses of 

corporate and labor facilities and resources for election-related activity; and 

• They clarify that corporate and labor facilitation of 

contributions to candidates and committees is prohibited. 

Application of New Standard. The new rules also 

specify how the "express advocacy" standard should 

be applied to various corporate and labor communications, including: 

• Candidate appearances and speeches at corporate/ 

labor events; 

• Endorsements of candidates; 

• Candidate appearances and speeches on college 

campuses; 

• Candidate debates; 

• Written political communications, including voter 

guides, voting records and press releases; 

• Voter registration and get-out-the-vote drives; and 

• Voting information. 

Coordination with Candidate. A new provision in 

the revised rules addresses the topic of coordination 

between a candidate and the corporate or labor sponsor of an election-related communication. In some 

cases, coordination may result in an in-kind contribution. 

9 The restricted class includes members of an incorporated membership organization or labor organization, stockholders, executive and administrative personnel, and the 

families of each group. 

7 See Appendix 7 for a more detailed summary of the 

rules and a convenient summary chart. 

8 These rules became effective on March 13, 1996. 
Legal Issues 17 

Permissible Use of Corporate and Labor Facilities. 

The new regulations reaffirm that, if a candidate or 

committee uses the facilities of a corporation or labor 

organization, the organization must be reimbursed 

within a commercially reasonable time. 

Facilitation of Contributions. Additionally, the rules 

clarify that corporations and labor organizations are 

prohibited from facilitating contributions to candidates 

or political committees (other than the organization's 

separate segregated fund). Facilitation means using 

corporate or labor facilities or resources to raise funds 

in connection with any federal election. 

Coordinated Party Expenditures 

In 1995 litigation, the issue of express advocacy 

was raised again, this time as it related to party 

spending. National and state party committees may 

make special expenditures in connection with the 

general election campaigns of federal candidates. 

These coordinated party expenditures are governed 

by special limits in the statute. These expenditures 

are also called §441a(d) expenditures because they 

are provided for in 2 U.S.C. §441a(d). 

In FEC v. Colorado Republican Federal Campaign 

Committee, a Colorado party committee sought to 

narrow the definition of coordinated expenditures, 

arguing that an expenditure had to expressly advocate the election or defeat of a candidate in order to 

count against the coordinated party expenditure limit 

for a party's nominee. 

The U.S. Court of Appeals for the Tenth Circuit, 

however, concluded that express advocacy was not a 

defining feature of coordinated party expenditures. In 

making this determination on June 23, 1995, the court 

deferred to the Commission's interpretation of Section 

441a(d) in AOs 1984-15 and 1985-14: An expenditure 

for a communication counts against a §441 a(d) limitif 

it clearly identifies a candidate and conveys an electioneering message; the presence of express advocacy is not required. 

The court of appeals also ruled that the Act's limitations on party spending do not violate the First 

Amendment rights of party committees. 10 

National Committee Status 

The Commission addressed another party-related 

question in a 1995 advisory opinion: When does a 

group qualify as a "national party committee"? Under 

the Act, national party committees have a higher limit 

on contributions received than other committees and 

can support candidates by making coordinated party 

expenditures in addition to contributions. In AO 1995-

16, the Commission said that placement of federal 

candidates on the ballot and party building activities 

were crucial components in obtaining national committee status. The Commission determined that the 

National Committee of the U.S. Taxpayers Party 

qualified as a national party committee under the Act 

because it had sufficiently done both. 

The U.S. Taxpayers Party had previously sought 

national status in AO 1994-44. There, the Commission concluded that the Party had not yet reached a 

level of activity to qualify as a national committee. 

Since then, the Party had shown significant development. Most importantly, the Party had made progress 

in obtaining ballot access for non-Presidential candidates. Additionally, it had held a voter registration 

drive and several national committee meetings 

throughout the nation. 

Disclaimers 

December 20, 1995, was the effective date of revisions to the FEC disclaimer regulations (11 CFR 

110.11 ). The Act requires a disclaimer on general 

public political advertising that expressly advocates 

the election or defeat of a candidate or that solicits 

contributions. The disclaimer must state who paid for 

the communication and, in most cases, whether it was 

authorized by any candidate. General public political 

advertising includes media such as television and 

10 The Supreme Court heard oral arguments in this case 

on April 15, 1996. 
18 Chapter Three 

radio, newspapers, bill boards, yard signs and "direct 

mailings." 

Changes prescribed by the final rules include a 

new definition of "direct mailing" as a mailing of more 

than 100 substantially similar pieces of mail, and clarification of the disclaimer requirements for coordinated 

party expenditures and exempt party activities. The 

new rules also set size and air time specifications for 

disclaimers in television ads, consistent with Federal 

Communications Commission rules. 

Definition of Member 

Under the Act, only "members" of an incorporated 

membership organization (and the organization's 

executive and administrative personnel and the families of both groups) may be solicited for contributions 

to the organization's separate segregated fund, commonly called a political action committee or PAC. 

Additionally, only these persons are allowed to receive the organization's communications which expressly advocate the election or defeat of candidates. 

In November 1993, the Commission prescribed new 

regulations specifying the criteria for qualifying as a 

member.11 CFR 114.1(e). During 1995, these rules 

were the subject of litigation and advisory opinions. 

To qualify as a member of a membership association under FEC rules, a member must: 

• Pay regular dues and be entitled to vote for at least 

one member of the association's "highest governing 

body'' or for those who choose at least one member 

of that body; or 

• Have a significant financial attachment to the association in addition to the payment of dues; or 

• Have the right to vote directly for all those on the 

association's highest governing board; or 

• Have an organizational and financial attachment to 

the association that is significant enough to confer 

membership status, as determined by the Commission on a case-by-case basis. 

Legal Challenge 

The U.S. Court of Appeals for the District of Columbia, on November 14, 199q, found a portion of the 

membership rules unconstitutional in Chamber of 

Commerce of the U.S.A., eta/. v. FEC. 

The Chamber of Commerce and the American 

Medical Association (AMA) had filed suit against the 

Commission in 1994, claiming that the rules on the 

definition of member violated their constitutional rights 

of free speech and association by preventing them 

from sending partisan communications (candidate 

endorsements) to large segments of their memberships. 

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

dismissed the case in 1994, ruling that the associations lacked standing to bring suit and that the regulations were within the Commission's discretion to construe the Act. Because the Commission had deadlocked on whether all the organizations' supporters 

were members, the court said that the regulations did 

not pose any threat of enforcement against the 

groups. For similar reasons, the court concluded that 

the matter was not ripe for review. 

Reversing the district court's decision, the court of 

appeals found that the Chamber and the AMA did 

have standing to argue their case before the court for 

three reasons. First, the membership regulations had 

caused both the Chamber and the AMA harm by discouraging them from sending advocacy communications to those constituents who did not qualify as 

"members" under FEC rules. Second, there was a 

credible threat of enforcement if they had chosen to 

ignore the regulation. Third, even if the FEC had not 

voted to enforce the regulations against the organizations, their political competitors might have challenged 

the legality of their actions and the Commission's 

failure to pursue administrative complaints against 

them. Finally, there was a possibility that their First 

Amendment rights had been chilled by the FEC's 

regulations. 

The court found that the FEC rules presented "serious constitutional difficulties" because they precluded 

"appellants from communicating on political subjects 

with thousands of persons, heretofore regarded by 

the Commission as members." In these circumstances, the Court stated, the FEC's interpretation of 

the FECA embodied in the new regulations was not 

entitled to deference. 

At issue here, in the court's view, was whether the 

FEC's membership rules accorded with the Supreme 
Legal Issues 19 

Court's opinion in FEC v. National Right to Work 

Committee (NRWC). 459 U.S. 197 (1982). There, the 

Court ruled that "members of nonstock corporations 

were to be defined ... by analogy to stockholders of 

business corporations and members of labor unions 

.... [which] suggest[ed] that some relatively enduring 

and independently significant financial or organizational attachment is required ...•" 

The court of appeals concluded that the FEC's new 

rules did not square with the Supreme Court's opinion 

in NRWC: "[l]mplicit in the Commission's view is that 

dues, no matter how high, are not by themselves a 

manifestation of significant financial attachment." The 

court said that FEC rules interpreted the disjunctive 

"or" between "financial" and "organizational" as if the 

Supreme Court had used the conjunctive "and." The 

court also concluded that the voting requirements in 

the new membership rules "ignored other indications 

of organizational attachment." 

The court noted that the membership rules treated 

some labor unions and federated rural electric cooperatives differently, exempting them from certain provisions of the new definition of "member." Not satisfied with the FEC's claim that the separate treatment 

was consistent with the Act's legislative history, the 

court stated that these exemptions made the regulation arbitrary and capricious. 11 

Advisory Opinions 

Prior to the Chamber of Commerce decision, the 

Commission received several advisory opinion requests from persons seeking guidance on the definition of member. In two opinions, AOs 1995-13 and 

1995-14, the Commission concluded that two incorporated associations could solicit members who paid 

dues and had sufficient voting rights but could not 

solicit members who lacked both dues obligations and 

voting rights. In AO 1995-14, the association's "life" 

and "retired" members could also be solicited because, even though they no longer paid dues, they 

had done so for many years in the past. "Life" and 

"retired" members also retained voting rights and 

11 On March 1, 1996, the Court of Appeals declined to 

reconsider the Chamber of Commerce decision, en bane or 

otherwise. 

therefore qualified as members under the case-bycase rule. 

The Commission was unable, however, to reach a 

majority decision on whether members who paid dues 

and had certain participatory rights but no voting 

rights qualified as members under FEC rules. At issue 

was whether these members had a sufficient financial 

and organizational attachment to qualify as members 

even without voting rights. 

Personal Use of Campaign Funds 

New Regulations 

The Federal Election Campaign Act prohibits the 

use of excess campaign funds to pay for personal 

expenses. 2 U.S.C. §439a. New rules, effective April 

5, 1995, clarify what is meant by "personal use" of 

campaign funds The regulations differentiate cam- , 

paign and officeholder expenses from unlawful personal use expenses. 

Under 11 CFR 113.1 (g), the personal use ban applies to expenses that would exist irrespective of the 

campaign or of officeholder duties. The regulations list 

specific expenses that are considered per se (or automatic) personal use expenses, not payable with . 

campaign funds: 

• Household food items and supplies; 

• Funeral, cremation and burial expenses; 

• Clothing; 

• Tuition payments except for the training of campaign 

staff to perform campaign tasks; 

• Mortgage, rent and utility payments including the 

candidate's personal residence, even if part of the 

residence is being used by the campaign; 

• Entertainment, including admission to all events 

which are not part of a specific campaign or officeholder activity; 

• Dues, fees and gratuities at a health club, country 

club or other nonpolitical organization; and 

• Salary payments to the candidate's family, unless 

they are compensation for bona fide services to the 

campaign. 

The new rules state that the Commission will address payments for legal services, meals, travel, vehicles and mixed-used expenses on a case-by-case 

basis. 
20 Chapter Three 

Advisory Opinions 

In several 1995 advisory opinions, the Commission 

determined how the new personal use rules applied to 

specific situations: 

• A candidate could not use campaign funds to pay 

membership dues at a health club where he had 

regularly held campaign fundraising events during 

previous campaigns. The new rules specifically prohibit use of campaign funds for such dues unless 

they are part of the costs of a specific fundraising 

event. Payments to maintain unlimited access to 

such a facility-even when access is maintained to 

facilitate fundraising activity-are considered personal use expenses. AO 1995-26. 

• An incumbent could use campaign funds to pay for 

an airline ticket for his 2-year-old son when traveling 

from Washington, DC, to his home district with his 

wife, who was also his campaign advisor. The child's 

expenses were campaign-related because they were 

necessitated by the campaign trips of the parents. 

AO 1995-20. 

• A campaign's rental of office space and equipment 

from a candidate, his wife and his incorporated law 

firm would not constitute personal use if the property 

was rented at the fair market rate and if it was not 

the personal residence of the candidate or his family. 

AO 1995-8. 

• House members could donate their excess campaign funds to commission an official portrait of a 

former committee chairman. This did not constitute 

personal use because the portrait was to be donated 

to the U.S. House of Representatives. The Act specifically permits making donations of excess funds to 

charitable organizations described in 26 U.S.C. 

§170(c). Section 107(c) considers the U.S. Government a charitable organization when a donation is 

exclusively for public purposes. AO 1995-18. 

• A campaign's use of a $1 ,500 court award to pay the 

attorney who worked. on the case was not personal 

use because the lawsuit arose from circumstances 

clearly attributable to the campaign. AO 1995-21. 

• A Congressman could use campaign funds to pay 

the legal costs of a lawsuit brought against him by 

one of his opponents because the costs directly 

arose from his candidacy and campaign activity. AO 

1995-23. 

Major-Purpose Test 

The Act defines a political committee as any group 

of persons that either receives contributions or makes 

expenditures exceeding $1 ,000 per year for the purpose of influencing a federal election. 2 U.S.C. 

§431 (4). In interpreting this definition, the Commission 

has considered whether a group's major purpose is 

the nomination or election of candidates. 

On September 29, 1995, the U.S. Court of Appeals 

for the District of Columbia, in Akins eta/. v. FEC, 

affirmed that the FEC's use of a "major-purpose tesf' 

to narrow the definition of political committee was 

reasonable. 

In 1989, James E. Akins and his colleagues had 

filed a complaint with the FEC alleging that the American Israel Public Affairs Committee (AIPAC), a nonprofit corporation, qualified as a political committee 

under the Federal Election Campaign Act (the Act) 

because AIPAC had made expenditures and contributions in excess of $1 ,000 a year for the purpose of 

influencing federal elections. Therefore, Mr. Akins had 

argued, AI PAC was subject to the Act's financial disclosure requirements. 

After its investigation, the FEC had concluded that 

AI PAC did not qualify as a political committee because its campaign-related activities constituted only 

a small portion of its overall activities and were not its 

major purpose. Rather, the FEC determined that 

AIPAC was primarily a lobbying organization and was 

therefore not subject to the Act's requirements for 

political committees. 

Mr. Akins challenged the legality of the major-purpose test in the U.S. District Court for the District of 

Columbia. In a 1994 decision, the court upheld the 

FEC's conclusions, ruling that the major-purpose 

standard was a valid interpretation of the Act. Mr. 

Akins and the other plaintiffs filed an appeal. 

The court of appeals, in upholding the lower court 

decision, cited Supreme Court precedent (Buckley v. 

Valeo) for limiting the definition of political committee 

to groups whose major purpose was the nomination 

or election of a candidate.12 Referring to the major12 This decision was vacated on January 29, 1996, with 

an order granting a rehearing by the en bane court of appeals. 
Legal Issues 21 

purpose test, the appeals court said: "Under this narrow interpretation, gleaned from case law, an organization is not a political committee unless, in addition 

to crossing the $1 ,000 threshold, it is under the control of a candidate or its major purpose is the nomination or election of a candidate. Buckley, 424 U.S. at 

79 .... A more expansive definition would be constitutionally dangerous due to interference with 'fundamental First Amendment interests."' Buckley, 424 

U.S. at 23. (Another aspect of this case is discussed 

under "Prosecutorial Discretion," page 24.} 

The major-purpose test was also central to an advisory opinion issued in 1995. The Commission, in AO 

1995-11 , determined that a limited liability companya form of business distinct from a corporation or partnership-could make contributions in excess of 

$1,000 per year without triggering political committee 

status and attendant reporting obligations because 

influencing elections was not "a major purpose" of the 

company. 13 

Corporate Reimbursement 

Schemes 

The Act prohibits a corporation from making a contribution in connection with the election of a candidate 

for federal office. 2 U.S.C. §441 b. In addition, a corporation may not circumvent the corporate contribution 

prohibition by paying or reimbursing an individual for 

his or her contribution through a corporate bonus, 

expense account or other form of direct or indirect 

compensation. 11 CFR 114.5(b}. Such devices are 

commonly referred to as corporate reimbursement 

schemes. In addition to violating the Act's prohibition 

against corporate contributions, these schemes also 

violate the Act's prohibition against making contributions in the name of another at 2 U.S.C. 4411. In such 

instances, the corporation makes a contribution in the 

13 The major-purpose test also figured prominently in 

another court opinion, handed down in early 1996. On February 28, 1996, the U.S. District Court for the District of 

Columbia denied the FEC's motion for summary judgment 

in FEC v. GOPAC, ruling that, under Buckley v. Valeo, a 

political committee's major purpose must be the nomination 

and election of a specific, identified federal candidate. 

name of the individual whose contribution it reimbursed. 

Examples of corporate reimbursement schemes 

were brought to light in an enforcement case, MUR 

3508. In that case, two corporations, through their 

officers and directors, reimbursed contributions made 

by employees and their spouses to a particular candidate. The reimbursements were made either through 

cash payments from a special fund or through yearend bonuses. The Commission determined that eight 

respondents had made knowing and willful violations 

of 2 U.S.C. §§441 b and 4411, and subsequently approved two separate conciliation agreements totaling 

$157,000 in civil penalties on May 19, 1995. 

In a separate matter, FEC v. Williams, decided on 

January 31, 1995, the U.S. District Court for the Central District of California ordered the defendant to pay 

$10,000 in civil penalties for making contributions in 

the names of others. Larry R. Williams, who was a 

fundraiser for a 1988 Presidential campaign, had reimbursed employees and friends for their $1 ,000 contributions to the candidate. The Commission reported 

the matter to the House Ethics Committee for apparent violation of House rules. It was the Commission's 

first-ever report to the committee. (Another aspect of 

the Williams case is discussed on page 23.} 

Campaign Loans 

Loans made to and by campaigns were at issue in 

two advisory opinions, one enforcement case and one 

court case during 1995. 

The Act allows candidates to assume personal 

liability for repaying campaign loans they secure. 

Because FEC debt settlement procedures do not 

relieve candidates from this legal liability , the Commission ruled in AO 1995-7 that Key Bank of Alaska 

could pursue its claim against a 1992 House candidate who defaulted on a $40,573 loan from the bank. 

The Commission rejected the candidate's argument 

that regulations at 11 CFR 116.7 prevented him from 

repaying the loan until the Commission approved his 

committee's debt settlement plan. These regulations 

did not apply to this case, the Commission noted, 

because bank loans are not subject to the debt settlement process. 
22 Chapter Three 

Under the Act, campaign committees are required 

to continuously report loans, including those secured 

by the candidate. The Commission ruled in AO 1994-

35, also issued in 1995, that a 1992 House candidate 

committee was responsible for continuously reporting 

payments on a 30-year mortgage used by the candidate to repay a campaign loan. However, the Commission noted that the candidate might in the future 

seek relief from reporting obligations under FEC Directive 45, which establishes criteria for the administrative termination of an insolvent committee, at its 

own request or Commission initiative. 

In MUR 3972, a Congressional campaign committee agreed to pay a $90,000 civil penalty for failing to 

report four loans totaling $26,500 and a $10,000 advance it had made to the candidate. 14 By omitting this 

loan activity from its reports, the committee had violated various requirements at 2 U.S. C. §434(b}. The 

case had been referred to the FEC by the Justice 

Department's House Bank Task Force. The FEC, in 

turn, reported the matter to the House Ethics Committee. It was the first time the agency made such a report. 

Earmarking 

An earmarked contribution is one that a contributor 

gives to a conduit (such as a political committee} with 

a designation or instruction (express or implied} that 

the funds be forwarded to a candidate's committee or 

spent on his or her behalf. Earmarked contributions 

were the focus of a 1995 enforcement case, MUR 

3620, and a court decision. 

The MUR concerned a Democratic Senatorial 

Campaign Committee (DSCC} program which encouraged contributors to certain candidates to make additional contributions to the DSCC that were "tallied" for 

those candidates. The amount tallied for a given candidate was a significant factor in DSCC decisions on 

how much it would spend in coordinated party expenditures on behalf of that candidate. 

14 Since January 1993, all members of Congress have 

been prohibited from using campaign funds for any personal 

purpose. See page19 for discussion of the new personal 

use regulations. 

The Commission believed that the tallied contributions were earmarked contributions and that the 

DSCC and three candidate committees had violated 

the earmarking provisions at 11 CFR 11 0.6. Specifically, the DSCC failed to transmit the contributions to 

the candidates' campaign within 1 0 days of receipt 

and failed to report the contributions as earmarked, 

while the candidate committees failed to report the 

receipt of the contributions. In a conciliation agreement signed in August 1995, the DSCC agreed to pay 

a $75,000 civil penalty for violating the law and to take 

measures to comply with the law in future tally programs. 

In FEC v. National Republican Senatorial Committee (NRSC}, the U.S. District Court for the District of 

Columbia found on June 12, 1995, that, in carrying 

out an earmarking program, NRSC had exceeded its 

contribution limits and failed to report the activity properly. The court case arose from a 1986 election earmarking scheme in which the NRSC, having exhausted its contribution and coordinated party expenditure limits, asked contributors to redesignate a portion of their NRSC contributions to the principal campaign committee of Republican Senate candidate Jim 

Santini. 

Constitutionality of the 

Commission 

During 1995, parties in two cases argued that past 

FEC enforcement and repayment decisions were 

invalid because the agency's structure was unconstitutional when the decisions were made. 

These arguments were based on the Supreme 

Court's decision in FEC v. National Rifle Association 

Victory Fund (NRA). 115 S. Ct. 537 (Dec. 6, 1994}. 

The late 1994 ruling curtailed the FEC's ability to 

bring cases before the Supreme Court and left standing an October 1993 appellate court ruling that the 

composition of the agency was unconstitutional. That 

court had ruled that the presence of the Clerk of the 

House and the Secretary of the Senate as ex officio, 

nonvoting members of the FE C-an independent 

agency with executive power-violated the 

Constitution's separation of powers doctrine. The 

court said that, because the FEC's composition was 
Legal Issues 23 

unconstitutional, the agency could not pursue a case 

against the NRA Political Victory Fund. However, the 

Court also found that the provision for ex officio members could be severed from the remainder of the federal election law. Consequently, after that ruling, the 

Commission reconstituted itself as a six-member 

body, without the ex officios, and ratified past actions 

it had taken in enforcement cases (MURs) and audits. 

(See the Annual Report 1993, pages 3-4, and the 

Annual Report 1994, pages 3-4, for more details on 

the NRA court decisions.) 

Robertson v. FEC 

In one case, the campaign of 1988 Presidential 

candidate Marion (Pat) Robertson challenged an FEC 

determination that it repay federal matching funds. 

The campaign argued that FEC repayment proceedings were invalid because they took place when the 

agency's composition was unconstitutional. 

On February 3, 1995, the U.S. Court. of Appeals for 

the District of Columbia Circuit concluded that the 

Robertson campaign was estopped from challenging 

the constitutionality of the Commission's composition 

because he had already accepted $1 0 million in public funds authorized by the very Commission he now 

argued was unconstitutional. (For another aspect of 

the Robertson case, see also page 31 of Chapter 

Four, "Presidential Public Funding.") 

