Federal 

Election 

Commission 

Annual Report 1989 

Federal Election Commission 

Washington, D.C. 20463 
Commissioners 

Lee Ann Elliott, Chairman 

John Warren McGarry, Vice Chairman 

Joan D. Aikens, Commissioner 

Thomas J. Josefiak, Commissioner 

Danny L. McDonald, Commissioner 

Scott E. Thomas, Commissioner 

Ex Officio Commissioners 

Walter J. Stewart, Secretary of the Senate 

Donnald K. Anderson, Clerk of the House 

Statutory Officers 

John C. Surina, Staff Director 

Lawrence M. Noble, General Counsel 

The Annual Report 1989 was written and published by 

the Commission's Information Services Division. 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 1, 1990 

The President of the United States 

The United States Senate 

The United States House of Representatives 

Dear Sirs: 

we are pleased to submit for your information the 15th 

annual report of the Federal Election Commission, as 

required by the Federal Election Campaign Act of 1971, as· 

amended. The Annual Report 1989 describes the activities 

performed by the Commission in carrying out its duties. under 

the Act. The report also outlines the legislative recommendations the Commission adopted and transmitted to the 

Congress for consideration in March 1990. We are hopeful 

that you will find this annual report a useful summary of 

the Commission's efforts to implement the Federal Election 

Campaign Act. 

Respectfully, 

LEE ANN ELLIOTT 

Chairman 
Table of Contents 

Introduction 1 

Chapter 1 

The Commission 3 

Commissioners 3 

International Delegations 3 

Office Automation 4 

Personnel and Labor Relations 5 

Inspector General 5 

The FEC's Budget 7 

Chapter2 

Presidential Public Funding 9 

Shortfall in Presidential Fund 9 

Public Funding Grants 12 

Audits and Repayments 13 

Enforcing Contribution and Spending Limits 16 

Chapter 3 

Administration of the Law 17 

New Legislation 17 

Public Disclosure 17 

Assistance and Outreach 19 

Review of Reports 20 

Advisory Opinions 20 

Regulations 20 

Enforcement 23 

Clearinghouse on Election Administration 24 

Chapter 4 

Legal Issues 27 

Expenditures by Nonprofit Corporations 27 

Corporate Support of PAC 28 

Corporations Owned by Foreign Nationals 29 

Jurisdiction Over Debt Settlements 29 

Preemption of State Law 30 

Party Committee Contributions and Expenditures 31 

Chapter 5 

Campaign Finance Statistics 33 

Chapter 6 

Legislative Recommendations 41 

Appendices 

1. Biographies of Commissioners and Officers 59 

2. Chronology of Events, 1989 63 

3. FEC Organization Chart 67 

4. FEC Offices 69 

5. Statistics on Commission Operations 73 

6. FEC Federal Register Notices, 1989 77 
Introduction 

A number of events highlighted 1989, the Federal 

Election Commission's fourteenth year of operation: 

On November 30, President Bush signed the 

Ethics Reform Act of 1989, which phases out the 

Federal Election Campaign Act provision that allows 

Members of Congress holding office in January 

1980 to use their excess campaign funds for 

personal use. The new law also assigns a new 

duty to the FEC, that of overseeing the personal 

finance reports filed by nonincumbent candidates 

under the Ethics in Government Act. 

Responding to the growing international interest 

in democratic forms of government, the Commission 

briefed numerous foreign delegations on the federal 

election process. The most in-depth exchange of 

views took place between the Commission and its 

Soviet counterpart, the Central Electoral Commission of the USSR. In June, the FEC visited the 

Soviet Commission in Moscow, which returned the 

visit in November. The Soviet delegation observed 

the Virginia gubernatorial election in Richmond and 

then traveled to New York City, which had just 

concluded its mayoral election. 

In April and November 1989, the Commission 

alerted Congress to a probable shortfall in the 

Presidential Election Campaign Fund by 1996. 

Using new data available in January 1990, the 

Commission projected that the Fund could run out 

of money even earlier, during the 1992 Presidential 

elections. A shortfall would materially alter the 

public funding system in place since the 1976 

Presidential elections. 

The Commission replaced its outdated word 

processing equipment with a computer system that 

permits agency-wide communication and access to 

the FEC database. Through a series of cost-saving 

measures, the agency expanded the system to 

more users than originally planned without exceeding the $1 million Congress allocated for the 

project. 

As one of the agencies covered by the Inspector 

General Act amendments of 1988, the Commission 

created an Inspector General's Office and appointed an Acting Inspector General. 

