Federal 

Election 

Commission 

Annua1Report1993 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

Trevor Potter, Chairman 

Danny L. McDonald, Vice Chairman 

Joan D. Aikens, Commissioner 

Lee Ann Elliott, Commissioner 

John Warren McGarry, 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 the 

Information Division. 

Louise D. Wides, Assistant Staff Director 

Janet Hess, Writer 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF THE CHAIRMAN June 1, 1994 

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 19th 

annual report of the Federal Election Commission, pursuant to 

2 u.s.c. § 438(a)(9). The Annual Report 1993 describes the 

activities performed by the Commission in the last calendar 

year. The report also includes the legislative recommendations 

the Commission has adopted and transmitted to the President and 

theCongress 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. 

Even without any additional responsibilities which would 

come if new campaign finance legislation were enacted, the 

Commission remains in urgent need of additional resources. The 

current system of reporting requirements and contribution 

prohibitions and limitations, and the resulting audit and 

enforcement mechanisms required to administer these provisions, 

are complex. This Annual Report details the Commission's many 

responsibilities, and identifies those areas where the imbalance 

between the Commission's resources and the demands on those 

resources is the most critical. 

Respectfully, 

c;::a

Trevor Potter 

Chairman 
Table of Contents 

Introduction 1 

Chapter One 

The Commission 3 

Commissioners 3 

FEC v. NRA Political Victory Fund: Composition 

of FEC Found Unconstitutional 3 

Effects of New Legislation 4 

Other Programs 5 

The FEC's Budget 6 

Chapter Two 

Administration of the Law 11 

Enforcement 11 

Audits 12 

Public Disclosure 12 

Data Systems Development Division 13 

Press Office 14 

Review of Reports 15 

Regulations 15 

Advisory Opinions 16 

Assistance and Outreach 16 

National Clearinghouse on 

Election Administration 17 

Chapter Three 

Presidential Activity 19 

Presidential Election Campaign Fund 19 

Audits of 1992 Presidential Campaigns 19 

Repayments-1988 20 

Public Funding: Legal Issues 23 

Chapter Four 

Legal Issues 27 

Constitutionality of the Commission 27 

"Best Efforts" 27 

Preemption of State Laws 28 

Candidate Issues . 30 

Coordinated Party Expenditures 31 

New Multicandidate Committee Rules 33 

Corporate/Labor Activity 33 

Native American Tribe as a Federal Contractor 35 

Procedural Matters 35 

Chapter Five 

Legislative Recommendations 37 

Public Financing 37 

Registration and Reporting 41 

Use of Campaign Funds 46 

Contributions and Expenditures 46 

Compliance 53 

Litigation 57 

Disclaimers 58 

Public Disclosure 60 

Agency Funding 62 

Miscellaneous 62 

Chapter Six 

Campaign Finance Statistics 65 

Appendices 

1. Biographies of Commissioners 

and Officers 73 

2. Chronology of Events 77 

3. FEC Organization Chart 81 

4. FEC Offices 83 

5. Statistics on Commission 

Operations 87 

6. 1993 Federal Register Notices 91 

7. Regulations on Definition of "Member'': 

Summary 93 

8. Regulations Banning Transfers from 

Nonfederal Campaigns: Summary 95 

9. Multicandidate Committee Regulations: 

Summary 97 

10. Revised Interim Rules on 

Ex Parte Communications: Summary 99 

11. "Best Efforts" Regulations: Summary 101 
Introduction 

Nineteen-ninety-three was a year of growth, change 

and redefinition for the Federal Election Commission. 

The agency faced an increased workload arising, 

in part, from monitoring the unprecedented level of 

federal election activity that took place during 1992. 

The Commission received increased funding for a 

small increase in staff and implemented new procedures to handle the growing workload of enforcement 

matters, including a new prioritization system 

Additionally, in 1993 the Commission began to 

make greater use of technological advances in all 

phases of the agency's operations. The agency designed an enhanced disclosure program to afford 

visitors to the Public Records Office on-line access to 

reports filed with the Commission for the 1993-94 

election cycle, and began to introduce new document 

retrieval workstations throughout the agency. 

An important new responsibility was assigned to 

the Commission when Congress passed the National 

Voter Registration Act of 1993. The Commission 

embarked on an intensive effort to help states implement this new law designed to facilitate and increase 

voter participation. 

The constitutionality of the organization of the 

Commission itself became a focus of the agency's 

operations toward the end of 1993. On October 22, 

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

ruled that the composition of the Commission violated the Constitution's separation of powers. Under 

the Federal Election Campaign Act (the Act}, the 

President appoints the Commission's six voting 

members, and Congress designates two nonvoting 

ex officio members. In FEC v. NRA Political Victory 

Fund (NRA), the appeals court found that Congress 

"exceeded its legislative authority when it placed its 

agents, the Secretary of the Senate and the Clerk of 

the House of Representatives, on the independent 

Commission as non-voting ex officio members." After 

the NRA decision, the Commission voted to petition 

the Supreme Court for a review of the case and initiated a series of actions to ensure the uninterrupted 

enforcement of the election laws. 

The following material documents the 

Commission's activity during this particularly productive year. 
3 Chapter One 

The Commission 

Commissioners 

During 1993, Scott E. Thomas served as Chairman 

of the Commission, and Trevor Potter was the 

Commission's Vice Chairman. On December 

15,1993, the Commission elected Trevor Potter to be 

its 1994 Chairman and Danny L. McDonald to be 

Vice Chairman for 1994. 

For biographies of the Commissioners, Staff Director, General Counsel and Inspector General, see 

Appendix 1. 

FEC v. NRA Political Victory Fund: 

Composition of FEC Found 

Unconstitutional 

On October 22, the U.S. Court of Appeals for the 

District of Columbia ruled that the composition of the 

Federal Election Commission "violates the 

Constitution's separation of powers." 1 

Under the Federal Election Campaign Act (the 

Act), the President appoints the Commission's six 

voting members, and the Secretary of the Senate 

and the Clerk of the House of Representatives, or 

their designees, serve as non-voting ex officio members. The court found that "Congress exceeded its 

legislative authority when it placed its agents, the 

Secretary of the Senate and the Clerk of the House 

of Representatives, on the independent Commission 

as non-voting ex officio members." 

The court rejected the Commission's contention 

that the ex officio members play solely an "informational or advisory role." The court concluded that 

"advice...implies influence, and Congress must limit 

the exercise of its influence ... to its legislative role." 

The court added that the "mere presence" of the 

Congressional representatives "has the potential to 

influence the other Commissioners." Citing legislative 

history, the court concluded that Congress intended 

the ex officio members to "serve its interests while 

serving as commissioners." Ultimately, the court said, 

"the mere presence of agents of Congress on an 

entity with executive powers offends the Constitution." 

Based on the severability clause in the Act, 2 

U.S.C. §454, the court concluded that "the unconstitutional ex officio membership provision can be severed" from the rest of the statute, permitting a reconstituted Commission to continue to operate. The court 

added that Congress was not, in this instance, required to amend the statute. 

The court rejected two other constitutional challenges raised in the case: one regarding the 

Commission's bipartisan composition and the other, 

its status as an independent agency. The NRA had 

argued that: 

• The Act's requirement that "[n]o more than 3 members of the Commission ...may be affiliated with the 

same political party," 2 U.S.C. §437c(a)(1) (1988), 

limited the President's power to nominate under the 

Appointments clause; and 

• The FEC's civil enforcement authority, as an independent agency, unconstitutionally impinged on 

executive enforcement powers. 

The court found the first of these challenges to be 

nonjusticiable because it was the Senatorial confirmation process, and not the statute itself, that arguably 

restrained the President. Indeed, the court noted that 

"without the statute the President could have appointed exactly the same members" to the Commission. 

The court also upheld the FEC's status as an independent agency, citing a number of court cases that 

specifically sanction such entities. 

The appeals court ruling reversed a district court 

decision that the NRA had violated 2 U.S.C. §441b(a) 

by contributing corporate funds to its separate segregated fund, the NRA Political Victory Fund. (For a 

summary of that case, see Annual Report 1992, p. 

28.) Having ruled on the constitutional issue, the appeals court did not consider the merits of the case. 

Commission Response 

In the wake of the appeals court decision, the Commission undertook a number of steps to ensure the 

uninterrupted enforcement of the federal election law. 

October 26: Reconstitution. Subject to further judicial review, the Commission voted to reconstitute itself 

1 FEC v. NRA Political Victory Fund, 6 F.3d 821 (D.C. Cir. 

1993}. 
4 

as a six-member body, comprising only those Commissioners appointed by the President. 

November 2: Appeal to Supreme Court. The reconstituted Commission decided to petition the Supreme Court for a writ of certiorari in the case. That 

decision was consistent with the agency's tradition of 

defending the constitutionality of the Act. The Commission decided that, in its petition, the FEC would 

ask the high court to address the separation of powers issue, and-if necessary-to consider its effect 

on other agency actions. 

November 4: Ratification of Regulations, Forms 

and Advisory Opinions. As a precaution, the Commission voted to ratify its existing regulations and 

forms, and to adopt a policy statement confirming the 

efficacy of its advisory opinions. 

November 9: Ratification ofAudits, MURs and 

Litigation. The Commission ratified or voted again on 

its past actions regarding ongoing audits and public 

financing determinations. It also adopted specific 

procedures for ratifying its decisions related to ongoing enforcement cases (MURs) and litigation. 

Future actions on MURs would depend upon the 

status of the enforcement matter and the facts of the 

specific cases: 

• For MURs in the investigative stage, the Commission would vote again on the question of reason to 

believe (RTB); 

• For MURs in which the Commission had authorized 

formal discovery but the respondent had not complied with the subpoena or order, the Commission 

would vote again on authorizing the subpoena or 

order; 

• For MURs in which the investigation was complete, 

the Commission would ratify its prior finding of RTB; 

• For MURs in which the Commission had found 

probable cause to believe,. it would vote again on 

that question; 

• For MURs in which the Commission was engaged 

in pre-probable cause conciliation with a respondent, the Commission would vote again on entering 

conciliation and on the last approved proposed con~ 

ciliation agreement; and ·· 

• For MURs in which the Commission and a respondent were engaged in post-probable cause conciliation, the Commission would take another vote on its 

approval of the last proposed conciliation agreement. 

• With respect to enforcement litigation, for each case 

the Commission would vote to ratify its prior actions 

and to authorize the General Counsel to continue 

proceeding with the suit. 

November 24: Chairman's Letter to Committees, 

Attorneys and Consultants. Chairman Scott E. Thomas explained the FEC's actions taken after NRA to 

ensure uninterrupted enforcement of federal election 

law. 

Effects of New Legislation 

During 1993 Congress enacted two laws that have 

direct impact on the Commission and the programs 

the Commission administers. These are discussed 

below. 

FEC Assumes New Duties Under 

"Motor Voter" Law 

Congress assigned significant new duties to the 

Commission under the National Voter Registration 

Act of 1993 (NVRA, also sometimes called the "motor 

voter'' law). President Clinton signed the legislation 

on May 20. The law requires states to implement 

several voter registration procedures: Registration of 

individuals applying for driver's licenses; registration 

by mail; and registration at designated government 

agencies, specifically, public assistance agencies, 

state-funded agencies serving persons with disabilities, and armed forces recruitment offices. States 

must also select additional agencies to provide voter 

registration services. The Implementation date for the 

law in most states is January 1, 1995, although the 

effective date will be extended for certain states 

whose constitutions will have to be changed. 

The FEC is required to provide information to the 

states about their responsibilities under the law and; 

in consultation with state officials, to design a. 

national mail-in voter registration form. (A state may 

also design its own form, but the form must satisfy 

the criteria set forth in the law.} Additionally, every 

two years, the Commission must report to Congress 

on the law's effectiveness and recommend legislative 
5 

changes. Finally, the Commission must prescribe 

regulations necessary to carry out its new responsibilities to develop forms and report to Congress. 

The FEC's National Clearinghouse on Election 

Administration is largely responsible for carrying out 

the FEC's National Voter Registration Act duties. 

During 1993, in an intense outreach effort, the Clearinghouse held numerous meetings and conferences 

around the country to discuss the new law with state 

officials.._and it distributed an NVRA guide for the 

states. Additionally, the agency published an Advance Notice of Proposed Rulemaking on September 

30. Over 60 comments were submitted in response. 

For more information about the NVRA and the activities of the Clearinghouse, see Chapter Two, Administration of the Law. 

Congress Increases Tax Checkoff to $3 

In another action directly affecting the Commission's 

administration of election laws, Congress increased 

the Presidential Election Campaign Fund taxpayer 

checkoff to $3. The increase-the first since the law 

was originally enacted-was included in the Omnibus Budget Reconciliation Act, signed by President 

Clinton on August 10. The checkoff provides funding 

for the Presidential public funding program, which 

has provided money in Presidential campaigns since 

the 1976 elections. 

The increase in the taxpayer checkoff from $1 to 

$3 is expected to avert an estimated $100 million 

public funding shortage for the 1996 Presidential 

elections, according to FEC projections. The $3 de- . 

posits will begin in 1994, when taxpayers file their 

1993 returns. 

Presidential public funds almost ran short in 1992, 

and that year the Commission predicted that the 

program would nearly collapse in 1996 unless Congress took action. The new legislation, in effect, adjusts the checkoff amount for inflation since 1973, 

when the checkoff was first implemented.(For more 

information, see Chapter Five.) 

After the change in the law, the Commission announced that the new legislation should ensure funding for 1996 and at least one additional Presidential 

election, based on FEC projections. The agency 

estimated that payments for the 1996 Democratic 

and Republican nomination conventions would be 

$25.1 million. General election grants were projected 

at $125.8 million, leaving sufficient funds available for 

primary matching fund payments. 

(By law, the convention committees receive first 

priority for public funding payments, then the general 

election nominees and, lastly, the primary candidates.) 

The agency's projections were based on three 

assumptions: 

• Inflation would gradually rise from 3.0 percent in 

1993 to 4.5 percent in 1998 and each year thereafter. 

• Checkoff participation would continue to decline and 

then level off. 

• Matching fund demand represented an average of 

payments made in 1988 (an unusually expensive 

campaign cycle) and 1992 (an unusually inexpensive campaign cycle), adjusted for inflation. 

The rate of inflation is especially critical in determining how long the $3 tax checkoff will allow the 

Fund to remain solvent. For example, an inflation rate 

of 4 percent or less in future years would likely permit 

full funding of Presidential elections through th~ year 

2004. Ultimately, however, public funding payouts, 

indexed to inflation as they are, will outpace deposits 

to the Fund, causing a shortfall. 

With respect to taxpayer participation, the Budget 

Reconciliation Act will initially shrink the pool of possible participants by raising the income threshold at 

which families incur tax liability. (Those who have no 

tax liability cannot allocate money to the Fund by 

checking ''yes" on their federal tax returns.) It is unknown whether taxpayer participation will be affected 

by the increased value of the checkoff. 

For a more comprehensive discussion of the tax 

checkoff and Presidential public funding, consult the 

FEC report, released in April 1993, The Presidential 

Public Funding Program. 

Other Programs 

Ethics 

During 1993, the Commission's ethics staff worked to 

implement new government-wide standards of conduct prepared by the Office of Government Ethics 

and the Office of Personnel Management. 
6 

In another development, senior FEC staff members 

and procurement officials began filing confidential 

disclosure reports on their personal finances, as required by the Ethics in Government Act of 1978, as 

amended. The staff reports were filed with the General Counsel, who also serves as Designated Agency 

Ethics Official (DAEO). To keep current with the new 

ethics-related duties, the DAEO designated a staff 

member to serve as full-time deputy ethics official. 

Management Issues 

During 1993, the Chairman appointed a top-level 

committee, comprising the Staff Director, General 

Counsel, Deputy Staff Director and Director of Personnel, to evaluate the applicability to Commission 

operations of various proposals emanating from the 

Vice President's National Performance Review. On 

the committee's recommendation, the Commission 

voluntarily reduced the number of internal agency 

directives in response to a nonbinding executive order. On the other hand, the Commission demurred on 

another executive order on staffing levels. The Commission took the position that in this period of burgeoning campaign finance activity, the agency could 

not reduce its requested staffing levels and continue 

to meet its obligation to administer and enforce the 

campaign finance laws. 

As reported in Annual Report 1992, the Commission's Office of General Counsel introduced a Total 

Quality Management (TOM) program during 1992. 

During 1993, the TOM program became part of union/ 

management negotiations over a new Labor/Management Agreement. No agreement on the matter could 

be reached, and the TOM program was suspended. 

Equal Employment Opportunity Program 

The EEO Director manages the EEO Program, including the Federal Women's Program and special emphasis programs for minorities. Each year the director 

submits, to the EEOC, statistical reports on discrimination complaint processing and the Commission's 

workforce. In addition, the director files, with the Office of Personnel and Management, status reports on 

the Disabled Veterans Affirmative Action Plan. 

During 1993, the Office of EEO Programs 

(OEEOP) embarked on the development of an alternative dispute resolution program and a career advancement program. It revised the Commission's 

instructions for the complaint process and began 

updating the affirmative employment program for 

minorities and women. The OEEOP sponsored programs for Black History Month and for National Disability Employment Awareness Month. The OEEOP 

also participated in the orientation program for new 

employees and cosponsored, with the Personnel 

Office, in-house training for supervisors. The OEEOP 

published a quarterly newsletter, EEO Focus, for 

Commission staff, provided counseling for those with 

equal employment concerns and sponsored a workshop on sexual harassment prevention for new employees. 

The EEO Advisory Committee, whose charter was 

approved in October, made recommendations for a 

career advancement program and cosponsored 

mammogram screening and crime prevention programs with the Personnel Office. 

Inspector General 

The Commission's Office of Inspector General (OIG) 

is authorized, under the Inspector General Act, to 

conduct audits and investigations to detect waste, 

fraud and abuse. During 1993 the OIG audited several components of the Commission's operations. 

The Commission implemented a practice whereby 

the chairman of the agency would act as audit followup official. Management resolved all outstanding OIG 

audit recommendations as of the last OIG reporting 

period. The OIG also participated in the orientation 

program for new employees to ensure that staff are 

aware of the duties and responsibilities of the OIG. 

The FEC's Budget 

Fiscal Year 1994 

On April 22, FEC Vice Chairman Trevor Potter, as 

Chairman of the Finance Committee, testified before 

the Senate Committee on Rules and Administration, 

emphasizing the need for a $2.6 million increase in 

the FEC's funding for the 1994 fiscal year (beginning 

on October 1, 1993). "[T]he Commission is currently 

overwhelmed by a rapidly growing enforcement case 

load and by the wave of data flowing from the 1992 
7 

elections," he stated. ''This is despite the fact that a 

very lean FEC staff has been working furiously 

throughout the 1992 cycle .... " 

The $2.6 million increase would bring the agency's 

budget to $23.6 million, with 320 full-time equivalent 

(FTE) employees. 

The Vice Chairman pointed out that campaign finance activity jumped to almost $2 billion in the 1992 

election cycle. This resulted in more-and longercommittee reports than in previous election cycles. 

Consequently, more staff time had been needed to 

review the reports and enter data from them. The 

enforcement workload, too, had demanded more resources due to the increasing complexity of the cases 

and the growing number of respondents over the past 

four years. 

He also said that the passage of the "motor voter'' 

law placed further strains on the agency, and noted 

that Congress was also considering major changes in 

the federal election laws. Even without new legislation, however, the agency anticipated an extremely 

heavy workload for the 1994 election cycle. 

Concluding his testimony, Mr. Potter stressed that 

"there is no point in keeping campaign finance laws 

on the books, certainly not in adding to them, if we 

cannot administer and enforce them in a timely manner. If Congress and the President are serious about 

wanting us to do the job, then we ask that we be 

given the tools." 

On November 18, the Commission approved the 

FY 1994 Revised Management Plan for its 

$23,564,000 appropriation. Under the plan, the Commission expected to enter FY 1995 at a staffing level 

of approximately 320 FTE positions. 1 By contrast, the 

Commission received an appropriation of 

$21,031,000 and 276 FTE for FY 1993. 

Fiscal Year 1995: Request for Program 

Enhancements 

On October 1, 1993, the Commission sent OMB and 

Congress a budget request for $29.8 million and 347 

FTE for fiscal year 1995. The document asked for 

$6.3 million more than the anticipated FY 1994 appropriation. The increase would be used primarily to 

pay for the following programs: 

• Electronic filing of campaign finance reports submitted to the FEC and enhancement of the agency's 

computer equipment and capability. The program 

would cost nearly $4 million and require 7 additional 

staff for FY 1995. 

• The 1996 Presidential funding program. Additional 

auditors would replace GAO auditors who, during 

previous Presidential cycles, had been detailed to 

the FEC on a nonreimbursable basis. 

• Audits of 20 to 25 political committees. This program, to be carried out under 2 U.S.C. §438(b), 

would ensure that committees with the most egregious reporting problems would be audited, and 

would be subject to enforcement action, even in 

Presidential election years. (All publicly funded 

committees and host committees would continue to 

be audited, as well.) 

• Enforcement of the $25,000 annual limit on contributions from individuals. Rather than relying on 

outside sources to generate examples of apparent 

violations, the Commission would rely on its own 

resources to initiate enforcement cases. At a cost of 

$238,600, the program would need 4 additional 

staff. 

If the electronic filing program were fully funded, 

the Commission would begin to implement it in time 

for the 1996 elections. It would be available for the 

national party committees and large PACs, which file 

reports with the FEC. (House and Senate committees, which file with the Clerk of the House and the 

Secretary of the Senate, respectively, would not be 

included in this program.) Under this proposal, the 

Commission would begin to develop a program 

whereby smaller PACs and party committees could 

file data by magnetic disk. In addition, the FEC would 

develop software specifications for those committees 

that wanted to file computer-generated paper copies 

of FEC reports. 

1 Although the Commission was authorized 320 FTE for 

FY 1994, the appropriation received did not include the 

funds to cover the January 1994 government-wide locality 

pay adjustment, which effectively reduced staffing by almost 19 positions. 

il,, 

it 
8 

The request for funds to implement electronic filing 

came in response to suggestions from Congressional 

oversight committees. While acknowledging that the 

system should increase the breadth and scope of 

data collected (e.g., more detailed disbursement 

data) and reduce the time required to capture the 

data, the Commission made clear that the program 

would be expensive, particularly during development 

and installation. Furthermore, if the agency chose to 

maintain a consistent data base (i.e., capture from 

hard copy filers the same types of expenditure data 

that would be available from electronic filers), FEC 

staff would have to manually capture more data from 

reports filed on paper. 

Commenting on the budget submission, the 

Commission's request stated that "with the fate of 

proposed campaign finance reform legislation in 

doubt, it is even more imperative that the Commission receive adequate funds to vigorously enforce the 

existing laws and promote the widest possible disclosure of campaign finance data." 

Fiscal Year 1995: Revised Request 

In a December 9 letter to Leon E. Panetta, Director 

of the Office of Management and Budget, FEC Chairman Scott E. Thomas formally submitted an adjustment to the agency's FY 1995 Budget Request, raising the full request to $31,793,000 for 347 FTE. The 

adjustment reflected increases in locality pay and 

employee cost-of-living adjustments, as well as 

changes in the grade and position structure of the 

Commission subsequent to the submission of the 

original Budget Request. 

In his letter, the Chairman noted that the Commission "has received strong Congressional support from 

our oversight and appropriation committees to seek 

some major computerization initiatives for the 1996 

elections, as included in our FY 1995 Budget Request. Given that both Houses of Congress have 

passed campaign finance legislation, and that the 

Clinton Administration has repeatedly stated that 

campaign finance reform remains a priority, it is imperative that the Federal Election Commission receive the full funding for the 347 FTE requested in FY 

1995." 