FEC v. Williams 

In another case, the U.S. District Court for the Central District of California rejected the defendant's argument that the presence of ex-officio members on the 

Commission rendered the agency's enforcement action against him unconstitutional. Disagreeing with the 

appellate court opinion in NRA, the district court, on 

January 31 , 1995, ruled that the presence of the ex 

officios did not render the Commission's actions unconstitutional. The court based its ruling on the 

grounds that the ex officios did not "hold an 'Office 

Under the United States"' and could not vote on Commission actions. The court said that the ex officios 

merely exercised an advisory role. 

The court also found, however, that even if the exofficios had been unconstitutional, any defect in the 

case was corrected when the reconstituted Commission ratified its prior actions in this case. 15 This decision has been appealed to the U.S. Court of Appeals 

for the Ninth Circuit. 

Five-Year Statute of Limitations 

Certain legal proceedings for the enforcement of a 

civil fine or penalty must begin within five years from 

the date when the claim arose. 28 U.S.C. §2462. This 

statute does not apply, however, to those proceedings 

involving statutes in which Congress has specified 

another time limitation. 

In FEC v. National Republican Senate Committee 

(NRS9), the U.S. District Court for the District of Columbia found that the five-year limit under Section 

2462 applied to enforcement actions stemming from 

violations of the Federal Election Campaign Act. Accordingly, on February 24, 1995, the court held that 

the FEC was precluded from recovering monetary 

penalties from the NRSC for an alleged violation because the agency had filed the court case more than 

five years after the violations took place. The Court 

maintained, however, that Section 2462 did not apply 

to injunctive and declaratory relief. 16 

In FEC v. Williams, however, the district court rejected, without opinion, a motion to dismiss based on 

Section 2462. The case has been appealed to the 

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

15 In a similar fashion, on February 16, 1996, the U.S. 

Court of Appeals for the District of Columbia overturned the 

district court's dismissal of FEC v. Legi-Tech, Inc., ruling 

that the Commission's reconstitution as a constitutionally 

structured agency was valid. 

16 On February 15, 1996, another judge in the District 

Court for the District of Columbia dismissed FEC v. National 

Right to Work Committee, ruling that the five-year statute of 

limitations had expired in this case. This ruling, which conflicted in certain respects with that of the NRSC and Williams courts on how the statute applies to FEC actions, held 

that the statute of limitations precluded awarding injunctive 

relief as well as civil penalties. 
24 Chapter Three 

Prosecutorial Discretion 

In Branstool, eta/. v. FEC and Akins, eta/. v. FEC, 

courts upheld the FEC's prosecutorial discretion in 

investigating alleged violations of the law. 

In Branstool, the U.S. District Court for the District 

of Columbia on April 4, 1995, sustained the 

Commission's dismissal of an administrative complaint filed by Eugene Branstool and others. They 

claimed that a PAC had coordinated with the 1988 

Presidential campaign of George Bush in sponsoring 

a television ad critical of his opponent, Michael 

Dukakis. The alleged coordination would have negated the independence of the expenditures and consequently resulted in illegal contributions. 

Following a limited investigation, the Commission 

Jacked the four votes needed to support the General 

Counsel's recommendation that a full investigation be 

conducted. The Commission then voted to take no 

further action in the matter. 

The court saw no reason to depart from the general 

policy of giving broad deference to agency · 

prosecutorial decisions. It ruled that the factual conclusions underpinning the Commission's decision 

were "sufficiently reasonable" to warrant the court's 

deference. 

In the second case, decided on September 29, 

1995, the U.S. Court of Appeals for the District of 

Columbia Circuit determined that the FEC had conducted a fairly extensive inquiry into allegations made 

by James E. Akins and his colleagues, who had challenged the adequacy of the investigation. The court 

also ruled that the agency had arrived at a reasonable 

conclusion in the matter. This opinion was vacated 

when the court agreed to rehear the case en bane. 

(In their complaint filed with the Commission, 

James E. Akins and his colleagues had alleged that a 

nonprofit corporation, the American Israel Public Affairs Committee (AIPAC), was a political committee 

subject to the Act's requirements. These allegations 

are discussed earlier under "Major-Purpose Test.") 

Litigation vs. Legislation 

In 1995litigation, three courts said that sweeping 

changes to the public funding law must be accomplished through the legislative and executive 

branches of the government rather than through the 

judicial system. 

In Albanese eta/. v. FEC, plaintiffs sought to eliminate all private contributions and expenditures in all 

federal elections. They also attempted to enjoin incumbents' franking privileges and other benefits of 

officeholder status, arguing that they financially handicapped challengers and rendered the electoral system unconstitutional. Plaintiffs specifically challenged 

the constitutionality of the Federal Election Campaign 

Act, on the grounds that it authorized private contributions, as well as the statutes authorizing the franking 

privileges enjoyed by incumbents. On April 20, 1995, 

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

York dismissed the case because plaintiffs lack standing to bring suit. The court also noted that addressing 

plaintiffs' grievance was outside its jurisdiction and 

that they had to seek relief through the legislative and 

executive branches of government. 17 

In Froelich eta/. v. FEC, Francis E. Froelich and 

other individuals challenged the constitutionality of 

out-of-state contributions to a U.S. Senate campaign 

in Virginia, arguing that nonresident contributions 

created the appearance that an elected senator was 

answerable to nonresident contributors. The U.S. 

Court of Appeals for the Fourth Circuit, on June 14, 

1995, affirmed the district court's decision to dismiss 

the case. The district court had ruled that the plaintiffs 

Jacked standing to bring suit because their claims 

were too general. The lower court commented that if it 

were to uphold the claims, it would be making legislative policy and interfering with the legislative branch. 

Out-of-state contributions withstood a third constitutional challenge. On October 26, 1995, the U.S. 

Court of Appeals for the Ninth Circuit affirmed the 

district court's decision to dismiss Whitmore and 

Quinlan v. FEC. The court found that even if the plaintiffs had been able to show they were injured by outof-state contributions, those contributions resulted 

from the individual actions of private citizens, not from 

the Act. Plaintiffs have filed a petition for certiorari 

with the Supreme Court. 

17 The U.S. Court of Appeals for the Second Circuit affirmed this decision on March 12, 1996. 
Legal Issues 25 

Federal Preemption 

When the Federal Election Campaign Act and state 

law both regulate matters pertaining to the financing 

of federal elections, the Act takes precedence. Federal preemption was the issue in AO 1995-10, which 

addressed ownership of a federal campaign's 

records. The Commission ruled that the Act preempted North Carolina law with regard to this issue, 

determining that the financial records of the Helms for 

Senate Committee belonged to the committee, not to 

a former treasurer who refused to surrender the 

records. The Commission noted that, under the Act, 

only the committee and its duly designated treasurer 

had legal title and control over all of the committee's 

records, and that the Act preempted North Carolina 

law to the extent that the state law would grant ownership of campaign records to any person other than the 

committee and its treasurer. 
27 

Chapter Four 

Presidential Public Funding 

Public funds have financed every Presidential election since 1976. The Presidential Election Campaign 

Fund, composed of money from the $3 tax form 

checkoff, provides grants to qualified Presidential 

candidates for their primary and general campaigns 

and to parties for their Presidential nominating conventions. The Federal Election Commission administers the public funding program and certifies payments to qualified candidates and committees; the 

U.S. Treasury makes those payments. 

Shortfall in Fund 

A cash flow problem in the Presidential Election 

Campaign Fund caused by low reserves and recordbreaking demand resulted in partial matching fund 

payments to Presidential primary candidates in early 

1996. 

The Fund's overall balance in January 1996 was 

$146.7 million-:-enough to cover the $37 million in 

first-round matching fund certifications to the 1 0 candidates participating in the program. However, the 

U.S. Treasury required that $124 million be set aside 

to cover the grants to general election candidates and 

the payments to party nominating conventions, leaving only $22.4 million available for matching funds at 

the start of 1996. The 1 0 matching fund candidates 

therefore received a pro rata amount-60 cents on 

the dollar-in January matching fund payments. The 

remaining entitlements were to be paid out to candidates during 1996 as the Fund was replenished with 

tax checkoff deposits. (See "Certification of Matching 

Funds" for the amounts certified and paid to the 1996 

candidates.} 

The required set aside was one of three factors 

causing the shortfall. The second was that the Fund 

had benefited from only two years of the tax checkoff 

increase from $1 to $3, which took effect in 1994-too 

late to replenish the Fund for the 1996 elections. The 

third factor was that many states held their primaries 

earlier than in the past, forcing campaigns to raise 

significantly more early money than in previous Presidential cycles. (For example, in the 1992 cycle, the 

first matching fund certifications to the eight participating candidates totaled $6.4 million, compared with the 

$37 million in first-round certifications to the 1 0 participating candidates in the 1996 cycle.} 

The Commission expected that as the Treasury 

received tax returns and checkoff funds during 1996, 

it would have more than adequate receipts to fund all 

aspects of the Presidential elections. 

Certification of Matching Funds 

Presidential candidates eligible to participate in the 

matching fund program receive matching federal dollars for a portion of the contributions they raise. The 

federal government will match up to $250 per contributor, but only contributions from individuals qualify 

for matching. To establish eligibility, each candidate 

must submit copies of contributor checks and other 

documentation showing that he or she raised in excess of $5,000 in matchable contributions in each of 

at least 20 states (i.e., over $100,000}. This threshold 

submission undergoes FEC review to determine 

whether the candidate has met the eligibility requirements. The candidate must also agree to comply with 

the law in a letter of agreement and certification. 

Presidential candidates may establish their eligibility during the year before the election (i.e., in 1995 for 

the 1996 primaries} and, once eligible, may submit 

additional contributions for matching funds (called 

matching fund submissions} on specified dates. 

Chart 4-1 lists the 1996 Presidential primary candidates who qualified for matching funds and the total 

amount of matching funds certified and actually paid 

to each as of January 1996. 
28 Chapter Four 

CHART4-1 

Matching Fund Certifications 

and Payments, January 1996 

Candidate* Amount Certified AmoLilt 

(millions) Paid t 

Lamar Alexander (R) * $3.23 $1.93 

Pat Buchanan (R) $3.98 $2.38 

Bill Clinton (D) $9.01 $5.40 

Bob Dole (R) $9.27 $5.55 

Phil Gramm (R) * $6.65 $3.99 

John Hagelin (NLP) ** $0.10 $0.06 

Lyndon LaRouche (D) $0.26 $0.16 

Richard Lugar (R) * $2.28 $1.36 

Arlen Specter (R) *** $0.99 $0.59 

Pete Wilson (R) - $1.59 $0.95 

* An additional candidate, Alan Keyes, was certified eligible in 

February 1996. 

t Candidates received only 60 percent of their January payments due to a shortfall in the Fund. They received the remainder 

of their January certifications later in 1996. 

*Senator Gramm, Senator Lugar and Governor Alexander 

withdrew from the race in February 1996. 

**Natural Law Party.

*** Senator Specter withdrew from the race in November 1995. 

- Governor Wilson withdrew from the race in September 

1995. 

CD ROM Technology 

Before certifying matching funds, the Commission 

reviews each submission to verify that the contributions qualify for matching funds and are properly 

documented. (The agency uses a statistical sampling 

technique to select contributions for review.) In 1995, 

CD ROM technology accelerated the review process 

for matching funds requests submitted on CD ROM 

disks by the Clinton and Dole campaigns. The disks 

contained images of the contribution checks submitted for matching funds and the other required documents. 

The impetus for CD ROM submissions came from 

a formal request by the Dole campaign in March 

1995. In July 1995, the campaign submitted its first 

CD ROM disk containing matching fund submissions. 

The campaign estimated that it would save $1 million 

by using this medium. 

For the FEC, receiving submissions on CD ROMs 

shortened by two-thirds the time needed to verify the 

1995 matching fund requests from the two participating campaigns. Time savings largely resulted from 

faster searches for particular contribution checks. A 

manual search through approximately 40,000 checks 

included in a typical monthly submission-some 20 

boxes-could take longer than 30 minutes. Using CD 

ROMs, staff could access an image of a check in 3 

seconds. 

While submitting matching fund information on CD 

ROMs is voluntary, it is expected to become more 

popular with campaigns in future Presidential elections. The technology will vastly decrease the amount 

of paper that committees must submit and the agency 

must process. During the 1992 election cycle, the 

FEC accumulated 5 tons of paper records in processing $42 million in matching funds. 

New Public Funding Regulations 

Over the years, the Commission has developed 

and refined the regulations explaining the complicated 

requirements and procedures for public funding. After 

each Presidential cycle, the agency revises the regulations to clarify the law and address problems 

brought to light in the previous cycle. Revised rules 

for 1996 candidates became effective on August 16, 

1995.1 They are highlighted below. 

Streamlined Audit Process 

The public funding statutes require the FEC to 

audit each committee that receives public funds. The 

new rules streamline the audit process by eliminating 

the interim audit report, which should save time and 

money for both the Commission and participating 

committees. 

Under the old rules, after completing fieldwork, 

FEC auditors would hold an exit conference to dis1 Revisions to the public funding rules governing party 

nominating conventions became effective in August 1994 

and are discussed on page 20 of Annual Report 1994. 

Technical and correcting amendments to these regulations 

were published in the Federal Register on November 16, 

1995. 
Presidential Public Funding 29 

cuss preliminary findings with each committee. Those 

findings were later incorporated into an interim audit 

report. Later, after the campaign had responded to 

the interim report, the Commission would issue a final 

audit report containing an initial repayment determination. After reviewing responses to the final audit report, the agency would make a final determination. 

The elimination of the interim audit report reduces 

the process to the following stages: 

• An expanded exit conference with findings documented in a memo to the committee; 

• An audit report that includes the Commission's repayment determination and constitutes notification 

for purposes of the three-year statute of limitations 

under 26 U.S.C. §9038); 

• The opportunity for an FEC administrative review of 

the audit report, including, upon the committee's 

request, a public presentation with respect to specified repayment issues; and 

• A post-review repayment determination accompanied by a Statement of Reasons. 

General Election Legal and Compliance 

(GELAC) Funds 

Revised Rules. A GELAC fund is a special account 

used by Presidential nominees of the major parties to 

pay legal and accounting expenses incurred solely to 

comply with the campaign finance law and to pay 

other specified expenses. While publicly funded nominees. agree to limit their campaign spending to the 

amount of their grants, FEC regulations permit them 

to solicit and spend GELAC funds. 

Under the revised regulations, solicitations for contributions to a GELAC fund must state that the committee may not pay campaign expenses with GELAC 

contributions and must instruct donors on how to designate a contribution to the GELAC fund. Only contributions clearly designated in writing for the GELAC 

fund may be deposited into a GELAC account. 

The new rules also describe when a primary committee must secure redesignations from contributors 

before transferring the contributions to the GELAC 

fund. In all cases, the primary committee must settle 

its debts before making the transfer. Similarly, all 

GELAC expenses must be paid before GELAC monies may be used to retire primary election debts. 

Finally, the new rules reduce from 70 to 50 the 

percentage of computer-related costs that may be 

paid with GELAC monies. 

Rulemaking Petition. In revising the GELAC fund 

regulations, the Commission rejected a petition urging 

the repeal of those regulations. Filed by the Center for 

Responsive Politics (CFRP) in March 1994, the petition argued that GELAC funds should be banned because they allowed campaigns to evade the prohibition against private contributions and the limits on 

expenditures. CFRP further argued that the FEC 

lacked authority to create the regulations because 

GELAC funds were not provided for in the statute. In 

response, the Commission pointed out that the 

GELAC regulations were approved by Congress 

when they underwent legislative review in 1980. The 

agency also noted that Congress had never responded to subsequent FEC requests for clarifying 

legislation on compliance-related costs. 

When the FEC rejected the rulemaking petition, the 

CFRP asked the U.S. Court of Appeals for the District 

of Columbia Circuit to overrule the Commission. On 

September 7, 1995, the court dismissed the case, 

ruling that the Center did not have standing to bring 

suit. 

Paying General Election Expenses 

with Primary Funds 

In past Presidential elections, the nominees sometimes had trouble determining whether an expense 

should be attributed to the primary or general election 

spending limits and, therefore, which funds-primary 

or general-should have been used to cover the expense. To solve this problem, the new regulations 

establish criteria to help distinguish between primary 

and general election expenses. For example, attribution of overhead and salary costs is based on the date 

of the candidate's nomination. Expenses incurred 

prior to that date are attributable to the primary limits 

while those incurred after are general election expenses. As another example, the production costs of 

advertising and other communications aired or pub-
30 Chapter Four 

lished both before and after the nomination date are 

split equally between the primary and general election 

limits. 

Other Revisions 

The new regulations address several other areas, 

including disgorgement of illegal contributions to the 

U.S. Treasury; reimbursement for use of government 

aircraft; documentation of disbursements; and submission of Statements of Net Outstanding Qualified 

Campaign Expenses (financial profiles of committee's 

finances). Most of the changes served to clarify the 

law and fine-tune certain provisions. 

Rulemaking Petition on Electoral 

College Expenditures 

The Commission decided on November 2, 1995, 

not to address a petition for rulemaking submitted by 

Anthony F. Essaye and William Josephson. Their 

petition asked the Commission to revise the public 

funding regulations to address campaign activity conducted after the Presidential general election and 

directed toward the electoral college or the U.S. 

House of Representatives in the event of an inconclusive general election vote. 

Pointing out that the situation in question had not 

occurred during the history of the Act, the Commission found it difficult to anticipate all the potential issues that should be addressed in such a rulemaking. 

The better approach, the Commission maintained, 

was to deal with these issues on a case-by-case basis. 

Repayment of Public Funds 

Committees receiving matching funds are subject 

to an FEC audit to determine whether they must repay public funds to the Treasury. Public funds must 

be repaid if, for example, the campaign incurred 

nonqualified expenses, received more than its entitlement or had surplus funds remaining at the end of the 

campaign. 

During 1995, the Commission issued final repayment determinations for several 1992 campaigns and 

conducted an investigation into alleged fraud by another. With respect to 1988 campaigns, the agency 

defended itself in litigation on the three-year statute of 

limitations that applies to repayment determinations. 

Final Determinations: 1992 Campaigns 

By the end of 1994, the Commission had completed audits of all of the 1992 Presidential campaigns 

and had issued 6 final repayment determinations. In 

1995, the Commission essentially wrapped up the 

audit and repayment process by issuing final determinations for all the remaining campaigns except Dr. 

Lenora B. Fulani's primary campaign committee. The 

Commission authorized an investigation of the committee after receiving information alleging fraud. 

Fulanl Repayment 

Based on a preliminary investigation2 into Dr. 

Fulani's 1992 primary campaign, the Commission 

determined on August 3, 1995, that the campaign had 

to repay over $600,000. The investigation was based 

on allegations that Dr. Fulani's committee was involved in a fraudulent scheme to overpay a network of 

vendors used by her campaign manager and that the 

campaign reported salary payments and reimbursements to individuals who allegedly did not receive 

them. 

The initial repayment determination included 

$381,172 in misspent matching funds, $98,096 in 

nonqualified campaign expenses and $133,289 received in excess of the candidate's entitlement. 

At the end of 1995, the investigation was still ongoing. During 1996, the FEC will finish the investigation 

and issue a final repayment determination.3 

Statute of Limitations 

In 1995, the courts resolved repayment issues 

raised by candidates who received matching funds for 

2 1n Fulani v. FEC, Dr. Fulani had asked the court to 

review the FEC's decision to conduct the investigation, but 

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

on April 12, 1995, dismissed the case on procedural 

grounds. 

3 Dr. Fulani's committee challenged the Commission's 

initial repayment determination in a February 7, 1996, public 

hearing. 
Presidential Public Funding 31 

the 1988 Presidential primaries. The major issue was 

the timeliness of FEC repayment determinations. 

Under the matching fund statute, the Commission 

has three years after a party nominates its Presidential nominee to notify the party's primary candidates of 

the amount they must repay the U.S. Treasury. 26 

U.S.C. §9038(c). Three 1995 court cases addressed 

whether the Commission had missed the notification 

deadline. 

Dukakis and Simon. In May 1995, the U.S. Court of 

Appeals for the District of Columbia Circuit ruled that 

two 1988 Democratic party candidates were not obligated to make public funding repayments totaling 

almost $1 million because the FEC had failed to notify 

them of the repayment amounts within the three-year 

deadline. The agency made the initial repayment determinations for the candidates in question-Governor 

Michael Dukakis and Senator Paul Simon-in December and October 1991, respectively, but the threeyear statute of limitations had expired in July 1991 

(three years after the July 1988 nomination of Governor Dukakis). 

The FEC claimed that the interim audit reportissued, in both cases, within three years of the nomination date-was sufficient notice to satisfy the statute of limitations. The court disagreed because the 

preliminary repayment calculation included in the 

interim audit report did not purport to impose an obligation to repay the amount stated. The court found 

that the FEC was required to state that obligation 

within three years. 

The court also dismissed the FEC's reliance on a 

1991 amendment to its regulations, 11 CFR 

9038..2(a)(2), which explicitly stated that the interim 

audit report constituted notification for purposes of the 

three-year statute of limitations. "[No] such administrative action by the Commission can override the 

plain mandate of the legislation," said the court. (The 

cited regulation was revised in 1995, when the Commission decided to eliminate the interim audit report 

from the process.) 

Robertson. Marion (Pat) Robertson, a 1988 Republican Presidential candidate, also based his repayment challenge, in part, on the three-year statute of 

limitations. On February 3, 1995, however, the U.S. 

Court of Appeals for the District of Columbia Circuit 

upheld the Commission's decision that the Robertson 

campaign had raised the issue too late for consideration. 

The Robertson campaign did not raise the threeyear deadline issue until the public hearing on the 

initial repayment determination. The court found that 

the FEC was within its rights in enforcing its own procedures, which require campaigns to raise such issues earlier in the process. 
33 

Chapter Five 

The Commission 

Commissioners 

During 1995, Danny L. McDonald served as Chairman of the Commission, and Lee Ann Elliott served 

as Vice Chairman of the Commission and Chairman 

of the Finance Committee. 

In October, Trevor Potter resigned from the Commission after having served almost four years as a 

Commissioner. He gave up the post in order to teach 

at Oxford University in England. His departure left 

three openings on the Commission. The other two 

were caused by the expiration in April 1995 of the 

appointments of Commissioners Joan D. Aikens and 

John Warren McGarry. Under the law, however, Com-. 

missioners may continue to hold office until new appointments are made by the President and confirmed 

by the Senate. In the absence of new appointments, 

Commissioners Aikens and McGarry continued to 

serve. 

On December 7, 1995, the Commission elected 

Ms. Elliott to be its 1996 Chairman and Mr. McGarry 

to be its 1996 Vice Chairman. For biographies of the 

Commissioners and statutory officers, see Appendix 

1. 