The FEC's Clearinghouse on Election Administration, responding to concerns about the reliability 

and accuracy of the computer-based voting systems, requested final comments on a draft of 

voluntary voting system standards and three documents on their implementation. 

The Commission continued its efforts to clarify 

the law by prescribing a comprehensive set of new 

regulations on affiliation, transfers and earmarked 

contributions. 

Finally, the Commission oversaw eight special 

elections during 1989, more than in any other year. 

These and other Commission activities are 

summarized in this Report, which also contains the 

agency's 1990 recommendations for legislative 

change. 
3 

Chapter 1 

The Commission 

Commissioners 

On October 5, 1989, the Senate confirmed the 

Presidential reappointments of Joan D. Aikens and 

John Warren McGarry to new six-year terms as 

FEC Commissioners. Mrs. Aikens, one of the 

original members of the Commission, has served as 

Commissioner since April 1975 and has been 

reappointed four times. This was Mr. McGarry's 

second reappointment; he began serving as Commissioner in 1978. 

Commission officers during 1989 were Chairman 

Danny L. McDonald and Vice Chairman Lee Ann 

Elliott. In December 1989, the Commission elected 

the 1990 officers: Chairman Lee Ann Elliott and 

Vice Chairman John Warren McGarry. 

Biographies of the Commissioners, the Staff 

Director and the General Counsel appear in Appendix 1. 

International Delegations 

The global movement toward more democratic 

elections made history in 1989. The Commission 

was fortunate in being able to play a role by 

responding to a clear demand from the international 

community to learn more about United States 

elections. Visitors from a broad scope of nations 

asked the Commission to explain the mechanics of 

the American electoral process. The Commission 

hosted delegations from Italy and Singapore, while 

the Clearinghouse briefed visitors from 88 countries. 

Most noteworthy among the FEC's international 

contacts were the exchange visits between the 

Soviet Union's Central Electoral Commission and 

the FEC. 

FEC Visit to USSR 

At the invitation of the Central Electoral Commission of the USSR, a 12-person delegation of Commissioners and FEC staff visited the Soviet Union 

from June 5 through June 14, 1989. The trip was 

funded by the Soviet government and the International Foundation for Electoral Systems, a private 

American organization whose executive director 

accompanied the FEC delegation. 

Headed by 1989 Chairman Danny L. McDonald, 

the delegation exchanged information and ideas on 

the electoral process with Vice President Anatoliy 

Lukyanov; Soviet election officials at the central, 

republic and municipal levels; several deputies to 

the new Soviet Congress of People's Deputies, 

including Boris Yeltsin; and professors of law and 

political science. The delegation met with Soviet 

officials in Moscow, Leningrad and Kiev. Meetings 

focused on the new Soviet election law, adopted in 

December 1988, which established the Congress of 

People's Deputies. The first elections to the Congress were held in March 1989. Among the topics 

discussed were: 

• The nomination process; 

• Ballot access and vote counting; 

• Campaign funding and other campaign issues; 

• The composition and role of the Congress of 

People's Deputies; 

• The structure and functions of the Central Electoral Commission and local electoral commissions; and 

• Election reforms under consideration in the 

Soviet Union. 

At a press conference held on September 13 to 

announce the release of a report on the visit (see 

below), the Commissioners said they were impressed by the progress the Soviets have made 

toward introducing democratic elections. Chairman 

McDonald commented, "They are truly feeling their 

way through this process," and noted their "eagerness to learn about the American system." 

Report on the FEC Visit 

In September 1989, the Commission released a 

report on the Soviet/American discussions that took 

place in the Soviet Union. 1 Listed below are some 

of the report's findings: 

• Soviet officials appeared to be proud of the 

1 Copies of the report are available from the Public 

Records Office. 
4 

steps taken toward democratic elections: 

grassroots participation in the selection of 

nominees; multicandidate contests; and secret 

voting. 

• Nevertheless, Soviet officials acknowledged that 

the March 1989 elections were only a beginning. They noted, for example, the need to: 

equalize campaign resources; further promote 

multicandidate slates and grassroots participation in the nomination process; provide adequate forums for candidates; re-examine the 

representation of public organizations in the 

Congress; strengthen the enforcement powers 

of the Central Electoral Commission; and clarify 

the election law. 

• In carrying out further reforms, officials stated 

they wanted to draw on the constitutional laws 

of other countries and the experience of 

Western nations in conducting democratic 

elections. They sought information on nomination procedures, campaign funding, vote counting and election law enforcement. 