Functional Allocation of Budget 

FY 1993 FY 1994 

Personnel $14,742,900 $17,068,000 

Travel 384,100 382,000 

Motor Pool 6,700 12,000 

GSA Space 2,070,500 2,333,000 

Commercial Space 24,900 26,500 

Equipment Rental 374,400 450,000 

Printing 352,200 392,500 

Training 66,100 126,000 

Administrative Expenses 264,600 341,000 

Support Contracts 724,200 829,000 

Supplies and Materials 320,900 297,500 

Publications 215,300 237,000 

Telephone/Telegraph 245,500 277,500 

Postage 198,000 250,000 

GSA Services, Other 141,200 194,000 

Equipment Purchases 996,300 348,000 

Total $21,127,800 $23,564,000 
9 

Divisional Allocation FY 1994 Projected 

- FY 1993 Actual 

Percent 

0 5 10 15 20 25 30 35 Allocation of Budget 

* Commissioners 

Staff Director 

t Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Division 

Public Disclosure 

Reports Analysis 

. Percent 

0 5 10 15 20 25 30 35 Allocation of Stat! 

§ Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Division 

Public Disclosure 

Reports Analysis 

* Includes Inspector General's office and Representational Fund. 

tThe Commission's budget for the Office of General Counsel includes these functions (listed in alphabetical order): administrative law, advisory opinions, enforcement, ethics, litigation, Presidential public financing, regulations and special projects.· 

:I= The Commission averaged 270.1 full-time equivalent positions (FTE) in FY 1993 and projected 301 for FY 1994. See page 7. 

§Includes Inspector General's office. 
11 Chapter Two 

Administration of the Law 

The Federal Election Commission is the independent 

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

Campaign Act (the Act) . This chapter discusses the 

Commission's efforts to fulfill its mission during 1993. 

Enforcement 

As 1993 opened, the Commission faced a substantial 

backlog of enforcement cases because Commission 

resources had not kept pace with an increase in the 

complexity of the cases themselves, a three-fold increase in respondents since 1988 and the explosion 

of campaign finance activity. In the 1992 election 

cycle, the Commission regulated the activities of over 

9,000 political committees that spent $2 billion, a 

$500 million increase over the last Presidential election cycle. Moreover, in the past four election cycles, 

the Commission handled 1 ,997 cases involving several thousand respondents. As of December 1 , 1993, 

the FEC's docket contained 448 cases involving approximately 2,300 respondents. 

Prioritization System 

During 1993, the Commission ushered in substantial 

enforcement reform by implementing a comprehensive prioritization system designed to produce timely 

resolution of significant cases. The prioritization system had been under development in the 

Commission's Office of General Counsel for some 

time. (See Annual Report 1991, p. 23.} 

In a news conference of December 13, 1993, announcing the new enforcement measures, Chairman 

Scott E. Thomas observed, "While the new enforcement measures I am announcing today include several procedural and administrative changes, the foremost difference-and the most important for the regulated community and public to understand-is that the 

FEC has adopted a sweeping, new approach to enforcing election law." 

Specific elements of the new priority system included the following: 

• Using objective criteria to rank cases to identify 

those best warranting the use of the agency's limited 

resources; 

• Determining the total number of cases that enforcement staff could efficiently pursue at one time; 

• Establishing realistic time goals for resolving targeted cases and specifically trying to resolve cases 

within an election cycle; 

• Managing cases through periodic evaluations; and 

• Creating a central enforcement docket system to 

process incoming cases. 

As part of the prioritization process, the Commission voted on December 9 to take no further action on 

137 enforcement cases and 9 enforcement referrals 

from its Reports Analysis Division. The closed cases 

fell into two broad categories: those which were relatively insignificant compared with other pending cases 

and those that were stale, meaning the activity occurred prior to the 1990 election cycle. 

In explaining the Commission's action, Chairman 

Scott E. Thomas said that the agency "cannot, and 

should not, attempt to fully investigate and resolve 

each and every one of the hundreds of cases that 

come before [it]. Law enforcement agencies at every 

level of government often use their prosecutorial discretion in selecting the cases they can prosecute." 

Among the factors the Commission uses to prioritize cases 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 violation; and 

whether a particular legal area needs special attention. 

While prioritization will mean that the Commission 

does not pursue some cases, Chairman Thomas explained that the system ''will better enable the FEC to 

work on a wide range of cases at all times." He cautioned, "No one should assume that any particular 

type of violation will be overlooked." 

During 1993 the Commission also moved toward 

assessing higher civil penalties when serious violations of the law were found. During the year, one case 

involved civil penalties of nearly $123,000. 

"If paying civil penalties was considered simply the 

cost of doing business in the past, that will change," 

Chairman Thomas noted. 
12 

Violations of the $25,000 Annual 

Contribution Limit 

As part of the Commission's enforcement efforts in 

1993, the agency imposed significant penalties on 

individuals who had exceeded the $25,000 annual 

limit on contributions to federal committees. 

Under federal law, an individual's total contributions 

to influence federal elections may not exceed $25,000 

in one calendar year. At the direction of the Commissioners, the General Counsel launched an investigation into possible violations of the $25,000 limit, two 

days after an April 1990 Los Angeles Times article 

reported that several individuals had exceeded the 

limit during the 1988 election cycle. Concluding the 

investigation into these matters and a related case, 

the Commission announced on March 17 that ten 

individuals agreed to pay $64,000 in civil penalties for 

violating the $25,000 annual limit on contributions and 

for other violations of the contribution limits. Most of 

the violations took place in 1988. The civil penalties 

were included in conciliation agreements signed by 

the individuals. The agreements included admissions 

of the violations, and noted when refunds had been 

obtained by the contributors. 

FEC Chairman Scott E. Thomas commented: ''The 

message from this case is that the FEC does enforce 

contribution limits. Those making political contributions should be knowledgeable of the limits enacted 

by Congress." 

The Commission's budget request for FY 1995 

asked for an additional $238,600 for a program to 

enable the FEC to identify individuals who have exceeded the $25,000 annual limit and to pursue appropriate enforcement action against them. 

Audits 

Because the statute requires the Commission to give 

priority to the mandatory audits of publicly funded 

Presidential candidates and committees, almost all of 

the Audit Division's resources during 1993 were devoted to reviews of those 17 committees from 1992 

(including fieldwork and drafting of interim audits). 

However, the Commission was also able to begin 

audits of 8 House and Senate candidates on a ''forcause" basis. 

In addition, a number of new audit procedures 

were implemented which allowed for more effective 

use of the Division's resources and expedited the 

release of audit reports. Most notable is the release 

of final audit reports in their entirety and the inclusion of an executive summary which provides a 

summary of the findings in the report. 

For more information about these new procedures 

and other Audit activities, see Chapter Four, Presidential Activity. 

Public Disclosure 

The disclosure of campaign finance information has 

been an essential part of the FEC's mission since the 

agency's beginnings. This year saw a number of 

changes in the FEC's public disclosure program, 

many of them designed to take greater advantage of 

improved technology. 

Public Records 

Under the Act, campaign reports filed by federal committees must be available for inspection in the 

agency's Public Records Office within 48 hours of 

their receipt. Interested persons visit the Public 

Records Office to review these reports and computer 

printouts, monitoring the sources of funds and spending patterns or looking for possible errors and violations of the law. 

In 1993, the Public Records Office, working closely 

with the Commission's Data Services Division, moved 

further down the road to implementing a computerized 

imaging system to replace the older microfilm system 

for processing and retrieving material filed with the 

agency. By the end of 1993, the processing branch in 

the Public Records Office had scanned the entire 

database of 1993-94 reports filed with the Commission. 

Initially, the imaging system would function much 

like the microfilm system itreplaced, allowing the 

user to enter an image number and retrieve a specific 

page of a report filed by a given committee. By year's 

end, equipment was being installed to permit such 

retrieval at new, computerized workstations in the 

Public Records Office. The individual would be able to 
13 

copy a report, or part of a report, using a laser printer 

at the workstation. 

Later in the 1993-94 cycle, the Commission's disclosure database and imaging system will be integrated. The integrated retrieval system will feature a 

graphical user interface, permitting an individual to 

obtain information using simple "point and click" commands with a mouse (no longer needing, for example, 

an image number to retrieve information). 

To expedite the processing of reports in 1993, the 

processing branch in Public Records added a night 

shift for the first time. The experimental second shift 

provided the agency with a 16-hour day for processing documents. 

The Public Records Office also implemented a fax 

service under which, for example, a subscriber could 

place a standing order to receive copies of all items 

on the agenda of a Commission meeting when those 

documents became public, or copies of all advisory 

opinions as they were issued. 

In addition, during 1993 the office bought a ''flash 

fax" system. This technology will permit callers to call 

a special Commission number, review a menu of 

documents, and, using a touch-tone phone, place an 

order for documents to be faxed to them in a return 

call. The office also developed a new brochure for 

visitors to the Public Records Office, setting out a 

checklist of the office's resources available to researchers. 

The Public Records Office participated in numerous classes for reporters during 1993 and, with a 

representative from the Data Systems Division, took 

part in a three-day conference for investigative reporters on the use of computers in reporting. 

Finally, during 1993 the Public Records Office received approval to begin taking payment for documents by credit card, rather than requiring individuals 

to make pre-payments for document orders or establish accounts with the office. The office estimates that 

the credit card option will reduce the time for processing orders from outside the Washington, D.C., area 

by 50 percent. 

Data Systems Development 

Division 

In 1993, Data Systems began implementing the 

FEC's electronic imaging system in the Reports 

Analysis Division (RAD) and in the Public Records 

office. Completion of the first phase of the project, 

which includes the imaging and retrieval of financial 

documents filed at the FEC, is projected for July 

1994. The Document Imaging System (DIS) replaces 

microfilm reader stations with a computer application 

that permits a user to view a document (such as a 

committee's report) on a high resolution computer 

screen, just as the document appeared in its original 

form. The DIS provides users with the ability to view 

and print reports filed at the FEC during the 1993-

1994 election cycle. 

During 1993, Data Systems also worked with the 

Reports Analysis Division and the Audit Division as 

those divisions joined the Commission's computer 

network. With the installation of desk top computer 

capabilities in RAD and Audit, all offices in the Commission will have desk top computing capabilities. 

This will complete a five year project. 1 

As a result of a competitive procurement process, a 

new contractor began providing computer services to 

the Commission in October 1993. The contract tripled 

the computing power, doubled the storage capacity to 

12 gigabytes (12 billion characters), and increased 

the communications capability thirteen times over the 

previous ADP contract. The monthly cost to the FEC 

decreased by $500. 

During the past year, the Commission processed 

41 ,000 documents, or 1 0,000 documents more than 

during a comparable period in 1991. These documents represented 682,000 transactions. Compared 

with a similar off-election year in 1991, 1993 saw a 

129 percent increase in the number of transactions 

entered and verified. This increase was, in part, because of the unusually high number of amendments 

filed with the Commission, as committees corrected 

the reports that detailed the record $2 billion spent in 

the 1992 election cycle. 

1 Installation of desktop computing capabilities in RAD 

and Audit was completed in March 1994. 
14 

In 1993, Data continued its work with the Direct 

Access Program (DAP). Under DAP, users have direct, on-line access to the Commission's database. 

Users of DAP pay an hourly rate for the service. Under the new contract, the Commission was able to 

reduce the hourly rate charged for DAP by 20%. Of 

the 300 accounts using DAP at any time, most were 

continuing subscribers (accounts that are not using 

the system for the first time). Among the heaviest 

users of the system were newspapers, journalism 

schools, and other interested organizations. Law firms 

were especially active as new subscribers to DAP 

during 1993. About 575 organizations have subscribed to DAP since the program began in 1985. 

Forty-four percent more time was used by DAP subscribers in 1993 than had been used in 1991, the last 

non-election year. In 1993, usage totaled 1592 hours 

(valued at $37 ,980), and 116 new DAP accounts were 

added, a 41 percent increase over 1991. 

Press Office 

For the Commission's Press Office, 1993 was the 

busiest nonelection year in the agency's history. The 

year saw a significant increase in phone calls, press 

releases and visitors to the Press Office. The office 

also fielded an especially high number of requests 

under the Freedom of Information Act. Both major 

metropolitan outlets and smaller newspapers took 

greater advantage of the Commission's Direct Access 

Program. The Press Office also increased its staff in 

1993 in anticipation of expanding its outreach. 

Direct Access Usage by Month 

1990 through 1993 

Hours 

300 

250 

200 

150 

100 

50 

1990 1991 1992 1993 
15 

On December 13, the Commission held a press 

conference to announce substantial reform of its enforcement program. The Press Office scheduled the 

announcement at the National Press Club and provided extensive material to reporters covering the 

conference. 

Review of Reports 

Reports analysts review each report filed with the 

C?ommi~sion to ~nsure total disclosure of campaign 

fmance 1nformat1on and compliance with the Act and 

the Commission's regulations. If an examination of a 

report suggests that a committee may have violated 

the law, the reports analyst sends the committee a 

letter (called a request for additional information, or 

RFAI). The letter provides a vehicle for filers to correct 

errors and omissions on their reports or to explain the 

possible violations. Serious violations are referred to 

the Commission's Office of General Counsel or Audit 

Division for appropriate action. 

In 1993, the Reports Analysis Division processed 

326 administrative terminations of political committees. The Act and the FEC regulations (at 11 CFR. 

102.4) provide that the Commission may administratively terminate a political committee's reporting obligation in certain specified circumstances. Most of the 

committees that were subject to administrative termination in 1993 were old committees, many of which 

had for years been filing reports that simply disclosed 

outstanding debts from previous election cycles. The 

1993 administrative terminations represented the first 

mass administrative terminations by the Commission 

in ten years. During the year, the agency also received 30 debt settlement plans from political committees and closed 20 debt settlements. 

The extraordinary level of activity during the 1992 

election cycle resulted in a backlog of reports, despite 

the fact that the productivity of reports analysts had 

actually increased. To help avoid future backlogs, the 

agency planned to install computer workstations for 

every analyst and authorized the addition of new staff 

to handle the ever increasing workload. 

Regulations 

In 1993, the Commission adopted new regulations in 

five areas, as follows: 

• Transfers from a candidate's nonfederal to federal 

campaign; 

• The definition of "member'' and "membership association"; 

• Disclosure of multicandidate committee status· 

• Best efforts to obtain and report information about 

contributors; 2 and 

• Interim ex parte regulations. 

The first four subjects are discussed in Chapter Five, 

Legal Issues, and summarized in the appendices. The 

rules on ex parte communications are discussed below and summarized in the appendices as well. 

In 1993, the Commission also began other 

rulemaking proceedings in five different areas: 

• Enforcement regulations that would revise or clarify 

almost every aspect of the enforcement process, 

from the initial filing of a complaint to the payment of 

penalties; 

• Regulations on the personal use of campaign funds .. 

which would prohibit a campaign committee from 

paying a salary to the candidate or paying any expense that would exist regardless of the campaign; 

• A proposal to permit the use of a candidate's name 

in the title of a fundraising project opposing the candidate; 

• Revised regulations on the public funding of Presidential nominating conventions; and 

• Regulations to implement the Commission's new 

r~sponsibilities, under the National Voter Registrat~on Act, to develop a national mail-in voter registration form and to file biennial reports to Congress. 

.Revised Interim Ex Parte Rules 

On October 28, the Commission adopted revised 

interim rules on ex parte communications that reflected public comments and testimony, and its own 

experience with the previous interim rules. (Ex parte 

communications are written and oral communications 

made by persons outside the agency to Commission-

· 2These regulations were submitted to Congress in October 1993 and became effective on March 3, 1994. 
16 

ers or their staff concerning substantive Commission 

action.) The revised rules, which took effect November 10, replaced those adopted in December 1992. 

The amended rules extended the ban on ex parte 

communications regarding audits and litigation to 

those concerning public funding determinations, and 

specified how Commissioners and their staff must 

report attempted prohibited communications. The 

revised rules continue to permit ex parte communications related to rulemaking proceedings and advisory 

opinions; the recipient Commissioner or staff member, 

however, must disclose the contact within three business days or before the Commission's next consideration of the matter, whichever occurs first. Such communications become part of the public record. 

Other Regulations 

During 1993, the Commission continued its analysis 

of issues involving corporate and labor communications. It also analyzed issues in a number of other 

areas of its regulations, including disclaimer notices, 

recordkeeping and reporting, coordinated party expenditures and the allocation of travel expenses. 

In addition, the Commission created a task force to 

evaluate the efficacy of the agency's rules for allocating shared federal/nonfederal expenses (the "soft 

money'' rules). After reviewing the findings of the task 

force, the Commission will consider whether to amend 

the allocation regulations after the 1994 election 

cycle. 

Advisory Opinions 

Advisory opinions clarify the election law for the person who requests an advisory opinion and for anyone 

else in the same situation as the requester. The 

Commission discusses and votes on advisory opinions in public meetings. The Commission issued 25 

advisory opinions in 1993. It is notable that in 1993, 

for the first time in the FEC's AO history, there were 

no advisory opinion requests withdrawn, no AO deadlocks, and no advisory opinion requests closed with- • 

out issuance of an opinion. 

Selected advisory opinions issued during 1993 are 

included in the discussion of legal issues, Chapter 

Four. 

Assistance and Outreach 

The Commission has, since its beginning, encouraged voluntary compliance with the law by offering 

information, advice and clarification to those seeking 

help. Some of the activities undertaken by the 

agency during 1993 are discussed below. 

Telephone Assistance 

The agency's toll-free information line, 800-424-9530, 

is central to the Commission's outreach program. 

Individuals throughout the country can speak anonymously with staff in the Information Division, who provide information on the law. Public affairs specialists 

answer thousands of questions each year, often researching relevant advisory opinions and litigation for 

callers. During 1993, the office handled 72,704 calls. 

Reporting Assistance 

Reports analysts, who are knowledgeable about complex questions of reporting and related compliance 

matters, are available to discuss reporting problems 

or questions with political committees. Any committee 

with reporting questions may call the Commission and 

speak directly to the analyst assigned to review the 

committee's reports. 

The agency sends each committee treasurer a 

reminder of upcoming reporting deadlines three 

weeks before the due date of a report. In addition, 

The Record, the FEC's monthly newsletter, publishes 

reporting schedules and requirements. 

Publications 

In 1993 the Commission's Information Division published The Presidential Public Funding Program, a 

comprehensive study covering the history, achievements and problems associated with the public financing of Presidential elections. The study presented many of the arguments made for and against 

the program and also discussed the long-standing 

concern about a funding shortfall for the 1996 Presidential elections. (The report was published before 

the $3 checkoff was enacted; see Chapter One.) 

The report also addressed other policy matters, 

including the use of soft money and private money in 

Presidential elections, the requirements that candi~ 
17 

dates must meet to qualify for public funding, the 

spending ceilings for primary candidates, and the 

audit and enforcement process. 

The Public Records Office published a new edition 

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

committees (PACs). The Commission also published 

the Combined Federal/State Disclosure Directory 

1993 and Federal Elections 92. In 1993, the agency 

published a revised brochure explaining the Direct 

Access Program (DAP), which provides on-line access to campaign finance information, advisory opinions and court case abstracts. 

In 1993, the Commission's monthly newsletter, the 

Record, was redesigned. The new Record and all 

other publications and brochures benefited from the 

Information Division's new desktop publishing capability. 

The Commission published a new edition of the 

Campaign Guide for Congressional Candidates and 

Committees. Additionally, the agency released Local 

Party Activity, a completely revised publication to 

explain federal campaign finance rules for "local party 

organizations"-that is, party committees below the 

state level that have not registered as federal "political 

committees." The Commission also published The $3 

Tax Checkoff to inform citizens about the Presidential 

Election Campaign Fund, financed by the $3 checkoff 

on individuals' tax forms. Selected Court Case Abstracts was updated, as was the compilation of Explanations and Justifications, materials which accom• 

pany agency regulations. 

In 1993, the Commission won awards for two 1992 

publications, taking honorable mention Blue Pencil 

Awards for the brochure The FEC and the Federal 

Campaign Finance Lawand the Campaign Guide for 

Corporations and Labor Organizations. 3 

Conferences and Visits · 

The Commission's first conference on campaign finance law for the 1994 cycle took place in San Francisco on September 30 and October 1 , 1993. The 

regional conference offered workshops for candidate 

committees, party committees, and corporate and 

labor PACs and their connected organizations. Representatives of the Internal Revenue Service and the 

California Fair Political Practices Commission attended and answered questions from the audience. 

On December 13 and 14, the FEC held a conference 

in Washington, DC, for corporations, labor organizations, trade associations and their PACs. More than 

400 people attended these conferences. 

FEC staff held informal meetings in five state capitals as part of the Commission's State Outreach Program. They visited Harrisburg, Hartford, Indianapolis, 

Lincoln and Helena to meet with candidates, campaign staff and staff members of party committees 

and PACs. 

National Clearinghouse on Election 

Administration 

National Voter Registration Act of 1993 

The Clearinghouse efforts during 1993 focused on 

assisting the states in the implementation of the 

National Voter Registration Act of 1993 (NVRA). 

Congress adopted the NVRA to facilitate voter 

registration and to increase the number of eligible 

citizens who register to vote in elections for federal 

office. To this end, the law provides citizens with 

opportunities to register to vote: 

• At state-funded offices that provide services to persons with disabilities; 

• At state offices that issue driver's licenses; 

• At state offices that provide public assistance; 

• At other state-designated offices; 

• At armed forces recruitment offices; and 

• Via a national mail voter registration form. 

In addition, the NVRA mandates specific maintenance 

procedures for voter registration files and provides 

certain fail-safe voting procedures to protect an individual's right to vote. 

The Commission has four responsibilities under the 

NVRA: 

• To provide information to the states with regard to 

their responsibilities under the NVRA; 

• To develop a national mail voter registration application form for federal elections; 

3 The Blue Pencil Awards are given annually by the 

National Association of Government Communicators. 
18 

• To submit biennial reports to Congress assessing 

the impact of the NVRA on the administration of 

federal elections; and 

• To prescribe regulations necessary for the development of the mail registration application and the 

report to Congress. 

Pursuant to these responsibilities, the Clearinghouse convened an ad hoc discussion group in June 

to begin substantive consideration of the requirements of the NVRA, the range of options available to 

the states under the NVRA, and the roles of the affected federal agencies. The group comprised representatives from various federal agencies, election 

officials from around the nation, representatives of 

associations of public officials, and representatives of 

various public interest groups from the National Motor 

Voter Coalition. 

The Clearinghouse staff divided the summer 

months between making presentations on the NVRA 

before groups of election officials, state legislators 

and local government officials around the nation, and 

writing a guide for the states entitled Implementing the 

National Voter Registration Act of 1993: Requirements, Issues, Approaches, and Examples. This 

document is available free from the Clearinghouse. 

In September and October, the Clearinghouse held 

a series of five regional conferences in Seattle, Dallas, Chicago, Boston and Atlanta. The conferences 

provided a forum for a more thorough discussion of 

the NVRA among key officials from the states. The 

conferences also assisted state legislators preparing 

to enact the measures necessary to ensure compliance with the law by the implementation date, which, 

for most states, is January 1 , 1995. 

Publications 

Election Directory. This directory contains an updated list of the names and addresses of state election officials, and the addresses of local election officials responsible for canceling prior voter registrations. 

Polling Place Accessibility in the 1992 General 

Election. This is the fourth progress report issued by 

the Commission under the Voting Accessibility for the 

Elderly and Handicapped Act of 1984. Under that 

Act, the FEC must issue one more report, covering 

the 1994 elections. The FEC is responsible for conducting surveys on accessibility, compiling the results, 

and reporting these results to Congress. 