EEO and Special Programs 

The Office of Equal Employment Opportunity and 

Special Programs assumed responsibility for several 

programs designed to improve employees' professional and personal lives. These programs included 

guest speakers and panel discussions addressing 

varied topics such as income tax return preparation, 

civil rights, cultural diversity training, communications 

skills, career advancement, domestic violence, personal financial management, weight management, 

support staff issues and sexual harassment. The EEO 

office also invited speakers as part of the agency's 

observance of cultural diversity and equal opportunity 

programs. 

The agency's 1995 Combined Federal Campaign 

and U.S. Savings Bond Drive were managed by the 

EEO office. 

The office, in its second year of operation, continued to help employees resolve issues informally by 

using the Early Intervention Program. As a result of 

this process, only one formal EEO complaint was filed 

during 1995. 

Ethics 

The Ethics staff trained managers and other staff 

on the rules and regulations concerning the payment 

of travel-related expenses for Federal employees by 

nonfederal sources. Ethics staff also submitted re­

. 

quired . reports with the Office of Government Ethics ' mclud1ng the annual agency ethics report, the financial disclosure reports filed by presidential and vice 

presidential candidates and semiannual travel payment reports. 

Inspector General 

The Commission's Office of the Inspector General 

(OIG) conducted audits and investigations of FEC 

programs to find waste, fraud and abuse. In 1995, 

OIG conducted a financial audit of the FEC's payroll 

system and a peer review of the inspector general's, 

office at another agency. 

New rules, which became effective in February 

1995, protect OIG investigative files from access by 

individuals under investigation. The rules, which exempt those files from certain provisions of the Privacy 

Act of 1974, safeguard the office's enforcement of 

criminal and civil laws. 

A peer review conducted by the National Labor 

Relations Board's Office of Inspector General found 

that the Commission's OIG had an effective quality 

control system and that its audits included appropriate 

assessments of compliance with applicable laws and 

internal controls. 

Computer Upgrade 

During 1995, the agency began switching from 

network-based computer terminals to personal computers. The project involved improving the agency's 

computer infrastructure so that it had adequate space 

to store both new documents and those created on 

the old network. Staff in the Staff Director's, General 

Counsel's, Inspector General's and Commissioners' 
34 Chapter Five 

offices, equipped with 143 personal computers, enjoyed easy access to both groups of documents by 

the end of 1995. In 1996, the agency expected to 

install more personal computers. 

The FEC's Budget 

Heading into the 1995-96 Presidential election 

cycle, the FEC experienced a 5 percent rescission of 

its fiscal year 1995 budget and received an FY 1996 

appropriation that was $2.5 million less than what the 

Office of Management and Budget (OMB) had recommended. Faced with a tight budget for the 1996 election cycle-when the agency expected an unprecedented level of campaign finance activity-the Commission recognized that it could not continue to operate as it had in previous fiscal years. Staffing shortages and program cuts would reduce the timeliness of 

some FEC services and eliminate others. 

Fiscal Year 1995 

The Commission's FY 1995 appropriation of $27.1 

million was reduced to $25.7 million, a rescission of 

over $1.4 million (or 5 percent of the original appropriation). The budget cut was part of an overall $17.2 

billion rescissions package that became effective July 

1995. The rescission meant that the originally-approved full-time equivalent (FTE) staffing level of 327 

had to be cut to 314.8 by the end of the year. Coming 

as late in the fiscal year as it did, the impact could 

have been devastating if the Commission had not 

anticipated the rescission by imposing spending restraints early in March, when it feared that its appropriation would be cut by as much as 1 0 percent. At 

that time, the FEC froze hiring and most nonpersonnel spending (e.g., travel, training, printing). 

These measures reduced the impact of the rescission, but at a cost. Due to the hiring freeze, the 

agency lost ground in processing workloads and in 

implementing a computer enhancement program. To 

save funds, the agency also had to cancel a state 

outreach program designed to help candidates and 

committees understand and comply with the campaign finance law. The Clearinghouse on Election 

Administration was hardest hit by the funding cut-it 

had to postpone research projects, cut back National 

Voter Registration Act activities and cancel the annual 

Advisory Panel meeting. 

The spending cuts allowed the agency to withstand 

the rescission. The Commission used some of the 

savings to fund critical programs, such as the computer enhancement program. 

A multiyear project, the computer enhancement 

program was implemented to replace existing terminal-based equipment with a personal-computer-based 

system that would allow the agency to take fuller advantage of digital imaging and other new technologies. The project's objective is to accelerate responses to information requests from the public, 

streamline staff research and drafting, improve 

workload management and reduce copying and distribution of paper documents. The agency was able to 

devote $972,000 to its computer enhancement program. The FEC was also able to perform limited work 

on the electronic filing program. (See page 35 for 

more details). 

Fiscal Year 1996 

Because President Clinton and the Congress could 

not reach agreement on the federal budget for FY 

1996, the FEC and all other government agencies 

began the fiscal year operating on a continuing resolution that funded agencies at FY 1995 levels. When 

that resolution expired on November 12, government 

employees were furloughed until November 18. While 

some agencies resumed operations by means of another continuing resolution and experienced yet another furlough in December, the FEC was among 

those agencies which received their FY 1996 appropriations in late November and thus were able to continue operating for the rest of the fiscal year. 

The FEC's appropriation was enacted at $26.5 

million, $2.5 million less than OMB had recommended 

and a nominal $800,000 above the agency's FY 1995 

appropriation. Of the 26.5 million budgeted for the 

1996 fiscal year, Congress mandated that $1.5 million 

be set aside for computer enhancements, electronic 

filing and point-of-entry costs. (See next section for 

more information). 
The Commission 35 

With respect to other programs, the Commission 

had to change course by reducing planned staffing 

and other costs to stay within the appropriation. The 

agency planned to cut staff to 313 FTE (from the 321 

FTE on board in December 1995 and from the 327 

authorized before the 1995 rescission). Severe cuts 

were made to nonpersonnel expenses, such as training and outreach programs, as well. 

Funding for Electronic Filing 

Electronic filing was a major issue in FY 1996, 

especially with the passage of new legislation. Effective December 28, 1995, new legislation officially 

changed where House candidates file their reports 

and directed the FEC to make electronic filing an option for committees for reporting periods that begin in 

1997. (See page 3 for more information.) 

The House Appropriations and Authorization Committees first encouraged the FEC to seek adequate 

funding for electronic filing and the computer upgrade 

in the spring of 1993. That fall, the agency asked for 

additional funds in its FY 1995 budget request. Because actual 1995 funding was below the FEC's original request, the agency focused its FY 1995 efforts on 

the computer system upgrade. 

The FEC again requested funding for electronic 

filing in its FY 1996 budget request and received $1.5 

million earmarked for both electronic filing and an 

agency-wide computer upgrade in the final 1996 appropriation. Congress also directed the agency to hire 

an independent contractor to analyze the requirements and cost benefits of electronic filing and the 

agency's computer system upgrade. In December 

1995, the contractor provided detailed technical guidance for beginning effective electronic filing at the 

FEC, and recommended several enhancements in the 

agency's ADP capability. 

Impact of Budget Constraints on FEC Operations 

Given the experience of the 1992 and 1994 election cycles-recordbreaking levels of campaign finance activity coupled with static or marginally increased staffing levels in most divisions-the Commission expected that its processing of the 1996 election cycle workload could be seriously hampered by 

inadequate resources. 

During the 1992 election cycle, the FEC lost 

ground in processing campaign finance activity compared with the two previous cycles (1988 and 1990). 

The sheer volume of activity swamped FEC resources 

despite gains in productivity. That trend continued 

early in the 1994 cycle, when a backlog of remaining 

1992 cycle activity still had to be processed. Later in 

the 1994 cycle, however, the agency regained lost 

ground due to greater productivity and small increases in disclosure and informational staff. 

The agency had hoped to maintain or, in some 

cases, increase staffing levels to keep pace with the 

record level of activity projected for the 1996 Presidential and Congressional races. Instead, due to the 

FY 1995 rescission and the reduced FY 1996 appropriation, the agency had to reduce planned staffing 

and program costs. 

As a result, the agency anticipated backlogs and 

delays in review of reports, coding and entry of campaign finance data into the FEC's database, responses to public requests for data and enforcement 

of the law. With respect to educational programs, the 

agency expected that there would be delays in responding to public inquiries on the law and orders for 

publications. Additionally, because printing costs were 

cut, some educational publications would not be available. 

Budget Allocation: FYs 1995 and 1996 

Budget allocation comparisons for FYs 1995 and 

1996 appear in the table and charts that follow. 
36 Chapter Five 

CHART 5·1 

Functional Allocation of Budget 

FV1995 FV1996 

Personnel $18,495,303 $19,180,500 

Travel(rransportation 285,992 367,500 

Space Rental 2,295,469 2,660,000 

Phones/Postage 487,931 479,000 

Printing 398,261 291,100 

Training(ruition 99,397 64,900 

Contracts/Services 983,615 976,400 

Maintenance/Repairs 373,251 329,500 

Software/Hardware 339,386 336,000 

Federal Agency Service 270,697 271,000 

Supplies 456,880 224,000 

Publications 253,623 246,100 

Equipment Purchases 888,678 1,095,000 

Total $25,628,483 $26,521,000 
Allocation of Budget 35 

Commissioners liiiiliin--'-----'------L-----lL....----'----___. 

Inspector General 

Staff Director 

Audit 

Information 

Clearinghouse 

Office of General Counsel 

Data Systems Development 

Public Disclosure 

Reports Analysis Division 

Administration* •••••••••••• 

Computer Upgrade ···-11111 

Percent 

Allocation of Staff 

Commissioners 

Inspector General 

Staff Director 

Administration 

Audit 

Information 

Clearinghouse 

Office of General Counsel 

Data Systems Development 

Public Disclosure Division 

Reports Analysis Division 

10 15 20 25 30 

* The Administrative Division pays for agency-wide housekeeping expenses such as telephones, photocopies and office supplies. 

The Commission 37 

CHART 5-2 - FY1995Actual 

Divisional Allocation - FY 1996 Projected 

Percent 
Legislative Recommendations 39 Chapter Six 

Legislative 

Recommendations 

On April 4, 1996, the Commission submitted 50 

legislative recommendations to the President and 

Congress in a three-part package. The first part, entitled "Legislative Recommendations to Improve the 

Efficiency and Effectiveness of Current Law," contained 18 administrative recommendations designed 

to ease the burden on political committees and 

streamline the administration of current law. The second part, "General Legislative Recommendations," 

contained 23 recommendations concerning areas of 

the law which have been problematic. In each case, 

the Commission described the problem and asked 

Congress to consider clarification or more comprehensive reform of the law. 

Finally, the third part, "Conforming Legislative Recommendations," contained 9 additional recommendations that seek to correct outdated or inconsistent 

portions of the law. 

The complete set of recommendations follows. As 

in the past, each recommendation is followed by an 

explanation of the need for and expected benefits 

from the change. Parenthetical references to 1996 

indicate new recommendations or recommendations 

that were revised in 1996. 

Part/ 

Legislative Recommendations to 

Improve Efficiency and 

Effectiveness 

of Current Law 

Disclosure 

Waiver Authority (revised 1996) 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congress give the Commission the authority to adjust 

the filing requirements or to grant general waivers or 

exemptions from the reporting requirements of the 

Act. 

Explanation: In cases where reporting requirements 

are excessive or unnecessary, it would be helpful if 

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

the reporting requirements of authorized committees 

whose respective candidates were not on the election 

ballot. The Commission had to consider whether the 

election-year reporting requirements were fully applicable to candidate committees operating under one of 

the following circumstances: 

• The candidate withdraws from nomination prior to 

having his or her name placed on the ballot. 

• The candidate loses the primary and therefore is not 

on the general election ballot. 

• The candidate is unchallenged and his or her name 

does not appear on the election ballot. 

Unauthorized committees also face unnecessary 

reporting requirements. For example, the Act requires 

monthly filers to file Monthly reports on the 20th day 

of each month. If sent by certified mail, the report 

must be postmarked by the 20th day of the month. 

The Act also requires monthly filers to file a Pre-General election report 12 days before the general election. If sent by certified or registered mail, the PreGeneral report must be postmarked by the 15th day 

before the election. As a result of these specific due 

dates mandated by the law, the 1996 October 

Monthly report, covering September, must be postmarked October 20. Meanwhile the 1996 Pre-General 

report, covering October 1 -16, must be postmarked 

October 21, one day after the October Monthly. A 

waiver authority would enable the Commission to 

eliminate the requirement to file the monthly report, as 

long as the committee includes the activity in the PreGeneral Election Report and files the report on time. 

The same disclosure would be available before the 

election, but the committee would only have to file 

one of the two reports. 

In other situations, disclosure would be served if 

the Commission had the authority to adjust the filing 

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

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

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

will participate. When this occurs, the 12-day preelection report discloses almost no runoff activity. In 
40 Chapter Six 

such a situation, the Commission should have the 

authority to adjust the filing requirements to allow for a 

7 -day pre-election report (as opposed to a 12-day 

report), which would provide more relevant disclosure 

to the public. 

Granting the Commission the authority to waive 

reports or adjust the reporting requirements would 

reduce needlessly burdensome disclosure demands. 

Campaign-Cycle Reporting 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congress revise the law to require authorized candidate committees to report on a campaign-to-date 

basis, rather than a calendar year cycle, as is now 

required. 

Explanation: Under the current law, authorized committees must track contributions received in two different ways. First, to comply with the law's reporting 

requirements, the committee must track donations on 

a calendar year basis. Second, to comply with the 

law's contribution limits, the committee must track 

contributors' donations on a per-election basis. Simplifying the law's reporting requirement to allow reporting on a campaign-to-date basis would make the 

law's recordkeeping requirements less burdensome to 

committees. (Likewise, the Commission recommends 

that contribution limits be placed on a campaign-cycle 

basis as well. See the recommendation entitled "Election Period Limitations.') 

This change would also benefit public disclosure of 

campaign finance activity. Currently, contributions 

from an individual are itemized only if the individual 

donates more than $200 in the aggregate during a 

calendar year. Likewise, disbursements are itemized 

only if payments to a specific payee aggregate in 

excess of $200 during a calendar year. Requiring 

itemization once contributions from an individual or 

disbursements to a payee aggregate in excess of 

$200 during the campaign would capture information 

of interest to the public that is currently not available. 

Moreover, to determine the actual campaign finance 

activity of a committee, reporters and researchers 

must compile the total figures from several year-end 

reports. In the case of Senate campaigns, which may 

extend over a six-year period, this change would be 

particularly helpful. 

Monthly Reporting for Congressional Candidates 

SeCtion: 2 U.S.C. §434(a)(2) 

Recommendation: The Commission recommends that 

the principal campaign committee of a Congressional 

candidate have the option of filing monthly reports in 

lieu of quarterly reports. 

Explanation: Political committees, other than principal 

campaign committees, may choose under the Act to 

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

when they have a high volume of activity. Under those 

circumstances, accounting and reporting are easier 

on a monthly basis because fewer transactions have 

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

Principal campaign committees can also have a 

large volume of receipts and expenditures. This is 

particularly true with Senatorial campaigns. These 

committees should be able to choose a more frequent 

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

Reporting Deadlines for Semiannual, Year-End 

and Monthly Filers 

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

Recommendation: The Commission recommends that 

Congress change the reporting deadline for all semiannual, year-end and monthly filers to 15 days after 

the close of books for the report. 

Explanation: Committees are often confused because 

the filing dates vary from report to report. Depending 

on the type of committee and whether it is an election 

year, the filing date for a report may fall on the 15th, 

20th or 31st of the month. Congress should require 

that monthly, quarterly, semiannual and year-end 

reports are due 15 days after the close of books of 

each report. In addition to simplifying reporting procedures, this change would provide for more timely dis-
Legislative Recommendations 41 

closure, particularly in an election year. In light of the 

increased use of computerized recordkeeping by political committees, imposing a filing deadline of the 

fifteenth of the month would not be unduly burdensome. 

Commission as Sole Point of Entry 

for Disclosure Documents (revised 1996) 

Section: 2 U.S.C. §432(g) 

Recommendation: The Commission recommends that 

it be the sole point of entry for all disclosure documents filed by federal candidates and political committees. This would affect Senate candidate committees only. Under current law, those committees alone 

file their reports with the Secretary of the Senate, who 

then forwards microfilmed copies to the FEC. 

Explanation: The Commission has offered this recommendation for many years. Congress recently passed 

Public Law 104-79, effective December 28, 1995, 

which changed the point of entry for reports filed by 

House candidates from the Clerk of the House to the 

FEC. However, Senate candidates still must file their 

reports with the Secretary of the Senate, who then 

forwards the copies on to the FEC. A single point of 

entry is desirable because it would conserve government resources and promote public disclosure of 

campaign finance information. 

For example, Senate candidates sometimes file 

reports mistakenly with the FEC, rather than with the 

Secretary of the Senate. Consequently, the FEC must 

ship the reports back to the Senate. Disclosure to the 

public is delayed and government resources are 

wasted. 

Public Law 1 04-79 eliminates the requirements for 

a candidate to file copies of FEC reports with his or 

her State, provided that the State has electronic access to reports and statements filed with the FEC. In 

order to eliminate the State filing requirement for Senate candidates, it would be necessary for a State to 

have electronic access to reports filed with the Secretary of the Senate, as well as to reports filed with the 

Federal Election Commission. In other words, unless 

the FEC becomes the point of entry for reports filed 

·by Senate candidates, either the States will need to 

have the technological and financial capability to link 

up electronically with two different federal offices, or 

Senate candidates must continue to file copies of their 

reports with the State. 

We also reiterate here the statement we have 

made in previous years because it remains valid. A 

single point of entry for all disclosure documents filed 

by political committees would eliminate any confusion 

about where candidates and committees are to file 

their reports. It would assist committee treasurers by 

having one office where they would file reports, address correspondence and ask questions. At present, 

conflicts may arise when more than one office sends 

out materials, makes requests for additional information and answers questions relating to the interpretation of the Jaw. A single point of entry would also reduce the costs to the federal government of maintaining two different offices, especially in the areas of 

personnel, equipment and data processing. 

The Commission has authority to prepare and publish lists of nonfilers. It is extremely difficult to ascertain who has and who has not filed when reports may 

have been filed at or are in transit between two different offices. Separate points of entry also make it 

difficult for the Commission to track responses to 

compliance notices. Many responses and/or amendments may not be received by the Commission in a 

timely manner, even though they were sent on time 

by the candidate or committee. The delay in transmittal between two offices sometimes leads the Commission to believe that candidates and committees are 

not in compliance. A single point of entry would eliminate this confusion. 

Finally, the Commission notes that the report of the 

Institute of Politics of the John F. Kennedy School of 

Government at Harvard University, An Analysis of the 

Impact ofthe Federal Election Campaign Act, 1972-

78, prepared for the House Administration Committee, 

recommended that all reports be filed directly with the 

Commission (Committee Print, 96th Gong., 1st Sess., 

at 122 (1979)). 
42 Chapter Six 

Facsimile Machines 

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

Recommendation: The Commission recommends that 

Congress modify the Act to provide for the acceptance and admissibility of 24-hour notices of independent expenditures via telephone facsimiles. 

Explanation: Independent expenditures that are made 

between 20 days and 24 hours before an election 

must be reported within 24 hours. The Act requires 

that a last-minute independent expenditure report 

must include a certification, under penalty of perjury, 

stating whether the expenditure was made "in cooperation, consultation, or concert with, or at the request 

or suggestion of, any candidate or any authorized 

committee or agent of such committee." This requirement appears to foreclose the option of using a facsimile machine to file the report. The next report the 

committee files, however, which covers the reporting 

period when the expenditure was made, must also 

include the certification, stating the same information. 

Given the time constraint for filing the report, the requirement to include the certification on the subsequent report, and the availability of modern technology that would facilitate such a filing, Congress 

should consider allowing such filings via telephonically transmitted facsimiles (''fax" machines}. This 

could be accomplished by allowing the committee to 

fax a copy of the schedule disclosing the independent 

expenditure and the certification. The original schedule would be filed with the next report. Acceptance of 

such a filing method would facilitate timely disclosure 

and simplify the process for the filer. 

State Filing for Presidential 

Candidate Committees 

Section: 2 U.S.C. §439 

Recommendation: The Commission recommends that 

Congress consider clarifying the state filing provisions 

for Presidential candidate committees to specify 

which particular parts of the reports filed by such committees with the FEC should also be filed with states 

in which the committees make expenditures. Consideration should be given to both the benefits and the 

costs of state disclosure. 

Explanation: Both states and committees have inquired about the specific requirements for Presidential 

candidate committees when filing reports with the 

states. The statute requires that a copy of the FEC 

reports shall be filed with all states in which a Presidential candidate committee makes expenditures. The 

question has arisen as to whether the full report 

should be filed with the state, or only those portions 

that disclose financial transactions in the state where 

the report is filed. 

The Commission has considered two alternative 

solutions. The first alternative is to have Presidential 

candidate committees file, with each state in which 

they have made expenditures, a copy of the entire 

report filed with the FEC. This alternative enables 

local citizens to examine complete reports filed by 

candidates campaigning in a state. It also avoids reporting dilemmas for candidates whose expenditures 

in one state might influence a primary election in another. 

The second alternative is to require that reports 

filed with the states contain all summary pages and 

only those receipts and disbursements schedules that 

show transactions pertaining to the state in which a 

report is filed. This alternative would reduce filing and 

storage burdens on Presidential candidate 

committees and states. It would also make state filing 

requirements for Presidential candidate committees 

similar to those for unauthorized political committees. 

Under this approach, any person still interested in 

obtaining copies of a full report could do so by contacting the Public Disclosure Division of the FEC. 

Contributions and Expenditures 

Election Period Limitations for Contributions to 

Candidates 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends that 

limits on contributions to candidates be placed on an 
Legislative Recommendations 43 

election cycle basis, rather than the current per election basis. 

Explanation: The contribution limitations affecting 

contributions to candidates are structured on a "per 

election" basis, thus necessitating dual bookkeeping 

or the adoption of some other method to distinguish 

between primary and general election contributions. 

The Commission has had to adopt several rules to 

clarify which contributions are attributable to which 

election and to assure that contributions are reported 

and used for the proper election. Many enforcement 

cases have been generated where contributors' donations are excessive vis-a-vis a particular election, but 

not vis-a-vis the $2,000 total that could have been 

contributed for the cycle. Often this is due to donors' 

failure to fully document which election was intended. 

Sometimes the apparent "excessives" for a particular 

election turn out to be simple reporting errors where 

the wrong box was checked on the reporting form. 

Yet, substantial resources must be devoted to examination of each transaction to determine which election 

is applicable. Further, several enforcement cases 

have been generated based on the use of general 

election contributions for primary election expenses or 

vice versa. 

Most of these complications would be eliminated 

with adoption of a simple "per cycle" contribution limit. 