Soviet election officials were able to learn more 

about American elections when they made a return 

visit to the United States in November 1989. 

Soviet Visit to U.S. 

On November 2, a delegation of members of the 

Central Electoral Commission of the USSR, headed 

by Chairman Vladimir P. Orlov, arrived in Washington, D.C., where they met with FEC Commissioners 

and were briefed by staff and attorneys. The Soviet 

delegation, accompanied by Chairman McDonald, 

met with Vice President Quayle, Attorney General 

Thornburgh and the Chairmen of the two Congressional committees that oversee election law: Representative AI Swift, Chairman of the House Administration Committee's Subcommittee on Elections, 

and Senator Wendell H. Ford, Chairman of the 

Senate Rules Committee. 

The Soviet commissioners were able to observe 

U.S. elections firsthand when they visited Richmond 

on the day of. the Virginia elections. They went to 

polling places, to the gubernatorial candidates' 

headquarters, to City Hall to see the votes collected 

and to a television station to see how the news 

media reported elections. They also had meetings 

with Governor Gerald L. Baliles and state election 

officials. Traveling to New York City the day after 

the election for mayor, they talked with New York 

City election officials . and the city council. 

Report on the Soviet Visit 

The Commission released a December 1989 report 

on the topics raised by the Soviet delegation during 

its election study tour. 2 The report summarized the 

three broad areas of discussion outlined below. 

• The Administration of Elections: election responsibilities of officials at the municipal, state 

(republic) and national levels; and resolution of 

disputed elections in the courts. 

• Campaign Finance and Politics: the formation 

and legitimacy of political committees; multiparty politics; campaign funding of candidates 

in the USSR; and allocation of Congressional 

seats (USSR) to all-union social organizations. 

• Federalism and the Role of Representational 

Bodies: the election of chief executives of the 

Soviet Republics, either by popular vote or by 

representative bodies; the formation of factions 

and caucuses in the Soviet Congress; and the 

operations of the U.S. Congress. 

Office Automation 

During 1989, the Commission replaced its 1970svintage word processing equipment with an up-todate office automation system. The old equipment 

was failing with increasing frequency. Because the 

manufacturer stopped producing the machines, 

replacement .Parts were scarce and maintenance 

costs high. Recognizing this, Congress earmarked 

$1 million in fiscal year 1989 for new computer 

equipment. 

2 Copies of the report are available from the Public 

Records Office. 
5 

The agency received the funds in late 1988 and, 

in less than one year, negotiated a contract, installed the equipment and trained employees to use 

it. The system was fully operational by October 

1989, without budget overruns. Taking advantage of 

price cuts and other opportunities for savings, the 

Commission installed almost 150 desk-top workstations and purchased a temperature alarm for the 

mainframe computers to prevent equipment damage. 

The agency chose the VAX system, developed 

bY DigitarEquipment Corporation, because it 

integrated into one system new word processing 

capabilities and existing database functions. The 

system also provided maximum security of individual files and the FEC database and the capacity for 

upgrading the equipment as system improvements 

become available. 

Personnel and Labor Relations 

Labor-Management Relations 

The Commission and the National Treasury Employees Union entered into a new labor-management agreement on November 6, 1989. The new 

contract sets forth personnel policies and practices 

for the bargaining unit represented by NTEU 

Chapter 204. 

Training 

The Commission completed the first phase of 

training to implement the FEC's Drug-Free 

Workplace Program. In November 1989, senior 

managers and supervisors were briefed on the 

basic elements of the program: education, prevention and constructive treatment. Staff training will 

follow. 

Another training program provided FEC attorneys 

with intensive instruction on depositions and negotiations, two facets of legal practice used extensively in FEC enforcement cases. Designed by the 

National Institute of Trial Advocacy, the September 

1989 courses were taught by Institute attorneys 

along with the FEC's General Counsel and Associate General Counsels. 

EEO Program 

A new Equal Employment Opportunity officer was 

appointed in February 1989. The officer manages 

the EEO program and special emphasis programs, 

such as the Federal Women's and Hispanic programs. A 1989 program organized by the EEO 

officer focused on career development. Employees 

heard from outside consultants, FEC managers and 

a panel of federal personnel managers on topics 

such as resume writing, interviewing, training 

opportunities and career outlooks for the 1990s. 