Election Case Law '93. This publication contains an 

overview of the laws governing elections as applied 

by state and federal appellate courts. Each chapter 

addresses a separate issue, beginning with a comprehensive summary of the current state of the law, followed by summaries of leading court cases. Each 

chapter also contains synopses of other selected 

cases and a bibliography of legal literature. 

Education 

During 1993, the Clearinghouse received a detailed 

analysis of the training and educational needs of local 

election officials. This study was the first step in a 

multiyear project to develop training videos and handbooks focusing on various aspects of election administration. The ultimate goal of the project is to provide 

state and local election officials with a vehicle for conducting comprehensive training seminars. 
19 Chapter Three 

Presidential Activity 

By increasing the taxpayer checkoff from $1 to $3, in 

1993 Congress ensured that the Presidential public 

funding system would remain solvent for the immediate future. 

With the continuance of the public funding system 

assured, the Commission focused its efforts on enhancing the timeliness of its audits in the wake of the 

unprecedented activity of the 1992 elections. This 

chapter reports on those efforts. 

Presidential Election Campaign 

Fund 

Public funding has been a key part of our Presidential 

election system since 1976. Using the dollars 

checked off by taxpayers on their federal income tax 

returns, the federal government provides matching 

funds to qualified candidates for their primary campaigns, funding to major parties for Presidential nominating conventions, and grants to Presidential nominees for their general election campaigns. 

Beginning in 1988, the Commission predicted a 

shortfall in the Presidential Election Campaign Fund. 

The Commission testified that a shortfall was inevitable because of a fatal flaw in the public funding program: payments from the Fund were indexed to inflation, but the $1 tax checkoff that financed the system 

was not. The Fund was also affected by a gradual 

decline in taxpayer participation in the checkoff program. 

Then, in 1993, Congress enacted the Omnibus 

Budget Reconciliation Act, which included a provision 

increasing the checkoff from $1 to $3. The change 

had the effect of adjusting the checkoff amount for 

inflation since 1973, when the checkoff was first 

implemented. The increase in the checkoff averted an 

estimated $100 million public funding shortage for the 

1996 Presidential elections. Deposits to the Presidential Election Campaign Fund started increasing in 

1994, when taxpayers filed their 1993 returns. 

(For more information about the Fund, see Chapter 

One, The Commission.} 

Audits of 1992 Presidential 

Campaigns 

Changes in Procedures 

The law requires the Commission to audit all Presidential candidates and convention committees receiving federal funds to ensure that the funds are not misused and that committees maintain proper records. In 

the past, audits have often taken two to four years to 

complete. 

Starting with the 1992 elections, however, the 

agency changed its audit procedures, modifying certain regulations, updating technology used to conduct 

the audits, and increasing the audit staff. The 

changes adopted by the Commission were discussed 

at length in Annual Report 1992, pp. 8-11. The impact 

of these changes began to be apparent in 1993. Most 

notably, by year's end, the agency had issued two 

Presidential audits (see below} and had completed 

the fieldwork on ten (out of a total of seventeen} audits. The process, itself, changed as well. 

Full Disclosure ofAll Findings in Final Audit Report. 

Final audit reports issued in 1993 disclosed all findings, including those that might later become the subject of an enforcement action. (In the past, descriptions of certain findings were purged from the material 

before the audit report was released to the public.} 

Records Inventory. Before starting fieldwork on an 

audit, staff conducted a thorough inventory of committee records. If records were not found to be satisfactory, the Commission gave the committee 30 days to 

correct the records or obtain the information. If the 

records remained unavailable after the 30 days, the 

Commission could proceed with subpoenas to obtain 

the needed records from appropriate parties. The 

records inventory procedures proved to be effective in 

1992 and 1993, allowing the Commission to devote its 

resources to committees that were fully prepared for 

fieldwork. 

Audit Testing Using Sampling Technique. The 

agency relied on a sampling technique to test contributions and supporting documentation to find excessive and prohibited contributions. This approach was 

designed to save time and money in the audit process 

without sacrificing the essential accuracy of audit 
20 

findings. In past years, auditors often reviewed 

lengthy contribution records to compile lists of potentially prohibited or excessive contributions. 

By using the sampling technique in conjunction 

with other limited testing, the agency evaluated a 

committee's compliance with contribution limits and 

prohibitions as demonstrated in a sample of the committee's transactions. The Commission then projected 

the dollar value of contribution violations in each category, based on the apparent violations identified in 

the sample. In this way, sampling was used to develop the audit findings. In some instances, committees would now have to make payments to the U.S. 

Treasury, rather than refunds to contributors, toresolve findings of excessive and prohibited contributions. 

Changes to Rules 

Audits of the 1992 Presidential campaigns were the 

first conducted under the Commission's new rules 

simplifying the allocation of a campaign's expenses to 

state spending limits. New rules also required committees that had computerized their receipts and/or expenditures to submit that information on computer 

tapes or diskettes in a format compatible with industry 

standards. 

Summaries of Audits 

Agran for President 92. On June 8, the Commis" 

sion approved the final audit report on Agran for 

President 92. The audit covered the period, August 

21, 1991, through July 31, 1992. During that time, the 

committee had total receipts of $630,442, total disbursements of $593,253, and a closing cash balance of 

$37,189. It received $335,488 from 4,417 contributors. 

The audit showed that the committee had not made 

reimbursements to individuals within the time periods 

required by 11 CFR 116.5, but by the time of the fieldwork, no expense reimbursements remained outstanding. 

The campaign received $269,691 in matching 

funds from the U.S. Treasury, an amount representing 

1.95 percent of the $13,810,000 maximum entitlement 

that any candidate could receive. 

New York '92 Host Committee. On November 10, 

1993, the Commission approved the final audit report 

on the New York '92 Host Committee, Inc.-the host 

committee for the 1992 Democratic convention. (Host 

committees are established by cities hosting Presidential nominating conventions to encourage commerce and to project a favorable image of the city to 

convention attendees. Unlike party convention committees, host committees do not receive public funds.) 

The audit report's findings included apparent prohibited contributions from two businesses located 

outside the New York metropolitan area, which the 

committee subsequently refunded; and the failure to 

disclose the actual value of certain in-kind contributions received and the source of interest income. The 

Commission required the committee to amend its 

reports accordingly. 

Repayments-1988 

As mentioned above, the Audit Division prepares an 

audit report for each committee, documenting the 

committee's financial activity for the consideration of 

the Commission. 

The final audit report may include an initial determination by the Commission that the committee repay 

public funds. (The interim audit report, however, constitutes notification of a repayment determination.) A 

repayment is required when the Commission determines that a primary or general election committee 

received public funds in excess of the amount to 

which it was entitled, or incurred nonqualified campaign expenses. (There are other bases for repayment as well, such as stale-dated checks.) A committee that wishes to dispute the Commission's initial 

repayment determination may submit a written response and may also request an oral presentation 

before the Commission. 

The basis for the Commission's final repayment 

determination is set forth in a statement of reasons 

prepared by the Office of General Counsel. 

The paragraphs below summarize 1993 repayment 

actions with respect to 1988 Presidential committees. 

For other reports pertaining to 1988 candidates, see 

Annual Repo/11989, pp. 14-15; Annual Repo/11990, 

pp~ 7-9; Annual Repo/11991, pp. 8-10, and Annual 

Report 1992, pp. 11-13. 
21 

Jesse Jackson 1988 Campaign 

On April 15, 1993, the Commission made a final determination ordering Jesse Jackson's 1988 Presidential campaign to repay $122,031 in public funds to the 

U.S. Treasury. (The Jackson for President '88 Committee and two affiliated committees in New York and 

California had received over $8 million in primary 

matching funds.) The campaign made a $75,000 repayment in January 1993. The balance was paid in 

full by December 2, 1993. 

In making its final determination, the Commission 

considered the campaign's responses throughout the 

audit process. For a summary of the final audit report, 

see Annual Report 1992, p.12. A large part of the 

repayment-$91 ,192-represented the pro rata portion of $294,115 in disbursements that were insufficiently documented. (A ratio formula is applied to 

nonqualified campaign expenses to determine what 

portion was paid with public funds, as opposed to 

private contributions, and must therefore be repaid to 

the U.S. Treasury.) 

The repayment also included $10,196 for matching 

funds received for excessive contributions; $18,953 

for the pro rata portion of $61 , 127 in income tax penalties; and $1,689 for stale-dated checks (checks 

never cashed by the payees). 

LaRouche v. FEC 2 

Lyndon H. LaRouche, Jr., and the LaRouche Democratic Campaign '88 sought review of the FEC's final 

determination that the Campaign repay $151,260 in 

federal matching funds to the U.S. Treasury. The FEC 

made the determination on September 17, 1992, and 

notified the Campaign in a letter dated September 22. 

(See Annual Report 1992, p. 12.) The petitioners filed 

their petition on October 22, 30 days after the September 22 letter date but 35 days after the September 

17 determination. 

On April 20, 1993, the U.S. Court of Appeals for the 

District of Columbia Circuit 1 denied the FEC's motion 

to dismiss this case, holding that petitioners had filed 

1 Commission actions under the Presidential public funding law are directly reviewable by this court. 26 U.S.C. 

§9041. 

2 No. 92-1555. 

their petition for judicial review within the 30-day time 

limit under the Presidential Primary Matching Payment Account Act. 

Under that statute, petitions for review must be filed 

''within 30 days after the agency action by the Commission for which review is sought." (See 26 U.S.C. 

§9041{a).) 

Final Repayment Determinations: Robertson, 

Dukakis and Simon 1988 Primary Campaigns 

The Commission approved final repayment determinations requiring the 1988 Presidential primary campaign of Michael Dukakis to return $491 ,282 in public 

funds to the U.S. Treasury and Senator Paul Simon's 

1988 Presidential campaign to return $412,163. (For 

summaries of the final audit reports of the Simon and 

Dukakis campaigns, see Annual Report 1991, p.9.) 

The final determinations and their supporting statements of reasons were approved on February 25 

(Dukakis) and March 4 (Simon). The Dukakis for 

President Committee had received over $9 million in 

primary matching funds, while the Paul Simon for 

President Committee had received almost $3.8 million. 

The repayments were due within 30 days of the 

committees' receipt of the final determinations. (The 

Commission accepted a $485,000 check from the 

Dukakis committee in April 1991, and received the 

remaining $6,282 by April20, 1992.) 

The statements of reasons responded to the committees' challenges to the agency's earlier initial repayment determinations. Both committees took the 

position that the agency had failed to notify them of 

their repayment obligations within the statutory threeyear deadline, which expired July 20, 1991. 

The Commission said that it had satisfied the threeyear notification requirement by providing the committees with preliminary repayment calculations that were 

approved before the three-year period had expired. 

The preliminary calculations were included in the 

Dukakis and Simon interim audit reports issued in 

february 1990 and July 1990, respectively. The two 

committees, however, continued to challenge the 

Commission's position, taking the matter to court (see 

below). 
22 

In another repayment determination in which a 

committee questioned the three-year deadline, the 

Commission voted, on September 23, to require Pat 

Robertson's 1988 Presidential campaign, Americans 

for Robertson, to repay $290,794 in public funds to 

the U.S. Treasury. The campaign had received over 

$10.4 million in primary matching funds. (For a summary of the final audit report, see Annual Report 

1992, p. 11.) 

The final repayment amount represented the pro 

rata portion of over $950,000 in nonqualified campaign expenses incurred by the campaign. The campaign was also ordered to refund $105,635 to news 

media organizations for travel overcharges. 

In its December 1992 oral presentation, the 

Robertson campaign disputed the FEC's initial repayment determination, claiming that the agency had 

failed to notify the campaign of the final repayment 

amount within the three-year deadline. (See 

26 U.S.C. §9038(c).) The Commission, however, said 

that the campaign had raised the issue too late for 

agency consideration. The agency said that the 

Robertson campaign, by failing to include the threeyear notification argument in its written response, 

waived its right to raise the argument during the oral 

presentation or at any future stage of the repayment 

proceedings, including a court challenge to the final 

repayments 11 CFR 9038.5(b). The Robertson campaign nevertheless used the late-notification argument in its court challenge to the repayment determination, as did the Dukakis and Simon campaigns. 

(See court cases below.) 

Dukakis v. FEC 4 

Simon v. FEC 5 

Contending that the FEC failed to notify them of their 

repayment obligations within the three-year statutory 

deadline, petitioners asked the U.S. Court of Appeals 

for the District of Columbia Circuit whether the FEC is 

time barred from requiring any repayment. 

Although each suit raises other issues unique to its 

case, petitioners filed a joint motion asking the court 

to consolidate the two cases, since the ruling on the 

late-notification issue could resolve the cases without 

need to examine the other issues, should the court 

rule in the petitioners' favor. The court declined to 

consolidate the cases, but agreed to schedule the 

cases on the same day and before the same panel of 

judges. 

Robertson v. FEC 6 

Pat Robertson and his 1988 Presidential campaign, 

Americans for Robertson, asked the U.S. Court of 

Appeals for the District of Columbia Circuit to review 

the FEC's determination that the campaign repay 

almost $300,000 in public funds to the U.S. Treasury. 

Contending that the FEC failed to notify the campaign 

of its repayment obligation within the deadline specified in the law, the campaign asked the court whether 

the FEC had the authority to seek repayment. The 

Robertson campaign further asked the court to schedule the campaign's case before the same panel of 

judges who would hear the Simon and Dukakis suits 

(above) and on the same day as those suits. On December 13, the court of appeals denied the Robertson 

motion. The Commission had opposed the motion. 

The Robertson campaign also filed a motion for 

summary reversal, arguing that the NRA decision 

(see Chapter One) rendered the Commission's repayment determination void , since it had been issued 

when the Commission still had ex officio members. 7 

3 By contrast, the Dukakis and Simon Presidential campaigns raised a similar notification argument in a timely 

fashion. 

4No. 93-1219. 

5 No. 93-1252. 

6 No. 93-1698. 

7 The Court of Appeals denied the motion for summary 

reversal on February 22, 1994. The NRA decision may 

nevertheless be argued in subsequent briefs. 
23 

Public Funding: Legal Issues 

1992 Matching Fund Entitlement: 

LaRouche v. FEC7 

On July 2, 1993, the Court of Appeals for the District 

of Columbia Circuit a directed the Commission to certify matching funds to Lyndon LaRouche, Jr., for his 

1992 Presidential primary campaign. The court held 

that the Commission did not have statutory authority 

to deny matching funds based on its conclusion that 

Mr. LaRouche's past actions indicated that he would 

fail to keep his promise to comply with the law. 

In February 1992, the agency had determined that 

Mr. LaRouche's written agreement and certification to 

comply with the law-a requirement for receiving 

matching funds-were not made in good faith. Mr. 

LaRouche had not complied with promises in candidate agreements he submitted to obtain public financing for his four previous Presidential campaigns. 

Moreover, he had been convicted of conspiracy to 

defraud the IRS and some of his own financial supporters. The Commission therefore found he was not 

eligible for matching funds. (See Annual Report 199~, 

p. 6.) Mr. LaRouche immediately challenged the decrsion in the D.C. Circuit. 

On July 2, the court reversed the FEC's decision, 

holding that the statute did not grant the agency the 

authority to evaluate the reliability of a candidate 

agreement. The court found that the law's enforc.ement provisions, which grant the FEC the authonty to 

take action with respect to past or ongoing violations 

of the law, implied a Congressional intent to withhold 

FEC authority to assess a candidate's future likelihood of violating the law in the context of a request for 

matching funds. The court observed that the voters 

should be the ones to judge a candidate's integrity. 

The court further noted that Congress intended 

public funds to be dispensed on a nondiscriminatory 

basis: "Any inquiry into the bona fides of candidates' 

promises would take the Commission into highly subjective territory that would imperil the assurance of 

even-handed treatment." 

The FEC had argued that its position was supported by the court's decision in Committee to Elect 

Lyndon LaRouche v. Federal Election Commission 

(CTEL),9 which allowed the agency to consult other 

information in its possession when deciding whether 

to accept a candidate's current threshold submission 

for matching funds. The court, however, said that 

CTEL stressed the need to apply objective standards 

when evaluating a matching fund submission, quite 

different from the use of subjective criteria ''to evaluate a candidate's character." 

The majority opinion was filed by Judge Williams; 

an opinion concurring in part and dissenting in part 

was filed by Judge Wald. She concluded that, although the Commission had statutory authority to 

deny certification to candidates, the Commission had 

exceeded its statutory authority in its consideration of 

matters that were not directly related to Mr. 

LaRouche's campaign (such as his criminal convictions for mail fraud and conspiring to defraud the 

IRS).10 

Funds Raised for Legal Expenses Related 

to Justice Department Investigation of 

Campaign Consultant 

On August 26, the Commission issued AO 1993-15 to 

The Tsongas Committee, Inc., the 1992 Presidential 

campaign committee of former Senator Paul E. 

Tsongas, providing guidance on legal expenses incurred in connection with a Department of Justice 

(DOJ) investigation. The committee had retained a 

law firm to advise the campaign and its personnel 

during the course of a DOJ investigation of the 

campaign's principal fundraising consultant, who had 

been indicted on 47 counts of illegal activity. The indictment had indicated that the consultant might have 

misappropriated a large amount of campaign contributions. 

1 No. 92-1100. 

a The three judge panel consisted of Judges Wald, 

Buckley and Williams. 

9 613 F.2d 834 (D.C. Cir. 1979). 

1o The Supreme Court, without comment, refused to 

review this decision. No. 93-519. The Commission certified 

an initial $100,000 in public funds to the campaign on February 17, 1994. 
24 

The Commission found that, with regard to activities being investigated that fell within the purview of 

the Federal Election Campaign Act and directly implicated its provisions, funds raised to defray the legal 

expenses were considered contributions, subject to 

the Act's limits, prohibitions and disclosure requirements. However, payments for such legal services 

were not subject to the Presidential primary expenditure limits. 11 CFR 1 00.8(b}(15). 

This conclusion was consistent with past advisory 

opinions in which the Commission determined that the 

costs of legal representation for post-election FEC 

audit and enforcement matters were clearly within the 

scope of the Act. AOs 1990-17 and 1981-16. Although The Tsongas Campaign's situation pertained 

to a Justice Department investigation, that agency 

has criminal enforcement authority with respect to the 

Act, and many of the indictment counts had explicitly 

referred to violations of the Act (e.g., excessive loans) 

or false statements to the Commission. 

Contributions from Candidate To Retire 1984 

Presidential Debt 

Presidential candidates who accept public funding 

must agree not to spend more than $50,000 of their 

personal funds (or the funds of their families) in connection with the campaign. 26 U.S.C. §9035; 11 CFR 

9035.2. Citing extraordinary circumstances, in AO 

1993-19 the Commission voted to permit Senator 

John Glenn to contribute unlimited amounts of his 

personal funds to retire the debt from his 1984 Presidential campaign. 

In waiving the personal funds limit in its advisory 

opinion of November 15, the Commission noted "the 

truly singular situation presented" by the Glenn campaign: 

• Nearly ten years had passed since the debt was 

incurred; 

• The obligation was large (approximately $3.25 million); and 

• Fundraising efforts to retire the debt had been 

largely unsuccessful. 

In addition to using his personal funds, Senator 

Glenn was permitted to transfer excess funds from his 

Senatorial campaign committee to retire the Presidential debt. Transferred funds, however, had to consist 

of contributions that were raised for the Senate campaign, not to retire the Presidential debt. 

Campaign Assessed $100,000 Penalty 

In an enforcement matter, MUR 3309, Senator Robert 

Dole's 1988 Presidential campaign committee, his 

leadership PAC and 11 other respondents entered 

into conciliation agreements with the FEC. Respondents agreed to pay civil penalties totaling nearly 

$123,000 for violations discovered during the 

Commission's audit of the campaign. The Dole for 

President Committee (the campaign committee) and 

Campaign America (Senator Dole's leadership PAC) 

agreed to pay civil penalties of $100,000 and $12,000 

respectively. The publicly funded campaign committee also agreed to refund over $104,000 in excessive 

and prohibited contributions either to the contributors 

or to the U.S. Treasury. 

During 1986 and 1987, Campaign America spent 

over $47,000 on testing-the-waters activities on behalf 

of Senator Dole in Iowa and New Hampshire. Under 

11 CFR 100.7(b)(1}, payments made to test the waters for a future candidacy are not considered contributions, although they are subject to contribution limits and prohibitions. Once the individual triggers candidacy, however, the payments retroactively become 

reportable campaign contributions. Since Campaign 

America could legally contribute only $5,000 to Senator Dole's Presidential campaign, it exceeded its contribution limit by more than $42,000, and the campaign accepted the in-kind contributions. 2 U.S.C. 

§§ 441a(a}(2}(A) and 441a(f). The campaign agreed 

to refund the excessive amount. 

The Dole for President Committee also accepted 

excessive contributions totaling over $251,000 from 

individuals, partnerships and political committees; 

accepted $64,000 in monetary and in-kind contributions from several corporations; failed to pay, in ad-
25 

vance, for the use of corporate aircraft, thereby accepting prohibited extensions of credit; and exceeded 

the state spending limits in Iowa and New Hampshire 

by a total of more than $588,000. In addition, the 

committee failed to make timely refunds from a legal 

and accounting compliance fund and failed to disclose 

the financial activity of 18 authorized delegate com· 

mittees. 

Presidential Campaign Overbilled Media for Travel 

In another enforcement matter from 1988, the Commission found that Bush-Quayle '88, a publicly funded 

Presid~ntial campaign, had overcharged the media 

$133,819 in travel costs. In MUR 3385, the committee 

agreed to pay a $10,000 civil penalty for the overcharges. Under the terms of the conciliation agreement, the campaign also had to refund the overpayment. 
27 Chapter Four 

Legal Issues 

To clarify the requirements of the Federal Election 

Campaign Act (the Act), the Commission promulgates regulations and also issues advisory opinions 

applying 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 1993 as it considered regulations, advisory opinions and enforcement 

actions. 

Constitutionality of the 

Commission 

The salient legal issue faced by the Commission 

during 1993 was an unusual one: the constitutionality of the composition of the Federal Election Commission itself. 

As discussed in the first chapter, on October 22 

the U.S. Court of Appeals for the District of Columbia found, in FEC v. NRA Political Victory Fund, that 

the composition of the Federal Election Commission 

"violates the Constitution's separation of powers." In 

the wake of the appeals court decision, the Commission undertook a series of actions to ensure the uninterrupted enforcement of the federal election laws. 

These steps, explained in more detail in the first 

chapter, included: 

• Voting to reconstitute itself as a six-member body, 

comprising only Commissioners who have been 

appointed by the President with the advice and 

consent of the Senate, pending review by the Supreme Court; 

• Exclusion of ex officio members and their special 

deputies from access to any confidential Commission documents or matters; 

• Adopting specific procedures for ratifying or voting 

again on Commission decisions pertaining to open 

enforcement cases (Matters Under Review, or 

MURs) and litigation; 

• Ratifying or voting again on Commission audit and 

public financing determinations; 

• Ratifying existing federal campaign finance regulations and forms; 

• Issuing a policy statement reaffirming the validity of 

advisory opinions issued before the court opinion; 

• Deciding to petition the Supreme Court for a writ of 

certiorari in the case; and 

•Informing all registered federal political committees 

of these actions in a letter from the Chairman. 

"Best Efforts" 

Under 11 CFR 104.7, political committees and their 

treasurers must exercise "best efforts" to obtain, 

maintain and report the identification of individuals 

who contribute more than $200 in a calendar year. 

"Identification" means the name, mailing address, 

occupation and employer of the individual. The Commission examined the "best efforts" standard during 

1993 in the context of an enforcement matter as well 

as in a revision to its regulations. 