Thus, multicandidate committees could give up to 

$10,000 and all otherpersons could give up to $2,000 

to an authorized committee at any point during the 

election cycle. The Commission and committees 

could get out of the business of determining whether 

contributions are properly attributable to a particular 

election, and the difficulty of assuring that particular 

contributions are used for a particular election could 

be eliminated. 

It would be advisable to clarify that if a candidate 

has to participate in more than two elections (e.g., in a 

post-primary runoff as well as a primary and general), 

the campaign cycle limit would be $3,000. In addition, 

because at the Presidential level candidates might opt 

to take public funding in the general election and 

thereby be precluded from accepting contributions, 

the $1 ,000/5,000 "per election" contribution limits 

should be retained for Presidential candidates. 

A campaign cycle contribution limit may allow donors to target more than $1 ,000 toward a particular 

primary or general election, but this would be tempered by the tendency of campaigns to plan their 

fundraising and manage their resources so as not to 

be left without fundraising capability at a crucial time. 

Application of $25,000 Annual Limit 

Section: 2 U.S.C. §441a(a)(3) 

Recommendation: The Commission recommends that 

Congress consider modifying the provision that limits 

individual contributions to $25,000 per calendar year 

so that an individual's contributions count against his 

or her annual limit for the year in which they are 

made. 

Explanation: Section 441 a(a) (3) now provides that a 

contribution to a candidate made in a nonelection 

year counts against the individual donor's limit for the 

year in which the candidate's election is held. This 

provision has led to some confusion among contributors. For example, a contributor wishing to support 

Candidate Smith in an election year contributes to her 

in November of the year before the election. The contributor assumes that the contribution counts against 

his limit for the year in which he contributed. Unaware 

that the contribution actually counts against the year 

in which Candidate Smith's election is held, the contributor makes other contributions during the election 

year and inadvertently exceeds his $25,000 limit. By 

requiring contributions to count against the limit of the 

calendar year in which the donor contributes, 

confusion would be eliminated and fewer contributors 

would inadvertently violate the law. The change would 

offer the added advantage of enabling the Commission to better monitor the annual limit. Through the 

use of our data base, we could more easily monitor 

contributions made by one individual regardless of 

whether they were given to retire the debt of a 

candidate's previous campaign, to support an upcoming election (two, four or six years in the future) or to 

support a PAC or party committee. Such an amendment would not alter the per candidate, per election 
44 Chapter Six 

limits. Nor would it affect the total amount that any 

individual could contribute in connection with federal 

elections. 

Certification of Voting Age Population Figures and 

Cost-of-Living Adjustment 

Section: 2 U.S.C. §441a(c) and (e) 

Recommendation: The Commission recommends that 

Congress consider removing the requirement that the 

Secretary of Commerce certify to the Commission the 

voting age population of each Congressional district. 

At the same time, Congress should establish a deadline of February 15 for supplying the Commission with 

the remaining information concerning the voting age 

population for the nation as a whole and for each 

state. In addition, the same deadline should apply to 

the Secretary of Labor, who is required under the Act 

to provide the Commission with figures on the annual 

adjustment to the cost-of-living index. 

Explanation: In order for the Commission to compute 

the coordinated party expenditure limits and the stateby-state expenditure limits for Presidential candidates, 

the Secretary of Commerce certifies the voting age 

population of the United States and of each state. 2 

U.S.C. §441a(e). The certification for each Congressional district, also required under this provision, is ·· 

not needed. 

In addition, under 2 U.S.C. §441a(c), the Secretary 

of Labor is required to certify the annual adjustment in 

the cost-of-living index. In both instances, the timely 

receipt of these figures would enable the Commission 

to inform political committees of their spending limits 

early in the campaign cycle. Under present circumstances, where no deadline exists, the Commission 

has sometimes been unable to release the spending 

limit figures before June. 

Enforcement 

Ensuring Independent Authority of FEC in 

All Litigation (revised 1996} 

Section: 2 U.S.C. §§437c(f)(4) and 437g 

Recommendation: Congress has granted the Commission authority to conduct its own litigation independent of the Department of Justice. This independence 

is an important component of the statutory structure 

designed to ensure nonpartisan administration and 

enforcement of the campaign financing statutes. The 

Commission recommends that Congress make the 

following four clarifications that would help solidify the 

statutory structure: 

1. Congress should clarify that the Commission is 

explicitly authorized to petition the Supreme Court for 

certiorari under Title 2, i.e., to conduct its Supreme 

Court litigation. 

2. Congress should amend the Act to specify that 

local counsel rules (requiring district court litigants to 

be represented by counsel located within the district) 

cannot be applied to the Commission. 

3. Congress should give the Commission explicit 

authorization to appear as an amicus curiae in cases 

that affect the administration of the Act, but do not 

arise under it. 

4. Congress should req!Jire the United States 

Marshal's Service to serve process, including summonses and complaints, on behalf of and at no expense to the Federal Election Commission. 

Explanation: The first recommendation states explicitly that the Commission is authorized to petition the 

Supreme Court for a writ of certiorari in cases relating 

to the Commission's administration of Title 2 and to 

independently conduct its Supreme Court litigation 

under that Title. The Commission explicitly has this 

authority under Title 26 and had a long-standing practice of doing so under Title 2, until the Supreme Court 

ruled that Title 2 does not grant the Commission such 

authority. See FEC v. NRA Political Victory Fund, 

cert. dismissed for want ofjurisdiction, 115 S.Ct. 537 

(December 6, 1994). Under this ruling, the Commission must now obtain permission from the Solicitor 

General before seeking certiorari in a Title 2 case. 
Legislative Recommendations 45 

The Solicitor General may decline to authorize this 

action in cases where the Commission believes·supreme Court review is advisable. Even where acting 

in accordance with the Commission's recommendation to seek certiorari in a given case, the Solicitor 

General would still control the position taken in the 

case and the arguments made on behalf of the Commission. This transfer of the Commission's Supreme 

Court litigation authority to the Solicitor General, who 

is an appointee of and subject to removal by the 

President, misconstrues Congressional intent in establishing the Commission as a bipartisan and independent civil enforcement agency. Pertinent provisions·of Title 2 should be revised to clearly state the 

Commission's exclusive and independent authority on 

all aspects of Supreme Court litigation in all cases it 

has litigated in the lower courts. 

With regard to the second of these recommendations, most district courts have rules requiring that all 

litigants be represented by counsel located within the 

district. The Commission, which conducts all of its 

litigation nationwide from its offices in Washington,· 

D.C., is unable to comply with those rules without 

compromising its independence by engaging the local 

United States Attorney to assist in representing it in 

courts outside of Washington, D.C. Although most 

judges have been willing to waive applying these local 

counsel rules to the Commission, some have insisted 

that the Commission obtain local representation. An 

amendment to the statute specifying that such local 

counsel rules cannot be applied to the Commission 

would eliminate this problem. 

Concerning the third recommendation, the FECA 

explicitly authorizes the Commission to "appear in and 

defend against any action instituted under this Act," 2 

U.S.C. §437c(f)(4), and to "initiate...defend...or appeal 

any civil action...to enforce the provisions of this Act 

and chapter 95 and chapter 96 of title 26," 2 U.S.C. 

§437d(a)(6). These provisions do not explicitly cover 

instances in which the Commission appears as an 

amicus curiae in cases that affect the administration 

of the Act, but do not arise under it. A clarification of 

the Commission's role as an amicus curiae would 

remove any questions concerning the Commission's 

authority to represent itself in this capacity. 

Concerning the final recommendation, prior to its 

amendment effective December 1, 1993, Rule 4(c)(B) 

of the Federal Rules of Civil Procedure provided that 

a summons and complaint shall be served by the 

United States Marshal's Service on behalf of the 

United States or an officer or agency of the United 

States. R.ule 4, as now amended, requires all plaintiffs, including federal government plaintiffs such as 

the Commission, to seek and obtain a court order 

directing that service of process be effected by the 

United States Marshal's Service. Given that the Commission must conduct litigation nationwide from its 

offices in Washington, D.C., it is burdensome and 

expensive for it to enlist the aid of a private process 

server or, in the alternative, seek relief from the court, 

in every case in which it is a plaintiff. Returning the 

task of serving process for the Commission to the 

United States Marshal's Service would alleviate this 

problem and assist the Commission in carrying out its 

mission. 

Enhancement of Criminal Provisions 

Section: 2 U.S.C. §437g(a)(5)(C) and (d) 

Recommendation: The Commission recommends that 

it have the ability to refer appropriate matters to the 

Justice Department for criminal prosecution at any 

stage of a Commission proceeding. 

Explanation: The Commission has noted an upsurge 

of §441f contribution reimbursement schemes, that 

may merit heavy criminal sanction. Although there is 

no prohibition preventing the Department of Justice 

from initiating criminal FECA prosecutions on its own, 

the vehicle for the Commission to bring such matters 

to the Department's attention is found at 

§437g(a)(5)(C), which provides for referral only after 

the Commission has found probable cause to believe 

that a criminal violation of the Act has taken place. 1 

1 The Commission has the general authority to report 

. apparent violations to the appropriate law enforcement 

authority (see 2 U.S. C. §437d(a)(9)), but read together with 

§437g, §437d(a)(9) has been interpreted by the Commission to refer to violations of law unrelated to the Commission's FECAjurisdiction. 
46 Chapter Six 

Thus, even if it is apparent at an early stage that a 

case merits criminal referral, the Commission must 

pursue the matter to the probable cause stage before 

referring it to the Department for criminal prosecution. 

To conserve the Commission's resources, and to 

allow the Commission to bring potentially criminal 

FECA violations to the Department's attention at the 

earliest possible time, the Commission recommends 

that consideration be given to explicitly empower the 

Commission to refer apparent criminal FECA violations to the Department at any stage in the enforcement process. 

Random Audits 

Section: 2 U.S.C. §438(b) 

Recommendation: The Commission recommends that 

Congress consider legislation that would require the 

Commission to randomly audit political committees in 

an effort to promote voluntary compliance with the 

election law and ensure public confidence in the election process. 

Explanation: In 1979, Congress amended the FECA 

to eliminate the Commission's explicit authority to 

conduct random audits. The Commission is concerned that this change has weakened its ability to 

deter abuse of the election law. Random audits can 

be an effective tool for promoting voluntary compliance with the Act and, at the same time, reassuring 

the public that committees are complying with the law. 

Random audits performed by the IRS offer a good 

model. As a result of random tax audits, most taxpayers try to file accurate returns on time. Tax audits 

have also helped create the public perception that tax 

laws are enforced. 

There are many ways to select committees for a 

random audit. One way would be to randomly select 

committees from a pool of all types of political committees identified by certain threshold criteria such as 

the amount of campaign receipts and, in the case of 

candidate committees, the percentage of votes won. 

With this approach, audits might be conducted in 

many states throughout the country. 

Another approach would be to randomly select 

several Congressional districts and audit all political 

committees in those districts (with the exception of 

certain candidates whose popular vote fell below a 

certain threshold) for a given election cycle. This system might result in concentrating audits in fewer geographical areas. 

Such audits should be subject to strict confidentiality rules. Only when the audits are completed should 

they be published and publicized. Committees with no 

problems should be commended. 

Regardless of how random selections were made, 

it would be essential to include all types of political 

committees-PACs, party committees and candidate 

committees-and to ensure an impartial, evenhanded 

selection process. 

Public Financing 

State Expenditure Limits for Publicly Financed 

Presidential Primary Campaigns (revised 1996) 

Section: 2 U.S.C. §441a 

Recommendation: The Commission recommends that 

the state-by-state limitations on expenditures for publicly financed Presidential primary candidates be 

eliminated. 

Explanation: The Commission has now administered 

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

limitations could be removed with no material impact 

on the process. 

Our experience has shown that, in past years, the 

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

New Hampshire. In most other states, campaigns 

have been unable or have not wished to expend an 

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

administration of the entire program has resulted in 

limiting disbursements in these two primaries alone. 

In 1996, however, many larger states (such as New 

York, California' and Texas) moved their primaries to 

February and March. Consequently, a campaign had 

to diversify its resources among more states in the 

early primaries in order to secure the nomination, and 

was far less likely to exceed the spending limit for any 

particular state. 
Legislative Recommendations 47 

With an increasing number of primaries vying for a 

campaign's limited resources, however, it would not 

be possible to spend very large amounts in these 

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

limit would serve as a constraint on state spending, 

even in the early primaries. At the same time, 

candidates would have broader discretion in the running of their campaigns. 

Our experience has also shown that the limitations 

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

fundraising limitation, the compliance cost exemption, 

the volunteer service provisions, the unreimbursed 

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

complex series of allocation schemes have developed 

into an art which, when skillfully practiced, can partially circumvent the state limitations. 

Finally, the allocation of expenditures to the states 

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

task for the Commission. For all these reasons, the 

Commission decided to revise its state allocation 

regulations for the 1992 Presidential election. Many of 

the requirements, such as those requiring distinctions 

between fundraising and other types of expenditures, 

were eliminated. However; the rules could not undo 

the basic requirement to demonstrate the amount of 

expenditures relating to a particular state. Given our 

experience to date, we believe that this change to the 

Act would still be of substantial benefit to all parties 

concerned. 

Fundraising Limitation for Publicly Financed 

Presidential Primary Campaigns 

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

Recommendation: The Commission recommends that 

the separate fundraising limitation provided to publicly 

financed Presidential primary campaigns be combined with the overall limit. Thus, instead of a 

candidate's having a $1 0 million limit (plus COLA2) for 

2 Spending limits are increased by the cost-of-living adjustment (COLA), which the Department of Labor calculates 

annually. 

campaign expenditures and a $2 million (plus COLA) 

limit for fund raising (20 percent of overall limit), each 

candidate would have one $12 million (plus COLA) 

limit for all campaign expenditures. 

Explanation: Campaigns that have sufficient funds to 

spend up to the overall limit usually allocate some of 

their expenditures to the fundraising category. These 

campaigns come close to spenc;ling the maximum 

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

limits, Congress would not substantially alter spending amounts or patterns. For those campaigns which 

do not spend up to the overall expenditure limit, the 

separate fundraising limit is meaningless. Many 

smaller campaigns do not even bother to use it, except in one or two states where the expenditure limit 

is low, e.g., Iowa and New Hampshire. Assuming that 

the state limitations are eliminated or appropriately 

adjusted, this recommendation would have little impact on the election process. The advantages of the 

recommendation, however, are substantial. They 

include a reduction in accounting burdens and a simplification in reporting requirements for campaigns, 

and a reduction in the Commission's auditing task. 

For example, the Commission would no longer have 

to ensure compliance with the 28-day rule, i.e., the 

rule prohibiting committees from allocating expenditures as exempt fundraising expenditures within 28 

days of the primary held within the state where the 

expenditure was made. 

Eligibility Threshold for Public Financing 

Section: 26 U.S.C. §9033 

Recommendation: The Commission recommends that 

Congress raise the eligibility threshold for publicly 

funded Presidential. primary candidates. 

Explanation: The Federal Election Commission has 

administered the public funding provisions in five 

Presidential elections. The statute provides for a costof-living adjustment (COLA) of the overall primary 

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

remains exactly the same as it was in 197 4. An ad-
48 Chapter Six 

justment to the threshold requirement would ensure 

that funds continue to be given only to primary candidates who demonstrate broad national support. To 

reach this higher threshold, the Commission 

recommends increasing the number of states in which 

the candidate had to raise the qualifying amount of 

matchable contributions; and/or increase the total 

amount of qualifying matchable contributions that had 

to be raised in each of the states. 

Eligibility Requirements for Public Financing 

(revised 1996) 

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

Recommendation: The Commission recommends that 

Congress amend the eligibility requirements for publicly funded Presidential candidates to make clear that 

candidates. who have been convicted of a willful violation of the laws related to the public funding process 

or who are not eligible to serve as President will not 

be eligible for public funding. 

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

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

matter how severe. And yet public confidence in the 

integrity of the public financing system would risk 

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

requirements to ensure that such candidates do not 

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

candidate would be ineligible for public funds if he or 

she had been convicted of fraud with respect to raising funds for acampaign that was publicly financed, 

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

willfully disregarded the statute or regulations. See 

LaRouche v. FEC, 992 F.2d 1263 (D.C. Cir. 1993} 

cert. denied, 114 S. Ct. 550 (1993}. In addition, Congress should make it clear that eligibility to serve in 

the office sought is a prerequisite for eligibility for 

public funding. 

Deposit of Repayments 

Section: 26 U.S.C. §9007(d} 

Recommendation: The Commission recommends that 

Congress revise the law to state that: All payments 

received by the Secretary of the Treasury under subsection (b) shall be deposited by him or her in the 

Presidential Election Campaign Fund established by 

§9006(a}. 

Explanation: This change would allow the Fund to 

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

by general election grant recipients. Currently the 

Fund recaptures only repayments made by primary 

matching fund recipients. 
Legislative Recommendations 49 

Part II: 

General Legislative 

Recommendations 

Disclosure 

Candidates and Principal Campaign Committees 

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

Recommendation: The Commission recommends that 

Congress revise the law to require a candidate and 

his or her principal campaign committee to register 

simultaneously. 

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

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

designating the principal campaign committee, which 

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

the candidate's designation to register. This schedule 

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

financial activity that occurred prior to the registration 

is not disclosed until the committee's next upcoming 

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

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

individual becomes a candidate, the unregistered 

committee would not have to file a report on that date 

and disclosure would be delayed. The next report 

might not be filed for 3 more months. By requiring 

simultaneous registration, the public would be 

assured of more timely disclosure of the campaign's 

activity. 

PACs Created by Candidates 

Section: 2 U.S.C. §441a(a) 

Recommendation: The Commission recommends that 

Congress consider whether PACs created by candidates should be deemed affiliated with the 

candidate's principal campaign committee. 

Explanation: A number of candidates for federal office, including incumbent officeholders, have created 

PACs in addition to their principal campaign committees. Under current law, such PACs generally are not 

considered authorized committees. Therefore, they 

may accept funds from individuals up to the $5,000 

limit permitted for unauthorized committees in a calendar year and may make contributions of up to 

$5,000 per election to other federal candidates once 

they achieve multicandidate status. In contrast, authorized committees may not accept more than $1 ,000 

per election from individuals and may not make contributions in excess of $1 ,000 to other candidates. 

The existence of PACs created by candidates can 

present difficult issues for the Commission, such as 

when contributions are jointly solicited with the 

candidate's principal campaign committee or the resources of the PAC are used to permit the candidate 

to gain exposure by traveling to appearances on behalf of other candidates. At times the operations of the 

two committees can be difficult to distinguish. 

If Congress concludes that there is an appearance 

that the limits of the Act are being evaded through the 

use of PACs created by candidates, it may wish to 

consider whether such committees are affiliated with 

the candidate's principal campaign committee. As 

such, contributions received by the committees would 

be aggregated under a single contribution limit and 

subjected to the limitations on contributions to authorized committees. The same treatment would be accorded to contributions made by them to other candidates. 

Require Monthly Filing for Certain Multicandidate 

Committees 

Section: 2 U.S.C. §434(a)(4) 

Recommendation: The Commission recommends that 

multicandidate committees which have raised or 

spent, or which anticipate raising or spending, over 

$100,000 be required to file on a monthly basis during 

an election year. 

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

during an election year. Quarterly filers that make 

contributions or expenditures on behalf of primary or 

general election candidates must also file pre-election 

reports. 
50 Chapter Six 

Presidential candidates who anticipate receiving 

contributions or making expenditures aggregating 

$1 00,000 or more must file on a monthly basis. Congress should consider applying this same reporting 

requirement to multicandidate committees which have 

raised or spent, or which anticipate raising or spending, in excess of $100,000 during an election year. 

The requirement would simplify the filing schedule, 

eliminating the need to calculate the primary filing 

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

more influential committees' reports. Although the 

total number of reports filed would increase, most 

reports would be smaller, making it easier for the 

Commission to enter the data into the computer and 

to make the disclosure more timely. 

Reporting of Last-Minute Independent 

Expenditures 

Section: 2 U.S.C. §434(c) 

Recommendation: The Commission recommends that 

Congress clarify when last-minute independent expenditures must be reported. 

Explanation: The statute requires that independent 

expenditures aggregating $1 ,000 or more and made 

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

election be reported within 24 hours after they are 

made. This provision is in contrast to other reporting 

provisions of the statute, which use the words "shall 

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

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

mail and postmarked within 24 hours of when the 

expenditure is made? Should Congress decide that 

committees must report the expenditure within 24 

hours after it is made, committees should be able to 

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

Reporting and Recordkeeplng of Payments to 

Persons Providing Goods and Services 

Section: 2 U.S.C. §§432(c), 434(b)(5)(A), (6)(A) and 

(6)(8) 

Recommendation: The current statute requires reporting ''the name and address of each ... person to whom 

an expenditure in an aggregate amount or value in 

excess of $200 within the calendar year is made by 

the reporting committee to meet a candidate or committee operating expense, together with the date, 

amount, and purpose of such operating expenditure." 

The Commission recommends that Congress clarify 

whether this is meant, in all instances, to require reporting committees to disclose only the payments 

made by the committee or whether additional reporting is required, in some instances, when a payment is 

made to an intermediary contractor or consultant who, 

in turn, acts as the committee's agent by making expenditures to other payees. If Congress determines 

that disclosure of secondary payees is required, the 

Act should require that committees maintain the 

name, address, amount and purpose of the disbursement made to the secondary payees in their records 

and disclose it to the public on their reports. Congress 

should limit such disclosure to secondary payments 

above a certain dollar threshold or to payments made 

to independent subcontractors. 

Explanation: The Commission has encountered on 

several occasions the question of just how detailed a 

committee's reporting of disbursements must be. See, 

e.g., Advisory Opinion 1983-25, 1 Fed. Election 

Camp. Fin. Guide (CCH), '115742 (Dec. 22, 1983) 

(Presidential candidate's committee not required to 

disclose the names, addresses, dates or amounts of 

payments made by a general media consultant retained by the committee); Advisory Opinion 1984-8, 1 

Fed. Election Camp. Fin. Guide (CCH), 'II 5756 (Apr. 

20, 1984) (House candidate's committee only required to itemize payments made to the candidate for 

travel and subsistence, not the payments made by the 

candidate to the actual providers of services); Financial Control and Compliance Manual for Presidential 

Primary Election Candidates Receiving Public Financing, Federal Election Commission, pp. 123-130 (1992) 
Legislative Recommendations 51 

(distinguishing committee advances or reimbursements to campaign staff for travel and subsistence 

from other advances or reimbursements to such staff 

and requiring itemization of payments made by campaign staff only as to the latter). Congressional intent 

in the area is not expressly stated, and the Commission believes that statutory clarification would be beneficial. In the area of Presidential public financing, 

where the Commission is responsible for monitoring 

whether candidate disbursements are for qualified 

campaign expenses (see 26 U.S.C. §§9004(c) and 

9038(b)(2)), guidance would be particularly useful. 