Recruitment 

Like other federal agencies, the Commission has 

had difficulty recruiting secretaries, auditors and 

attorneys. The federal government payscale and the 

high cost of living in the Washington, D.C., area 

discourage many qualified candidates from applying 

for and accepting these positions. To supplement 

in-house recruitment of auditors, the FEC reached 

an informal agreement with the General Accounting 

Office (GAO) that allows the Commission to take 

advantage of GAO's extensive recruitment program. 

In addition, the Office of General Counsel continued 

efforts to attract qualified attorneys by conducting 

on-campus interviews at various law schools and 

consortia around the country. 

Inspector General 

In April 1989, the Commission appointed an Acting 

Inspector General. The 1988 amendments to the 

Inspector General Act of 1978 called for the appointment of an Inspector General (IG) in 33 

federal agencies, one of which was the FEC. The 

IG conducts audits and investigations to detect 

fraud, waste and abuse within the agency and 

recommends policies and procedures designed to 

improve the economy and effectiveness of operations. Every six months, the IG must notify Congress of any serious problems or deficiencies in 

agency operations and any corrective measures 

taken by management. The IG files these reports 

with the Commissioners, who forward the reports, 

along with their comments, to Congress. 
6 

Divisional Allocations I Fiscal Year 1989 

I Fiscal Year 1990 

Percent 

Allocation of Budget 

*Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Services 

Public Disclosure 

Reports Analysis 

t Office Automation System •••••• 

Allocation of Staff* 

* Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Services 

Public Disclosure 

Reports Analysis 

Percent 

* Includes Inspector General's Office. 

t This category represents the one-time purchase, installation and training costs. 

*The Commission averaged 251.3 full-time equivalent positions (FTE) in FY 1989 and projected 248 FTE for FY 1990. 
7 

In compliance with the Inspector General Act, the 

Commission notified Congress and the Office of 

Management and Budget on steps taken to implement the Act: appointing an Acting IG until a permanent replacement was made and providing administrative and budgetary support for the IG's 

office. The Acting IG developed formal working 

guidelines with the General Counsel and the Staff 

Director and initiated a Commission-wide survey to 

establish an audit plan for fiscal year 1990. 

The FEC' s Budget 

Fiscal Year 1989 

The Commission's initial FY 1989 appropriation was 

$15.433 million. (This funding included the $1 

million earmarked for the office automation program.) The Commission recognized that it could not 

afford the 264 full-time equivalent positions (FTE) 

authorized in the appropriation. The budget was 

strained because the agency had to absorb costs 

for the 4.1 percent 1989 pay raise, the 31.5 percent 

increase in health benefits and the establishment of 

an Inspector General's Office. The agency requested a $368,000 supplemental appropriation but 

had little assurance that it would be forthcoming. 

Consequently, the Commission tried to cut costs by 

reducing staff through attrition and by keeping a 

tight rein on nonpersonnel expenses. 

Even with these controls in place, the agency 

had to adopt emergency austerity measures in 

April. The Commission cut temporary data-entry 

staff and imposed a hiring freeze in all offices 

except the Audit Division and the General Counsel's Office, where the agency had to maintain 

staffing to complete the post-election workload. 

Further cuts were made in nonpersonnel programs, 

for example, in Clearinghouse contract money. 

In July 1989, however, the agency received a 

$250,000 supplemental appropriation and was able 

to allocate funds to several nonpersonnel programs 

that had been cut. The supplemental appropriation 

came through too late, however, for the agency to 

hire the additional staff that was needed. While the 

level of staffing for FY 1989 averaged 251.3 FTE, 

on-board strength declined to 243 FTE by the end 

of the fiscal year. 

The Commission's total funding for FY 1989, 

including the supplemental appropriation, was 

$15.683 million, of which $13,910 remained unspent 

and was returned to the U.S. Treasury. 

Fiscal Year 1990 

The Commission operated on a fiscal year funding 

level of $14.257 million through October 25, 1989. 

The final appropriation for FY 1990 was $15.330 

million. However, to cover the cost of the 3.6 

percent payraise ($274,000) in January 1990, the 

agency had to cut nonpersonnel costs and reduce 

the FY 1990 staffing level from the 253 FTE 

positions authorized by the budget to 248 FTE. 