Compliance Matter 

In Matter Under Review (MUR) 3528, the Commission found that a committee that had subsequently 

received missing contributor information for a previously reported contribution was required to disclose 

the new information in an amended report. 

The campaign committee in MUR 3528 had used 

best efforts to "obtain and maintain" the required 

information, but had failed to "submif' it in amended 

reports. The committee filed two consecutive reports 

lacking occupation and employer information for several contributors. The committee was later successful in obtaining the missing information from 38 contributors whose contributions totaled $28,475. The 

committee did not, however, amend its reports to 

reflect the information until the Commission had 

found reason to believe that the committee had violated the reporting provisions. The committee agreed 

to pay a $2,000 civil penalty. 

Final Rules on "Best Efforts" 

On October 21, the Commission revised its rules1 to 

clarify the steps that a committee must take to demonstrate that it has made "best efforts": 

• Requesting contributor information in the initial solicitation; 

• Making a follow-up request (if necessary); 

1 The regulations became effectiive on March 3, 1993. 
28 

• Reporting the information; and 

• Filing amendments to disclose previously unreported 

information. 

For a summary of the new rules, see Appendix 11 . 

Preemption of State Laws 

The extent to which the Federal Election Campaign 

Act (the Act) preempts provisions of state campaign 

finance laws has long been an issue of concern to the 

election community. At 2 U.S.C. §453, Congress 

specified, "The provisions of this Act, and of rules 

prescribed under this Act, supersede and preempt 

any provision of State law with respect to election to 

Federal office." Preemption questions were a focus of 

concern in a number of matters involving the Commission during 1993. 

Minnesota: Weber v. Heaney 

On June 17, 1993, the U.S. Court of Appeals for the 

Eighth Circuit held that the Act preempted the Minnesota Congressional Campaign Reform Act (MCCR ) 

in its entirety. The Court's decision in John Vincent 

Weber, eta/. v. William M. Heaney, eta/. affirmed a 

district court holding. The Commission had filed a 

''friend of the court" brief. 

Under the MCCR, candidates for the U.S. House 

and Senate who were listed on the general election 

ballot could choose to limit their campaign expenditures to specified amounts. A contributor to these 

candidates could then receive up to a $50 refund from 

the state. If one candidate agreed to observe the limit 

but a major party opponent did not, neither candidate 

was subject to the spending limit, but the first candidate was entitled to a public funding grant from the 

state. 

The FEC had addressed the Minnesota preemption 

question in Advisory Opinion (AO) 1991-22, requested by three members of the Minnesota delegation to the U.S. Congress. In that opinion, the Commission concluded that the MCCR sought to regulate 

an area under the sole authority of federal law and· 

was therefore preempted. The requesters, seeking 

the same ruling from the courts, filed suit against the 

state officials responsible for enforcing the Campaign 

Reform Act. 

On June 11, 1992, the U.S. District Court for the 

District of Minnesota held that the MCCR was preempted in its entirety based on the FEC's interpretation of the federal preemption provision. The court 

permanently enjoined Minnesota from implementing 

or enforcing the MCCR. 

In its decision of June 17, 1993, the court of appeals also found the FEC preemption regulation to be 

controlling: "We find this duly authorized regulation is 

a further express preemption of the Campaign Reform 

Act." 

Washington State . 

A number of FEC advisory opinions issued during 

1993 addressed preemption questions as well. In AO 

1992-43, the Commission found that the Act preempted the fundraising restrictions of a Washington 

State law as it related to fundraising by state legislators to retire campaign debts remaining from a federal 

campaign. State Senator Tim Erwin could therefore 

raise .funds to retire his 1992 federal campaign debt 

without regard to the state law's time constraints on 

conducting such activity, 

Michigan 

In AO 1993-9, the Commission found that the Michigan Republican State Committee could accept corporate donations to its building fund for a party headquarters despite a Michigan State law that would have 

prohibited the use. of corporate funds for an office 

used even occasionally for campaign purposes. The 

state law is superseded·by federal law, which clearly 

permits such donations. Under the Act and FEC regulations, donations specifically designated to pay for 

the construction or purchase of a national or state 

party office facility are exempt from the prohibitions 

and limits on contributions provided the facility is not 

acquired for the purpose of influencing any particular 

federal. election. 2 U.S.C. §431 (8)(B)(viii); 11 CFR 

100.7(b)(12), 100.8(b)(13) and 114.1(a)(2)(\x). 

Tennessee 

The Act also supersedes Tennessee State law with 

respect to the state law's restrictions on certain contributions by committees that have incorporated for 
29 

liability purposes only, according to AO 1993-8. Congressman John J. Duncan, Jr. (TN, 2nd CD) proposed transferring funds remaining in his old committee to his new federal reelection committee, incorporated under 11 CFR 114.12(a). That provision permits a political committee to incorporate for liability 

purposes only and not be treated as a corporation 

subject to the Act's prohibitions. The new committee 

planned to use the excess funds to make contributions to party committees and candidates. Tennessee 

law, however, prohibits corporations-including those 

which incorporate for liability purposes only-from 

supporting any candidate or political party. Because 

the Act supersedes any provision of State law with 

respect to election to federal office, federal law 

clearly supersedes Tennessee law with respect to 

contributions to federal candidates. Because the 

federal provisions explicitly permit the transfer of 

excess funds to party committees, regardless of 

whether they are federal committees under the Act, 

federal law supersedes Tennessee law in this respect as well. However, the Act does not supersede 

state law concerning contributions to nonfederal candidates. 

Massachusetts 

One 1993 advisory opinion involved preemption and 

the Commission's allocation regulations as well. 

Commission regulations require committees that 

maintain separate federal and nonfederal bank accounts to allocate certain expenses between those 

accounts, according to specific formulas. 11 CFR 

106.5 and 106.6. In AO 1993-17, the Commission 

determined that these rules preempted a Massachusetts requirement that party committees pay a prescribed portion of shared federal/nonfederal expenses with funds raised under state law. As a result, 

the Massachusetts Democratic Party was permitted 

to use federal funds to pay up to 1 00 percent of its 

allocable administrative expenses. To the extent that 

the state provision denied the state party committee 

that flexibility, the Commission preempted it. 

Ohio 

In AO 1993-21, the Commission found that the Act 

preempted an Ohio statute that effectively prohibited 

the transfer of tax-checkoff funds from a "separate 

segregated account" to an allocation account, as 

prescribed in the FEC's allocation regulations. 

Under Ohio law, each political party received a 

share of the proceeds from the state's income tax 

checkoff. The parties were required to deposit the 

checkoff funds into a "separate segregated account," 

and were prohibited from commingling them with any 

other party funds. Checkoff funds could be used only 

to support party activities, including the party's administrative and get-out-the-vote expenses. The 

funds could not be used to further the election or 

defeat of any particular candidate or to pay a party 

debt incurred as the result of an election. 

Expenditures for administrative and get-out-thevote activities and other, similar expenditures permissible under state law are subject to the FEC's allocation rules. Those rules require committees that maintain separate federal and nonfederal accounts to 

allocate certain shared federal/nonfederal expenses 

according to specific formulas. 11 CFR 106.5 and 

106.6. Federal law preempts the Ohio provision that 

purports to bar the transfer of tax-checkoff funds from 

the party's "separate segregated account'' to its allocation account. However, nothing in the Act or FEC 

rules prevents the state from auditing the use of state 

revenues to ensure compliance with state laws. 

Rhode Island 

In AO 1993-14, the Commission found that the Act 

supersedes a state law that would impose registration, reporting and contribution requirements on the 

federal account of the Rhode Island Democratic 

State Committee and on federal political committees 

making contributions to the federal account. The 

party committee's federal account was a federally 

registered committee used solely for federal election 

activity. (The party also had a nonfederal account 

registered with the state.) In the absence of nonfederal activity by the federal account, the imposition of 
30 

the state's registration, reporting and compulsory 

contributions requirements on the federal account 

would encroach upon the Act's authority in those 

areas. The state requirements, therefore, would not 

apply to the federal account. Nor would they apply to 

a political committee solely because of its contribution to the federal account. 

Candidate Issues 

New Rules on Transfers from Nonfederal 

Campaigns 

During 1993, the Commission also considered a 

number of issues involving funds used by candidates 

for federal office. 

Under a regulation that became effective on July 

1 , the Commission prohibited transfers of funds and 

assets from a candidate's nonfederal campaign to his 

or her federal campaign (11 CFR 110.3(d)).(For more 

information about previous Commission consideration of this issue, see Annual Report 1992, p. 31.) 

If a federal campaign committee had received 

transfers of funds from the candidate's nonfederal 

committee, it was required to identify any nonfederal 

funds remaining in its account as of July 1 and to 

remove them by July 31. The Commission originally 

intended to set April 1 as the effective date for the 

new regulation, but to avoid changing rules in the 

midst of special elections, it postponed the date to 

July 1. 

Rulemaking on Personal Use of Campaign Funds 

During the year the Commission used the regulatory 

process to address another issue that directly affected federal candidate committees: the Act's prohibition on the personal use of excess campaign funds. 

The prohibition on the use of excess campaign 

funds was first set out in the 1979 amendments to 

the Act at 2 U.S.C. §439a. That provision stated that 

"no such amounts may be converted by any person 

to any personal use .... " 

However, the Act also contained a "grandfather 

clause" that exempted individuals who were Members of Congress on January 8, 1980, from the prohibition on personal use. 

In its consideration of specific situations concerning 

the use of campaign funds over the years, the Commission has tried to balance the desire of Congress to 

prohibit the personal use of campaign funds against 

the need to give candidates and their campaigns the 

discretion to conduct their campaigns as they see fit. 

However, until recently, most advisory opinions about 

the use of campaign funds involved "grandfathered" 

Members. Consequently, the Commission was not 

often called upon to rule on the personal use of 

funds. 

Then, in 1989, Congress repealed the "grandfather 

clause" under the Ethics Reform Act of 1989, and 

Members serving in the 1 03rd Congress or later Congresses were subject to the "personal use" prohibition. 

Under the Commission's proposed rule, published 

on August 30,2 a federal campaign committee would 

be prohibited from using campaign funds to pay a 

salary to the candidate, to pay the candidate's ordinary household expenses, or to pay any personal use 

expense-an expense that would exist regardless of 

the campaign, and that would not be related to officeholder duties. 3 

Use of Funds by Former Member 

Proposed uses of campaign funds were at issue in 

several advisory opinion requests received by the 

Commission in 1993. 

In AO 1993-6, issued to Citizens for Congressman 

Panetta, the Commission resolved several questions 

about the personal use of excess campaign funds by 

a former Member of Congress who was no longer 

"grandfathered." Although formerly eligible to convert 

excess campaign funds to personal use because he 

was a Member of Congress on January 8, 1980, Leon 

Panetta lost that status when he was sworn in as a 

Member of the 1 03d Congress on January 5, 1993. 

The Commission found that the committee could 

not use excess campaign funds for Mr. Panetta's 

personal use, but that it could use them to pay hotel 

expenses related to closing down his Congressional 

2 58 FR 45463 

3 A public hearing on these proposed rules was held on 

January 12, 1994. 
31 

office; to pay his travel expenses for certain political 

party appearances; and to make charitable donations. However, the committee could not cover travel 

expenses for days spent on personal activity or fees 

for Mr. Panetta's membership in tax-exempt organizations, as these would constitute a prohibited personal use of excess funds. The committee could also 

use campaign funds for operating expenditures to 

wind down its activities. 

Mr. Panetta resigned his Congressional seat on 

January 21 and was sworn in to his new position, 

Director of the Office of Management and Budget 

(OMB), on January 22. The law permits the use of 

excess campaign funds to defray expenses in connection with the individual's duties as a federal office· 

holder. The committee could therefore pay hotel expenses related to Mr. Panetta's Congressional duties. Because the term ''federal office" applies only to 

elected federal offices, however, the committee could 

not pay hotel expenses related to Mr. Panetta's duties as OMB Director, an appointed position. Payment of those expenses would constitute personal 

use of excess campaign funds. 

Use of Funds for Campaign Storage 

In another "personal use" matter, AO 1993-1, Congressman Dan Burton proposed using personal funds 

to build a storage shed on his property and then renting the unit to his campaign committee for storage of 

campaign materials. He planned to charge rent 

equivalent to that charged by commercial storage 

firms in the area. The Commission had previously 

concluded that this type of arrangement was permissible. Quoting AO 1988-13, the Commission cautioned that "[i]f such rental payments by a candidate's 

campaign committee represent more than the usual 

and normal charge for the use of the facilities in 

question, the amount in excess of the usual and normal charge would be subject to the personal use ban 

of 2 U.S.C. §439a." 

Other Lawful Purposes 

In two other AOs, the Commission found that proposed uses of campaign funds did not constitute 

personal use of the funds and were therefore permissible. In AO 1993-13, the Commission said that the 

Fowler for Senate Committee, the 1992 campaign 

committee of former Senator Wyche Fowler, could 

donate its remaining funds to establish a scholarship 

program for minority students at Oglethorpe University. 

In AO 1993-10, Antonio J. Colorado, a 1992 candidate for Resident Commissioner of Puerto Rico, proposed using excess funds for three activities: conducting a public opinion survey in preparation for a 

1994 campaign for governor; transferring funds to a 

committee formed to support his election as president of the Popular Democratic Party; and transferring funds to a nonprofit corporation he planned to 

form but from which he would not benefit financially . 

The Commission found that such activities were permissible under the "any other lawful purpose" clause 

of §439a, but noted that any Puerto Rican law applicable to the proposed activities would not be preempted by the Act. 

Coordinated Party Expenditures 

FEC v. Colorado Republican Federal Campaign 

Committee 

On August 31, 1993, a Colorado district court ruled 

that a communication by a party committee is subject 

to the coordinated party expenditure limits under 

2 U.S.C. §441a(d) only if it "expressly advocates" the 

election or defeat of a candidate. The court defined 

"express advocacy" as a direct plea for specific action, using words such as "elect," "support," "defeaf' 

or "reject." Based on these conclusions, the U.S. 

District Court for the District of Colorado granted 

summary judgment to the Colorado Republican Federal Campaign Committee. The court held that the 

Committee's $15,000 expenditure for a radio ad, 

because it did not contain "express advocacy," was 

not subject to the coordinated party expenditure limit. 

The FEC had claimed that the advertisement had 

caused the Committee to exceed its party expenditure limit in a Senate race. 

In April 1986-four months before the Democratic 

primary and seven months before the November 

general election-the Committee ran a radio ad in 
32 

response to a series of television ads sponsored by 

the Senate campaign committee of then-Congressman Wirth, a Democrat. The Committee's ad contrasted Mr. Wirth's campaign statements with his 

voting record, concluding with: "Tim Wirth has a right 

to run for the Senate, but he doesn't have a right to 

change the facts." The Committee reported the 

$15,000 payment as an operating expense for "voter 

information to Colorado voters-advertising." 

Under the Act, the Committee could spend up to a 

specified limit on coordinated party expenditures 

made "in connection with the general election campaign" of the Republican Party candidate running in 

the U.S. Senate race in Colorado. 2 U.S.C. 

§441 a(d)(3). 

The court concluded that the Committee's expenditure would be subject to the §441a(d) limits only if it 

were made "in connection with" the general election 

campaign of the Senate nominee. The court looked 

to the Supreme Court's interpretation of "in connection with" in Federal Election Commission v. Massachusetts Citizens for Life, Inc. (MCFL), a case which 

involved the prohibition on corporate and labor contributions and expenditures under 2 U.S.C. §441 b. In 

MCFL, the Supreme Court held that "an expenditure 

must constitute 'express advocacy' in order to be 

subject to the prohibition of §441b." MCFL, 479 U.S. 

238, 249 (1986). The district court found that a canon 

of statutory construction-namely, that identical 

words used in different parts of the same statue have 

the same meaning-applied to sections 441 b and 

441a(d) because they had a similar purpose, to regulate expenditures by organizations. The court therefore concluded: '"[E]xpress advocacy' is required in 

order for a coordinated expenditure to be 'in connection with' the general election campaign of a candidate for federal office under section 441 a(d)(3)." 

The court went on to consider whether the committee's radio ad constituted "express advocacy." The 

court pointed out that the Supreme Court, in Buckley 

v. Valeo, defined "express advocacy" as "express 

words of advocacy of election or defeat, such as 

'vote for,' 'elect,' 'support,' 'cast your ballot for,' 

'Smith for Congress,' 'vote against,' 'defeat,' or 'reject.'" Buckley, 424 U.S. 1, 46 n.52 (1976). Using this 

language as a bright-line test for express advocacy, 

the court said that "[t]he Advertisement does not contain any words which expressly advocate action. At 

best, as plaintiff suggests, the Advertisement contains 

an indirect plea for action." 

The FEC never explicitly addressed the issue of 

whether the ad constituted "express advocacy." Instead, it was the agency's position that section 

441a(d) was applicable because the ad contained an 

electioneering message against Mr. Wirth in favor of 

the eventual Republican nominee based on the surrounding circumstances: The ad responded to Mr. 

Wirth's TV ads; he was identified as a Senate candidate; and the disclaimer identified the Republican 

Committee as the ad's sponsor. The court, however, 

declined to consider the surrounding circumstances, 

holding that the Buckley Court created a bright-line 

test for express advocacy. 

In October 1993, both the Commission and the 

Colorado party Committee appealed the district 

court's decision to the U.S. Court of Appeals for the 

Tenth Circuit. 

Texas Special Election 

In AO 1993-2, the Commission considered how the 

coordinated party expenditure limits would apply with 

respect to the Texas special election to fill the Senate 

seat vacated by the resignation of Lloyd Bentsen to 

become Secretary of the Treasury. A special general 

election was scheduled May 1; under Texas law, a 

special runoff election would be scheduled later if no 

candidate in the May 1 election won a majority of the 

vote. The Democratic Senatorial Campaign Committee (DSCC), planning to make coordinated party 

expenditures for the party's candidate in the special 

election, requested an advisory opinion about how the 

§441a(d) limit would apply. 

The Commission said that, if a runoff were held, it 

would not be considered a separate election for purposes of the §441 a(d) limit. Therefore, the DSCC had 

a single §441 a( d) limit covering both the general and 

the runoff. However, the runoff election would be considered a separate election for purposes of the contribution limit. 
33 

New Multicandidate 

Committee Rules 

The Commission adopted new requirements for multicandidate committees to take effect January 1, 

1994. The rules were designed to make it easier to 

identify committees that have achieved multicandidate status. Multicandidate committees may contribute up to $5,000 to a candidate per election; other 

committees are subject to a $1 ,000 per election limit. 

(To qualify for rnulticandidate status, committees 

must receive contributions from at least 51 persons, 

be registered at least six months and contribute to at 

least five federal candidates. The last requirement 

does not apply to state party committees.) 

Under the new rules, committees that have qualified for multicandidate status must disclose that fact 

on each report (Form 3X) they file. Committees that 

have not disclosed their multicandidate status by 

January 1 , 1994, must also submit an FEC Form 1 M 

to demonstrate that they have met the multicandidate 

criteria, before they contribute more than $1 ,000 to a 

candidate per election. In addition, multicandidate 

committees must include written notice of their status 

with each contribution they make. 

Corporate/Labor Activity 

Under 2 U.S.C. §441 b, corporations, labor organizations and incorporated membership organizations 

are prohibited from making contributions or expenditures in connection with federal elections. The Act 

does, however, permit such organizations to participate in certain activities that are exempt from the 

definition of contribution and expenditure. For example, such an organization may establish a sepa~ 

rate segregated fund (SSF), often called a political 

action committee (or PAC). During 1993, the Commission addressed issues of interest to corporations 

and labor organizations both in advisory opinions and 

in the agency's regulations. 

Solicitable Class of Corporation 

Blue Cross of California (BCC) proposed to solicit 

contributions to its separate segregated fund (SSF) 

from three classes of employees. In AO 1993-16, the 

Commission concluded that only one of those 

classes-regional sales managers-could be solicited 

as "executive or administrative personnel" under 

11 CFR 114.5. 

Under that regulation, an SSF may solicit contributions, at any time, from its executiVe and administrative personnel, stockholders and the families of both 

groups.11 CFR 114.5(g). "Executive or administrative 

personnel" is defined as corporate employees who 

are paid on a salary basis and "have policymaking, 

managerial, professional, or supervisory responsibilities." 11 CFR 114.1(c). 

All three classes of employees that BCC planned to 

solicit-telemarketing representatives, lead 

telemarketing representatives and regional sales 

managers-were paid, in part, on a salary basis, but 

only the sales managers had sufficient supervisory 

responsibilities to qualify as "executive or administrative personnel." Unlike the other classes, the managers routinely monitored the quality of sales work, 

planned sales strategies and handled other "supervisory, administrative and professional responsibilities." 

By contrast, the two classes of telemarketing representatives focused primarily on sales. 

Corporate Plan to Encourage 

Volunteer Political Activity 

Southwestern Bell Corporation and its subsidiaries 

(SBC) proposed to undertake a program to encourage 

individuals to volunteer on behalf of candidates' campaigns. Under the program, SBC would ask all candidates running for a particular office how volunteers 

could best help with their campaigns, whom the volunteers should contact and when they would be 

needed. SBC would then disseminate this information 

in writing or through candidate information booths set 

up in company locations. SBC companies might also 

invite candidates on a nonpartisan basis to make 

appearances at company locations, at which time the 

company would provide the relevant volunteer information. 

In A01993-18, the Commission found that SBC 

could offer the program to employees and stockholders, but not to retirees or the general public. Federal 

election law prohibits corporations from making contri-
34 

butions or expenditures in connection with federal 

elections. Corporations may, however, make partisan 

and nonpartisan communications, subject to certain 

conditions (see 11 CFR 114.3 and 114.4). Since the 

communications contemplated by SBC did not favor 

one candidate over another, the rules governing nonpartisan communication applied. Those rules permit 

a corporation to communicate with its employees and 

stockholders, and with the general public, provided 

that the specific guidelines at 114.4 are followed. 

Permissible nonpartisan communications to the 

general public are limited to voter registration and 

get-out-the-vote information; distribution of official 

registration or voting materials; voting records not 

prepared for the purpose of influencing an election; 

voter guides; and nonpartisan candidate debates. 

SBC's program to gather and distribute volunteer 

information did not fall within these categories. 

Therefore, SBC could not offer the volunteer information to the general public. Because the regulations at 

11 CFR 114.4 do not distinguish between company 

retirees and the general public, retirees could not 

receive the volunteer information either. 

The Commission noted that prior consultation with 

and receipt of information from candidates' campaigns would compromise the ability of SBC's SSF to 

make independent expenditures on behalf of the 

campaigns. 

Regulations on Definition of Member 

In 1993, the Commission prescribed regulations 

specifying the voting rights and financial attachments 

necessary for persons to qualify as "members" of 

incorporated membership groups. Only qualified 

"members" are eligible to receive PAC solicitations 

and partisan communications from the incorporated 

membership group. See 2 U.S.C. §441 b(b)(2)(A) and 

(4)(C). The membership rules apply to both individual 

and corporate members. Although a membership 

group may not solicit contributions from its corporate 

members, it may direct partisan communications to 

individual representatives of corporate members, and 

a trade association may seek approval from its corporate members to solicit their solicitable class for 

contributions to the association's PAC. 11 CFR 

114.8(d) and (h). 

A membership association is defined as a labor 

organization or as an incorporated membership organization, trade association, cooperative or corporation without capital stock that expressly: 

• Provides for members in its articles and by-laws 

• Seeks members; and 

• Acknowledges the acceptance of membership, such 

as by sending membership cards to new members 

or including them on a membership newsletter list. 