Excluding Political Committees from Protection of 

the Bankruptcy Code 

Section: 2 U.S.C. §433(d) 

Recommendation: The Commission recommends that 

Congress clarify the distribution of authority over insolvent political committees between the Commission's authority to regulate insolvency and termination 

of political committees under 2 U.S.C. §433(d), on 

one hand, and the authority of the bankruptcy courts, 

on the other hand. 

Explanation: In 2 U.S.C. §433(d), the Commission is 

given authority to establish procedures for "the determination of insolvency" of any political committee, the 

"orderly liquidation of an insolvent political committee," the "application of its assets for the reduction of 

outstanding debts," and the "termination of an insolvent political committee after such liquidation ... " However, the Bankruptcy Code, 11 U.S.C. §1 01 et seq., 

generally grants jurisdiction over such matters to the 

bankruptcy courts, and at least one bankruptcy court 

has exercised its jurisdiction under Chapter 11 of the 

Bankruptcy Code to permit an ongoing political committee to compromise its debts with the intent thereafter to resume its fundraising and contribution and 

expenditure activities. In re Fund for a Conservative 

Majority, 100 B.R. 307 (Bankr. E.D.Va. 1989). Not 

only does the exercise of such jurisdiction by the 

bankruptcy court conflict with the evident intent in 2 

U.S.C. §433(d) to empower the Commission to regulate such matters with respect to political committees, 

but permitting a political committee to compromise 

debts and then resume its political activities can result 

in corporate creditors effectively subsidizing the committee's contributions and expenditures, contrary to 

the intent of 2 U.S.C. §441b(a). The Commission 

promulgated a regulation generally prohibiting ongoing political committees from compromising outstanding debts, 11 CFR 116.2(b), but the continuing potential jurisdiction of the bankruptcy courts over such 

matters could undermine the Commission's ability to 

enforce it. Accordingly, Congress may want to clarify 

the distribution of authority between the Commission 

and the bankruptcy courts in this area. In addition, 

Congress should specify whether political committees 

are entitled to seek Chapter 11 reorganization under 

the Bankruptcy Code. 

Fundraislng Projects Operated by Unauthorized 

Committees (revised 1996) 

Section: 2 U.S.C §432(e) 

Recommendation: The Commission recommends that 

Congress specifically require that contributions solicited by an unauthorized committee (i.e., a committee 

that has not been authorized by a candidate as his/ 

her campaign committee) be made payable to the 

registered name of the committee and that unauthorized committees be prohibited from accepting checks 

payable to any other name. 

Explanation: Unauthorized committees are not permitted to use the name of federal candidate in their name 

of in the name of a fundraising project they sponsor 

unless, in the case of a fundraising project, the name 

selected clearly indicates opposition to the named 

candidate(s). The Commission adopted this latter 

prohibition after a rulemaking where the record clearly 

established that contributors were sometimes confused or misled into believing that they were contributing to a candidate's authorized committee (when, for 

example, the project's name was "Citizens for X''), 

when in fact they were giving to the nonauthorized 

committee that sponsored the event. This confusion 

sometimes Jed to requests for refunds, allegations of 

coordination, inadequate disclaimers, and inability to 

monitor contribution limits. While recent revisions to 

the Commission's rules at 11 CFR 1 02.14(b)(3) have 
52 Chapter Six 

now reduced this possibility, the Commission believes 

that contributor awareness might be further enhanced 

if Congress were to modify the statute by requiring 

that all checks intended for an unauthorized committee be made payable to the registered name of the 

unauthorized committee, and by prohibiting unauthorized committees from accepting checks payable to 

any other name. 

Disclaimer Notices (revised 1996) 

Section: 2 U.S.C. §441 d 

Recommendation: The Commission recommends that 

Congress revise the FECA to require registered political committees to display the appropriate disclaimer 

notice (when practicable) in any communication issued to the general public, regardless of its content or 

how it is distributed. Congress should also revise the 

Federal Communications Act to make it consistent 

with the FECA's requirement that disclaimer notices 

state who paid for the communication. 

Explanation: Under 2 U.S.C. §441d, a disclaimer notice is only required when "expenditures" are made for 

two types of communications made through "public 

political advertising": (1) communications that solicit 

contributions and (2) communications that "expressly 

advocate" the election or defeat of a clearly identified 

candidate. The Commission has encountered a number of problems with respect to this requirement. 

First, the statutory language requiring the disclaimer notice refers specifically to "expenditures," 

possibly leading to an interpretation that the requirement does not apply to disbursements that are exempt from the definition of "expenditure" such as "exempt activities" conducted by local and state party 

committees under, for example, 2 U.S.C. 

§431 (9)(B)(viii), Believing that Congress intended 

such activities to be exempt only from the definitions 

of "contribution" and "expenditure," the Commission 

recently amended its rules at 11 CFR 110.11 to require that covered "exempt activity" communications 

include a statement of who paid for the communication. See 60 FR 61199 (October 5, 1995), effective 

December 20, 1995 (60 FR 65515). However, it would 

be helpful if Congress were to clarify that all types of 

communications to the public should carry a disclaimer. 

Second, the Commission has encountered difficulties in interpreting "public political advertising," particularly when volunteers have been involved with the 

preparation or distribution of the communication. 

Third, the Commission has devoted considerable 

time to determining whether a given communication in 

fact contains "express advocacy" or "solicitation" language. The recommendation here would erase this 

need. 

The Commission considered expanding the general disclaimer requirements in the course of the recently-completed rulemaking, supra, but this was not 

included in the final rules, which rather clarify the 

scope of some of the subordinate requirements. Most 

of these problems would be eliminated, however, if 

the language of 2 U.S.C. §441 d were simplified to 

require a registered committee to display a disclaimer 

notice whenever it communicated to the public, regardless of the purpose of the communication and the 

means of preparing and distributing it. The general 

public would benefit by being aware of who has paid 

for a particular communication. Moreover, political 

committees and the Commission would benefit because they would no longer have to examine the content of communications or the manner in which they 

were disseminated to determine whether a disclaimer 

was required. 

This proposal is not intended to eliminate exemptions for communications appearing in places where it 

is inconvenient or impracticable to display a disclaimer. 

Fourth, Congress might want to consider adding 

disclaimer requirements for so-called "push poll" activity. This term generally refers to phone bank activities 

or written surveys that seek to influence voters, such 

as by providing false or misleading information about 

a candidate. This practice appears to be growing. The 

Commission considered requiring disclaimers on push 

poll communications in the course of the recent rulemaking, but declined to do so for a number of reasons, including difficulty in defining push polls and the 

fact that many such polls do not appear to expressly 

advocate the election or defeat of a clearly identified 
Legislative Recommendations 53 

candidate. If Congress enacted the general disclaimer 

requirement proposed above, this would encompass 

push poll communications by political committees. 

However, Congress might also wish to require disclosure by other groups engaging in this practice. 

Finally, Congress should change the sponsorship 

identification requirements found in the Federal Communications Act to make them consistent with the 

disclaimer notice requirements found in the FECA. 

Under the Communications Act, federal political 

broadcasts must contain an announcement that they 

were furnished to the licensee, and by whom. See 

FCC and FEC Joint Public Notice, FCC 78-419 (June 

19, 1978). In contrast, FECA disclaimer notices focus 

on who authorized and paid for the communication. 

The Communications Act should be revised to ensure 

that the additional information required by the FECA 

is provided without confusion to licensees and political 

advertisers. In addition, the FECA should be 

amended to require that the disclaimer appear at the 

end of all broadcast communications. 

Fraudulent Solicitation of Funds 

Section: 2 U.S.C. §441 h 

Recommendation: The current §441 h prohibits 

fraudulent misrepresentation such as speaking, writing or acting on behalf of a candidate or committee on 

a matter which is damaging to such candidate or committee. It does not, however, prohibit persons from 

fraudulently soliciting contributions. The Commission 

recommends that a provision be added to this section 

prohibiting persons from fraudulently misrepresenting 

themselves as representatives of candidates or political parties for the purpose of soliciting contributions 

which are not forwarded to or used by or on behalf of 

the candidate or party. 

Explanation: The Commission has received a number 

of complaints that substantial amounts of money were 

raised fraudulently by persons or committees purporting to act on behalf of candidates. Candidates have 

complained that contributions which people believed 

were going for the benefit of the candidate were diverted for other purposes. Both the candidates and 

the contributors were harmed by such diversion. The 

candidates received less money because people desirous of contributing believed they had already done 

so. The contributors' funds were used in a manner 

they did not intend. The Commission has been unable 

to take any action on these matters because the statute gives it no authority in this area. 

Draft Committees 

Section: 2 U.S.C. §§431 (8)(A)(i) and (9)(A)(i), 

441a(a)(1) and 441b(b) 

Recommendation: The Commission recommends that 

Congress consider the following amendments to the 

Act in order to prevent a proliferation of "draft'' committees and to reaffirm Congressional intent that draft 

committees are "political committees" subject to the 

Act's provisions. 

1. Bring Funds Raised and Spent for Undeclared 

but Clearly Identified Candidates Within the Act's 

Purview. Section 431 (8)(A)(i} should be amended to 

include in the definition of "contribution" funds contributed by persons "for the purpose of influencing a 

clearly identified individual to seek nomination for 

election or election to Federal office ...." Section 

431 (9}(A}(i} should be similarly amended to include 

within the definition of "expenditure" funds expended 

by persons on behalf of such "a clearly identified individual." 

2. Restrict Corporate and Labor Organization Support for Undeclared but Clearly Identified Candidates. 

Section 441 b(b) should be revised to expressly state 

that corporations, labor organizations and national 

banks are prohibited from making contributions or .. 

expenditures ''for the purpose of influencing a clearly 

identified individual to seek nomination for election or 

election..." to federal office. 

.3. Limit Contributions to Draft Committees. The law 

should include explicit language stating that no person shall make contributions to any committee (including a draft committee) established to influence the · 

nomination or election of a clearly identified individual 

for any federal office which, in the aggregate, exceed 

that person's contribution limit, per candidate, per 

election. 
54 Chapter Six 

Explanation: These proposed amendments were 

prompted by the decisions of the U.S. Court of Ap~ 

peals for the District of Columbia Circuit in FEC v. 

Machinists Non~Partisan Political League and FEC v. 

Citizens for Democratic Alternatives in 1980 and of 

the U.S. Court of Appeals for the Eleventh Circuit in 

FEC v. Florida for Kennedy Committee. The District of 

Columbia Circuit held that the Act, as amended in 

1979, regulated only the reporting requirements of 

draft committees. The Commission sought review of 

this decision by the Supreme Court, but the Court 

declined to hear the case. Similarly, the Eleventh 

Circuit found that "committees organized to 'draft' a 

person for federal office" are not "political committees" 

within the Commission's investigative authority. The 

Commission believes that the appeals court rulings 

create a serious imbalance in the election law and the 

political process because a nonauthorized group 

organized to support someone who has not yet become a candidate may operate completely outside the 

strictures of the Federal Election Campaign Act. However, any group organized to support someone who 

has in fact become a candidate is subject to the Act's 

registration and reporting requirements and contribution limitations. Therefore, the potential exists for funneling large aggregations of money, both corporate 

and private, into the federal electoral process through 

unlimited contributions made to nonauthorized draft 

committees that support a person who has not yet 

become a candidate. These recommendations seek 

to avert that possibility. 

Contributions and Expenditures 

Candidate's Use of Campaign Funds 

(revised 1996) 

Section: 2 U.S.C. §439a 

Recommendation: Congress may wish to examine 

whether the use of campaign funds to pay a salary to 

the candidate is considered to be a "personal use" of 

those funds. 

Explanation: Under §439a of the Act, excess campaign funds cannot be converted by any person to 

personal use. The Commission has promulgated final 

rules on what would constitute "personal use" of excess funds. See 60 FR 7862 (February 9, 1995), effective April 5, 1995 (60 FR 17193). It was unable, 

however, to decide whether excess campaign funds 

may be used to pay a salary to the candidate. In the 

past, some have argued before the Commission that 

candidate salary payments are legitimate campaign 

expenditures, while others have felt that such payments constitute a personal use of excess funds prohibited by §439a. Congressional guidance on this 

issue would be helpful. 

Disposition of Excess Campaign Funds 

Section: 2 U.S.C. §439a 

Recommendation: In those cases where a candidate 

has largely financed his campaign with personal 

funds, the Commission recommends that Congress 

consider limiting the amount of excess campaign 

funds that the campaign may transfer to a national, 

state or local committee of any political party to 

$1 00,000 per year. 

Explanation: Under current law, a candidate may 

transfer unlimited amounts of excess campaign funds 

to a political party. This makes it possible for a candidate to contribute unlimited personal funds to his 

campaign, declare these funds excess and transfer 

them to a political party, thus avoiding the limit on 

individual contributions to political parties. 

Distinguishing Official Travel from 

Campaign Travel 

Section: 2 U.S.C. §431 (9) 

Recommendation: The Commission recommends that 

Congress amend the FECA to clarify the distinctions 

between campaign travel and official travel. 

Explanation: Many candidates for federal office hold 

elected or appointed positions in federal, state or local 

government. Frequently, it is difficult to determine 

whether their public appearances are related to their 

official duties or whether they are campaign related. A 

similar question may arise when federal officials who 

are not running for office make appearances that 
Legislative Recommendations 55 

could be considered to be related to their official duties or could be viewed as campaign appearances on 

behalf of specific candidates. 

Another difficult area concerns trips in which both 

official business and campaign activity take place. 

There have also been questions as to how extensive 

the campaign aspects of the trip must be before part 

or all of the trip is considered campaign related. Congress might consider amending the statute by adding 

criteria for determining when such activity is campaign 

related. This would assist the committee in determining when campaign funds must be used for all or part 

of a trip. This will also help Congress determine when 

official funds must be used under House or Senate 

Rules. 

Coordinated Party Expenditures 

Section: 2 U.S.C. §441a(d) 

Recommendation: The Commission recommends that 

Congress clarify the number of coordinated party 

expenditure limits that are available to party committees during the election cycle. 

In addition, Congress may want to clarify the distinction between coordinated party expenditures 

made in connection with general elections and generic party building activity. 

Explanation: Section 441 a(d) provides that national 

and state party committees may make expenditures in 

connection with the general election campaigns of the 

party's nominees for House and Senate. The national 

party committees may also make such expenditures 

on behalf of the party's general election Presidential 

and Vice Presidential nominees. The Commission has 

interpreted these provisions to permit party committees to make nearly any type of expenditure they 

deem helpful to their nominees short of donating the 

funds directly to the candidates. Expenditures made 

under §441 a(d) are subject to a special limit, separate 

from contribution limits. 

The Commission has been faced several times 

with the question of whether party committees have 

one or two coordinated party expenditure limits in a 

particular election campaign. In particular, the issue 

has been raised in special election campaigns. Some 

state laws allow the first special election either to narrow the field of candidates, as a primary would, or to 

fill the vacancy if one candidate receives a majority of 

the popular vote. If a second special election becomes necessary to fill the vacancy, the question has 

arisen as to whether the party committees may spend 

against a second coordinated party expenditure limit 

since both special elections could have filled the vacancy. In a parallel manner, the Commission has 

been faced with the question of whether party committees have one or two coordinated party expenditure limits in a situation that includes an election on a 

general election date and a subsequent election, required by state law, after the general election. Although in the latter situation, a district court has concluded that only one coordinated party expenditure 

limit would apply (see Democratic Senatorial Campaign Committee v. FEC (No. 93-1321) (D.D.C., November 14, 1994)), broader Congressional guidance 

on this issue would be helpful. 

Party committees may also make expenditures for 

generic party-building activities, including get-out-thevote and voter registration drives. These activities are 

not directly attributable to a clearly identified candidate. In contrast to coordinated party expenditures, 

these activities are not subject to limitation. 

When deciding, in advisory opinions and enforcement matters, whether an activity is a §441 a( d) expenditure or a generic activity, the Commission has 

considered the timing of the expenditure, the language of the communication, and whether it makes 

reference only to candidates seeking a particular office or to all the party's candidates, in general. However, the Commission still has difficulty determining, 

in certain situations, when a communication or other 

activity is generic party building activity or a coordinated party expenditure. Congressional guidance on 

this issue would be helpful. 

Volunteer Participation in Exempt Activity 

Section: 2 U.S.C. §§431 (8)(B)(x) and (xii); 

431 (9)(B)(viii) and (ix) 

Recommendation: The Commission recommends that 

Congress clarify the extent to which volunteers must 
56 Chapter Six 

conduct or be involved in an activity in order for the 

activity to qualify as an exempt party activity. 

Explanation: Under the Act, certain activities con~ 

ducted by state and local party committees on behalf 

of the party's candidates are exempt from the contribution limitations if they meet specific conditions. 

Among these conditions is the requirement that the 

activity be conducted by volunteers. However, the 

actual level of volunteer involvement in these activi~ 

ties has varied substantially. 

Congress may want to clarify the extent to which 

volunteers must be involved in an activity in order for 

that activity to qualify as an exempt activity. For ex~ 

ample, if volunteers are assisting with a mailing, must 

they be the ones to stuff the envelopes and sort the 

mail by zip code or can a commercial vendor perform 

that service? Is it sufficient involvement if the volunteers just stamp the envelopes or drop the bags at the 

post office? 

Contributions from Minors 

Section: 2 U.S.C. §441 a(a)(1) 

Recommendation: The Commission recommends that 

Congress establish a presumption that contributors 

below age 16 are not making contributions on their 

own behalf. 

Explanation: The Commission has found that contributions are sometimes given by parents in their 

children's names. Congress should address this potential abuse by establishing a minimum age for contributors, or otherwise provide guidelines ensuring 

that parents are not making contributions in the name 

of another. 

Application of Contribution Limitations to Family 

Members (revised 1996) 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends that 

Congress examine the application of the contribution 

limitations to immediate family members. 

Explanation: Under the current posture of the law,· a 

family member is limited to contributing $1 ,000 per 

election to a candidate. This limitation applies to 

spouses and parents, as well as other immediate 

family members. (SeeS. Conf. Rep. No. 93-1237, 

93d Cong., 2d Sess., 58 (1974) and Buckley v. Valeo, 

424 U.S. 1, 51 (footnote 57)(1976).) This limitation 

has caused the Commission substantial problems in 

attempting to implement and enforce the contribution 

limitations. 3 

Problems have arisen in enforcing the limitations 

where a candidate uses assets belonging to a parent. 

In some cases, a parent has made a substantial gift to 

his or her candidate-child while cautioning the candidate that this may well decrease the amount which 

the candidate would otherwise inherit upon the death 

of the parent. 

Problems have also occurred in situations where 

the candidate uses assets held jointly with a spouse. 

When the candidate uses more than one-half of the 

value of the asset held commonly with the spouse (for 

example, offering property as collateral for a loan), the 

amount over one-half represents a contribution from 

the spouse. If that amount exceeds $1 ,000, it becomes an excessive contribution from the spouse. 

The Commission recommends that Congress consider the difficulties arising from application of the 

contribution limitations to immediate family members. 

Lines of Credit and Other Loans Obtained by 

Candidates (revised 1996) 

Section: 2 U.S.C. §431 (8)(B)(vii) 

Recommendation: The Commission recommends that 

.Congress provide guidance on whether candidate 

committees may accept contributions which are derived from advances on a candidate's brokerage account, credit card, or home equity line of credit, and, if 

so, Congress should also clarify how such extensions 

of credit should be reported. 

3 While the Commission has attempted through regulations to prese(lt an equitable solution to some of these problems (see Explanation and Justification, Final Rule, 48 Fed. 

Reg. 19019, April27, 1983, as prescribed by the Commission on July 1, 1983), statutory resolution is required in this 

area. 
Legislative Recommendations 57 

Explanation: The Act currently exempts from the definition of "contribution" loans that are obtained by political committees in the ordinary course of business 

from federally-insured lending institutions. 2 U.S.C. 

§431 (8)(B)(vii). Loans that do not meet the requirements of this provision are either subject to the Act's 

contribution limitations, if received from permissible 

sources, or the prohibition on corporate contributions, 

as appropriate. · 

Since this aspect of the law was last amended in 

1979, however, a variety of financial options have 

become more widely available to candidates and 

committees. These include a candidate's ability to 

obtain advances against the value of a brokerage 

account, to draw cash advances from a candidate's 

credit card, or to make draws against a home equity 

line of credit obtained by the candidate. In many 

cases, the credit approval, and therefore the check 

performed by the lending institution regarding the 

candidate's creditworthiness, may predate the 

candidate's decision to seek federal office. Consequently, the extension of credit may not have been 

made in accordance with the statutory criteria such as 

the requirement that a loan be "made on a basis 

which assures repayment." In other cases, the 

extension of credit may be from an entity that is not a 

federally-insured lending institution. The Commission 

recommends that Congress clarify whether these 

alternative sources of financing are permissible and, if 

so, specify standards to ensure that these advances 

are commercially reasonable extensions of credit. 

Enforcement 

Audits for Cause 

Section: 2 U.S.C. §438{b) 

Recommendation: The Commission recommends that 

Congress expand the time frame, from 6 months to 12 

months after the election, during which the Commission can initiate an audit for cause. 

Explanation: Under current law, the Commission must 

initiate audits for cause within 6 months after the election. Because year-end disclosure does not take 

place until almost 2 months after the election, and 

because additional time is needed to computerize 

campaign finance information and review reports, 

there is little time to identify potential audits and complete the referral process within that 6-month window. 

Modifying Standard of "Reason to Believe" 

Finding 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

Congress modify the language pertaining to "reason 

to believe," contained at 2 U.S.C. §437g, so as to 

allow the Commission to open an investigation with a 

sworn complaint, or after obtaining evidence in the 

normal course of its supervisory responsibilities. Essentially, this would change the "reason to believe" 

standard to "reason to open an investigation." 

Explanation: Under the present statute, the Commission is required to make a finding that there is "reason 

to believe a violation has occurred" before it may investigate. Only then may the Commission request 

specific information from a respondent to determine 

whether, in fact, a violation has occurred. The statutory phrase "reason to believe" is misleading and 

does a disservice to both the Commission and the 

respondent. It implies that the Commission has evaluated the evidence and concluded that the respondent 

has violated the Act. In fact, however, a "reason to 

believe" finding simply means that the Commission 

believes a violation may have occurred if the facts as 

described in the complaint are true. An investigation 

permits the Commission to evaluate the validity of the 

facts as alleged. 

It would therefore be helpful to substitute words 

that sound less accusatory and that more accurately 

reflect what, in fact, the Commission is doing at this 

early phase of enforcement. 