However, because an anticipated sequester of 

Functional Allocation of Budget 

FY 1989 FY 1990 

Personnel 10,527,200 10,962,500 

Travel 208,800 144,000 

Motor Pool 8,700 6,000 

Commercial Space 19,300 20,000 

GSA Space 1,640,000 1,671,500 

Equipment Rental 260,400 387,000 

Equipment Purchase * 1,040,900 60,000 

Printing 224,000 315,000 

Support Contracts 616,300 699,500 

Administrative Expenses 117,300 113,500 

Supplies and Materials 228,100 222,000 

Publications 120,700 126,500 

Telephone/Telegraph 313,500 323,500 

Postage 110,000 140,000 

Training 83,200 44,000 

GSA Services, Other 150,700 95,000 

Total $15,669,100 $15,330,000 

*In fiscal year 1989, this total included $1 million specially 

appropriated for an office automation system. 
8 

$66,000 did not occur, the agency was able to reallocate the funds for increased professional and 

managerial training and continued data entry of 

contributions of $200 and above from individuals for 

the 1990 election cycle. (In previous election cycles, 

the threshold for data entry had been $500.) 

The FY 1990 management plan called for a 

gradual return to an Audit Division staffing level 

comparable to that of the 1980 Presidential cycle 

(42 FTE positions). After 1980, budget constraints 

and legislative limits on non-Presidential audits led 

the Commission to reduce Audit staff to a core of 

24 FTE, supplemented in Presidential years by 

temporary staff and GAO staff (detailed on a 

nonreimbursable basis) to help with the public 

funding program. However, during the 1988 Presidential cycle, the Commission experienced problems created by a shortage of experienced Audit 

staff. With the planned increase in Audit staff, supplemented by GAO employees, the agency will 

have sufficient trained staff in place for the 1992 

elections. 

A comparison of the allocation of budget resources for FYs 1989 and 1990 appears in the 

table and graphs above. 
9 

Chapter 2 

Presidential Public 

Funding 

During 1989, the Commission continued to audit the 

1988 Presidential campaigns and convention committees that received public funds. Looking ahead 

to future Presidential elections, the agency expressed its concern that the Presidential public 

financing system, in place since 1976, may be out 

of funds by 1992. 

Shortfall in Presidential Fund 

In April 1989, and again in November, the Commission alerted Congress to the crisis of a declining 

balance in the Presidential Election Campaign 

Fund. Financed with dollars voluntarily checked off 

by individual taxpayers on their annual 1 040 tax 

returns, the Fund is the sole source of federal 

money for the three phases of the Presidential 

election process: the primaries, the party conventions and the general election. 

Although the previous (1989) projections had 

shown a Fund deficit for the 1996 elections, revised 

projections calculated in January 1990 showed that 

a shortfall in the Fund might occur even earlier, in 

1992. 

The inflation rate was the dominant factor in the 

Commission's revised projections, since payments 

from the Fund to convention committees and 

general election candidates are automatically 

adjusted for inflation. The inflation rate was also 

used to estimate future matching fund payments to 

primary candidates. The 1989 projections had been 

based on the 1988 inflation rate of 4 percent. The 

1989 rate, however, was higher. In January 1990, 

the Department of Labor released the figure of 4.8 

percent. Using the new inflation figure, the Commission increased projected payouts from the Fund. 

Another factor the Commission considered in 

projecting the Fund balance was the estimated 

yearly deposit of taxpayer checkoff dollars. While 

payouts from the Fund are adjusted for inflation, 

the checkoff amount of one dollar is not indexed to 

the inflation rate. As a result, even with a constant 

level of taxpayer participation, deposits will eventually be overtaken by disbursements. Exacerbating 

this situation, taxpayer participation in the checkoff 

program has declined (see the accompanying 

graph). 

Using a yearly inflation rate of 4.5 percent and 

taking into account the declining deposits to the 

Fund, the agency projected that the Fund might run 

short for the 1992 Presidential elections by about 

$202,000. For the 1996 elections, however, the 

agency projected a shortfall of over $131 million. 

Should the Fund run out of money, the law stipulates that priority be given to funding for party conventions and general election nominees, with 

primary c:anqidCites receiving a smaller portion of 

federal matching funds. Should the Fund balance 

be insufficient to fully pay for the conventions and 

general election campaigns, as projected for the 

1996 elections, private contributions would have to 

make up the difference. 

"Such a result," said the Commission in a 1989 

legislative recommendation, ''would clearly alter the 

Presidential public funding program, which has 

been in effect in the general elections since 1976." 

Reiterating this concern in his November letter to 

Congress, 1989 FEC Chairman Danny L. McDonald 

said that "serious distortions to the Presidential 

election process will occur unless the balance in 

the Presidential Fund can be fully restored or the 

election finance system is fundamentally changed." 