11 CFR 1 00.8(b)(4)(iv)(A) and 114.1 (e)(1 ). 

In addition to satisfying the association's requirements for membership, a member must affirmatively 

accept the membership invitation and meet one of 

the following three conditions: 

1. Regular Dues/Limited Voting Rights. The member is required to pay dues of a specific amount on a 

regular basis (e.g., annually or monthly) and is entitled to vote directly for: (a) at least one member who 

has full participatory and voting rights on the highest 

governing body of the association, or (b) those who 

select at least one member of those on the highest 

governing body. 

2. Significant Financial Attachment. The member 

has some significant financial attachment to the 

membership association, such as a significant investment or ownership stake, but not merely the payment 

of dues. 

3. Full Voting Rights. The member is entitled to 

vote directly for all of those on the highest governing 

body of the membership association. 11 CFR 

100.8(b)(4)(iv)(B) and 114.1 (e)(2). 

For a summary of the new regulations, see Appendix?. 
35 

Native American Tribe as a Federal 

Contractor 

The Commission concluded, in AO 1993-12, that the 

Mississippi Band of the Choctaw Indians was a "federal contractor" because the tribe had entered into 

procurement contracts with agencies of the federal 

government. As a result, the tribe could not make 

contributions in connection with federal elections during the term of these agreements since contributions 

from federal contractors are prohibited. 2 U.S.C. 

§441c. 

The Choctaw Tribe entered into three types of 

agreements with the federal government: self-determination contracts, grant agreements and procurement 

contracts. Self-determination contracts with the U.S. 

Department of the Interior provide funds for the tribe 

to run programs that would otherwise be managed by 

Interior. Grant agreements provide federal funds (e.g., 

for vocational training} to the tribe because of its status as a government entity. The procurement contracts, by contrast, involve the sale of tribe-produced 

items to the federal government (e.g., to the Bureau 

of Indian Affairs}. 

Under Commission regulations, the ban on contributions by federal contractors applies to a person who 

enters into a contract with the government to provide 

property or services. 11 CFR 115.1. The tribe's selfdetermination contracts and grant agreements do not 

involve the provision of property or services to the 

government, but its procurement contracts do-making the tribe a federal contractor. 

As a federal contractor, the tribe may not make 

contributions in connection with federal elections. 

Moreover, the Act and Commission regulations do not 

permit federal contractors to segregate the proceeds 

of their contracts from other funds as a means of 

avoiding the prohibitions of §441 c. The Commission 

noted, however, that individual members of the tribe 

could make personal contributions or form a nonconnected political committee. 11 CFR 115.6 and AOs 

1985-23, 1984-1 0 and 1984-12. 

Procedural Matters 

Spannaus v. FEC 

On April 20, 1993, the U.S. Court of Appeals for the 

District of Columbia Circuit ruled on the 60-day deadline for requesting a court review of an FEC decision 

to dismiss an administrative complaint. No. 92-5191. 

The court held that the 60-day period begins on the 

date the FEC decides to dismiss the complaint, 

based on the wording of the statute. The appellant, 

Edward W. Spannaus (treasurer of the LaRouche 

Democratic Campaign}, had argued that the period 

should begin on the date the complainant receives 

notice of the dismissal. The ruling by the court of 

appeals affirmed the district court's dismissal of the 

suit. No. 91-0681. 

Under the Act, a petition for judicial review must 

be filed "within 60 days after the date of the dismissal" of the complaint. 2 U.S.C. §437g(a}(8}(B}. 

The court of appeals said that, in accordance with a 

Supreme Court decision on filing deadlines, the 

statutory language must be read literally. Therefore, 

based on the "date of dismissal" of the complaint, the 

court of appeals found that Mr. Spannaus filed his 

petition for review after the 60-day deadline. 

(The Commission dismissed Mr. Spannaus's complaint on January 9, 1991. The notice of dismissal 

arrived at his post office box on January 28 and was 

claimed on February 2. He filed his petition for review 

with the district court on April2, 1992.} 

Mr. Spannaus said that he had relied on a district 

court opinion holding that the 60-day review period 

begins "when the complainant actually receives notice of the dismissal." Common Cause v. Federal 

Election Commission, 630 F. Supp. 508, 512 (D.D.C. 

1985}. The court of appeals, however, rejected that 

holding. Commenting on the appellant's reliance on 

Common Cause, the court stated that it "[could not] 

extend the filing deadline for Spannaus simply because he relied on an unreviewed and, we now hold, 

incorrect district court decision." 
36 

Mr. Spannaus alternatively argued that he should 

be granted a dispensation from the 60-day time period 

in light of his late receipt of the FEC's notice of dismissal. The court refused the request, noting that Mr. 

Spannaus "was less than fully diligent" in filing his 

review petition. The court pointed out that the FEC's 

notification letter "conspicuously stated the dismissal 

date and referred Spannaus to the appropriate review 

provision." 

FEC v. Political Contributions Data, Inc. (PCD) 

Reversing a district court decision, the U.S. Court of 

Appeals for the Second Circuit, on June 17, 1993, 

found that the FEC was liable for payment of PCD's 

attorney's fees because the agency's position on the 

"sale or use" restriction was not "substantially justified." 955 F.2d 383. (The U.S. District Court for the 

Southern District of New York had previously said that 

the FEC was "substantially justified" in bringing suit 

against PCD and that the FEC's position had a "reasonable basis both in law and fact." 807 F. Supp. 

311.) 

The appeals court instructed the district court to 

determine the appropriate award of fees and expenses. The FEC asked for a rehearing or a rehearing 

en bane, but the court of appeals denied the request. 

The Commission has asked the Supreme Court to 

review the appeals court's decision.4 

For more information about this case, see Annual 

Report 1992, p. 33. 

Khachaturian v. FEC 

In Khachaturian v. FEC, the court of appeals clarified 

the meaning of 2 U.S.C. §437h, the provision that 

allows plaintiffs to challenge the constitutionality of the 

election law. Section 437h provides that the district 

court "shall certify all questions of constitutionality" of 

the Act to the U.S. court of appeals. 

Mr. Khachaturian, who was an independent candidate for the U.S. Senate in Louisiana's 1992 open 

primary, filed suit shortly before the election. He contended that the $1,000 limit on contributions from 

individuals discriminated against his candidacy because it prevented him from raising sufficient funds to 

wage a competitive campaign. The district court certified his constitutional questions to the U.S. Court of 

Appeals for the Fifth Circuit without conducting any 

preliminary proceedings. 

The court of appeals, however, remanded the 

case to the lower court with instructions to determine 

whether certification was merited. 

On May 17, 1993, the U.S. District Court for the Eastern District of Louisiana dismissed the case, ruling 

that Mr. Khachaturian had failed to raise a substantial 

constitutional challenge to the $1 ,000 contribution 

limit.5 

4 The Commission's petition for a writ of certiorari was 

denied on February 22, 1994. 

5 Mr. Khachaturian then appealed the dismissal, but on 

October 13, the U.S. Court of Appeals for the Fifth Circuit 

dismissed the case at Mr. Khachaturian's request. No. 93-

3365. 
37 Chapter Five 

Legislative 

Recommendations 

Public Financing 

State Expenditure Limits for Publicly Financed 

Presidential Primary Campaigns 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends 

that the state-by-state limitations on expenditures for 

publicly financed Presidential primary candidates be 

eliminated. 

Explanation: The Commission has now administered 

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

limitations could 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. · 

If the limitations were removed, the level of disbursements in these states would obviously increase. With an increasing number of primaries vying for a campaign's limited resources, however, it 

would not be possible to spend very large amounts 

in these early primaries and still have adequate 

funds available for the later primaries. Thus, the 

overall national limit would serve as a constraint on 

state spending, even in the early primaries. At the 

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

Our experience has also shown that the limitations have been only partially successful in limiting 

expenditures in the early primary states. The use of 

the fundraising limitation, the compliance cost exemption, the volunteer service provisions, the unreimbursed personal travel expense provisions, the 

use of a personal residence in volunteer activity 

exemption, and a comple)( series of allocation 

schemes have developed into an art which, when 

skillfully practiced, can partially circumvent the state 

limitations. 

In addition, experience has shown that one of the 

Congressional concerns motivating the adoption of 

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

d1scouragmg candidates from relying heavily on the 

outcome of big state primaries. The concern was that 

candidates might wish to spend heavily in such states 

as a way of securing their party's nomination. In fact, 

however, under the public funding system, this has 

not p~o~en to be an issue. Rather than spending 

heav1ly 1n large states, candidates have spent large 

amounts in the early primaries, for example, in Iowa 

and New Hampshire. 

Finally, the allocation of expenditures to the states 

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

task for the Commission. For all these reasons, the 

Commission decided to revise its state allocation 

regulati~ns for the 1992 Presidential election. Many of 

the reqwrements, such as those requiring distinctions 

between fundraising and other types of expenditures 

were eliminated. Since the Commission has not yet ' 

comple~ed its administration of this Presidential cycle, 

the full 1mpact of these changes is not yet clear. However, the rules could not undo the basic requirement 

to demonstrate the amount of expenditures relating to 

a particular state. Given our experience to date we 

believe that this change to the Act would still b~ of 

substantial benefit to all parties concerned. 

Compliance Fund 

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

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

Recommendation: The Commission recommends that 

Congress clarify what funds Presidential Election 

Campaign Fund recipients may utilize to meet the 

accounting and compliance requirements imposed 

u~on them by the Federal Election Campaign Act. If 

pnvate funds are not to be used, Congress may wish 

to either raise the spending limits to accommodate 

such costs or establish a separate fund of the Treasury to be used for this purpose. 

Explanation: Through regulation, the Commission has 

provided for the establishment by Presidential com-
38 

mittees of a General Election Legal and Accounting 

Compliance Fund (GELAC fund) consisting of private 

contributions otherwise within the limits acceptable for 

any other Federal election. The GELAC funds, which 

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

may be used to pay for costs related to compliance 

with the campaign laws. Determining which costs may 

be paid is sometimes difficult and complex. Contributions to the GELAC fund are an exception to the general rule that publicly funded Presidential general 

election campaigns may not solicit or accept private 

contributions. Congress should clarify whether 

GELAC funds are appropriate and, if not, specify 

whether additional federal grants are to be used. If 

GELAC funds are appropriate, Congress should provide guidelines indicating which compliance costs are 

payable from such funds. 

Supplemental Funding for Publicly Funded 

Candidates (revised 1994) 

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 ari 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. 

Applicability of Title VI to Recipients of Payments 

from the Presidential Election Campaign Fund 

(revised 1994) 

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 

of procedural and substantive grounds, including that 

Title VI does not apply to the political parties' apportionment and selection of delegates to their conventions. However, the court of appeals 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' 
39 

campaigns. The recommended clarification would 

help forestall such a possibility. 

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

financing provision cited above: "The acceptance of 

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

Civil Rights Act of 1964, as amended." 

Deposit of Repayments 

Section: 26 U.S.C. §9007(d) 

Recommendation: 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. 

Enforcement of Nonwillful 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 

to carry out its civil enforcement of the public funding 

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

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

Similarly, the Commission has used the candidate 

agreement and certification processes provided in 26 

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

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

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

provisions. 

Eligibility Requirements for Public Financing 

(revised 1994) 

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 a campaign that was publicly financed, 

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

willfully disregarded the statute or regulations. In addi-
40 

tion, Congress should make it clear that eligibility to 

serve in the office sought is a prerequisite for eligibility 

for public funding. See LaRouche v. FEC, 992 F.2d 

1263 (D.C. Cir. 1993) cert. denied, 114 S. Ct. 550 

(1993). 

Eligibility Threshold for Public Financing 

(revised 1994) 

Section: 26 U.S.C. §§9003 and 9033 

Recommendation: The Commission recommends that 

Congress raise the eligibility threshold for publicly 

funded Presidential 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 adjustment to the threshold requirement would ensure 

that funds continue to be given only to candidates 

who demonstrate broad national support. To reach 

this higher threshold, the Commission recommends 

increasing the number of states in which thecandidate 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. 

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

Fundraising Limitation for Publicly Financed 

Presidential Primary Campaigns 

Section: 2 U.S.C. §§431(9)(B)(vi) and 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 $10 million (plus COLA 1) limit for 

campaign expenditures and a $2 million (plus COLA) 

limit for fundraising (20 percent of overall limit), each 

candidate would have one $12 million (plus COLA) 

limit for all campaign expenditures. 

Explanation: Campaigns that have sufficient funds to 

spend up to the overall limit usually allocate some of 

their expenditures to the fundraising category. These 

campaigns come close to spending the maximum 

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

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

do not spend up to the overall expenditure limit, the 

separate fundraising limit is meaningless. Many 

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

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

the state limitations are eliminated or appropriately 

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

recommendation, however, are substantial. They 

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

and a reduction in the Commission's auditing task. 

For example, the Commission would no longer have 

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

adjustment (COLA), which the Department of Labor calculates annually. 
41 

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

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

days of the primary held within the state where the 

expenditure was made. 

Registration and Reporting 

Consolidated Reporting of Events (1994) 

Section: 2 U.S.C. §434(b) 

Recommendation: The Commission recommends that 

Congress consider strengthening disclosure by requiring Presidential committees to identify all receipts 

from a political fundraising event that grosses over 

$50,000 in itemizable receipts. Congress may wish to 

require committees to file an event schedule, listing all 

event-related contributions that meet the itemization 

threshold. 

Explanation: Under present law, it is difficult to see 

the contribution patterns of major fundraising events. 

More detailed reporting of major fundraising events 

would give the public an improved picture of how 

Presidential committees raise campaign funds. 

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 

wi.ll 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 d~ys 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 (revised 1994) 

Section: 2 U.S.C. §441 a( 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 contribu- . 

tions 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 
42 

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

Campaign-Cycle Reporting 

Section: 2 U.S.C. §434 

Recommendation: 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, a reporter or 

researcher must compile the total figures from several 

year-end reports in order to determine the true costs 

of a committee. In the case of Senate campaigns, 

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

would be particularly helpful. 

Monthly Reporting for Congressional Candidates 

Section: 2 U.S.C. §434(a}(2) 

Recommendation: The 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 less 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 disclosure, particularly in an election year. In light of the 

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

fifteenth of the month would not be unduly burdensome. 

Require Monthly Filing for Certain Multicandidate 

Committees 

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 

$1 00,000 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. 

Presidential candidates who anticipate receiving 

contributions or making expenditures aggregating 

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

requirement to multicandidate committees which have 

raised or spent; or which anticipate raising or spend-
43 

ing, 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 Last-Minute Coordinated Party 

Expenditures by Party Committees (1994) 

Section: 2 U.S.C. §§434 and 441a(d) 

Recommendation: The Commission recommends that 

Congress consider requiring state and national party 

committees to file 48-hour notices when they make 

coordinated expenditures shortly before an election. 

Explanation: Party committees must file pre-general 

election reports when they make contributions or 

expendiitures supporting general election candidates 

prior to the 19th day before the election. Candidate 

committees must file 48-hour notices when they receive last-minute contributions prior to the election. 

Coordinated expenditures made after the close of 

books of the pre-election report, however, are not 

disclosed until after the election. In order to disclose 

this important financial activity, the Commission recommends that Congress consider requiring state and 

national party committees to file 48-hour notices when 

they make coordinated expenditures during the period 

beginning with the close of books of the pre-election 

report and continuing through 48 hours before the 

election. The Commission shall receive this notice 

within 48 hours of the committee making the expenditure. 

Facsimile Machines 

Section: 2 U.S.C. §§434(b)(6)(B)(iii) and 434(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 telephoni-
44 

cally transmitted facsimiles (''fax" machines). This 

could be accomplished by allowing the committee to 

fax a copy of the schedule disclosing the independent 

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

such a filing method would facilitate timely disclosure 

and simplify the process for the filer. 

Waiver Authority 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congressgiye 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 1992 October Monthly report was due two days before the 12-

Day Pre-General Election Report; however the· PreGeneral Election Report had to be mailed first. A 

waiver authority would have enabled the Commission 

to eliminate the requirement to file the monthly report, 

as long as the committee included the activity in the 

Pre-General Election Report and filed the report on 

time. The same disclosure would have been available 

before the election, but the committee would have only 

had to file one report. 

In other situations, disclosure would be served 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 

such a situation, the Commission should have the 

authority to adjust the filing requirements to allow for a 

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

report), which would provide more relevant disclosure 

to the public. 

Granting the Commission the authority to waive 

reports or adjust the reporting requirements would 

reduce needlessly burdensome disclosure demands. 

Reporting and Recordkeeping of Payments to 

Persons Providing Goods and Services 

Section: 2 U.S.C. §§432(c), 434(b)(S)(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 
45 

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), 1]5742 (Dec. 22, 1983) 

(Presidential candidate's committee not required to 

disclose the names, addresses, dates or amounts of 

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

1 Fed. Election Camp. Fin. Guide (CCH), 1]5756 {Apr. 

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

travel and subsistence, not the payments made by the 

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

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

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

from other advances or reimbursements to such staff 

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

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

where the Commission is responsible for monitoring 

whether candidate disbursements are for qualified 

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

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

Incomplete or False Contributor Information 

(revised 1994) 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congress consider amending the Act to address the 

recurring problem of committees' inability to provide 

full disclosure about their contributors. 

Explanation: Concern has been expressed by the 

Commission, the public, and the press about the failure of candidates and political committees to report 

the addresses and occupations of many of their contributors. While the Commission revised its regulations in 1994 to further ensure that committees make 

their "best efforts" to obtain and report contributor 

information, Congress may want to strengthen the law 

further. 

Excluding Political Committees from Protection of 

the Bankruptcy Code (revised 1994) 

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. §101 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 poten-
46 

tial jurisdiction of the bankruptcy courts over such 

matters could undermine the Commission's ability to 

enforce it. Accordingly, Congress may want to clarify 

the distribution of authority between the Commission 

and the bankruptcy courts in this area. In addition, 

Congress should specify whether political committees 

are entitled to seek Chapter 11 reorganization under 

the Bankruptcy Code. 

Use of Campaign Funds 

Disposition of Excess Campaign Funds 

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 

$100,000 per year. 

Explanation: Under current law, a candidate may 

transfer unlimited amounts of excess campaign funds 

to a political party. This makes it possible for a candidate to contribute unlimited personal funds to his 

campaign, declare these funds excess and transfer 

them to a political party, thus avoiding the limit on 

individual contributions to political parties. 

Contributions and Expenditures 

Contributions and Expenditures to Influence 

Federal and Nonfederal Elections 

Section: 2 U.S.C. §§441 and 434 

Recommendation: The Commission recommends 

that Congress consider whether new legislation is 

needed to regulate the use of "soft money" in federal 

elections. 

Explanation: The law requires that all funds spent to 

influence federal elections come from sources that 

are permissible under the limitations and prohibitions 

of the Act. Problems arise with the application of this 

provision to committees that engage in activities that 

support both federal and nonfederal candidates. The 

Commission attempted to deal with this problem by 

promulgating regulations that required such committees to allocate disbursements between federal and 

nonfederal election activity. The focus of these regulations was on how the funds were spent. The public, 

however, has been equally concerned about the 

source of money that directly or indirectly influences 

federal politics. Much discussion has centered on the 

perception that soft money is being used to gain access to federal candidates. ("Soft money" is generally 

understood to mean funds that do not comply with the 

federal prohibitions and limits on contributions.) Even 

if soft money is technically used to pay for the nonfederal portion of shared activities (federal and nonfederal), the public may perceive that the contributors of 

soft money have undue influence on federal candidates and federally elected officials. In light of this 

public concern, Congress should consider amending 

the law in this area as it affects the raising of soft 

money. Such changes could include any or all of the 

following: (1) more disclosure of nonfederal account 

receipts (as well as "building fund" proceeds exempted under 2 U.S.C. §431 (8)(B)(viii)); (2) limits on 

nonfederal account donations coupled with tighter 

affiliation rules regarding party committees; (3) prohibiting nonfederal accounts for certain types of committees; (4) prohibiting the use of a federal candidate's 

name or appearance to raise soft money; and (5) 

confining soft money fund raising to nonfederal election years. 

In addition, further restrictions on the spending of 

soft money should be considered, such as: (1) requiring all party committees to disclose all nonfederal 

activity that is not exclusively related to nonfederal 

candidate support and expressly preempting duplicative state reporting requirements; (2) requiring that all 

party activity which is not exclusively on behalf of 

nonfederal candidates be paid for with federally permissible funds; and (3) limiting the use of soft money 

to nonfederal election year activity. 

Broader Prohibition Against Force and Reprisals 

Section: 2 U.S.C. §441 b(b)(3)(A) 

Recommendation: The Commission recommends that 

Congress revise the FECA to make it unlawful for a 

corporation, labor organization or separate segre-
47 

gated 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, Congress should include language to cover situations where the funds are solicited on behalf of and giv~n directly to candidates. 

Use of Free Air Time 

Section:2 U.S.C. §§431(9)(B)(i) and 441b 

Recommendation: The Commission recommends that 

Congress revise the FECA to indicate whether an 

incorporated broadcaster may donate free air time to 

a candidate or political committee and, if so, under 

what conditions and restrictions. 

Explanation: The Federal Election Campaign Act prohibits a corporation from providing "anything of value" 

to a candidate without full payment. However, 

§§312(a)(7) and 315(b) of the Communications Act 

require that broadcast stations provide "reasonable 

access" to federal candidates, and prohibit stations 

from charging candidates more than the "lowest unit 

charge" for the same class and amount of time in the 

same time period. Under FCC rules, broadcasters 

may satisfy their "reasonable access" obligations by 

providing free air time to candidates, although the 

Federal Communications Commission does not require them to provide free time. Therefore, the question has been raised as to whether the donation of 

free air time by an incorporated broadcaster is a prohibited corporate contribution under the FECA, or 

whether such a donation comes within the exemption 

for news stories, commentaries and editorials. The 

Commission has twice considered and been unable to 

resolve this issue. Hence, Congress may want to 

consider offering guidance on whether donations of 

free air time are permissible under the FECA and, if 

so, under what conditions and restrictions. 

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 

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 (revised 1994) 

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. 
48 

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 §441a(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. 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 441a(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 

conduct or be involved in an activity in order for the 

activity to qualify as an exempt party activity. 

Explanation: Under the Act, certain activities conducted by state and local party committees on behalf 

of the party's candidates are exempt from the contribution limitations if they meet specific conditions. 

Among these conditions is the requirement that the 

activity be conducted by volunteers. However, the 

actual level of volunteer involvement in these activities has varied substantially. 

Congress may want to clarify the extent to which 

volunteers must be involved in an activity in order for 

that activity to qualify as an exempt activity. For example, if volunteers are assisting with a mailing, must 

they be the ones to stuff the envelopes and sort the 

mail by zip code or can a commercial vendor perform 

that service? Is it sufficient involvement if the volunteers just stamp the envelopes or drop the bags at the 

post office? 

Colleges and Universities 

Section: 2 U.S.C. §§441a and 441b 

Recommendation: The Commission recommends that 

Congress consider amending the FECA to spell out 

the circumstances in which colleges, universities and 

other educational institutions may engage in political 

activities such as sponsoring candidate appearances 

and candidate debates, and conducting voter registration drives. 

Explanation: Under 2 U.S.C. §441 b, incorporated 

private educational institutions, like other corpora-
49 

tions, are prohibited from making contributions in connection with any Federal election. Similarly, stateoperated educational institutions, if unincorporated, 

are "persons" and thus subject to the contribution 

limitations of 2 U.S.C. §441a. Within the existing 

framework of the FECA, the Commission is currently 

considering the conditions under which an educational institution may sponsor a candidate appearance 

or candidate debate or conduct a voter drive, and the 

conditions under which such activities will constitute 

in-kind contributions. However, Congress may wish to 

consider whether the important educational role these 

institutions play in the democratic process warrants 

treating them differently from the way other corporations are treated with respect to these or other forms 

of political activities. The Commission notes that safeguards against certain political activities already exist. 