In order to avoid perpetuating the erroneous conclusion that the Commission believes a respondent 

has violated the law every time it finds "reason to 

believe," the statute should be amended. 
58 Chapter Six 

Protection for Those Who File Complaints 

or Give Testimony 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

the Act be amended to make it unlawful to improperly 

discriminate against employees or union members 

solely for filing charges or giving testimony under the 

statute. 

Explanation: The Act requires that the identity of anyone filing a complaint with the Commission be provided to the respondent. In many cases, this may put 

complainants at risk of reprisals from the respondent, 

particularly if an employee or union member files a 

complaint against his or her employer or union. This 

risk may well deter many people from filing complaints, particularly under §441 b. See, e.g., NLRB v. 

Robbins Tire & Rubber Company, 437 U.S. 214,240 

{1978); Brennan v. Engineered Products, Inc., 506 

F.2d 299, 302 {8th Cir. 1974); Texas Industries, Inc. v. 

NLRB, 336 F.2d 128, 134 {5th Cir. 1964). In other 

statutes relating to the employment relationship, Congress has made it unlawful to discriminate against 

employees for filing charges or giving testimony under 

the statute. See, e.g., 29 U.S.C. §158{a){4) {National 

Labor Relations Act); 29 U.S.C. §215{3) {Fair Labor 

Standards Act); 42 U.S.C. §2000e-3{a) {Equal Employment Opportunity Act). The Commission recommends that Congress consider including a similar 

provision in the FECA. 

Public Financing 

Supplemental Funding for Publicly Funded 

Candidates 

Section: 26 U.S.C. §§9003 and 9004 · 

Recommendation: The Commission recommends that 

Congress consider whether to modify the general 

election Presidential public funding system in instances where a nonpublicly funded candidate exceeds the spending limit for publicly funded candidates. 

Explanation: Major party Presidential candidates who 

participate in the general election public funding process receive a grant for campaigning. In order to receive the grant, the candidate must agree to limit expenditures to that amount. Candidates who do not 

request public funds may spend an unlimited amount 

on their campaign. Congress may want to consider 

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

Miscellaneous 

Funds and Services from Private Sources 

(revised 1996) 

Section: 2 U.S.C. §437c 

Recommendation: The Commission recommends that 

Congress give the Commission authority to accept 

funds and services from private sources to enable the 

Commission to provide guidance and conduct 

research on election administration and campaign 

finance issues. 

Explanation: The Commission has been very restricted in the sources of private funds it may accept 

to finance topical research, studies, and joint projects 

with other entities because it does not have statutory 

gift acceptance authority. In view of the Commission's 

expanding role in this area, Congress should consider 

amending the Act to provide the Commission with 

authority to accept gifts from private sources. Permitting the Commission to obtain funding from a broader 

range of private organizations would allow the Commission to have more control in structuring and conducting these activities and avoid the expenditure of 

government funds for these activities. If this proposal 

were adopted, however, the Commission would not 

accept funds from organizations that are regulated by 

or have financial relations with the Commission. 
Legislative Recommendations 59 

Part Ill 

Conforming Legislative 

Recommendations 

Disclosure 

Point of Entry for Pseudonym Lists (1996) 

Section: 2 U.S.C. §438(a){4) 

Recommendation: The Commission recommends that 

Congress make a technical amendment to section 

438(a){4) by deleting the reference to the Clerk of the 

House. 

Explanation: Section 438{a){4) outlines the processing of disclosure documents filed under the Act. The 

section permits political committees to "salt" their disclosure reports with 1 0 pseudonyms in order to detect 

misuse of the committee's FEC reports and protect 

individual contributors who are listed on the report 

from unwanted solicitations. The Act requires committees who "salf' their reports to file the list of pseudonyms with the appropriate filing office. 

Public Law No. 104-79 (December 28, 1995) 

changed the point of entry for House candidate reports from the Clerk of the House to the FEC effective December 31, 1995. As a result, House ~andi­ dates must now file pseudonym lists with the FEC, 

rather than the Clerk of the House. To establish consistency within the Act, the Commission recommends 

that Congress amend section 438{a){4) to delete the 

reference to the Clerk of the House as a point of entry 

for the filing of pseudonym lists. 

Contributions and Expenditures 

Broader Prohibition Against Force and Reprisals 

(revised 1996) 

Section: 2 U.S.C. §441b{b){3){A) 

Recommendation: The Commission recommends that 

Congress revise the FECA to make it unlawful for a 

corporation, labor organization or separate segregated fund to use physical force, job discrimination, 

financial reprisals or the threat thereof to obtain a 

contribution or expenditure on behalf of any candidate 

or political committee. 

Explanation: Current §441 b(b) (3) (A) could be interpreted to narrowly apply to the making of contributions or expenditures by a separate segregated fund 

which were obtained through the use of force, job 

discrimination, financial reprisals and threats. Thus, 

Congress should clarify that corporations and labor 

organizations are prohibited from using such tactics in 

the solicitation of contributions for the separate segregated fund. In addition, the FEC has recently revised 

its .rules to clarify that it is not permissible for a corporation or a labor organization to use coercion, threats, 

force or reprisal to urge any individual to contribute to 

a candidate or engage in fundraising activities. See 

60 FR 64260 (December 14, 1995). However, Congress should include language to cover such situations. 

Nonprofit Corporations and Express Advocacy 

(revised 1996) 

Section: 2 U.S.C. §441b 

Recommendation: In light of the decision of the U.S. 

Supreme Court in FEC v. Massachusetts Citizens for 

Life, Inc. (MCFL), the Commission recommends that 

Congress consider amending the provision prohibiting 

corporate and labor spending in connection with federal elections in order to incorporate into the statute 

the text of the court's decision. Congress may also 

wish to include in the Act a definition for the term "express advocacy." 

Explanation: In the Court's decision of December 15, 

1986, the Court held that the Act's prohibition on corporate political expenditures was unconstitutional as 

applied to independent expenditures made by a narrowly defined type of nonprofit corporation. The Court 

determined, however, that these nonprofit corporations had to disclose some aspect of their financial 

activity-in particular, independent expenditures exceeding $250 and identification of persons who contribute over $200 to help fund these expenditures. 

The Court further ruled that spending for political activity could, at some point, become the major purpose 
60 Chapter Six 

of the corporation, and the organization would then 

become a political committee. The Court also indicated that the prohibition on corporate expenditures 

for communications is limited to communications expenditures containing express advocacy. 

Since the Court decision and subsequent related 

decisions (e.g., Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990)), the Commission has 

concluded a rulemaking proceeding to implement 

changes necessitated by the current case law. See 60 

FR 35293 (July 6, 1995}. However, the Commission 

believes that statutory clarification would also be beneficial. 

Congress should consider whether statutory 

changes are needed: (1) to exempt independent expenditures made by certain nonprofit corporations 

from the statutory prohibition against corporate expenditures; (2) to specify the reporting requirements 

for these nonprofit corporations; and (3) to provide a 

definition of express advocacy. 

Honorarium 

Section: 2 U.S.C. §431 (B)(B)(xiv) 

Recommendation: The Commission recommends that 

Congress should make a technical amendment, deleting 2 U.S.C. §431 (8)(B)(xiv), now contained in a list of 

definitions of what is not a contribution. 

Explanation: The 1976 amendments to the Federal 

Election Campaign Act gave the Commission jurisdiction over the acceptance of honoraria by all federal 

officeholders and employees. 2 U.S.C. §441i.ln 1991, 

the Legislative Branch Appropriations Act repealed 

§441 i. As a result, the Commission has no jurisdiction 

over honorarium transactions taking place after August 14, 1991 , the effective date of the law. 

To establish consistency within the Act, the Commission recommends that Congress make a technical 

change to §431 (8)(B)(xiv) deleting the reference to 

honorarium as defined in former §441 i. This would 

delete honorarium from the list of definitions of what is 

not a contribution. 

Acceptance of Cash Contributions 

Section: 2 U.S.C. §441 g 

Recommendation: The Commission recommends that 

Congress modify the statute to make the treatment of 

2 U.S.C. §441g, concerning cash contributions, consistent with other provisions of the Act. As currently 

drafted, 2 U.S.C. §441g prohibits only the making of 

cash contributions which, in the aggregate, exceed 

$100 per candidate, per election. It does not address 

the issue of accepting cash contributions. Moreover, 

the current statutory language does not plainly prohibit cash contributions in excess of $1 00 to political 

committees other than authorized committees of a 

candidate. 

Explanation: Currently this provision focuses only on 

persons making the cash contributions. However, 

these cases generally come to light when a 

committee has accepted these funds. Yet the Commission has no recourse with respect to the committee in such cases. This can be a problem, particularly 

where primary matching funds are received on the 

basis of such contributions. 

While the Commission, in its regulations at 11 CFR 

110.4(c)(2), has included a provision requiring a committee receiving such a cash contribution to promptly 

return the excess over $1 00, the statute does not 

explicitly make acceptance of these cash contributions a violation. The other sections of the Act dealing 

with prohibited contributions (i.e., §§ 441 b on corporate and labor union contributions, 441 c on contributions by government contractors, 441 e on contributions by foreign nationals, and 441f on contributions in 

the name of another) all prohibit both the making and 

accepting of such contributions. 

Secondly, the statutory text seems to suggest that 

the prohibition contained in §441 g applies only to 

those contributions given to candidate committees. 

This language is at apparent odds with the Commission's understanding of the Congressional purpose to 

prohibit any cash contributions which exceed $1 00 in 

federal elections. 
Legislative Recommendations 61 

Public Financing 

Applicability of Title VI to Recipients of Payments 

from the Presidential Election Campaign Fund 

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

Recommendation: The Commission recommends that 

Congress clarify that committees receiving public 

financing payments from the Presidential Election 

Campaign Fund are exempt from the requirements of 

Title VI of the Civil Rights Act of 1964, as amended. 

Explanation: This proposed amendment was 

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

the District of Columbia in Freedom Republicans, Inc., 

and Lugenia Gordon v. FEC, 788 F. Supp. 600 

(1992), vacated, No. 92-5214 (D.C. Cir. January 18, 

1994). The Freedom Republicans' complaint asked 

the district court to declare that the Commission has 

jurisdiction to regulate the national parties' delegate 

selection process under Title VI. It also requested the 

court to order the Commission to adopt such regulations, direct the Republican Party to spend no more of 

the funds already received for its 1992 national nominating convention, and seek refunds of moneys already disbursed if the Republican Party did not 

amend its delegate selection and apportionment process to comply with Title VI. The district court found 

that the Commission "does have an obligation to promulgate rules and regulations to insure the enforcement of Title VI. The language of Title VI is necessarily broad, and applies on its face to the FEC as well 

as to both major political parties and other recipients 

of federal funds." 788 F. Supp. at 601. 

The Commission appealed this ruling on a number 

o! procedural and substantive grounds, including that 

T1tle VI does not apply to the political parties' apportionment and selection of delegates to their 

conventions. However, the court of appeals overruled 

the district court decision on one of the non-substantive grounds, leaving the door open for other lawsuits 

involving the national nominating conventions or other 

recipients of federal funds certified by the Commission. No. 92-5214, slip op. at 15. 

In the Commission's opinion, First Amendment 

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

did not intend Title VI to permit the Commission to 

dictate to the political parties how to select candidates 

or to regulate the campaigns of candidates for federal 

office. Nevertheless, the potential exists for persons 

immediately prior to an election to invoke Title VI in 

the federal courts' in a manner that might interfere with 

the parties' nominating process and the candidates' 

campaigns. The recommended clarification would 

help forestall such a possibility. 

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

financing provision cited above: ''The acceptance of 

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

Civil Rights Act of 1964, as amended." 

Enforcement of Nonwlllful Violations 

Section: 26 U.S.C. §§9012 and 9042 

Recommendation: The Commission recommends that 

Congress consider amending the Presidential Election Campaign Fund Act and the Presidential Primary 

Matching Payment Account Act to clarify that the 

Commission has authority for civil enforcement of 

nonwillful violations (as well as willful violations) of the 

public funding provisions. 

Explanation: Section 9012 of the Presidential Election 

Campaign Fund Act and §9042 of the Presidential 

Primary Matching Payment Account Act provide only 

for "criminal penalties" for knowing and willful violations of the spending and contribution provisions and 

the failure of publicly funded candidates to furnish all 

records requested by the Commission. The lack of a 

specific reference to nonwillful violations of these 

provisions has raised questions regarding the 

Commission's ability to enforce these provisions 

through the civil enforcement process. 

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

to carry out its civil enforcement of the public funding 

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

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

Similarly, the Commission has used the candidate 

agreement and certification processes provided in 26 

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

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

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

provisions. 

Contributions to Presidential Nominees Who 

Receive Public Funds In the General Election 

Section: 26 U.S.C. §9003 

Recommendation: The Commission recommends that 

Congress clarify that the public financing statutes 

prohibit the making and acceptance of contributions 

(either direct or in-kind) to Presidential candidates 

who receive full public funding in the general election. 

Explanation: The Presidential Election Campaign 

Fund Act prohibits a publicly financed general election 

candidate from accepting private contributions to defray qualified campaign expenses. 26 U.S.C. 

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

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

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

Miscellaneous 

Ex Officio Members of Federal Election 

Commission (1996) 

Section: 2 U.S.C. §437c(a)(1) 

Recommendation: The Commission recommends that 

Congress amend section 437c by removing the Secretary of the Senate, the Clerk of the House, and their 

designees from the list of the members of the Federal 

Election Commission. 

Explanation: In 1993, the U.S. Court of Appeals for 

the District of Columbia ruled that the ex officio membership of the Secretary of the Senate and the Clerk 

of the House on the Federal Election Commission 

was unconstitutional. (FEC v. NRA Political Victory 

Fund, 6 F.3d 821 (D.C. Cir. 1993), cert. dismissed for 

want ofjurisdiction, 115 S. Ct. 537 (12/6/94).) This 

decision was left in place when the Supreme Court 

dismissed the FEC's appeal on the grounds that the 

FEC lacks standing to independently bring a case 

under Title 2. 

As a result of the appeals court decision, the FEC 

reconstituted itself as a six-member body whose 

members are appointed by the President and confirmed by the Senate. Congress should accordingly 

amend the Act to reflect the appeals court's decision 

by removing the references to the ex officio members 

from section 437c. 
63 

Chapter 7 

Campaign Finance 

Statistics 

CHART7-1 Election Year 

Receipts of House Candidates for - Nonelection Year 

Each Year of Election Cycle, 1990·1996 

Millions of Dollars 

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

90 

60 

30 

0 

90 92 94 96 90 92 94 96 90 92 94 96 90 92 94 96 90 92 94 96 90 92 94 96 

Democrats Republicans Democrats Republicans Democrats Republicans 

Incumbents Challengers Open Seat Candidates 

Chart 7-1 shows the impact of the 1994 change in party membership on early campaign fundraising for the 1996 

election cycle. Generally, most funds are raised during election years. During the first year of the 1996 cycle, 

however, there was a sharp rise in receipts owing to several factors, including greater numbers of Republican 

members, their majority status and competitive races in many districts. Competitive races also help explain 

increased receipts of challengers from both parties during 1995. 
64 Chapter Seven 

CHART 7-2 

Contributions in Off-Election Years 

Received by Winners of the 1992 

and 1994 House Elections 

- Returning Republicans 

- Republican Freshmen 

Returning Democrats 

Democratic Freshmen 

Contributions from Individuals 

1993 1995 

$36.1 Million $47.9 Million 

Contributions from Committees 

1993 1995 

$35.8 Million $40.5 Million 

Charts 7-2 tracks changes in the primary sources of receipts for House members during the off years, 1993 and 

1995. Between 1993 and 1995, contributions from individuals increased much more than did contributions from 

committees. However, shifts in the type of campaign receiving contributions from committees were more pronounced than shifts in the type of committees receiving individual contributions. 

CHART7-3 

Senate Campaign Fundraising 

in Off-Election Years 

Receipts from Individuals 

- Receipts from PACs 

- Receipts from Other Sources 

Millions of Dollars 

80~-----------------------------

701-----

40 

30 

20 

10 

1989 1991 1993 1995 

Chart 7-3 shows that Senate campaigns raised 

somewhat less in 1995 than they did in the first year 

of the previous two election cycles. Comparisons 

between Senate election cycles are difficult because 

different groups of states are involved in each election 

cycle. Additionally, the small number of races makes 

comparisons difficult because one or two unusual 

campaigns have a big impact on totals for a given 

campaign cycle. Receipts in 1995 were somewhat 

larger than those in 1989, when the same seats were 

last contested. 
Campaign Finance Statistics 65 

CHART7-4 

Off-Year Fundraising by National Committees, 

Federal and Nonfederal Accounts 

- Federal Dollars 

I Nonfederal Dollars 

Republican National Committee 

$32M 

1991 1993 1995 

$43.2 Million $44.8 Million $67.4 Million 

Democratic National Committee 

$17M 

$9.6M 

1991 1993 1995 

$15 Million $35.6 Million $58.8 Million 

Chart 7-4 compares the federal and nonfederal fund raising of the two major national party committees in offelection years since 1991 , when the Commission first required full reporting of nonfederal fundraising. For both 

parties, fundraising has increased. The Democratic National Committee has reported more rapid growth in both 

its federal and nonfederal accounts and somewhat larger proportions of total activity in nonfederal funds than 

the Republican National Committee during the last two election cycles. 
CHART7·5 

Sources of National Committee: 

Federal Account Receipts 

in Off-Election Years 

-1991 

-1993 

-1995 

Republican National Committee 

Millions of Dollars 

66 Chapter Seven 

35 

301----

25 

Individual Individual PACs Other* 

Less Than $200 

$200 or More 

Democratic National Committee 

Millions of Dollars 

35 

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

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

Individuals Individual PACs Other* 

Less Than $200 

$200 orMore 

Chart 7-5 shows that both national party committees are significantly more dependent on small contributions (less 

than $200 each) from individuals than on any other source of federal funds. During 1995, the first year of the 1996 

cycle, both parties also experienced significant growth in individual contributions. 

*Includes loans, receipts from local and state party committees and offsets to operating expenditures. 
Campaign Finance Statistics 67 

CHART7-6 

Sources of National Committee: 

Nonfederal Account Receipts* 

in Off-Election Years 

Republican National Committee 

Millions of Dollars 

15 

6 

3 

0 

Corporate Individuals Othert 

-1991 

-1993 

11995 

Democratic National Committee 

Millions of Dollars 

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

Corporate Labor Individuals PACs Other ** 

Chart 7-6 shows that during 1995, the first year of the 1996 cycle, both parties experienced substantial growth in 

nonfederal receipts from both individuals and corporations. 

* The Democratic National Committee maintains separate accounts for specific sources of nonfederal funds, as shown in 

the chart. The Republican National Committee does not report different sources in different accounts, so a broader breakdown 

is shown in that chart. 

t Includes PACs and any unitemized receipts, bank loans, transfers from other party organizations, interest earnings and 

offsets to expenditures. 

** Includes any unitemized receipts, bank loans, transfers from other party organizations, interest earnings and offsets to 

expenditures. 
68 Chapter Seven 

CHART7-7 

Major Party Federal Account Receipts: 1995 

Democrats 

$73.6 Million 

DNC: Democratic National Committee 

DSCC: Democratic Senatorial Campaign Committee 

DCCC: Democratic Congressional Campaign Committee 

State/Local 

Committees 

$34M 

NRCC 

$25.9M 

RNC 

$46.1M 

Republicans 

$129.5 Million 

RNC: Republican National Committee 

NRSC: National Republican Senatorial Committee 

NRCC: National Republican Congressional Committee 

Chart 7-7 shows that Democrats' and Republicans' national, congressional, state and local committees raised 

funds in similar relative proportions during 1995. The National Republican Congressional Campaign Committee 

raised a larger share of that party's federal account total than did its Democrat counterpart, while the Democratic 

National Committee raised a larger portion of federal funds than did its Republican counterpart. 
Campaign Finance Statistics 69 

CHART7-8 

Major Party Federal Receipts Broken Down 

by Committee and by Source: 1995 

Millions of Dollars 

- Individuals 

Other* 

DNC RNC DSCC NRSC DCCC State/Local State/Local 

Democratic Republican 

50 

40 

30 

20 

10 

0 

NRCC 

Chart 7-8 reveals that Republican committees at all levels raised more than their Democratic counterparts during 

1995. Individual contributions were the dominant source of federal receipts for both Democratic and Republican 

party committees regardless of their geographic or jurisdictional focus. 

* Includes contributions from PACs and other party committees, loans, refunds and rebates. 
Corporate 

Nonconnected 

•••- Trade/Membership/Health 

Labor 

---• Other 

70 Chapter Seven 

CHART7-9 

Number of PACs, 1975-1995 

Number of PACs 

2,000 

1,500 

1,000 

500 

Chart 7-9 shows that the number of PACs has remained relatively stable over the last ten years. The decline in the 

number of corporate and nonconnected PACs was reversed somewhat in 1995, while a gradual increase in the 

number of trade/membership/health PACs continued. 
71 

CHART7-10 

Overall Presidential Primary Election 

Spending Limit 

Millions of Dollars 

35 

10 

5 

0 

1976 1980 1984 1988 1992 1996 

Campaign Finance Statistics 

Chart 7-1 0 shows how inflation has affected the 

primary spending limit for Presidential candidates who 

accept public matching funds. The limit for 1996 is 

nearly three times the limit for the 1976 campaign. 

CHART7·11 

Matching Funds Certified to Publicly 

Funded Presidential Primary Candidates 

on January 1 of ElectionYear 

Millions of Dollars 

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

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

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

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

10~-------------

51---------

1976 1980 1984 1988 1992 1996 

Chart 7-11 shows that the amount of matching funds 

certified for payment on January 1 , 1996, was much 

larger than that certified on January 1 , 1988, when 

both parties had competitive races for their nominations. Two factors contributed to the large amount of 

funds certified. The first was the competitive race for 

the Republican nomination during 1995, while the 

second was the extraordinarily early fundraising during 

1995. Early fund raising resulted from the fact that 

several state primaries were held earlier in 1996 than 

they had been in previous election years. 
72 Chapter Seven 

CHART7·12 

Presidential Campaign Fund Status: 

Projections for 1996 

- Checkoff Receipts@ $3 * 

- Checkoff Receipts@ $1 

- Primary Matching Funds t 

General Election Grants 

Convention Grants Millions of Dollars 

250 

Required Available 

Chart 7-12 shows the importance of the $3 tax 

checkoff, which funds the Presidential Campaign 

Fund. Without the change in amount of the checkoff, 

from $1 to $3, the funds available would not have 

supported the 1996 general election grants for the two 

major party nominees. Moreover, no primary campaign matching funds would have been available. 