In an effort to increase public participation in the 

dollar checkoff, the Commission requested, but did 

not receive, an additional $250,000 in fiscal year 

1990 to produce a nationwide education program in 

conjunction with the National Advertising Council. 

The agency amended this proposal in its fiscal year 

1991 budget request, asking for $116,000 to fund a 

smaller program. Under this plan, the agency would 

first survey taxpayers' awareness and knowledge of 

the checkoff program. The survey results would 

then help the agency prepare effective videos and 

brochures explaining the 1 040 checkoff and the 

public funding system. 
10 

Presidential Campaign Fund: 

Funds Available and Needed* 

Actual Funds Available 

- Actual Amounts Needed (Spent) 

~~;; Projected Funds Available 

Millions of Dollars Projected Amounts Needed 

250 

200 

150 

100 

50 

0 

1976 1980 1984 1988 1992 1996 

Actual Actual Actual Actual Projected Projected 

*The Commission used the following assumptions and estimates in making its projections: (1) a 4.5 percent inflation rate for 

calendar years 1990-1996; (2) a $450,000 decline per year in checkoff receipts beginning in 1990; (3) estimated 1992 election 

cycle payouts to primary candidates based on 1984 figures adjusted for inflation; (4) in 1992, incumbent will not face serious 

challenge from within party; (5) estimated 1996 election cycle payouts to primary candidates based on 1988 figures adjusted 

for inflation; (6) in 1996, no incumbent candidate (wide-open field); (7) in 1992 and 1996, no payouts to independent or third 

party candidates or conventions; (8) repayment estimates based on historical ratio of repayments to payouts (1976-1984 

cycles). 
351---------------

30 1-------------

251------

201------

151------

101------

51--------

0...___..... 

n n ~ ~ n ~ ~ oo ~ ~ ~ M ~ ~ ~ ~ ~ 

11 

Presidential Campaign Fund: 

Income Tax Checkoff Amounts by Year* 

Millions of Dollars 

45 

* Data provided by U.S. Department of Treasury. Figures for 1973 through 1976 are not verified. 
12 

Public Funding Grants 

Primary Matching Funds 

The Commission's total certifications for 1988 

matching funds reached $65.7 million by December 

1988. Additional funds were certified in 1989 as 

candidates continued to submit matching fund 

requests to retire debts and wind down campaign 

activities. The $1.8 million certified in 1989 brought 

total matching fund certifications for 1988 primary 

candidates to $67.5 million. 

The maximum amount a primary candidate may 

receive is half of the statutory spending limit ($1 0 

million, adjusted for inflation). The 1987 cost-ofliving adjustment (COLA) brought the 1988 spending limit to $23.050 million. A 1988 candidate could 

received half that amount in matching funds, or 

$11.525 million. No candidate, however, reached 

that limit. 

Convention Funding 

The Democratic and Republican parties each received a $9.220 million federal grant to finance 

their 1988 Presidential conventions. This amount 

represented the statutory entitlement of $4 million 

increased by the 1987 COLA. 

General Election Grants 

The statutory entitlement for major party nominees, 

$20 million, equaled $46.1 million when adjusted by 

the 1987 COLA. The major party nominees each 

received that amount in 1988. 

Matching Fund Payments: Robertson Protest 

Americans for Robertson wrote a letter of protest to 

the Commission concerning a resubmission for 

matching funds. The committee contended that it 

was entitled to a larger matching fund payment 

than the FEC Audit staff had calculated. The 

Commission considered this matter in October 

1989. 

Background. Since 1980, the Commission has used 

a statistical sampling technique to evaluate matching fund submissions. 1 Audit staff review a sample 

group of contributions, selected by a computer 

program, to see if they meet the requirements for 

matchable contributions. The error rate of the 

sample (expressed as a percentage) is then used 

to determine the amount of the matching fund 

payment. This process is applied to each submission. 

FEC rules and the Guideline for Presentation in 

Good Order provide committees with two alternatives for making matching fund resubmissions in 

order to obtain funds that were initially withheld. 

Under the first option, Audit staff explain the type of 

errors found in the sample review but do not 

identify the contributions. The committee resubmits 

the entire submission, taking care to make corrections so that it contains only matchable contributions. Audit staff then reexamine the original sample 

items and recalculate the error rate. If it is lower 

than the rate applied to the original submission, the 

committee receives additional matching funds. 

Alternatively, the committee may request the 

identification of the specific contributions that were 

rejected in the sample review and resubmit those 

contributions only, with the required corrections. In 

this case, the additional payment equals only the 

matchable amount of the face value of the contributions that were resubmitted (if they meet review 

standards). 