For example, under the Internal Revenue Code, private schools that qualify as nonprofit corporations 

under §501 (c)(3} of the Internal Revenue Code may 

not participate or intervene in political campaigns. 

Similarly, state-operated schools may be required to 

ensure that state funds are not used for political purposes. 

Direction or Control 

Section: 2 U.S.C. §441 a(a)(B} 

Recommendation: The Commission recommends that 

Congress consider whether the Act's provisions regarding earmarked contributions should incorporate 

the concept in the legislative history that contributions 

count toward a conduit's or intermediary's contribution 

limits when the conduit or intermediary exercises direction or control over them. If Congress does determine that such contributions count toward a conduit's 

or intermediary's contribution limit, then the Commission recommends that Congress also include a definition of what constitutes direction or control. 

Explanation: Under 2 U.S.C. §441 a(a}(B}, contributions made by any person which are earmarked 

through a conduit or intermediary to a particular candidate are treated as contributions from that person to 

the candidate. The Commission has seen an increase 

in conduit activity in recent years. 

Congress has indicated that "if a person exercises 

any direct or indirect control over the making of a 

contribution, then such contribution shall count toward 

the limitation imposed with respect to such person 

[under current 2 U.S.C. §441a], but it will not count 

toward such a person's contribution limitation when it 

is demonstrated that such person exercised no direct 

or indirect control over the making of the contribution 

involved." H.R. Rep. No. 93-1239, 93d Cong., 2d 

Sess. 16 (1974}. The Commission believes that the 

FECA should be amended to expressly reflect Congressional intent that contributions count toward a 

conduit's limits if the conduit exercises direction or 

control over the making of those earmarked contributions. In addition, determining what actions on the part 

of a conduit or intermediary constitute direction or 

control has presented difficulties for the Commission. 

Therefore, an amendment to the Act should also include standards for determining when "direction or 

control" has been exercised over the making of a 

contribution. 

Nonprofit Corporations 

Section: 2 U.S.C. §441 b 

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 in the statute the 

text of the court's decision. Congress may also wish 

to include in the Act a definition for the term "express 

advocacy." 

Explanation: In the Court's decision of December 15, 

1986, the Court held that the Act's prohibition on corporate political expenditures was unconstitutional as 

applied to independent expenditures made by a narrowly defined type of nonprofit corporation. The Court 

also indicated that the prohibition on corporate expenditures for communications is limited to communications expenditures containing express advocacy. 

Since that time, the Commission has published an 

Advance Notice of Proposed Rulemaking, and has 

conducted hearings on whether regulatory changes 
50 

are needed as a result of the Court's decision. The 

Commission sought a second round of public comment following the Court's related decision in Austin v. 

Michigan Chamber of Commerce, 494 U.S. 652 

(1990). More recently, the Commission published a 

Notice of Proposed Rulemaking and held a second 

hearing on these issues. 

Congress should consider whether statutory 

changes are needed: (1) to exempt independent expenditures made by certain nonprofit corporations 

from the statutory prohibition against corporate expenditures; (2) to specify the reporting requirements 

for these nonprofit corporations; and (3) to provide a 

definition of express advocacy. 

The Court found that certain nonprofit corporations 

were not subject to the independent expenditure prohibitions of 2 U.S.C. §441 b. The Court determined, 

however, that these nonprofit corporations had to 

disclose some aspect of their financial activity-in 

particular, independent expenditures exceeding $250 

and identification of persons who contribute over $200 

to help fund these expenditures. The Court further 

ruled that spending for political activity could, at some 

point, become the major purpose of the corporation, 

and the organization would then become a political 

committee. 

Transfer of Campaign Funds from 

One Committee to Another 

Section: 2 U.S.C. §441 a(a)(1) and (5)(C) 

Recommendation: The Commission recommends that 

Congress consider requiring contributors to redesignate contributions before they are transferred from 

one federal campaign to another federal campaign of 

the same candidate, and to clarify whether such contributions count against the contributors' limits for the 

transferee committee. 

Explanation: The Commission has traditionally permitted a committee to transfer funds from one campaign 

to another (e.g., from a 1992 election to a 1994 election committee) without the original contributor's 

redesignation of the contribution or approval of the 

transfer. Congress may wish to re-examine whether 

such transfers are acceptable, and if so, how should 

they affect the original contributor's contribution limit 

vis-a-vis both committees. 

Contributions from Minors (revised 1994) 

Section: 2 U.S.C. §441a(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 

Section:2 U.S.C. §441a 

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. 2 

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 candi2 While the Commission has attempted through regulations to present an equitable solution to some of these problems (see Final Rule, 48 Fed. Reg. 19019, April27, 1983, 

as prescribed by the Commission on July 1, 1983), statutory 

resolution is required in this area. 
51 

date 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 

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. 

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, 

should specify standards to ensure that these advances are commercially reasonable extensions of 

credit. 

Honorarium 

Section: 2 U.S.C. §431 (8)(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. §441 i. In 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. 

Application of $25,000 Annual Limit 

Section: 2 U.S.C. §441 a(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. 
52 

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

contribution to a candidate made in a nonelection 

year counts against the individual donor's limit for the 

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

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

Candidate Smith in an election year contributes to her 

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

his limit for the year in which he contributed. Unaware 

that the contribution actually counts against the year 

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

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

requiring contributions to count against the limit of the 

calendar year in which the donor contributes, confusion would be eliminated and fewer contributors 

would inadvertently violate the law. The change would 

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

use of our data base, we could more easily monitor 

contributions made by one individual regardless of 

whether they were given to retire the debt of a 

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

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

limits. Nor would it affect the- total amount that any 

individual could contribute in connection with federal 

elections. 

Election Period Limitations 

Section: 2 U.S.C. §441a 

Recommendation: The Commission recommends that 

limits on contributions to candidates be placed on an 

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

Explanation: The contribution limitations affecting 

contributions to candidates are structured on a "perelection" basis, thus necessitating dual bookkeeping 

or the adoption of some other method to distinguish 

between primary and general election contributions. 

The Act could be simplified by changing the contribution limitations from a "per-election" basis to an "election-cycle" basis. Thus, multicandidate committees 

could give up to $10,000 and all other persons could 

give up to $2,000 to an authorized committee at any 

point during the election cycle. 

Acceptance of Cash Contributions 

Section: 2 U.S.C. §441g 

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. §441 g prohibits only the making of 

cash contributions which, in the aggregate, exceed 

$100 per candidate, per election. It does not address 

the issue of accepting cash contributions. Moreover, 

the current statutory language does not plainly prohibit cash contributions in excess of $100 to political 

committees other than authorized committees of a 

candidate. 

Explanation: Currently this provision focuses only on 

persons making the cash contributions. However, 

these cases generally come to light when a committee has accepted these funds. Yet the Commission 

has no recourse with respect to the committee in such 

cases. This can be a problem, particularly where primary matching funds are received on the basis of 

such contributions. 

While the Commission, in its regulations at 11 CFR 

110.4(c)(2), has included a provision requiring a committee receiving such a cash contribution to promptly 

return the excess over $100, the statute does not 

explicitly make acceptance of these cash contributions a violation. The other sections of the Act dealing 

with prohibited contributions (i.e.,§§ 441b on corporate and labor union contributions, 441 c on contributions by government contractors, 441 e on contributions by foreign nationals, and 441 f on contributions in 

the name of another) all prohibit both the making and 

accepting of such contributions. 

Secondly, the statutory text seems to suggest that 

the prohibition contained in §441 g applies only to · 

those contributions given to candidate committees. 

This language is at apparent odds with the Commission's understanding of the Congressional purpose to 
53 

prohibit any cash contributions which exceed $1 00 in 

federal elections. 

Independent Expenditures by Principal 

Campaign Committees 

Section: 2 U.S.C. §432(e)(3) 

Recommendation: The Commission recommends that 

Congress consider amending the definition of principal campaign committee to clarify whether these committees may make independent expenditures on behalf of other principal campaign committees. 

Explanation: A principal campaign committee is defined as an authorized committee which has not supported more than one federal candidate. It is not 

clear, however, whether the term "support" is intended 

to include both contributions and independent expenditures or whether it refers to contributions alone. The 

same section states that the term "support" does not 

include a contribution by any authorized committee to 

another authorized committee of $1 ,000 or less {2 

U.S.C. §432(e)(3)(B)), but it is silent on the question 

of independent expenditures. The current language 

does not clearly indicate whether authorized committees can make independent expenditures on behalf of 

other committees, or whether Congress intended to 

preclude authorized committees from making independent expenditures. 

Certification of Voting Age Population Figures and 

Cost-of-Living Adjustment 

Section: 2 U.S.C. §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. 

Compliance 

Candidate Liability (1994) 

Section: 2 U.S.C. §§432(e)(2) and 437g 

Recommendation: The Commission recommends that 

Congress review who is liable for committee obligations to pay civil penalties for violations of the FECA. 

Congress may want to include in this review whether 

candidates should be jointly and severally liable for 

civil penalties incurred by their campaign committees. 

Explanation: In enforcement cases, the Commission 

proceeds against both committees and their treasurers because the treasurers are responsible for complying with most requirements of the FECA. In many 

cases, civil penalties are paid from the principal campaign committee's funds. Because committees may 

change treasurers several times before a matter is 

resolved, and it may be very difficult to locate the 

individual who was treasurer at the time the violation 

occurred, the Commission generally proceeds against 

the individual who is currently treasurer at the time of 

the enforcement matter. This can place a large burden on those who agree to become treasurers, particularly when the campaign committee does not have 

sufficient funds to pay the civil penalty. Treasurers 
54 

may be held jointly and severally liable for civil penalties, even in situations where the preparation and 

review of the reports was done by an assistant treasurer, bookkeeper, or other individual. Treasurers' 

liability may also make it more difficult for candidates 

to find individuals who are willing to serve as treasurers for their campaign committees. 

While the Commission does make findings against 

candidates when they are directly involved in the activities that constitute a violation, it does not do so 

absent such involvement. Under 2 U.S.C. §432(e)(2), 

candidates are agents of their campaign committees 

for purposes of receiving contributions and loans, and 

making disbursements. This statutory provision implies that the candidate is not the principal of the committee, and is therefore not responsible for committee 

actions absent personal involvement. Accordingly, 

Congress may want to review whether it would be 

preferable for liability to be placed on the current 

treasurer, or the treasurer at the time of the violation, 

or the candidate. 

Persons Who Can Be Named As Respondents 

Section:2 U.S.C. §§434(a)(1), 441a(f), 441b and 441f 

Recommendation: The Commission recommends that 

Congress consider amending the enforcement provisions of the Act to include a section that makes it a 

violation for anyone to actively assist another party.in 

violating the Act. 

Explanation: Many sections of the Act specifically list 

the parties that can be found in violation of those sections. See, e.g., 2 U.S.C. §§434(a)(1 ), 441 a(f), 441 b, 

441f. Oftentimes, however, parties other than those 

listed are actively involved in committing the violations. For example, §441 b makes it illegal for an officer or director of a corporation, national bank or labor union to consent to the making of a contribution 

prohibited under that section. The Commission has 

seen many instances where these types of organizations have made prohibited contributions which were 

consented to by individuals who have the authority to 

approve the making of the contributions, even though 

those individuals did not hold the titles listed in the 

statute. 

This issue has also been addressed on a limited 

basis in the context of 2 U.S.C. §4411. That section 

prohibits anyone from making or knowingly accepting 

a contribution made in the name of another, or from 

knowingly allowing his/her name to be used to effect 

such a contribution. In many situations involving this 

section, there are additional parties, not specified in 

the statute, who are actively involved in carrying out 

the violation. Without an "assisting" standard, those 

active participants cannot be found to have violated 

that section. The court has recognized such a standard with regard to §4411, FEC v. Rodriguez, No. 86-

687 Civ-T-10(8) (M.D. Fla. May 5, 1987)(unpublished 

order denying motion for summary judgment), and the 

Commission has reflected that decision in its regulations at 11 CFR 11 0.4. 

Although these actions have provided a basis for 

pursuing additional violators in a limited context, the 

preferable approach would be to codify the explicit 

statutory authority to pursue those who actively assist 

in carrying out all types of violations. 

Enhancement of Criminal Provisions 

Section: 2 U.S.C. §§437g(a)(5)(C) and 437g(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 §441 f 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 
55 

that a criminal violation of the Act has taken place.3 

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. 

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. 

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. 

3 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 FECA jurisdiction. 
56 

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. 

Expedited Enforcement Procedures and Injunctive 

Authority 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

Congress consider whether the FECA should provide 

for expedited enforcement of complaints filed shortly 

before an election, permit injunctive relief in certain 

cases, and allow the Commission to adopt expedited 

procedures in such instances.4 

Explanation: The statute now requires that before the 

Commission proceeds in a compliance matter it must 

wait 15 days after notifying any potential respondent 

of alleged violations in order to allow that party time to 

file a response. Furthermore, the Act mandates extended time periods for conciliation and response to 

recommendations for probable cause. Under ordinary 

circumstances such provisions are advisable, but they 

are detrimental to the political process when complaints are filed immediately before an election. In an 

effort to avert intentional violations that are committed 

with the knowledge that sanctions cannot be enforced 

prior to the election and to quickly resolve matters for 

which Commission action is not warranted, Congress 

4 Commissioner Elliott filed the following dissent: 

The Act presently enables the Commission to seek injunctive relief after the administrative process has been 

completed and this is more than sufficient. (See 2 U.S.C. 

§437g(a)(6)(A).) 

I am unaware of any complaint filed with the Commission 

which, in my opinion, would meet the four standards set · 

forth in the legislative recommendations. Assuming a case 

was submitted which met these standards, I believe it would 

be inappropriate for the Commission to seek injunctive relief 

prior to a probable cause finding. 

First, the very ability of the Commission to seek an 

injunction, especially during the "heat of the campaign," 

opens the door to allegations of an arbitrary and politically · 

motivated enforcement action by the Commission. The 

Commission's decision to seek injunction in one case while 

refusing to do so in another could easily be seen by candidates and respondents as politicizing the enforcement 

process. 

Second, the Commission might easily be flooded with 

requests for injunctive relief for issues such as failure to file 

an October quarterly or a 12-day pre-general report. Although the Commission would have the discretion to deny 

all these requests for injunctive relief, in making that decision the Commission would bear the administrative burden 

of an immediate review of the factual issues, 

Third, although the courts would be the final arbiter as 

to whether or not to grant an injunction, the mere decision 

by the Commission to seek an injunction during the final 

weeks of a campaign would cause a diversion of time and 

money and adverse publicity for a candidate during the 

most important period of the campaign. 

For these reasons; I disagree with the recommendation 

to expand the power of the Commission to seek injunctive 

relief except as presently provided for the Act. 
57 

should consider granting the Commission some discretion to deal with such situations on a timely basis. 

Even when the evidence of a violation has been 

clear and the potential impact on a campaign has 

been substantial, without the authority to initiate a civil 

suit for injunctive relief, the Commission has been 

unable to act swiftly and effectively in order to prevent 

a violation. The Commission has felt constrained from 

seeking immediate judicial action by the requirement 

of the statute that conciliation be attempted before 

court action is initiated, and the courts have indicated 

that the Commission has little if any discretion to deviate from the administrative procedures of the statute. 

In re Carter-Mondale Reelection Committee, Inc., 642 

F.2d 538 (D.C. Cir. 1980); Common Cause v. Schmitt, 

512 F; Supp. 489 (D.D.C. 1980), aff'd by an equally 

divided court, 455 U.S. 129 (1982); Durkin for U.S. 

Senate v. FEC, 2 Fed. Election Camp. Fin. Guide 

(CCH) 1]9147 (D.N.H. 1980). If Congress allows for 

expedited handling of compliance matters, it should 

authorize the Commission to implement changes in 

such circumstances to expedite its enforcement procedures. As part of this effort, Congress should consider whether the Commission should be empowered 

to promptly initiate a civil suit for injunctive relief in 

order to preserve the status quo when there is clear 

and convincing evidence that a substantial violation of 

the Act is about to occur. Congress should consider 

whether the Commission should be authorized to 

initiate such civil action in a United States district 

court, under expressly stated criteria, without awaiting 

expiration of the 15-day period for responding to a 

complaint or the other administrative steps enumerated in the statute. The person against whom the 

Commission brings the action would enjoy the procedural protections afforded by the courts. 

The Commission suggests the following legislative 

standards to govern whether it may seek prompt injunctive relief: 

1. The complaint sets forth facts indicating that a 

potential violation of the Act is occurring or will occur; 

2. Failure of the Commission to act expeditiously 

will result in irreparable harm to a party affected by 

the potential violation; 

3. Expeditious action will not result in undue harm 

or prejudice to the interests of other persons; and 

4. The public interest would be served by expeditious handling of the matter. 

Protection for Those Who File Complaints 

or Give Testimony 

Section: 2 U.S.C. §437g 

Recommendation: The 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. 

Litigation 

Ensuring Independent Authority of FEC in 

All Litigation (revised 1994) 

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 
58 

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 amend the Act to specify that 

local counsel rules (requiring district court litigants to 

be represented by counsel located within the district) 

cannot be applied to the Commission. 

2. Congress should give the Commission explicit 

authorization to appear as an amicus curiae in cases 

that affect the administration of the Act, but do not 

arise under it. 

3. Congress should require 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. 

4. Congress should also 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. 

Explanation: With regard to the first 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 second 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 third 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. Rule 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. 

The final recommendation is to clarify that the 

Commission is explicitly authorized to petition the 

Supreme Court for certiorari under Title 2 and conduct 

its Supreme Court litigation~ The Commission explicitly has this authority under Title 26 and has longstanding practice of doing so under Title 2. However, 

the Title 2 language would be revised to more clearly 

state the Commission's authority in the area. 

Disclaimers 

Fundraising Projects Operated by Unauthorized 

Committees (revised 1994) 

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 
59 

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 a federal candidate in their 

name or in the name of a fundraising project. However, unauthorized committees (those not authorized 

by candidates) often raise funds through fundraising 

efforts that name specific candidates. As a result, 

contributors are sometimes confused or misled, believing that they are contributing to a candidate's authorized committee when, in fact, they are giving to 

the nonauthorized committee that sponsors the event. 

This confusion sometimes leads to requests for refunds, allegations of coordination and inadequate 

disclaimers, and inability to monitor contributor limits. 

Contributor awareness might be enhanced if Congress were to modify 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 

Section: 2 U.S.C. §441d 

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. §441 d, 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," 

suggesting that the requirement does not apply to 

disbursements that are exempt from the definition of 

"expenditure" such as "exempt activities" conducted 

by local and state party committees under, for example, 2 U.S.C. §431 (9)(B)(viii). This proposal would 

make clear that all types of communications to the 

public would carry a disclaimer. 

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

preparation or distribution of the communication. 

Third, the Commission has devoted considerable 

time to determining whether a given communication in 

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

need. 

Most of these problems would be eliminated if the 

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

a registered committee to display a disclaimer notice 

whenever it communicated to the public, regardless of 

the purpose of the communication and the means of 

preparing and distributing it. The Commission would 

no longer have to examine the content of communications or the manner in which they were disseminated 

to determine whether a disclaimer was required. 

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

is inconvenient or impracticable to display a disclaimer. 

Finally, Congress should change the sponsorship 

identification requirements found in the Federal Communications Act to make them consistent with the 

disclaimer notice requirements found in the FECA. 

Under the Communications Act, federal political 

broadcasts must contain an announcement that they 

were furnished to the licensee, and by whom. See 

FCC and FEC Joint Public Notice, FCC 78-419 (June 

19, 1978). In contrast, FECA disclaimer notices focus 

on who authorized and paid for the communication. 

The Communications Act should be revised to ensure 

that the additional information required by the FECA 

is provided without confusion to licensees and political 

advertisers. In addition, the FECA should be 
60 

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, and the contributors' funds had been misused in a 

manner in which they did not intend. The Commission 

has been unable to take any action on these matters 

because the statute gives it no authority in this area. 

Public Disclosure 

Computer Filing of Reports 

Section: 2 U.S.C. §432(g) 

Recommendation: The Commission recommends that 

Congress consider developing guidelines for when 

committees should file reports via computer technology. For example, Congress could require that committees maintaining their records on computer make 

them available to the Commission on suitable computer disk, tape or other appropriate electronic form. 

Explanation: While some small committees do not 

maintain computerized reporting due to the expense, 

the vast majority facilitate their reporting obligations 

with computers. Direct transfer of these reports to the 

Commission would provide a financial savings to the 

Commission because less staff time would be needed 

to input the campaign finance information. At the 

same time, it would ensure full disclosure. 

Congress should consider, however, that the Clerk 

of the House and the Secretary of the Senate are the 

points of entry for House and Senate reports. Currently, none of the entry points are capable of accepting electronic filings. Should this recommendation be 

adopted, the Clerk of the House and the Secretary of 

the Senate, in addition to the Commission, would be 

required to purchase this technology. Alternatively, 

the Commission would have to be made the point of 

entry for such filers. 

Commission as Sole Point of Entry 

for Disclosure Documents 

Section: 2 U.S.C. §432(g) 

Recommendation: The Commission recommends that 

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

committees alone file their reports with the Clerk of 

the House and the Secretary of the Senate, respectively, who then forward microfilmed copies to the 

FEC. 

Explanation: The Commission has offered this recommendation for many years. The experience of handling the year-end report (filed in January 1992) provides an excellent illustration of why a single point of 

entry is desirable. Some 234 reports filed by House 

and Senate candidate committees were mistakenly 

filed with the Federal Election Commission instead of 

with the Clerk of the House and the Secretary of the 

Senate. Consequently, every day, for two weeks 

around the filing deadline, the FEC shipped back to 

the Clerk and the Secretary packages filled with 

House and Senate reports that were filed with the 
61 

FEC in error. The result? Disclosure to the public was 

delayed, and government resources were wasted. 

Moreover, if the FEC received the original report, it 

could use it directly for data entry, as it now uses the 

reports filed by PACs, party committees and Presidential committees. 

Should Congress decide to codify the previous 

recommendation on computerized reports, the Commission should become the sole point of entry to process these reports, avoiding the need for all three 

offices to obtain the technology necessary to accept 

electronic filings. 

We also reiterate here the statement we have 

made in previous years because it remains valid. A 

single point of entry for all disclosure documents filed 

by political committees would eliminate any confusion 

about where candidates and committees are to file 

their reports. It would assist committee treasurers by 

having one office where they would file reports, 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 law. A single point of entry would also reduce the costs to the federal government of maintaining three different offices, especially in the areas of 

personnel, equipment and data processing. 

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

have been filed at or are in transit between two different offices. Separate points of entry also make it difficult for the Commission to track responses to compliance notices. Many responses and/or amendments 

may not be received by the Commission in a timely 

manner, even though they were sent on time by the 

candidate or committee. The delay in transmittal between two offices sometimes leads the Commission to 

believe that candidates and committees are not in 

compliance. A single point of entry would eliminate 

this confusion. 

Finally, the Commission notes that the report of the 

Institute of Politics of the John F. Kennedy School of 

Government at Harvard University, An Analysis of the 

Impact of the Federal Election Campaign Act, 1972-

78, prepared for the House Administration Committee, 

recommended that all reports be filed directly with the 

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

at 122 (1979)). 

Public Disclosure at State Level 

Section: 2 U.S.C. §439 

Recommendation: The Commission recommends that 

Congress consider relieving both political committees 

(other than candidate committees) and state election 

offices of the burdens inherent in the current requirement that political committees file copies of their reports with the Secretaries of State. One way this 

could be accomplished is by providing a system 

whereby the Secretary of State (or equivalent state 

officer) would tie into the Federal Election Commission's computerized disclosure data base. 