*The voluntary tax checkoff, which funds the Presidential Public Funding System, was changed from $1 to $3 in 1994 to 

account for inflation since 1973, when the program began. 

t The estimate of the primary matching fund total is based on certifications from early periods of past cycles relative to the 

actual total of matching funds received by candidates in those cycles. 
Campaign Finance Statistics 73 

CHART7·13 

Receipts of Presidential Primary Candidates 

on January 1 of Election Year 

- January Matching Funds 

- Individuals 

-PACs 

Candidate 

-Loans 

I IOther* 

Millions of Dollars 

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

1988 1992 1996 

Chart 7-13 shows the total amount raised by Presidential primary campaigns as of January 1 of the election 

year, during three election cycles. The total includes 

contributions received in the year before the election 

plus the matching funds certified early in January of 

each election year. Contributions from individuals were 

the largest source of funds for primary campaigns, 

followed by public matching funds. PACs represented a 

very small share of receipts for these campaigns, while 

other sources (e.g. loans or the candidates' own funds) 

were sometimes important, depending on the specific 

candidate. 

* Includes transfers from previous campaigns, investment income and other miscellaneous sources. 
74 Chapter Seven 

CHART7-14 

Fundraising by 1996 Presidential Candidate

Millions of Dollars 

-Candidate Contributions/Loans 

-Individual Contributions 

Other* 

s

Clinton Dole Gramm Forbes Alexander Buchanan Lugar Taylor Keyes LaRouche 

30 

25 

20 

15 

10 

5 

0 

Chart 7-14 provides a breakdown of record-breaking Presidential primary fund raising during 1995 by specific 

candidates. Individual contributions were generally important, while candidates' personal funds played a major role 

in some campaigns. 

* Includes contributions from PACs and party committees, transfers from other committees and miscellaneous sources. 
75 

Appendix 1 

Biographies of 

Commissioners 

and Officers 

Commissioners 

Danny L. McDonald, Chairman 

April 30, 19991 

Now serving his fourth term as Commissioner, Mr. 

McDonald was first appointed to the Commission in 

1981 and was reappointed in 1987 and 1994. Before 

his original appointment, he managed 1 0 regulatory 

divisions as the general administrator of the Oklahoma Corporation Commission. He had previously 

served as secretary of the Tulsa County Election 

Board and as chief clerk of the board. He was also a 

member of the Advisory Panel to the FEC's National 

Clearinghouse on Election Administration. 

A native of Sand Springs, Oklahoma, Mr. 

McDonald graduated from Oklahoma State University 

and attended the John F. Kennedy School of Government at Harvard University. He served as FEC Chairman in 1983 and 1989. 

Lee Ann Elliott, Vice Chairman 

April 30, 1999 

Commissioner Elliott was first appointed in 1981 

and reappointed in 1987 and 1994. She served as 

Chairman in 1984 and 1990. Before her first appointment, Commissioner Elliott was vice president of a 

political consulting firm, Bishop, Bryant & Associates, 

Inc. From 1961 to 1979, she was an executive of the 

American Medical Political Action Committee. Commissioner Elliott was on the board of directors of the 

American Association of Political Consultants and on 

the board of the Chicago Area Public Affairs Group, of 

which she is a past president. She was also a member of the Public Affairs Committee of the U.S. Chamber of Commerce. In 1979, she received the Award 

for Excellence in Serving Corporate Public Affairs 

from the National Association of Manufacturers. 

A native of St. Louis, Commissioner Elliott graduated from the University of Illinois. She also completed Northwestern University's Medical Association 

Management Executive Program and is a Certified 

Association Executive. 

1 Term expiration date. 

Trevor Potter 

Aprll30, 1997 (resigned October 1995) 

Mr. Potter resigned from the Commission in October 1995 to teach at Oxford University in England 

and, subsequently, to return to the law firm Wiley, 

Rein and Fielding. He began as a Commissioner in 

November of 1991, serving as vice chairman of the 

Commission's Finance Committee and chairman of its 

Regulations Task Force during 1992. He was elected 

Commission Vice Chairman for 1993 and Chairman 

for 1994. 

Before his appointment, Mr. Potter specialized in 

campaign and election law as a partner in a Washington, DC, law firm. His previous experience in government included serving as assistant general counsel at 

the Federal Communications Commission from 1984 

to 1985, and as a Department of Justice attorney from 

1982 to 1984. · 

Mr. Potter was a graduate of Harvard College. He 

earned his J.D. degree at the University of Virginia 

School of Law, where he served as editor-in-chief of 

the Virginia Journal ofInternational Law and was a 

member of the Order of the Coif. 

Joan D. Aikens 

April 30, 1995 

One of the original members of the Commission, 

Commissioner Aikens was first appointed in 1975. 

Following the reconstitution of the FEC that resulted 

from the Supreme Court's Buckley v. Valeo decision, 

President Ford reappointed her to a five-year term. In 

1981, President Reagan named Commissioner 

Aikens to complete a term left open because of a 

resignation and, in 1983, once again reappointed her 

to a full six-year term. Most recently, Commissioner 

Aikens was reappointed by President Bush in 1989. 

She served as FEC Chairman in 1978, 1986 and 

1992. 

Before her 1975 appointment, Commissioner 

Aikens was an executive with Lew Hodges Communications, a public relations firm in Valley Forge, Pennsylvania. She was also a member of the Pennsylvania 

Republican State Committee, president of the Pennsylvania Council of Republican Women and on the 
76 Appendices 

board of directors of the National Federation of Republican Women. A native of Delaware County, Pennsylvania, Commissioner Aikens has been active in a 

variety of volunteer organizations and was a member 

of the Commonwealth Board of the Medical College of 

Pennsylvania and a past President of Executive 

Women in Government. She is currently a member of 

the board of directors of Ursinus College, where she 

received her B.A. degree and an honorary Doctor of 

Law degree. 

John Warren McGarry 

April 30, 1995 

First appointed to the Commission in 1978, Commissioner McGarry was reappointed in 1983 and 

1989. He served as FEC Chairman in 1991, 1985 and 

1981. Before his 1978 Commission appointment, 

Commissioner McGarry served as special counsel on 

elections to the House Administration Committee. He 

previously combined private law practice with service 

as chief counsel to the House Special Committee to 

Investigate Campaign Expenditures, a special committee established by Congress every election year 

through 1972. Before his work with Congress, Commissioner McGarry was the Massachusetts assistant 

attorney general. 

After graduating cum laude from Holy Cross College, Commissioner McGarry did graduate work at 

Boston University and earned a J.D. degree from 

Georgetown University Law School. 

Scott E. Thomas 

April 30, 1997 

Mr. Thomas was appointed to the Commission in 

1986 and reappointed in 1991 . He was the 1993 

Chairman, having earlier been Chairman in 1987. He 

previously served as executive assistant to former 

Commissioner Thomas E. Harris and succeeded him 

as Commissioner. Joining the FEC as a legal intern in 

1975, Mr. Thomas eventually became an Assistant 

General Counsel for Enforcement. 

A Wyoming native, Mr. Thomas graduated from 

Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member 

of the District of Columbia and U.S. Supreme Court 

bars. 

Statutory Officers 

John C. Surina, Staff Director 

Before joining the Commission in 1983, John 

Surina was assistant managing director of the Interstate Commerce Commission, where he was detailed 

to the "Reform 88" program at the Office of Management and Budget. In that role, he worked on projects 

to reform administrative management within the federal government. He was also an expert-consultant to 

the Office of Control and Operations, EOP-Cost of 

Living Council-Pay Board and on the technical staff of 

the Computer Sciences Corporation. During his Army 

service, Mr. Surina was executive officer of the Special Security Office, where he supported senior U.S. 

delegates to NATO's civil headquarters in Brussels. 

Mr. Surina served as 1991 chairman of the Council on 

Government and Ethics Laws (COGEL). 

A native of Alexandria, Virginia, Mr. Surina holds a 

degree in Foreign Service from Georgetown University. He also attended East Carolina University and 

American University. 

Lawrence M. Noble, General Counsel 

Lawrence Noble became General Counsel in 1987, 

after serving as Acting General Counsel. He joined 

the Commission in 1977, becoming the Deputy General Counsel in 1983. He previously served as Assistant General Counsel for Litigation and as a litigation 

attorney. Before his FEC service, he was an attorney 

with the Aviation Consumers Action Project. 

A native of New York, Mr. Noble holds a degree in 

Political Science from Syracuse University and a J.D. 

degree from the National Law Center at George 

Washington University. He is a member of the bars 

for the U.S. Supreme Court, the U.S. Court of Appeals for the D.C. Circuit and the District of Columbia. 

He is also a member of the American and District of 

Columbia Bar Associations. 

Lynne McFarland, Inspector General 

Lynne McFarland became the FEC's first permanent Inspector General in February 1990. She came 
Appendices 77 

to the Commission in 1976, first as a reports analyst 

and then as a program analyst in the Office of Planning and Management. 

A Maryland native, Ms. McFarland holds a sociology degree from Frostburg State College and is a 

member of the Institute of Internal Auditors. 
79 

Appendix2 

Chronology of Events 

January 

1 - Chairman Danny L. McDonald and Vice 

Chairman Lee Ann Elliott begin their oneyear terms of office. 

- National mail voter registration form becomes available. 

9 - Commission releases 1994 year-end PAC 

count. 

20 - FEC institutes new system of records under 

the Privacy Act of 1974. 

31 - U.S. district court rejects dismissal of case 

based on constitutional challenge to former 

Commission structure (FEC v. Williams) 

- 1994 year-end report due. 

February 

2 - Commission sends 63 recommendations for 

legislative action to President and Congress. 

3 - U.S. appeals court estops a 1988 Presidential candidate from challenging constitutionality of Commission composition because he 

had already accepted public funds 

(Robertson v. FEC). 

- Commission sends to Congress new rules 

clarifying ban on personal use of campaign 

funds. 

9 - U.S. appeals court dismisses 1992 Presidential candidate's challenge to FEC investigation of her campaign (Fulani v. FEC). 

13 - Commission makes final repayment determination for President Bill Clinton and his 1992 

primary election campaign. 

15 - FEC holds public hearing on proposed 

changes to regulations governing public 

funding of Presidential candidates. 

24 - U.S. district court precludes FEC from recovering civil penalties because five-year 

statute of limitations expired before suit was 

filed (FEC v. National Republican Senatorial 

Committee). 

March 

1 - Vice Chairman Elliott testifies before House 

Appropriations Subcommittee on $29 million 

FY 1996 budget request and proposed FY 

1995 $1 .4 million budget rescission. 

2 - U.S. district court upholds constitutionality of 

National Voter Registration Act (Wilson v. 

United States). 

- Commission holds public hearing on initial 

repayment determination for Patrick 

Buchanan's 1992 primary committee. 

3 - FEC releases preliminary spending limits for 

publicly funded 1996 Presidential candidates. , 

8 - FEC holds hearing on proposed changes to 

disclaimer regulations for campaign communications. 

20 - FEC declares Phil Gramm eligible to receive 

public funds. 

13 - FEC releases 1995 Federal/State Disclosure 

Directory. 

31 - FEC releases statistics on PAC contributions to federal campaigns from 1990 

through 1994. 

April 

4 - U.S. district court sustains Commission's 

dismissal of complaint alleging campaign 

coordination in an independent expenditure 

(Branstool, et a/. v. FEC). 

- Vice Chairman Elliott testifies before House 

Oversight Committee on $29 million FY 

1996 budget request and FY 1995 

rescission. 

5 - Regulations on personal use of campaign 

funds take effect. 

13 - FEC releases statistics on major party financial activity during 1994 election cycle. 

19 - U.S. Supreme Court rules that Ohio regulation prohibiting anonymous political literature 

violated First Amendment (Mcintyre v. 

Ohio). 

20 - U.S. district court dismisses case calling for 

total public funding of all federal elections 

(Albanese eta/. v. FEC). 

24 - FEC issues report marking agency's 20th 

anniversary. 

28 - FEC releases statistics on 1994 Congressional finance campaign activity. 
80 Appendices 

May 

1 - FEC releases Federal Elections 94: Election 

Results for the U.S. Senate and the U.S. 

House of Representatives. 

4 - Commission makes final repayment determi~ 

nation for Governor L Douglas Wilder and 

the Wilder for President Committee. 

5 - U.S. appeals court rules FEC is time-barred 

from imposing repayment obligations on two 

1988 Presidential campaigns because 3-

year statute of limitations had expired (FEC 

v. Dukakis, FEC v. Simon). 

17 - Commission holds public hearing for George 

Bush's 1992 Presidential campaign's chal~ 

lenge to initial repayment determination. 

18 - Vice Chairman Elliott testifies before Senate 

subcommittee in support of $29 million FY 

1996 budget request and against FY 1995 

rescission. 

31 - FEC declares Lamar Alexander, Patrick 

Buchanan and Robert Dole eligible to receive public funds. 

June 

1 - Commission determines final repayment for 

President Clinton's 1992 general election 

committee. 

- FEC publishes Annual Report 1994. 

12 - Commission submits to Congress new rules 

governing publicly funded Presidential campaigns. 

- U.S. district court finds national party senatorial committee failed to properly report 

earmarked contributions (FEC v. National 

Republican Senatorial Committee). 

14 - U.S. appeals court rejects challenge to constitutionality of out-of-state contributions to 

U.S. Senate campaigns (Froelich v. FEC). 

15 - Vice Chairman Elliott defends agency's $29 

million FY 1996 budget and argues against 

FY 1995 $1 .4 million rescission in front of 

Senate Committee on Rules and Administration. . 

23 - U.S. appeals court concludes that express 

advocacy is not a defining feature of coordinated party expenditures (FEC v. Colorado 

Republican Federal Campaign Committee). 

- U.S. appeals court rules that corporate advertisements critical of candidate Bill Clinton 

were permissible because the wording did 

not contain express advocacy (FEC v. Christian Action Network). 

30 - Commission presents Congress with status 

report on implementation of National Voter 

Registration Act. 

- Commission sends to Congress new rules 

defining express advocacy and exempting 

qualified nonprofit corporations from ban on 

independent expenditures by corporations 

and labor organizations. 

July 

27 - President Clinton signs bill that rescinds 

$1.4 million of the FEC's FY 1995 appropriation. 

29 - Democratic and Republican 1996 convention committees each receive $12 million in 

public funds. 

31 1995 midyear report due. 

August 

1 - Commission determines final repayment for 

Patrick Buchanan's 1992 presidential campaign. 

2 - FEC releases mid-year PAC count. 

3 - Commission makes initial repayment determination for Lenora B. Fulani's 1992 Presidential primary campaign. 

16 - New public funding regulations, including 

streamlined audit process, become effective. 

17 - FEC publishes eleventh edition of Selected 

Court Case Abstracts. 

- Commission determines final repayment for 

President George Bush's 1992 reelection 

campaign. 

18 - Commissioner Trevor Potter announces his 

resignation. 

- FEC invites selected PACs, party committees and candidate committees to participate in voluntary pilot program for electronic 

filing. 
Appendices 81 

- FEC releases statistics on financial activity 

of 1996 Senate candidates. 

30 - FEC declares Richard Lugar and Pete Wilson eligible to receive public funds. 

31 - FEC declares Arlen Specter eligible toreceive public funds. 

September 

1 - FEC releases statistics on campaign finance 

activity of party committees during first six 

months of 1995. 

7-8 - FEC holds regional conference in San Antonio, TX. 

8 - Commission offers Combined Federal State 

Disclosure Directory 1995 on computer disk. 

- FEC publishes 1995 edition of Pacronyms, 

an alphabetical compilation of acronyms, 

abbreviations and common names of PACs. 

12 - U.S. appeals court sustains FEC's disclaimer regulation and also rules that nonprofit corporation meets criteria which allow 

it to make independent expenditures although it has no policy against accepting 

donations from business corporations {FEC 

v. Survival Education Fund, Inc. eta/.). 

29 - U.S. appeals court upholds FEC's use of 

"major-purpose tesf' to narrow the definition 

of "political committee" (Akins, eta/. v. FEC). 

October 

2 - FEC sends revisions to disclaimer rules to 

Congress. 

5 - New rules defining "express advocacy" and 

"qualified nonprofit corporation" take effect. 

23-24 - FEC holds regional conference in San Francisco, CA. 

31 - FEC declares President Clinton eligible to 

receive matching funds. 

November 

2 - FEC declares Lyndon LaRouche, Jr., eligible 

to receive matching funds. 

- Commission decides not to address a petition for rulemaking concerning campaign 

activity conducted after an inconclusive vote 

in Presidential election. 

9 - U.S. appeals court dismisses case challenging FEC regulations that permit publicly 

funded Presidential candidates to accept 

private contributions for general election 

legal and compliance funds (Center for Responsive Politics v. FEC). 

- Commission repeal of obsolete rules becomes effective. 

14 - U.S. appeals court finds regulatory definition 

of "member" in conflict with the First Amendment (Chamber of Commerce of the U.S.A., 

et at. v. FEC). 

28 - Illinois holds special primary election in 2nd 

Congressional District. 

December 

1 - FEC announces partial payments of federal 

matching funds to Presidential candidates. 

5 - Oregon holds special primary election for 

Senate seat. 

- FEC sends to Congress report analyzing 

FEC .computer program and electronic filing. 

7 - Commission elects Lee Ann Elliott as 1996 

Chairman and John Warren McGarry as 

1996 Vice Chairman. 

8 - Commission sends to Congress final rules 

on communications by corporations and 

labor organizations and use of corporate/ 

labor facilities and resources. 

11-12 - FEC holds conference for corporate and 

labor PACs in Washington, DC. 

12 - California holds special general election in 

15th Congressional District. 

- Illinois holds special general election in 2nd 

Congressional District. 
82 Appendices 

20 - Revisions to disclaimer regulations become 

effective. 

- Reports on financial activity from 1994 cycle 

become available in print and on the · 

Internet. 

22 - FEC declares John S. Hagelin eligible to 

receive matching funds. 

28 - President Clinton signs legislation changing 

point-of-entry for House candidates and 

allowing for future electronic filing of reports. 
The Commissioners 

Danny L. McDonald, Chairman 1 

Lee Ann Elliott, Vice Chairman 2 

Joan D. Aikens, Commissioner 

John Warren McGarry, Commissioner 

Trevor Potter, Commissioner 3 

Scott E. Thomas, Commissioner 

I I I 

General Counsel - Staff Director Inspector General 

Public Funding 

Ethics and 

Special Projects 

Policy4 

Enforcement 

Litigation 

1--

1--

1--

1--

Deputy Staff Director 

for Management 

Administration 1-

Data Systems 1- Development 

Planning and 

Management 1-

~ 

1--

1--

1--

..... 

Audit 

Clearinghouse 

Information 

Public 

Disclosure 

Reports 

Analysis 

Commission - Secretary 

1-- Congressional

Affairs 

Equal Employment 1--

Opportunity 

Personnel 1-- Labor/Management 

. lo.o..- Press Office 

83 Appendix 3 

FEC Organization Chart 

1 Lee Ann Elliott was elected 1996 Chairman. 

2 John Warren McGarry was elected 1996 Vice Chairman. 

3 Trevor Potter resigned from the Commission in October 1995. 

4 Policy covers regulations, advisory opinions, legal review and administrative law. 
85 

Appendix4 

FEC Offices 

This appendix briefly describes the offices within 

the Commission, located at 999 E Street, NW, Washington, D.C. 20463. The offices are listed alphabetically, with local telephone numbers given for offices 

that provide services to the public. Commission offices can also be reached toll-free on 800-424-9530 

and locally on 202-219-3420. 

Administration 

The Administration Division is the Commission's 

"housekeeping" unit and is responsible for accounting, 

procurement and contracting, space management, 

payroll, travel and supplies. In addition, several support functions are centralized in the office such as 

printing, document reproduction and mail services. 

The division also handles records management, telecommunications, inventory control and building security and maintenance. 

Audit 

Many of the Audit Division's responsibilities concern the Presidential public funding program. The 

division evaluates the matching fund submissions of 

Presidential primary candidates and determines the 

amount of contributions· that may be matched with 

federal funds. As required by law, the division audits 

all public funding recipients. 

In addition, the division audits those committees 

which, according to FEC determinations, have not 

met the threshold requirements for substantial compliance with the law. Audit Division resources are also 

used in the Commission's investigations of complaints. 

Clearinghouse 

The National Clearinghouse on Election Administration, located on the second floor, assists state and 

local election officials by responding to inquiries, publishing research and conducting workshops on all 

matters related to election administration. Additionally, 

the Clearinghouse answers questions from the public 

and briefs foreign delegations on the U.S. election 

process, including voter registration and voting statistics. 

Local phone: 202-219-3670; toll-free phone: 800-

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

Commission Secretary 

The Secretary to the Commission handles all administrative matters relating to Commission meetings, 

including agenda documents, Sunshine Act notices, 

minutes and certification of Commission votes. The 

office also circulates and tracks numerous materials 

not related to meetings, and records the Commissioners' tally votes on these matters. 

Commissioners 

The six Commissioners-three Democrats and 

three Republicans-are appointed by the President 

and confirmed by the Senate. 

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: 202-219-4136; 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. 
86 Appendices 

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, additionally, provide a tool 

for monitoring 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: 202-219-3730; 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; and 

recommending 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 directs the agency's enforcement activities, represents and advises the Commission in any legal actions brought before it and serves 

as the Designated Agency Ethics Official. The Office 

of General Counsel handles all civil litigation, including Title 26 cases that come before the Supreme 

Court. The office also drafts, for Commission consideration, advisory opinions and regulations as well as 

other legal memoranda interpreting the federal campaign finance law. 

Information 

In an effort to promote voluntary compliance with 

the law, the Information Division provides technical 

assistance to candidates, committees and others 

involved in elections. Responding to phone and written inquiries, members of the staff conduct research 

based on the statute, FEC regulations, advisory opinions and court cases. Staff also direct workshops on 

the law and produce guides, pamphlets and videos on 

how to comply with the law. Located on the second 

floor, the division is open to the public. Local phone: 

202-219-3420; toll-free phone: 800-424-9530 (press 1 

on a touch-tone 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 files reports notifying Congress of any serious problems or deficiencies 

in agency operations and of any corrective steps 

taken by the agency. 

Law Library 

The Commission law library, part of the Office of 

General Counsel, is located on the eighth floor and is 

open to the public. The collection includes materials 

on campaign finance reform, election law and current 
Appendices 87 

political activity. Visitors to the law library can use 

automated legal research and gateway services via 

computer. The librarian and legal staff also maintain 

computer indices of enforcement proceedings (MURs) 

and advisory opinions, which may be searched in the 

Law Library or the Public Disclosure Division. Local 

phone: 202-219-3312; toll-free: 800-424-9530. 

Personnel and Labor/Management 

Relations 

This office provides policy guidance and operational support to managers and staff in a variety of 

human resource management areas. These include 

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

personnel actions such as step increases, promotions, leave administration, awards and discipline, 

personnel records maintenance and employee assistance program counseling. Additionally, Personnel 

administers the Commission's labor-management 

relations program and 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, providing monthly reports measuring the progress of each division in achieving the 

plan's objectives. 