Robertson Resubmission. The Robertson committee 

chose the second option, correcting only the 

sample contributions. The committee contended, 

however, that it was entitled to an amount based 

on a recalculated error rate ($688,818) rather than 

1 A full matching fund submission contains a list of 

matchable contributions and includes the amount of each 

contribution, the donor's name and address, a photocopy of 

the check (or other written instrument) and supporting bank 

documentation. The submission must comply with other 

requirements of the FEC's Guideline for Presentation in 

Good Order, an instruction manual. 
13 

the matchable value of the corrected sample 

contributions ($14,873). In its meeting of October 5, 

1989, the Commission concurred with the Audit 

staff's conclusion and certified payment of the lower 

amount. 

Audits and Repayments 

The Audit Process 

Under the public funding statutes, the Commission 

must audit all candidate and convention committees 

receiving federal funds to ensure that the funds 

were not misused. The audit process outlined in 

FEC rules involves several steps and can be 

lengthy, depending on such variables as the condition of the committee's records, the level of financial activity and committee requests for extensions 

of time to respond to preliminary audit findings. 

Audit staff first conduct a fieldwork audit-an on-site 

examination of the committee's financial records. At 

the conclusion, auditors hold an exit conference to 

discuss preliminary findings that will be incorporated 

into an interim audit report; (Follow-up fieldwork 

may be necessary depending on factors spelled out 

in FEC rules.) The committee may dispute findings 

contained in the interim audit report within 30 days. 

The final audit report, which is released to the 

public after legal review and Commission approval, 

may include adjustments to the interim report 

prompted by the committee's response. Moreover, 

the Commission may add information based on 

subpoenaed documents and responses from third 

parties. The final report may also include an initial 

determination by the Commission that the commit- · 

tee repay public funds. (Repayment determinations 

are discussed in the section below.) 

The Commission issues addenda to final audit 

reports based on follow-up fieldwork. Addenda may 

contain additional repayment determinations. 

Repayments 

Candidate and convention committees must repay 

federal funds to the U.S. Treasury for a number of 

reasons. For example, repayments are required 

when the audit determines that the committee: 

• Received public funds in excess of the amount 

to which the committee was entitled (e.g., 

received matching funds for contributions that 

were later determined to be nonmatchable); 

• Had surplus funds remaining on the date of 

ineligibility; 2 

• Earned interest on invested funds; 

• Had stale-dated checks (committee checks that 

were never cashed by the payees); or 

• Incurred nonqualified campaign expenses by 

spending in excess of the limits,3 by using 

public funds for expenses not related to the 

campaign or by insufficiently documenting the 

expenditure of public funds. 

In the case of primary campaigns, which receive 

contributions as well as public funds, a campaign 

must repay only the portion of nonqualified cam2 A primary candidate becomes ineligible to receive 

matching funds (except to retire debts incurred before 

ineligibility and to cover winding down costs) on the earliest 

of the following dates: (1) 30 days after the candidate fails 

to receive at least 1 0 percent of the votes in two consecutive primary elections; (2) the date the candidate publicly 

withdraws from the race; (3) the date on which the candidate notifies the Commission, or the Commission determines, that the candidate has ceased to campaign actively 

in more than one state; or (4) for all other candidates, the 

date on which the party nominates its candidate at the 

national convention. 

3 Major party convention committees and general election 

candidates must limit spending to the amount of their 

federal grants ($9.220 million and $46.100 million, respectively, in 19tl8). Primary candidates must comply with two 

types of spending limits: a national limit ($1 0 million 

multiplied by the COLA, which amounted to $23.050 million 

in 1988); and a limit in each state (the greater of $200,000 

or 16 cents multiplied by the state's voting age population, 

both amounts adjusted for inflation). Under a special 

exemption, primary candidates may also spend up to 20 

percent of the national limit on fundraising costs ($2.305 

million in 1988). These fundraising disbursements do not 

count against the national or state limits, with certain 

exceptions. 
14 

paign expenses that were defrayed with matching 

funds. A ratio formula is used to determine this 

amount. 

If a committee does not dispute the Commission's initial repayment determination (contained in 

the final audit report) within 30 days, the determination becomes final, and the committee must make 

the repayment to the U.S. Treasury within 90 days 

of the initial determination. The repayment date is 

suspended if the committee disputes the initial determination, but the committee must submit written 

arguments to support its view within 30 days. The 

committee may also be granted a hearing by the 

Commission to present its case against the initial 

repayment determination. The du Pont committee 

requested such a hearing in 1989 (see below). 