Explanation: At the present time, multicandidate political committees are required to file copies of their reports (or portions thereof) with the Secretary of State 

in each of the states in which they support a candidate. State election offices carry a burden for storing 

and maintaining files of these reports. At the same 

time, political committees are burdened with the responsibility of making multiple copies of their reports 

and mailing them to the Secretaries of State. 

With advances in computer technology, it is now 

possible to facilitate disclosure at the state level without requiring duplicate filing. Instead, state election 

offices would tie into the FEC's computer data base. 

The local press and public could access reports of 

local political committees through a computer hookup 

housed in their state election offices. All parties would 

benefit: political committees would no longer have to 

file duplicate reports with state offices; state offices 

would no longer have to provide storage and maintain 

files; and the FEC could maximize the cost effectiveness of its existing data base and computer system. 

Such a system has already been tested in a pilot 

program and proven inexpensive and effective. Initially, we would propose that candidate committees 

and in-state party committees continue to file their 

reports both in Washington, D.C., and in their home 
62 

states, in response to the high local demand for this 

information. Later, perhaps with improvements in 

information technology, the computerized system 

could embrace these committees as well. 

State Filing for Presidential Candidate 

Committees 

Section: 2 U.S.C. §439 

Recommendation: 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. 

Agency Funding 

Statutory Gift Acceptance Authority 

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. 

Miscellaneous 

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. 
63 

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 441b(b) should be revised to expressly state 

that corporations, labor organizations and national 

banks are prohibited from making contributions or 

expenditures ''for the purpose of influencing a clearly 

identified individual to seek nomination for election or 

election ... " to federal office. 

3. Limit Contributions to Draft Committees. The law 

should include explicit language stating that no person shall make contributions to any committee (including a draft committee) established to influence the 

nomination or election of a clearly identified individual 

for any federal office which, in the aggregate, exceed 

that person's contribution limit, per candidate, per 

election. 

Explanation: These proposed amendments were 

prompted by the decisions of the U.S. Court of Appeals for the District of Columbia Circuit in FEC v. 

Machinists Non-Partisan Political League and FEC v. 

Citizens for Democratic Alternatives in 1980 and 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. 

The Act presently enables the Commission to seek 

injunctive relief after the administrative process has 

been completed and this is more than sufficient. (See 

2 U.S.C. §437g(a)(6)(A).) 
California 17th 

D Sam Farr* 

R Jess Brown 

Michigan 3rd 

D Dale Sprik 

R Vernon Ehlers* 

Mississippi 2nd 

D Bennie Thompson* 

R John Dent 

Ohio 2nd 

D Lee Hornberger 

R Robert Portman* 

Wisconsin 1st 

D Peter Barca* 

R Mark Neumann 

Texas Senate 

D Robert Krueger 

R Kay Bailey Hutchison* 

0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 

0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 

65 Chapter Six 

Campaign Finance 

Statistics 

Contributions and Party Expenditures for 

1993 Special Elections 

- Individual Contributions 

- Nonparty Committee Contributions 

- Party Contributions 

Candidate Contributions 

~.....-_...JI Party Expenditures 

*Winner. 
66 

1993 Fundraising by 

Republican National Committtee (RNC) 

- Hard Dollars* 

Soft Dollars t 

Total Receipts by Category 

$44.8 Million 

Hard Dollar Receipts by Source 

Millions of Dollars 30~----------------------------

25 

20 

15 

10 

Individual 

$200 

or More 

5 

0 

Individual PACs Other 

Less than 

$200 

Soft Dollar Receipts by Source* 

Millions of Dollars 

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

10~----------------------------

5 

0 

Corporate Individuals Other 

*Money raised subject to the prohibitions and limitations of federal election law. 

t Money raised outside the prohibitions and limitations of federal election law. 

*In these charts, the categories of "Soft Dollar Receipts by Source" differ because the RNC and the DNC categorize their 

soft money receipts differently. 
Soft Dollar Receipts by Source* 

Millions of Dollars 

30.-------------------------------

25r------------------------------

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

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

10 

5 

0 

Corporate Labor Individuals PACs Other 

Hard Dollar Receipts by Source 

Millions of Dollars 30~------------------------------

25r-----------------------------

2or-----------------------------

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

Individual Individual PACs Other 

Less than $200 

$200 or More 

67 

1993 Fundraising by 

Democratic National Committtee (DNC) 

Total Receipts by Category 

$35.6 Million 

- Hard Dollars* 

Soft Dollars t 

*Money raised subject to the prohibitions and limitations of federal election law. 

t Money raised outside the prohibitions and limitations of federal election law. 

*In these charts, the categories of "Soft Dollar Receipts by Source" differ because the RNC and the DNC categorize their 

soft money receipts differently. 
68 

Receipts of 1994 Senate Candidates - 1989 -1990 Receipts 

- 1991 -1992 Receipts 

1993 Receipts Millions of Dollars 

----------------------------------------------------

0 

Democrats 

(18) 

Republicans 

(10) 

Democrats 

(13) 

Republicans 

(30) 

Democrats 

(13) 

Republicans 

(15) 

Incumbents Challengers Open Seat Candidates 

30 ~-----------
69 

Receipts of House Candidates 

for Each Year of Election Cycle 

1990 - 1994 Cycles 

-

-

Election Year 

Nonelection Year 

Millions of Dollars 

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

120 

90 

60 

30 

90 92 94 90 92 94 90 92 94 90 92 94 90 92 94 90 92 94 

Democrats Repubticans Democrats Republicans Democrats Republicans 

Incumbents Challengers Open Seat Candidates 

0 
70 

Comparison of Presidential and 

Congressional Spending 

- Congressional Spending 

Presidential Spending 

Millions of Dollars 

800~-----------------------------

1978 1980 1982 1984 1986 1988 1990 1992 

Source: The Presidential Public Funding Program, a 1993 

FEC publication. 

Presidential General Election 

Compliance Account Receipts 

-1980 

-1984 

1988 

1992 

Millions of Dollars 

6 .------------

5 

4 

3 

2 

1 

0 

Democrat Republican 

Source: The Presidential Public Funding Program, a 1993 

FEC publication. 
71 

PAC Receipts for Each Year Election Year 

of Election Cycle - Nonelection Year 

1990 - 1994 Cycles 

Millions of Dollars 

120~--------------------------------------------------------------

100 

80 

60 

40 

20 

0 

90 92 94 90 92 94 90 92 94 90 92 94 90 92 94 

Corporate Labor Non connected Trade/Member­ Other 

ship/Health 
72 

Number of PACs, 1975-93* 0 

e 

Corporate 

Nonconnected 

• 

~ 

Trade/Membership/Health 

Labor 

• Othert 

Number 

of PACs 

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

* For the years 1974 through 1976, numbers are not available for Nonconnected PACs, Trade/Membership/Health PACs or 

PACs in the "Other" category. 

t "Other'' category includes PACs formed by corporations without capital stock and PACs formed by incorporated 

cooperatives. 
73 

Appendix 1 

Biographies of 

Commissioners 

and Officers 

Commissioners 

Scott E. Thomas, Chairman 

April 30, 1997 1 

Mr. Thomas was appointed to the Commission in 1986 

and reappointed in 1991. He was elected Vice Chairman for 1992 and Chairman for 1993, having earlier 

been Chairman in 1987. He previously served as executive assistant to former Commissioner Thomas E. 

Harris and succeeded him as Commissioner. Joining 

the FEC as a legal intern in 1975, Mr. Thomas eventually became an Assistant General Counsel for Enforcement. 

A Wyoming native, Chairman Thomas graduated 

from Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member of 

the District of Columbia bar. 

Trevor Potter, Vice Chairman 

April 30, 1997 

Mr. Potter was confirmed by the Senate as a Commissioner in November of 1991. He served as Vice Chairman of the Commission's Finance Committee and 

Chairman of its Regulations Task Force during 1992. 

He was elected Commission Vice Chairman for 1993 

and Chairman for 1994. 

Before his appointment, Mr. Potter specialized in 

campaign and election law as a partner in a Washington, D.C. law firm. His previous experience in government includes serving as Assistant General Counsel at 

the Federal Communications Commission from 1984 

to 1985, and as a Department of Justice attorney from 

1982 to 1984. 

Mr. Potter is a graduate of Harvard College. He 

earned his J.D. degree at the University of Virginia 

School of Law, where he served as Editor-in-Chief of 

the Virginia Journal of International Law and was a 

member of the Order of the Coif. He is currently Chairman of the American Bar Association Committee on 

Election Law, Administrative Law Section. Mr. Potter is 

a resident of Fauquier County, Virginia. 

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 

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. 

Lee Ann Elliott 

April 30, 1993 

Commissioner Elliott was first appointed in 1981 and 

reappointed in 1987 by President Reagan. 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. 

1Term expiration date. 
74 

Chamber of Commerce. In 1979, she received the 

Award for Excellence in Serving Corporate Public 

Affairs from the National Association of Manufacturers. 

A native of St. Louis, Commissioner Elliott graduated from the University of Illinois. She also completed Northwestern University's Medical Association 

Management Executive Program and is a Certified 

Association Executive. 

Danny L. McDonald 

April 30, 1993 

Now serving his second term as Commissioner, Mr. 

McDonald was first appointed to the Commission in 

1981 and was reappointed in 1987. Before his original 

appointment, he managed 1 0 regulatory divisions as 

the general administrator of the Oklahoma Corporation Commission. He had previously served as secretary of the Tulsa County Election Board and as chief 

clerk of the board. He was also a member of the Advisory Panel to the FEC's National Clearinghouse on 

Election Administration. 

A native of Sand Springs, Oklahoma, Mr. McDonald 

graduated from Oklahoma State University and attended the John F. Kennedy School of Government at 

Harvard University. He served as FEC Chairman in 

1983 and 1989. 

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. 

Statutory Officers 

John C. Surlna, Staff Director 

Before joining the Commission in 1983, Mr. Surina 

was assistant managing director of the Interstate 

Commerce Commission, where he was detailed to the 

"Reform 88" program at the Office of Management 

and Budget. In that role, he worked on projects to 

reform administrative management within the federal 

government. He was also an expert-consultant to the 

Office of Control and Operations, EOP-Cost of Living 

Council-Pay Board and on the technical staff of the 

Computer Sciences Corporation. During his Army 

service, Mr. Surina was executive officer of the Special Security Office, where he supported senior U.S. 

delegates to NATO's civil headquarters in Brussels. 

Mr. Surina served as 1991 chairman of the Council on 

Government and Ethics Laws (GOGEL). 

A native of Alexandria, Virginia, Mr. Surina holds a 

degree in Foreign Service from Georgetown University. He also attended East Carolina University and 

American University. 

Lawrence M. Noble, General Counsel 

Mr. Noble became General Counsel in 1987, after 

serving as Acting General Counsel. He joined the 

Commission in 1977, becoming the Deputy General 

Counsel in 1983. He previously served as Assistant 

General Counsel for Litigation and as a litigation attorney. Before his FEC service, he was an attorney with 

the Aviation Consumers Action Project. 

A native of New York, Mr. Noble holds a degree in 

Political Science from Syracuse University and a J.D. 

degree from the National Law Center at George 

Washington University. He is a member of the bars for 

the U.S. Supreme Court, the U.S. Court of Appeals 

for the D.C. Circuit and the District of Columbia. He is 

also a member of the American and District of Columbia Bar Associations. 
75 

Lynne McFarland, Inspector General 

Ms. McFarland became the FEC's first permanent 

Inspector General in February 1990. She came to the 

Commission in 1976, first as a reports analyst and 

then as a program analyst in the Office of Planning 

and Management. 

A Maryland native, Ms. McFarland holds a sociol· 

ogy degree from Frostburg State College and is a 

member of the Institute of Internal Auditors. 
Appendix 2 77 

Chronology of Events 

January 

1 - Chairman Scott E. Thomas and Vice Chairman Trevor Potter begin their one-year 

terms of office. 

- Public Records Office begins offering Tuesday afternoon faxing service. 

- Updated FEC MUR Index is published. 

14 - FEC press release lists official 1992 Presidential vote counts. 

26 - FEC sends President and Congress 63 legislative recommendations. 

31 - 1992 year-end report due. 

February 

1 - Commission publishes "Local Party Activity" 

brochure. 

24 - Chairman Thomas, Vice Chairman Potter 

and Commissioner McDonald testify before 

House Appropriations' Subcommittee on 

Treasury, Postal Service and General Government. 

25 - FEC determines final repayments by 1988 

Dukakis primary campaign. 

March 

1 FEC announces 1993 coordinated party 

expenditure limit for House Special Elections. 

4 - FEC press release reports on House and 

Senate spending in 1992 election cycle. 

- FEC determines final repayments by 1988 

Simon primary campaign. 

11 - FEC issues press release on national party 

fund raising. 

16 - Chairman Thomas, Vice Chairman Potter 

and Commissioner McDonald testify before 

the House Administration's Subcommittee on 

Elections. 

17 - FEC announces $64,000 in civil penalties for 

1 0 individuals who violated annual contribution limits. 

19 - Dukakis challenges FEC repayment determination in court. 

24-26 - FEC's National Clearinghouse on Election 

Administration holds Advisory Panel meeting 

in Savannah, GA. 

31 - FEC holds public hearing on "best efforts" 

regulations. 

April 

1 FEC issues retrospective report on Presidential public funding. 

- FEC publishes revised Campaign Guide for 

Congressional Candidates and Committees. 

- FEC releases 1993 coordinated party expenditure limit for Texas Special Senate Election. 

- FEC holds public hearing on rules on ex 

parte communications. 

2 - Simon challenges FEC repayment determination in court. 

7 - FEC sets July 1 as effective date for ban on 

transfers from nonfederal campaigns to federal committees. 

13 - Mississippi holds special runoff election 

(special general March 30). 

15 - FEC determines final repayment by 1988 

Jackson primary campaign. 

22 - Vice Chairman Potter testifies on FEC budget before Senate Committee on Rules and 

Administration. 

29 - FEC press release provides comprehensive 

data on PAC activity. 

May 

4 - Ohio holds special election in 2nd Congressional District (primary March 16). 

- Wisconsin holds special election in 1st Congressional District (primary April 6). 

20 - President Clinton signs the National Voter 

Registration Act of 1993 (NVRA, sometimes 

called the "motor voter'' law). 

21 - FEC Chairman Thomas assures state governors that the Commission will work with 

them to implement the NVRA. 

June 

1 - Annual Report 1992 is published. 

- FEC publishes Federal Elections 92, 1992 

federal election results. 

5 - Texas holds special runoff election for Senate seat (special general May 1). 
78 

8 - California holds special runoff election in 

17th congressional District (special general 

Apri113}. 

11-12- FEC staff provide technical assistance to 

committees in Hartford, CT. 

24-25 - FEC staff provide technical assistance to 

committees in Indianapolis, IN. 

July 

1 FEC's National Clearinghouse on Election 

Administration publishes Election Case Law 

93. 

- Effective date of ban on transfers from nonfederal campaigns to federal campaigns. 

2 - U.S. Court of Appeals for D.C. Circuit directs 

FEC to certify matching funds for the 1992 

LaRouche primary campaign. 

8 - FEC publishes Notice of Proposed 

Rulemaking on enforcement regulations. 

8-9 - FEC staff provide technical assistance to 

committees in Lincoln, NE. 

15-16 - FEC staff provide technical assistance to 

committees in Helena, MT. 

31 - 1993 midyear report due. 

August 

1 - Commission publishes "Selected Court Case 

Abstracts, 1977-1993." 

6 - FEC sends Congress new rules on multicandidate committees. 

1 0 - President Clinton signs the Omnibus Budget 

Reconciliation Act, which included a $3 tax 

checkoff for the Presidential Election Campaign Fund. 

12 - FEC publishes Notice of Proposed 

Rulemaking on Presidential conventions 

17 - FEC issues Press Release on Senate activity. 

19-20 - FEC staff provide technical assistance to 

committees in Harrisburg, PA. 

30 - FEC sends Congress final rule on definition 

of member. 

- FEC publishes Notice of Proposed 

Rulemaking on candidates' personal use of 

campaign funds. 

September 

30 - FEC two-day regional conference begins in 

San Francisco, CA. 

October 

1 FEC submits budget request to OMB and 

Congress. 

FEC publishes revised brochure on Direct 

Access Program. 

20 - Commission holds public hearing on proposed changes to enforcement regulations. 

Robertson challenges FEC's repayment 

determination in court. 

21 Commission adopts, on a trial basis, procedures to permit outside comment on draft 

advisory opinions. 

22 - U.S. Court of Appeals for the District of Columbia, in FEC v. NRA, rules that the composition of the FEC "violates the 

Constitution's separation of powers." 

26 - Commission votes to reconstitute itself as a 

six-member body, comprising only those 

Commissioners appointed by the President. 

27 - FEC sends Congress new rules on "Best 

Efforts." 

Commission holds public hearing on rules 

governing publicly funded Presidential nominating conventions. 

November 

2 - Commission votes to petition the Supreme 

Court for a writ of certiorari in FEC v. NRA. 

4 - Commission votes to ratify existing regulations and forms, and to confirm the efficacy 

of its advisory opinions. 

9 - Commission ratifies its past actions on ongoing audits and adopts procedures for ratifying ongoing enforcement cases and litigation. 

1 0 - Effective date of new rules on Membership 

Associations. 

FEC releases audit of 1992 Democratic 

Convention host committee. 

FEC adopts revised interim rules on ex parte 

communications. 
79 

December 

1 - Commission publishes ''The $3 Tax Checkoff" brochure. 

7 - Michigan holds special election in 3rd Congressional District (primary November 2). 

9 - Commission votes to take no further action 

on 137 enforcement cases and 9 internal 

enforcement referrals, as part of 

prioritization process. 

9 - Commission votes to create a task force to 

evaluate allocation rules. 

13 - In a news conference, Chairman Scott E. 

Thomas, Vice Chairman Trevor Potter and 

General Counsel Lawrence Noble discuss 

enforcement prioritization program. 

13 - FEC two-day PAC conference begins in 

Washington, DC. 

15 - Commission elects Trevor Potter as 1994 

Chairman and Danny L. McDonald as 1994 

Vice Chairman. 
Appendix 3 

FEC Organization Chart 

---

The Commissioners 

Scott E. Thomas, Chairman 1 

Trevor Potter, Vice Chairman 2 

Joan D. Aikens, Commissioner 

Lee Ann Elliott, Commissioner 

Danny L. McDonald, Commissioner 

John Warren McGarry, Commissioner 

I I I 

Inspector General

- General Counsel Staff Director 

Deputy Staff Director Public Funding 

Ethics and ,...._ for Management ~ Audit

Special Projects 

Policy 3 1-- Administration 1-- Clearinghouse 1-

Data Systems 1- 1-- Information

Enforcement Development I ~ Planning and ~ Public

Management 1- Disclosure 

Reports i.o-

!--

I--

I--

1--

Litigation 1--

Analysis 

Commission 

Secretary 

Congressional 

Affairs 

Equal Employment 

Opportunity 

Personnel 

Labor/Management 

Press Office 

81 

1 Trevor Potter was elected 1994 Chairman. 

2 Danny L. McDonald was elected 1994 Vice Chairman. 

3 Policy covers regulations, advisory opinions, legal review and administrative law. 
83 Appendix 4 

FEC Offices 

This appendix briefly describes the offices within the 

Commission, located at 999 E Street, NW, Washington, D.C. 20463. The offices are listed alphabetically, 

with local telephone numbers given for offices that 

provide services to the public. Commission offices 

can also be reached toll-free on 800-424-9530 and 

locally on 202-219·3440. 

Administration 

The Administration Division is the Commission's 

"housekeeping" unit and is responsible for accounting, 

procurement and contracting, space management, 

payroll, travel and supplies. In addition, several support functions are centralized in the office such as 

printing, document reproduction and mail services. 

The division also handles records management, 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 seventh floor, assists state and 

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

Clearinghouse answers questions from the public and 

briefs foreign delegations on the U.S. election process. 

Localphone:202-219-3670. 

Commission Secretary 

The Secretary to the Commission handles all administrative matters relating to Commission meetings, including agenda documents, Sunshine Act notices, 

minutes and certification of Commission votes. The 

office also circulates and tracks numerous materials 

not related to meetings, and records the Commissioners' tally votes on these matters. 

Commissioners 

The six Commissioners-three Democrats and three 

Republicans-are appointed by the President and 

confirmed by the Senate. 

The six Commissioners serve full time and are 

responsible for administering and enforcing the Federal Election Campaign Act. They generally meet 

twice a week, once in closed session to discuss matters that, by law, must remain confidential, and once 

in a meeting open to the public. At these meetings, 

they formulate policy and vote on significant legal and 

administrative matters. 

Congressional, Legislative and 

Intergovernmental Affairs 

This office serves as primary liaison with Congress 

and Executive Branch agencies. The office is responsible for keeping Members of Congress informed 

about Commission decisions and, in turn, for keeping 

the agency up to date on legislative developments. 

Localphone:202-219-4136. 

Data Systems Development 

This division provides computer support for the entire 

Commission. Its responsibilities are divided into two 

general areas. 

In the area of campaign finance disclosure, the 

Data Systems Development Division enters into the 

FEC data base information from all reports filed by 

political committees and other entities. The division is 

also responsible for the computer programs that sort 

and organize campaign finance data into indexes. 
84 

These indexes permit a detailed analysis of campaign 

finance activity and, additionally, provide a tool for 

monitoring contribution limitations. The division publishes the Reports on Financial Activity series of periodic studies on campaign finance and generates statistics for other publications. 

The division also provides internal computer support for the agency's automation system (VAX) and 

for administrative functions such as management 

information, document tracking, personnel and payroll 

systems. 

Equal Employment Opportunity 

Programs (EEOP} 

The EEOP office advises the Commission on the 

prevention of discriminatory practices. The EEO Officer manages the Commission's Equal Employment 

Opportunity Program and develops plans to improve 

the Commission's equal employment opportunities. 

The office is also responsible for administering the 

discrimination complaint system; overseeing the Special Emphasis Program; training Commission staff on· 

the EEO Program; and reporting on the status of 

Commission's EEO program. 

General Counsel 

The General Counsel directs the agency's enforcement activities and represents and advises the Commission in any legal actions brought against it and 

serves as the Designated Agency Ethics Official. The 

Office of General Counsel handles all civil litigation, 

including several cases that have come before the 

Supreme Court. The office also drafts, for Commission consideration, advisory opinions and regulations 

as well as other legal memoranda interpreting the 

federal campaign finance law. 

Information 

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. 

Inspector General 

The FEC's Inspector General (IG) has two major responsibilities: to conduct internal audits and investigations to detect fraud, waste and abuse within the 

agency and to improve the economy and effectiveness 

of agency operations. The IG files reports notifying 

Congress of any serious problems or deficiencies in 

agency operations and of any corrective steps taken 

by the agency. 

Law Library 

The Commission law library, part of the Office of General Counsel, is located on the eighth floor and is open 

to the public. The collection includes basic legal research tools and materials dealing with political campaign finance, corporate and labor political activity and 

campaign finance reform. The library staff prepares 

indices to advisory opinions and Matters Under Review (MURs) as well as a Campaign Finance and Federal Election Law Bibliography, all available for purchase at the Public Records Office. Local phone: 202-

219-3312. 

Personnel and Labor/Management 

Relations 

This office handles employment, position classification, 

training and employee benefits. It also provides policy 

guidance on awards and discipline matters and administers a comprehensive labor relations program including contract negotiations and resolution of disputes 

before third parties. 
85 

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. 