Press Office 

Staff of the Press Office are the Commission's 

official media spokespersons. In addition to publicizing Commission actions and releasing statistics on 

campaign finance, they respond to all questions from 

representatives of the print and broadcast media. 

Located on the first floor, the office also handles requests under the Freedom of Information Act. Local 

phone: 202-219-4155; toll-free 800-424-9530. 

Public Disclosure 

The Public Disclosure Division processes incoming 

campaign finance reports from political committees 

and candidates involved in federal elections and 

makes their 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 also include 

computer indexes, advisory opinions and closed 

MURs. 

The division's Processing Section receives incoming reports and processes them for formats which can 

be easily retrieved. These formats include paper, 

microfilm and electronic computer images that can be 

easily accessed from the library's terminals and those 

of agency auditors. 

The Public Disclosure Division also manages 

Flashfax, an automated faxing service for ordering 

FEC documents, forms and publications, available 24 

hours a day, 7 days a week. 

Local phone: 202-219-4140; toll-free phone: 800-

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

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: 202-219-3580; toll-free phone 

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

Staff Director and Deputy Staff 

Director 

The Staff Director carries the responsibilities of 

appointing staff, with the approval of the Commission, 

and implementing Commission policy. The Staff Director oversees the Commission's public disclosure 

activities, outreach efforts, review of reports and the 

audit program, as well as the administration of the 

agency. 

The Deputy Staff Director has broad responsibility 

for assisting in this supervision, particularly in the 

areas of budget, administration and computer systems. 
89 

Appendix5

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

1995 

Filers 

Terminated 

as of 

12/31/95 

Continuing 

Filers as of 

12/31/95 

Number of 

Reportsa1d 

Statements 

in 1995 

Gross Receipts 

in 1995 

Gross 

Expenditures 

In 1995 

Presidential Candidate 

Committees 

535 28 507 576 $146,036,196 $127,745,067 

Senate Candidate Committees 819 90 729 1,367 $113,112,983 $67' 191,560 

House Candidate Committees 3,366 365 3,001 4,971 $128,847,101 $78,595,271 

Party Committees 525 34 491 1,800 $335,924,282 $285,696,632 

Federal Party Committees 

Reported Nonfederal 

464 34 430 1,502 $264,062,180 $222,433,238 

Party Activity 61 0 61 298 $71 ,862, 102 $63,263,394 

Delegate Committees 73 70 3 5 $54,500 $54,500 

Nonparty Committees 4212 196 4,016 17,384 $196,148,006 $152,543,549 

Labor Committees 348 14 334 1,632 $47,392,009 $30,621,313 

Corporate Committees 1,761 87 1,674 8,648 $62,052,506 $50,130,763 

Membership, Trade and 

Other Committees 2,103 95 2,008 7,104 $86,703,491 $71,791,473 

Communication Cost Filers 207 0 207 27 N/A $216,645 

Independent Expenditures by 

Persons Other Than 

Political Committees 

282 13 269 76 N/A $326,007 
90 Appendices 

Divisional Statistics for Calendar Year 1995 

Total 

Reports Analysis Division 

Documents processed 44,984 

Reports reviewed 44,390 

Telephone assistance and meetings 8,149 

Requests for additional information (RFAis) 8,019 

Second RFAis 3,234 

Data coding and entry of RFAis and 

miscellaneous documents 16,777 

Compliance matters referred to Office 

of General Counsel or Audit Division 159 

Data Systems Development Division* 

Documents receiving Pass I coding 35,048 

Documents receiving Pass Ill coding 38,317 

Documents receiving Pass I entry 35,566 

Documents receiving Pass Ill entry 38,921 

Transactions receiving Pass Ill entry 

•In-house 156,999 

• Contract 492,322 

Public Records Office 

Campaign finance material processed 

(total pages) 1,158,534 

Requests for campaign finance reports 11,459 

Visitors 14,043 

Total people served 25,502 

Information telephone calls 18,638 

Computer printouts provided 77,361 

Total income (transmitted to U.S. Treasury) $80,886 

Cumulative total pages of documents 

available for review 13,303,344 

Contacts with state election offices 3,342 

Notices of failure to file with state 

election offices 397 

Flashfax requests 6,621 

Total 

Administrative Division 

Contracting and procurement transactions 2,174 

Publications prepared for print 48 

Pages of photocopying 10,854,188 

Information Division 

Telephone inquiries 59,325 

Information letters 47 

Distribution of FEC materials 11,681 

Prior notices (sent to inform filers 

of reporting deadlines) 22,357 

Other mailings 17,683 

Visitors 189 

Public appearances by Commissioners 

and staff 172 

State workshops 3 

Publications 25 

Press Office 

News releases 147 

Telephone inquiries from press 13,884 

Visitors 1,786 

Freedom of Information Act 

(FOIA) requests 703 

Fees for materials requested under FOIA 

(transmitted to U.S. Treasury) $38,233 

Clearinghouse on Election Administration 

Telephone inquiries 5,867 

National Surveys Conducted 10 

Individual Research Requests 85 

Materials Distributed * 13,200 

Election Presentations/Conferences 25 

Foreign briefings 59 

Publications 9 

*Computer coding and entry of campaign finance information 

occur in two phases. In the first phase, Pass I, summary information is coded and entered into the computer within 48 hours of the 

Commission's receipt of the report. During the second phase, Pass 

Ill, itemized information is coded and entered. 

* Figure includes National Voter Registration Act materials. 
Appendices 91 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1995 8 

Requests received 49 

Issued 43 

Not Issued* 4 

Pending at end of 1995 10 

Compliance cases t 

Pending at beginning of 1995 320 

Opened* 177 

Closed 246 

Pending at end of 1995 251 

Litigation 

Cases pending at beginning of 1995 45 

Cases opened 33 

Cases closed 31 

Cases pending at end of 1995 47 

Cases won 17 

Cases lost 3 

Cases settled 11 

Law Library 

Telephone inquiries 693 

Visitors 1,443 

*Two advisory opinions were withdrawn, one resulted in a 3-3 

split vote and one did not present sufficient facts. 

t In annual reports previous to 1994, the category "compliance 

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

the enforcement prioritization system, the category has been expanded to include internally-generated matters in which the Commission has not yet made reason to believe findings. 

*This number includes 27 Public Financing, Ethics and Special 

Projects enforcement cases that were opened prior to 1995 but 

were excluded from the 1994 Annual Report Divisional Statistics. 

Audit Reports Publicly Released 

Year Title 2* Title 26t 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

Total 391 113 504 

Audits Completed by Audit Division, 1975 -1995 

Total 

Presidential 93 

Presidential Joint Fundraising 11 

Senate 19 

House 140 

Party (National) 46 

Party (Other) 120 

Nonparty (PACs) 75 

Total 504 

· 

• 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(2). 

tTitle 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. 
92 Appendices 

Status of Audits, 1995 

Pending Opened Closed Pending 

at Beginning at End 

of Year of Year 

Presidential 0 0 0 0 

Presidential Joint Fundraising 0 0 0 0 

Senate 4 0 3 1 

House 0 12 4 8 

Party (National) 0 0 0 0 

Party (Other) 11 12 5 18 

Nonparty (PACs) 0 2 0 2 

Total 15 26 12 29 
93 

Appendix6 

1995 Federal Register 

Notices 

1995-1 

11 CFR Part 11 0: Communications Disclaimer Re~ 

quirements; Notice of Public Hearing (60 FR 4114, 

January 20, 1995) 

1995-2 

11 CFR Parts 9003~9038: Public Financing of Presi~ 

dential and General Election Candidates; Notice of 

Public Hearing (60 FR 4114, January 20, 1995) 

1995-3 

11 CFR Part 1: Privacy Act of 1974; New and/or Re~ 

vised Systems of Records; Notice of Effective Date 

(60 FR 4165, January 20, 1995) 

1995-4 

11 CFR Part 1 : Privacy Act; New Exempt System of 

Records; Final Rule (60 FR 4072, January 20, 1995) 

1995-5 

11 CFR Parts 100, 104 and 113: Contribution and 

Expenditure Limitations and Prohibitions: Personal 

Use of Campaign Funds; Final Rule and Transmittal 

to Congress (60 FR 7862, February 9, 1995) 

1995-6 

11 CFR Parts. 1 00, 1 04 and 113: Personal Use of 

Campaign Funds; Final Rules: Announcement of Ef~ 

fective Date (60 FR 17193, April 5, 1995) 

1995-7 

Schedule of Matching Fund Submission and Certifica~ 

tion Dates for 1996 Presidential Candidates (60 FR 

21522, May 2, 1995) 

1995·8 

11 CFR Parts 1 04, 11 0 and 114: Repeal of Obsolete 

Rules (60 FR 31381, June 15, 1995) 

1995-9 

11 CFR Parts 1 06, 9002~9039: Public Financing of 

Presidential Candidates (60 FR 31854, June 16, 

1995) 

1995·10 

11 CFR Parts 1 00, 1 06, 1 09 and 114: MCFL 

Rulemaking; Final Rules on Express Advocacy, lnde~ 

pendent Expenditures and Corporate and Labor Or~ 

ganization Expenditures (60 FR 35292, July 6, 1995) 

1995-11 

11 CFR Parts 106, 9002-9004, 9006-9008, 9032-

9034, 9036-9039: Public Financing of Presidential 

Primary and General Election Candidates; Final Rule, 

Announcement of Effective Date (60 FR 42429, Au~ 

gust 16, 1995) 

1995-12 

Filing Dates for the Illinois Special Elections (60 FR 

50623, September 29, 1995) 

1995-13 

11 CFR Parts 1 00, 1 06, 109 and 114: Express Advo~ 

cacy, Independent Expenditures, Corporate and Labor Organization Expenditures; Final Rule, Announcement of Effective Date (60 FR 52069, October 5, 

1995) . 

1995-14 

11 CFR Part 11 0: Disclaimers; Final Rule (60 FR 

52069, October 5, 1995) 

1995-15 

Filing Dates for the Oregon Special Elections (60 FR 

53374, October 13, 1995) 

1995-16 

Filing Dates for the California Special Elections (60 

FR 55377, October 31, 1995) 

1995-17 

11 CFR Part 9002: Electoral College Expenditures; 

Notice of Disposition of Petition for Rulemaking (60 

FR 56268, November 8, 1995) 

1995-18 

11 Parts CFR 1 04, 11 0 and 114: Repeal of Obsolete 

Rules; Final Rule and Announcement of Effective 

Date (60 FR 56506, November 9, 1995) 
94 Appendices 

1995-19 

11 CFR Parts 9034 and 9038: Public Financing of 

Presidential Primary and General Election Candidates; Final Rule and Correcting Amendments (60 FR 

57538, November 16, 1995) 

1995·20 

11 CFR Parts 1 06, 9002-9008, 9032-9034 and 9036-

9039: Public Financing of Presidential Primary and 

General Election Candidates; Corrections (60 FR 

57537, November 16, 1995) 

1995·21 

11 CFR Part 11 0: Communications Disclaimer Requirements; Final Rule Correction (60 FR 61199, November 29, 1995) 

1995·22 

Schedule of Submission Dates for Statements of Net 

Outstanding Campaign Obligations Required of 1996 

Presidential Candidates Post Date of Ineligibility (60 

FR 61700, December 1, 1995) 

1995-23 

11 CFR Parts 1 00, 1 02, 1 09, 1 00 and 114: Corporate 

~nd Labor Organization Activity; Express Advocacy 

and Coordination with Candidates; Final Rule and 

Transmittal to Congress (60 FR 64260, December 14, 

1995) 

1995-24 

11 CFR Part 11 0: Communication Disclaimer Requirements; Final Rule and Announcement of Effective Date (60 FR 65515, December 20, 1995) 
95 Appendix 7 

Corporate and Labor 

Communications 

and Facilities 

In December, the Commission sent to Congress 

new regulations on corporate and labor communications and the use of corporate/labor facilities and resources. 1 These new and revised rules, which represented the second part of the Commission's MCFL 

rulemaking, reflect recent judicial and Commission 

interpretations of 2 U.S.C. §441 b. This section of the 

law prohibits corporations and labor organizations 

from using treasury funds to make contributions or 

expenditures in connection with federal elections. 

The new rules modify FEC regulations in five significant ways: 

• They provide a new standard for the partisan/nonpartisan standard that previously determined which 

communications must be limited to the restricted 

class; 2 

• They offer specific examples of how this new standard would apply to communications by corporations 

and labor organizations; 

• They clarify that coordination between a corporation 

(or labor organization) and a candidate generally 

results in an illegal contribution to the candidate; 

• They provide guidelines on the permissible uses of 

corporate and labor facilities and resources; and 

• They clarify that corporate and labor facilitation of 

contributions to candidates and committees is prohibited. 

New Standard for Identifying 

Communications Appropriate for 

Restricted Class 

The new rules substitute a new "express advocacy"3 standard for the partisan/nonpartisan standard 

previously used for deciding which communications 

had to be limited to the restricted class and which 

could be distributed to a broader audience, including 

the general public and sometimes all employees. 

Under this new standard, corporate and labor communications that contain express advocacy may be sent 

only to the restricted class. 

Application of New Standard 

The new rules also specify how the "express advocacy" standard should be applied to various corporate 

and labor communications, including: 

• Candidate appearances and speeches at corporate/ 

labor events; 

• Endorsements of candidates; 

• Candidate appearances and speeches on college 

campuses; 

• Candidate debates; 

• Written political communications, including voter 

guides, voting records and press releases; 

• Voter registration and get-out-the-vote drives; and 

• Voting information. (Consult the chart for details.) 

Coordination with Candidate 

A new provision in the revised rules addresses the 

topic of coordination between a candidate and the 

corporate or labor sponsor of an election-related communication. When communicating with its restricted 

class, a corporation or labor organization may coordinate with candidates concerning their campaign 

plans, projects and needs. That coordination, however, may compromise the independence of future 

communications to the general public by the organization or its separate segregated fund. 

When communicating beyond the restricted class, 

coordination with the candidate concerning campaign 

plans, projects and needs may result in a prohibited 

in-kind contribution to the candidate. (However, the 

new regulations permit certain types of other coordination. See the chart for details). Additionally, coordination with the candidate may compromise the independence of future communications to the general 

public by the organization or its separate segregated 

fund. 

1 The rules became effective on March 13, 1996. 

2The restricted class includes members of an incorporated membership organization, stockholders, executive 

and administrative personnel, and the families of each 

group. 

3 "Express advocacy" means that a communication expressly advocates the election or defeat of a clearly identified candidate for federal office. 
96 Appendices 

Permissible Use of Corporate and 

Labor Facilities 

The new regulations reaffirm that, if a candidate or 

committee uses the facilities of a corporation or labor 

organization, the organization must be reimbursed 

within a commercially reasonable time. Reimbursement is not required for the use of meeting rooms if 

the organization normally makes such rooms available to other groups and if it makes the room available to any other candidate (running for the same 

office) who requests to use it. 

Facilitation of Contributions 

Additionally, the rules clarify that corporations and 

labor organizations are prohibited from facilitating 

contributions to candidates or political committees 

(other than the organization's separate segregated 

fund). Facilitation means using corporate or labor 

facilities or resources to raise funds in connection with 

any federal election. The new rules provide several 

examples. The rules also explain that, in a few specific cases, use of a corporation's or labor 

organization's resources in connection with a 

fundraising activity is not facilitation if someone pays 

the organization in advance for the use of the facilities 

or resources. This principle applies to three situations: 

• Directing staff to work on the fundraiser; 

• Using the corporate or labor organization's mailing 

list; and 

• Using the organizations's food services. 
Appendices 97 

Corporate/Labor Communications 

Candidate Appearances1 Restricted Class 

Campaign-Related Appearance at 

Corporation or Labor Organization 

11 CFR 114.3(c)(2) and 114.4(b)(1) 

and (2) 

Organization and candidate may 

expressly advocate election or defeat of 

candidate. 

Organization may solicit for candidate, 

but may not collect contributions. 

Candidate may solicit and accept 

contributions before, during or after 

appearance. 

Organization may bar other candidates 

from addressing restricted class. 

Organization may consult candidate on 

structure, format and timing of appearance, and on campaign plans, projects 

or needs.3 

If organization allows more than one 

candidate to appear, and permits news 

coverage, it must allow media to cover 

appearances by other candidate(s) for 

same office. 

Organization must provide news media 

equal access. 

De minimus number outside restricted 

class may attend: employees who 

facilitate the meeting, news media, 

guests being honored or participating. 

Organization must file reports if 

communication contains express 

advocacy and costs exceed $2,000 per 

election. 

Other Employees2 

Candidate may advocate his/her 

election, but the organization and its

SSF may not; nor may they 

encourage employees to do so. 

Candidate may solicit funds, but 

neither the organization nor its SSF may 

solicit, direct or control contributions to 

candidate, in connection with the 

appearance. 

Candidate may not accept 

contributions at event, but may leave 

return envelopes and campaign 

materials for audience. 

Organization must, upon request, 

give opportunity to all candidates 

seeking the same office. Unless 

impractical, organization must make 

equal time and location available to 

all candidates who wish to appear. 

Organization may consult candidate 

on structure, format and timing of 

appearance, but not on candidate's 

campaign plans, projects or needs. 

(Same as the adjacent restricted 

class rules.) 

(Same as the adjacent restricted 

class rules.) 

In addition to restricted class and 

other employees, news media and 

guests being honored or participating 

may attend. 

1 These rules also apply to appearances by party representatives. 2 Communications directed to employees outside the restricted class may also go to those within the restricted class. 

3 That consultation, however, may compromise the independence of future communications to the general public by the organization or 

its separate segregated fund. 
98 Appendices 

Candidate Appearances General Public 

Noncampaign-Related Appearance at 

Corporation or Labor Organization 

AO 1980-22 

Candidate may speak about issues of interest to industry or union. 

Candidate must avoid reference to campaign-no solicitation and no advocacy of 

election. 

No requirement to offer other candidates equal opportunity. 

Proximity to election day is not relevant. 

Public Debates 

11 CFR 114.4(f) 

Any corporation or labor organization may donate funds to support debate 

conducted by nonprofit organization. 

Debate may be sponsored by nonprofit organization-501 (c)(3) and 501 (c)(4)-

that does not support or oppose any candidate or party, or by a broadcaster, 

newspaper, magazine or other general circulation periodical publication. 

Debate must include at least two candidates, meeting face to face, and may not 

promote one candidate over another. 

Organization staging debate must select debate participants on the basis of 

preestablished objective criteria: 

• In primary election, may restrict candidates to those seeking nomination of one 

party. 

• In general election, may not use nomination by a particular party as sole criterion. 

Public Appearance at a College or 

University3 

11 CFR 114.4(c)(7) 

Tax-exempt educational institution-either incorporated or not-may rent facilities 

to candidate or political committee in normal course of business and at usual and 

normal charge. 

Tax-exempt educational institution-either incorporated or not-may make 

facilities available to candidate or party for free or at discount if it: 

• Makes reasonable efforts to avoid campaign event and to ensure that appearance constitutes communication in academic setting; 

• Does not make express advocacy communication; and 

• Does not favor one candidate or party over another. 

College or university may host noncampaign appearance under above guidelines. 

College or university may host candidate debates under above guidelines. 

3 Consult IRS or applicable state rules regarding tax-exemption for state colleges and universities, and private tax-exempt schools. 
Appendices 99 

Publications Restricted Class General Public 

General Rule 

11 CFR 114.3(a), (b) and (c)(1), 

and 114.4(c)(1) 

Organization may expressly advocate 

election or defeat of candidate or a 

party's candidates. 

Organization may not expressly 

advocate election or defeat of 

candidate or a party's candidates. 

Organization may solicit contributions 

for candidate or party. 

No solicitations. 

Organization may use brief quotations 

from candidate, but may not republish 

candidate materials. 

Organization must file reports if 

communication contains express 

advocacy and costs exceed $2,000 

per election. 

General Public 

Voting Records of Incumbent 

Candidates 

11 CFR 114.4(c)(4) 

Organization may publish factual record of votes on legislative matters. 

Voting record may not include express advocacy. 

Decision on content and distribution may not be coordinated with candidate or 

party. 

Voter Guides 

11 CFR 114.4(c)(5) 

Type 1 : Based on prepared written questions submitted to candidates.

Type 2: Not based on written questions. 

Characteristics Common to Both Types of Guides: 

• Guide consists of at least two candidates' positions on campaign issues. 

• Guide may include biographical information. 

• Organization may not coordinate with candidates concerning content (other than 

by sending prepared questions) or distribution. 

• Guide may not contain express advocacy. 

Characteristics of Voter Guide Based on Written Questions (Type 1): 

• Questions may be directed in writing to all candidates for a particular House or 

Senate seat and candidates may respond in writing. 

• Questions may be directed in writing to Presidential candidates (all in one party 

for primary or all on general election ballot in state where guide is distributed or 

in enough states to win majority of electoral votes). 

• No candidate may receive greater prominence than another. 

• Guide may not contain an electioneering message. 

• Guide may not score or rate responses in such a way as to convey an electioneering message. 

Press Releases/Endorsements 

11 CFR 114.4(c)(6) 

Organization (except 501 (c)(3) nonprofit organization) may announce at a press 

conference or in a press release sent to regular press contacts that it made a 

candidate endorsement to its restricted class, as long as costs are de minimis and 

the announcement is not coordinated with candidate. 
100 Appendices 

Voting Information Restricted Class General Public 

Voter Drives: Registration 

and Get-Out-the-Vote 

11 CFR 114.4(d) 

Organization may expressly 

advocate election/defeat of 

candidate/party. 

Organization may use phone 

bank to encourage registration 

and voting for particular party 

and candidate. 

Organization may provide 

transportation to registration 

place and to polls, but cannot 

condition service on support of 

particular candidate or party. 

Organization may not expressly advocate election/ 

defeat of candidate/party. 

(Same as the adjacent restricted class rules.) 

Organization must give persons receiving services 

written notice of the nonpartisan nature of the 

services. 

No coordination with candidate or party is permitted. 

Organization may not pay individuals conducting 

drive based on number of persons (registered or 

transported) who support particular candidate or 

party. 

Organization may not target people it believes will 

support its favored candidate or party. 

. 

General Public 

Voter Advertisements 

11 CFR 114.4(c)(2) 

Organization may pay for ads (posters, billboards, broadcasting, print or direct mail) 

urging public to register to vote and to vote. 

The advertisement may not contain express advocacy. 

The advertisement may not be coordinated with candidate. 

Distribution of Official Voter 

Information 

11 CFR 114.4(c}(3} 

Organization may distribute voter information produced by official election administrators, 

including registration-by-mail forms and absentee ballots. 

Voter information may not contain express advocacy. 

Voter information may not be coordinated with candidate. 

Organization may give funds to state and local governments to defray costs of voter 

registration, voting information and forms. 

*U.S. GOVERNMENT PRINTING OFFICE: 1996 - 410 - 327 I 20083