Public Records 

Staff from the Public Records Office provide information on the campaign finance activities of political 

committees and candidates involved in federal elections. Located on the first floor, the office is a library 

facility with ample work space and a knowledgeable 

staff to help researchers locate documents and computer data. The FEC encourages the public to review 

the many resources available, including committee 

reports, computer indexes, advisory opinions and 

closed MURs. Local phone: 202-219-4140. 

Reports Analysis 

Reports analysts assist committee officials in complying with reporting requirements and conduct detailed examinations of the campaign finance reports 

filed by political committees. If an error, omission or 

prohibited activity (e.g., an excessive contribution) is 

discovered in the course of reviewing a report, the 

analyst sends the committee a letter which requests 

that the committee either amend its reports or provide further information concerning a particular problem. By sending these letters (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. 

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. 
87 Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

1993 

Filers 

Terminated 

as of 

12/31/93 

Continuing 

Filers as of 

12/31/93 

Number of 

Reports and 

Statements 

in 1993 

Gross Receipts 

in 1993 

Gross 

Expenditures 

in 1993 

Presential Candidate 

Committees 

447 21 426 386 $10,467,382 $15,524,460 

Senate Candidate Committees 768 26 742 1,221 $102,761,249 $68,599,073 

House Candidate Committees 3,524 592 2,932 5,232 $109,062,430 $83,580,487 

Party Committees 571 103 468 1,502 $248,094,102 $243,295,622 

Federal Party Committees 

Reported Nonfederal 

535 103 432 1,247 $213,022,626 $207,245,994 

Party Activity 36 0 36 255 $35,071 ,476 $36,049,628 

Delegate Committees 81 0 81 2 $3,583 $3,583 

Nonparty Committees 4,356 146 4,210 17,175 $185,539,725 $144,767,190 

Labor Committees 358 21 337 1,703 $44,338,470 $33,044,658 

Corporate Committees 1,794 5 1,789 8,554 $56,773,797 $43,594,906 

Membership, Trade and 

Other Committees 2,204 120 2,084 6,918 $84,427,458 $68,127,626 

Communication Cost Filers 200 0 200 28 N/A $72,086 

Independent Expenditures by 

Persons Other Than 

Political Committees 

289 3 286 59 N/A $44,352 
88 

Divisional Statistics for Calendar Year 1993 

Total 

Reports Analysis Division 

Documents processed 52,718 

Reports reviewed 46,222 

Telephone assistance and meetings 8,808 

Requests for additional information (RFAis} 7,944 

Second RFAis 3,726 

Data coding and entry of RFAis and 

miscellaneous documents 16,229 

Compliance rnatters referred to Office 

of General Counsel or Audit Division 266 

Data Systems Development Division 

Documents receiving Pass I coding* 36,502 

Documents receiving Pass Ill coding* 40,567 

Documents receiving Pass I entry 35,408 

Documents receiving Pass Ill entry 40,789 

Transactions receiving Pass Ill entry 

•In-house 54,450 

•Contract 573,529 

Public Records Office 

Campaign finance material processed 

(total pages} 1,193,644 

Requests for campaign finance reports . 10,271 

Visitors 12,875 

Total people served 23,146 

Information telephone calls 17,780 

Computer printouts provided 70,035 

Total income (transmitted to U.S. Treasury} $61,246 

Cumulative total pages of documents 

available for review 11,467,462 

Contacts with state election offices 3,269 

Notices of failure to file with state election offices 413 

*Computer coding and entry of campaign finance information occur in two phases. In the first phase, Pass I, 

summary information is coded and entered into the computer within 48 hours of the Commission's receipt of the 

report. During the second phase, Pass Ill, itemized information is coded and entered. 

Total 

Administrative Division 

Contracting and procurement transactions 

Pieces of outgoing mail processed 

Publications prepared for print 

Pages of photocopying 

Information Services Division 

Telephone inquiries 

2,801 

86,649 

44 

9,208,493 

Information letters 

Distribution of FEC materials 

Prior notices (sent to inform filers 

of reporting deadlines} 

Other mailings 

Visitors 

Public appearances by Commissioners 

and staff 

State workshops 

Publications 

Press Office 

Press releases 

Telephone inquiries from press 

Visitors to Press Office 

Freedom of Information Act 

(FOIA} requests 

Fees for materials requested under FOIA 

(transmitted to U.S. Treas~ry} 

Clearinghouse on Election Administration 

Telephone inquiries 

Informational letters 

Visitors 

Publications 

Foreign briefings 

72,704 

55 

11,970 

25,287 

45,999 

90 

141 

8 

32 

159 

14,627 

3,219 

414. 

$15,908 

4,513 

84 

64 

3 

35 
89 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1993 4 

Requests received 25 

Issued 25 

Pending at end of 1993 4 

Compliance cases (MURs) 

Pending at beginning of 1993 329 

Opened 119 

Closed 231 

Pending at end of 1993 217 

Litigation 

Cases pending at beginning of 1993 40 

Cases opened 12 

Cases closed 12 

Cases pending at end of 1993 40 

Cases won 9 

Cases lost 

Cases voluntarily dismissed 

Cases dismissed as moot 

Law Library 

Telephone inquiries 1,683 

Visitors served 784 

Audits Completed by Audit Division, 1975-1993 

Total 

Presidential 77 

Presidential Joint Fundraising 10 

Senate 15 

House 131 

Party (National) 46 

Party (Other) 115 

Nonparty (PACs) 75 

Total 469 

Audit Reports Publicly Released 

Year Title 2* Title 2&t 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 

TOTALS 374 126 470 

*Audits for cause: The Commission may audit any 

federally registered political committee: 1 ) whose reports do 

not substantially comply with the law (under thresholds 

established by the Commission), or 2) if the Commission 

has found reason to believe that the committee has committed (or is about to commit) a violation of the law. 2 U.S.C. 

§§438(b) and 437g(2). 

tTitle 26 audits: The statute requires the Commission 

to give priority to these mandatory audits of publicly funded 

Presidential candidates and committees and convention 

committees. 

*Random audits: The majority of these audits were 

performed under the Commission's random audit policy 

{pursuant to the former 2 U.S.C. §438{a){8)), which provided for random audits of all categories of political committees (including party committees, PACs and candidate 

committees). Under that policy, for House and Senate candidates, the Commission randomly selected 1 0 percent of 

the states and Congressional districts and, in these jurisdictions, audited all the viable candidates in the general election. The authorization for random audits was repealed by 

Congress in 1979. 
90 

Status of Audits, 1993 

Audit Type Pending Opened Closed Pending 

at Beginning at End 

of Year of Year 

Presidential 14 3 2 15 

Presidential Joint Fundraising 0 1 0 1 

Senate 1 4 0 5 

House 5 4 4 5 

Party (National) 0 0 0 0 

Party (Other) 7 0 4 3 

Nonparty (PACs) 2 0 2 0 

Total 29 12 12 29 
91 Appendix 6 

1993 Federal Register

Notices 

1993-1 

11 CFR Part 110: Transfers of Funds from State to 

Federal Campaigns; Final Rule and Retransmittal to 

Congress (58 FA 3474, January 8, 1993) 

1993·2 

11 CFR Part 1 04: Recordkeeping and Reporting by 

Political Committees; Best Efforts; Notice of Public 

Hearing (58 FA 4110, January 13, 1993) 

1993-3 

11 CFR Part 201: Ex Parte Communications; Notice 

of Public Hearing (58 FA 6875, February 3, 1993) 

1993-4 

Filing Dates for the Ohio Special Elections (58 FA 

7230, February 5, 1993) 

1993-5 

Filing Dates for the Texas Special Election (58 FA 

7785, February 9, 1993) 

1993-6 

Filing Dates for the Mississippi Special Election (58 

FA 8052, February 11 , 1993) 

1993-7 

Filing Dates for the California Special Election (58 FA 

8959, February 18, 1993) 

1993-8 

11 CFR Parts 102 and 110: Multicandidate Political 

Committees; Notice of Proposed Rulemaking (58 FA 

12189, March 3, 1993) 

1993·9 

11 CFR Part 1 02: Rulemaking Petition: Citizens 

Against David Duke; Notice of Availability (58 FA 

12189, March 3, 1993) 

1993-10 

Filing Dates for the Wisconsin Special Elections (58 

FA 12966, March 8, 1993) 

1993-11 

11 CFR Part 110: Transfers of Funds from State to 

Federal Campaigns; Revised Implementation Plan for 

New Rule (58 FA 14310, March 17, 1993) 

1993-12 

11 CFR Part 201: Ex Parte Communications; Change 

in Date of Public Hearing (58 FA 14510, March 18, 

1993) 

1993-13 

11 CFR Part 1 04: Recordkeeping and Reporting Requirements-Best Efforts; Change in Date of Public 

Hearing (58 FA 14530, March 18, 1993) 

1993-14 

11 CFR Part 11 0: Transfers of Funds from State to 

Federal Campaigns; Final Rule; Announcement of 

Effective Date (58 FA 17967, April7, 1993) 

1993·15 

Filing Dates for Texas Special Runoff Election (58 FA 

29413, May 20, 1993) 

1993-16 

Compliance Procedures: 11 CFR Parts 4, 5, 102 and 

111; Notice of Proposed Rulemaking (58 FA 36764, 

July 8, 1993) 

1993-17 

11 CFR Parts 102 and 110: Multicandidate Political 

Committees; Final Rule; Transmittal of Regulations to 

Congress (58 FA 42172, August 6, 1993) 

1993-18 

11 CFR Parts 1 07, 114 and 9008: Presidential Election Campaign Fund and Federal Financing of Presidential Nominating Conventions; Notice of Proposed 

Rulemaking; (58 FA 43046, August 12, 1993) 

1993-19 

11 CFR Parts 100 and 113: Expenditures; Personal 

Use of Campaign Funds; Notice of Proposed 

Rulemaking (58 FA 45463, August 30, 1993) 
92 

1993-20 

11 CFR Parts 1 00 and 114: Definition of "Member'' of 

Membership Association; Final Rule; Transmittal to 

Congress (58 FR 45770, August 30, 1993) 

1993-21 

Filing Dates for Michigan Special Elections (58 FR 

46642, September 2, 1993) 

1993-22 

11 CFR Part 8: National Voter Registration Act; Advance Notice of Proposed Rulemaking (58 FR 51132, 

September 30, 1993) 

1993-23 

11 CFR Parts 1 00 and 113: Personal Use of Campaign Funds; Extension of Comment Period and Notice of Hearing Request (58 FR 52040, October 6, 

1993) 

1993-24 

11 CFR Parts 107, 114: and 9008: Federal Funding of 

Presidential Nominating Conventions; Notice of Public 

Hearing (58 FR 52700, October 12, 1993) 

1993-25 

11 CFR Part 1 04: Recordkeeping and Reporting by 

Political Committees: Best Efforts; Final Rule; Transmittal to Congress (58 FR 57725, October 27, 1993) 

1993-26 

11 CFR Part 201: Ex Parte Communications; Revised 

Interim Rules (58 FR 59642, November 1 0, 1993) 

1993-27 

11 CFR Chapter 1: Ratification of Regulations (58 FR 

59640, November 10, 1993) 

1993-28 

11 CFR Parts 1 00 and 114: Definition of "Member'' of 

a Membership Association; Final Rule; Announcement of Effective Date (58 FR 59641, November 10, 

1993) 

1993-29 

11 CFR Parts 1 02 and 11 0: Multicandidate Political 

Committees; Final Rule; Announcement of Effective 

Date (58 FR 59641, November 10, 1993) 

1993-30 

11 CFR Part 112: Policy Statement on Advisory Opinion Precedent (58 FR 59642, November 10, 1993) 

1993-31 

11 CFR Part 112: Revision to Advisory Opinion Comment Procedure (58 FR 62259, November 26, 1993) 

1993-32 

11 CFR Parts 1 00 and 113: Expenditures; Personal 

Use of Campaign Funds; Notice of Hearing (58 FR 

64190, December 6, 1993) 

1993-33 

11 CFR Part 102: Special Fundraising Projects and 

Other Use of Candidate Names by Unauthorized 

Committees; Notice of Proposed Rulemaking (58 FR 

65559, December 15, 1993) 
93 Appendix 7 

Regulations on Definition 

of "Member": Summary 

New regulations specifying the voting rights and financial attachments necessary for persons to qualify 

as "members" of incorporated membership groups 

became effective on November 10, 1993. Only qualified "members" are eligible to receive PAC solicitations and partisan communications from the incorporated membership group. See 2 U.S.C. 

§441 b(b)(2)(A) and (4)(C). 

The membership rules apply to both individual and 

corporate members. Although a membership group 

may not solicit contributions from its corporate members, it may direct partisan communications to individual representatives of corporate members, and a 

trade association may seek PAC solicitation approval 

from its corporate members. 11 CFR 114.8(d) and 

(h). 

Definition of Membership 

Association 

A membership association is defined as a labor organization1 or as an incorporated membership organization, trade association, cooperative or corporation 

without capital stock that expressly: 

• Provides for members in its articles and by-laws; 

• Seeks members; and 

• Acknowledges the acceptance of membership, such 

as by sending membership cards to new members 

or including them on a membership newsletter list. 

11 CFR 1 00.8(b)(4)(iv)(A) and 114.1 (e)(1 ). 

Definition of Member 

In addition to satisfying the association's requirements for membership, a member must affirmatively 

accept the membership invitation and meet one of the 

following three conditions: 

1. Regular Dues/Limited Voting Rights. The member is required to pay dues of a specific amount on a 

regular basis (e.g., annually or monthly) and is entitled to vote directly for: (a) at least one member who 

has full participatory and voting rights on the highest 

governing body of the association, or (b) those who 

select at least one such member of the highest governing body. 

2. Significant Financial Attachment. The member 

has some significant financial attachment to the membership association, such as a significant investment 

or ownership stake, but not merely the payment of 

dues. 

3. Full Voting Rights. The member is entitled to 

vote directly for all of those on the highest governing 

body of the membership association. 11 CFR 

100.8(b)(4)(iv)(B) and 114.1(e)(2). 

The Commission may consider, on a case by case 

basis, whether other membership arrangements 

would satisfy the definition of member. For example, 

student members who pay lower dues while in school, 

or long.:termmembers who qualify for lifetime memberships with no further dues obligations, may be 

considered members if they retain some voting rights 

in the association. 11 CFR 100.8(b)(4)(iv)(C) and 

114.1 (e)(3). An association should seek an advisory 

opinion for further guidance on alternative membership arrangements. 

Multi-tiered Associations; 

Farm and Rural Electric 

Cooperatives 

The voting rights and financial attachment criteria set 

forth in the definition of member govern whether 

three-tiered or multi-tiered associations can solicit 

members across all tiers. For example, in a threetiered membership association, if members at the 

local level have the requisite ties to both the state and 

national tiers, solicitation is permissible across all 

1 As in the former rules, members of a local labor union 

are considered to be members of any affiliated national or 

international union and members of any federation affiliated 

with the local, national or international union. 11 CFR 

100.8(b)(4)(iv)(D) and 114.1(e)(4) 
94 

three tiers. See, for example, AOs 1992-9, 1991-24 

and 1981-23. 

Although members of federated farm and federated 

rural electric cooperatives do not have the precise 

financial and organizational ties required under the 

rules, they nevertheless have significant ties throughout all levels. The structure and organization of these 

cooperatives are comparable to those of federations 

of trade associations. Like federations of trade associations under section 114.8(g), federated farm and 

rural electric cooperatives are authorized to solicit and 

to direct partisan communications to members of their 

regional, state and local affiliates provided that political committees established by the affiliates are considered affiliated committees, subject to shared contribution limits. 11 CFR 114.7(k). 
95 Appendix 8 

Regulations Banning 

Transfers from 

Nonfederal Campaigns:

Summary 

The Commission set July 1 , 1993, as the effective 

date of a rule prohibiting transfers of funds and assets from a candidate's nonfederal campaign to his 

or her federal campaign (11 CFR 110.3(d)). The new 

rule granted a petition for rulemaking filed by Congressman William Thomas. 

Previously, the Commission's regulation at 11 

CFR 110.3(c)(6) permitted a nonfederal campaign 

committee to transfer funds that were from permissible sources to a federal campaign committee established by the same candidate. 

The prohibition on nonfederal transfers did not 

apply to the campaigns of candidates running in the 

speCial elections scheduled before July 1. Those 

campaigns were subject to the provisions of 11 CFR 

110.3(c)(6). Under the new rule, if a federal campaign 

committee had received transfers of funds from the 

candidate's nonfederal committee, it was required to 

identify any nonfederal funds remaining in its account 

as of July 1. Any such funds had to be removed before July 31. 

The Commission originally intended to set April 1 

as the effective date for the new rule. However, the 

required legislative review period (30 legislative days) 

took longer than expected. 1The Commission wanted 

to avoid setting an effective date in the middle of the 

special election activity and therefore decided on the 

July 1 effective date. 

1 Legislative days are those days when the House or 

Senate is in session. 2 U.S.C. §438(d)(3). The 30-day legislative review period expired on March 18, 1993. On April 1, 

the Commission approved an announcement of the July 1 

effective date for publication in the Federal Register. 
97 Appendix 9 

Multicandidate Committee 

Regulations: Summary 

In 1993 the Commission approved new regulations to 

make it easier to identify committees that have qualified as multicandidate committees under the Act. 

(Multicandidate committees may give up to $5,000 to 

a candidate, per election; 1 other committees are subject to a $1,000 per election limit.) 

The new requirements for multicandidate committees took effect January 1 , 1994. 

Initial Disclosure of Multicandidate 

Status on New Form 1M 

Under 11 CFR 102.2(a)(3), a newly qualified multicandidate committee must file a new form, FEC Form 1M, 

before it contributes over $1 ,000, per election, to a 

candidate. The committee must disclose the following 

information on the form: 

• The date it registered; 

• The date it received a contribution from its 51st contributor; 

• A list of five federal candidates it has supported;2 

and 

• The date it achieved multicandidate committee status. 

The form also makes provision for new committees 

that automatically qualify as multicandidate committees on the date of registration by virtue of their affiliation with an existing multicandidate committee. 

Continual Reporting of 

Multicandidate Status 

on Amended Form 3X 

In another reporting change, the multicandidate 

checkoff box on Form 3X (line 3) has been amended. 

Committees that have qualified as multicandidate 

committees must now check the box on every report 

they file. Previously, committees checked the box only 

once, on the first repori: filed after achieving multicandidate status. 

The amended Form 3X will allow candidates and 

other interested parties to determine a committee's 

status at a glance. 

Multicandidate Committee Notice to 

Candidates 

Under a second new provision, 11 CFR 110.2(a)(2), 

when making contributions to candidate committees, 

multicandidate committees are required to provide 

written notice of their multicandidate status to the 

recipient. In the explanation and justification accompanying the regulations, the Commission suggested 

that committees display the information on their 

checks or letterhead. The information may also be 

included in the body of an accompanying letter or 

other communication. 

1 Note that the conditions for qualifying as a multicandidate committee remain the same: Registration for at least 6 

months, contributions from more than 50 persons and contributions to at least 5 candidates for federal office. (The last 

requirement does not apply to state party committees.) 

2 This does not apply to state party committees. 
99 Appendix 10 

Revised Interim Rules on 

Ex Parte Communications: 

Summary 

On October 28, 1993, the Commission adopted revised interim rules on ex parte communications that 

reflect public comments and testimony, and its own 

experience with the previous rules. (Ex parte communications are written and oral communications made 

by persons outside the agency to Commissioners or 

their staff concerning substantive Commission action.) 

The revised rules, which took effect November 10, 

replace those adopted in December 1992. 

The amended rules extend the ban on ex parte 

communications regarding audits and litigation to 

those concerning public funding. (Ex parte communi· 

cations pertaining to enforcement actions are subject 

to a separate prohibition. 11 CFR 7.15 and 111.22.) 

Commissioners and their staff must attempt to prevent 

these communications. If, however, they do receive a 

prohibited communication, they must: 

• Advise the person making the communication that it 

will not be considered; and 

• Submit to the Designated Agency Ethics Official a 

statement describing the substance and circumstances of the communication. That submission 

must occur within three business days or prior to the 

agency's next consideration of the matter, whichever 

occurs first. The statement becomes part of the file 

related to the pertinent audit, court case or public 

funding decision. 

Ex parte communications related to rulemaking 

proceedings and advisory opinions continue to be 

permitted, but the recipient Commissioner or staff 

member must disclose the contact within three business days or prior to the Commission's next consider· 

ation of the matter, whichever occurs first. Such communications become part of the public record. 

The ex parte rules do not apply to discussions involving the procedural status of an open matter or to 

statements made in a public forum. 

The revised regulations include the possibility of 

sanctions for violations of the rules. In response to a 

written complaint, the Designated Agency Ethics Offi· 

cial would recommend to the Commission an appropriate action. The Commission would consider the 

recommendation and decide what action to take by a 

vote of at least four Commissioners. 

Only communications made to Commissioners and 

members of their staff are governed by the revised 

rules. The Commission planned to consider an internal agency directive to address outgoing communications. 

The Commission adopted the revised rules on an 

interim basis and may reevaluate them further before 

issuing final rules. 
101 Appendix 11 

"Best Efforts" Regulations: 

Summary 

Political committees and their treasurers must exercise "best efforts" to obtain, maintain and report the 

identification1 of individuals who contribute more than 

$200 in a calendar year. If they fail to disclose contributor information, but can demonstrate that they 

made "best efforts" to obtain it, they will be in compliance with the law. 11 CFR 104.7. On October 21, the 

Commission revised its rules to clarify the steps that 

must be taken to demonstrate "best efforts": 

1. Requesting contributor information in the initial 

solicitation; 

2. Making a follow-up request (if necessary); 

3. Reporting the information; and 

4. Filing amendments to disclose previously unreported information. 

The new rules and their explanation and justification 

were published in the Federal Register on October 27 

(58 FR 57725).2 

Solicitations 

Under the new rules, committees must include in 

each solicitation a clear and conspicuous request for 

the identification of contributors who give more than 

$200 per calendar year. That request must contain 

the following statement: 

Federal law requires political committees to report 

the name, mailing address, occupation and name of 

employer for each individual whose contributions aggregate in excess of $200 in a calendar year. 

The request will not be considered "clear and conspicuous" if it is illegible or smaller than the text of the 

solicitation and response materials or if it is placed 

where it may be easily overlooked. 

Follow-up Request 

If a committee receives a contribution that exceeds 

the $200 threshold but lacks contributor identification, 

the treasurer must-within 30 days-make an additional written or oral request for the information. That 

request may not include an additional solicitation 

or material on any other subject. It may, however, 

thank the contributor for his/her donation. Written 

requests must include a pre-addressed return post 

card or envelope for the contributor's response. The 

follow-up request must be made for any solicited or 

unsolicited contribution exceeding the threshold that 

lacks the necessary information. 

Reporting 

Committees must, of course, disclose on their FEC 

reports the information provided by each contributor. 

Under the new rules, committee treasurers must also 

disclose information that was not provided by the 

contributor, but is available in the committee's records 

for that two-year election cycle, including its contributor records, fundraising records and previous reports. 

Filing Amendments 

If a committee receives contributor information after 

the contributions have been reported, the committee 

must either: 

• Submit with its next report a memo Schedule A listing all the contributions for which additional information was received during that reporting period; or 

• File, on or before the next reporting date, amendments to the previous reports on which the contributions were originally disclosed. 

Under either option, committees should cross reference the new information to the specific reports and 

entries that are being amended. Committees need 

only amend the information pertaining to contributions 

received during the current two-year election cycle. 

1 "Identification" means the name, mailing address, occupation and employer of an individual. 11 CFR 100.12. 

2These regulations became effective on March 3, 1994.