In making a final repayment determination, the 

Commission may take into account the committee's 

written response and its presentation at a hearing. 

The final determination includes a statement of 

reasons supporting the agency's conclusions. A 

committee that disputes the initial repayment determination must repay the amount specified in the 

final determination within 30 days (1 0 days for a 

convention committee). Candidate committees may, 

within 20 days of the final determination, file a 

petition for a rehearing by the Commission for the 

purpose of introducing new questions or issues that 

could not be raised earlier. The deadline for repayment is suspended until the Commission makes a 

decision on the petition. Finally, a committee may 

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

Columbia to review a final repayment determination. 

The committee must nevertheless make the repayment to the Treasury within the deadline unless the 

committee obtains a stay from the Commission 

pending the appeal. 

1988 Presidential Audits 

Audit fieldwork was well under way before the 1988 

primary season ended. FEC auditors started with 

the Presidential campaigns of candidates who 

announced their withdrawal from the race. The 

paragraphs below summarize the final audit reports 

released in 1989 and include the Commission's 

repayment determinations made through December 

1989 with respect to the audited committees. Not 

included in the summaries are findings concerning 

committee reporting errors that were corrected 

through amended reports. 

• Pete du Pont for President. Using the repayment ratio explained above, the Commission 

made an initial determination that the committee repay to the U.S. Treasury $23,255, which 

represented the portion of public funds spent in 

excess of the Iowa spending limit. The final 

audit report concluded that the du Pont committee should have allocated to the Iowa limit 

an additional $257,943 in expenditures related 

to a telemarketing and mail program. The 

reallocation caused the committee to exceed 

the Iowa limit by $99,721. The committee 

contested the initial repayment determination in 

a Commission hearing held June 28, 1989. The 

committee argued that costs for the telemarketing program were exempt from the spending 

limits under exceptions in the statute and FEC 

rules for fundraising costs and campaign 

headquarters overhead. In a December 14 final 

repayment determination, the Commission 

concluded that neither exemption applied. 

Moreover, subpoenaed records showed that the 

committee further exceeded the Iowa limit by 

failing to allocate $8,395 in postage costs to 

Iowa. Consequently, the final determination 

increased the repayment amount to $25,775. 

• Babbitt for President. In the final audit report, 

the Commission made an initial repayment 

determination that the committee repay $1,005 

to the U.S. Treasury. This amount represented 

the portion of public funds used to defray 

expenses that did not meet the standard for 

qualified campaign expenses because they 

lacked sufficient documentation. The committee 

concurred with the initial determination, which 

became final in July 1989. The committee 

made the repayment on September 14, 1989. 

• Haig for President. The Haig committee also 

made insufficiently documented disbursements. 
15 

In the final audit report, the Commission made 

an initial determination that the committee 

repay to the Treasury $5,979, the portion of 

public funds used to defray the nonqualified 

campaign expenses. The Haig audit also 

revealed that the committee had received 

matching funds for contributions that were not 

matchable because they exceeded the legal 

limit or because they were not made payable 

to the committee. Based on these findings, the 

Commission initially determined that the committee repay the full amount of the nonmatchable contributions ($2,855). The committee 

concurred with the initial repayment determination ($8,834), which became final in August 

1989. The Commission granted the committee's 

request for a 90-day extension to make the 

repayment. 

• Albert Gore, Jr. for President. In the final 

audit report, the Commission made an initial 

determination that the Gore committee repay 

$4,035, the portion of matching funds used to 

defray $13,330 in expenses that were nonqualified because they were incurred after Senator 

Gore's date of ineligibility and were for purposes other than to defray winding down costs 

or to retire qualified debts. Despite its OJ::;agreement with this finding, the Gore committee 

made the repayment. The committee also 

disagreed with another finding, but nevertheless 

complied with the report's recommendation that 

it return an impermissible transfer of $24,000 it 

had received from the candidate's 1990 Senate 

committee. Finally, in response to a recommendation in the interim audit report, the committee 

listed its efforts to have stale-dated checks 

cashed and repaid $292 to the Treasury, the 

amount the committee believed would remain 

uncashed. The Commission's initial repayment 

determination became final on August 29, 

1989. 

• Lenora B. Fulani's Committee for Fair Elections. The Commission initially determined that 

the committee repay $15,065 in matching funds 

that exceeded the candidate's entitlement 

because the committee received them after the 

candidate's date of ineligibility and after the 

committee had sufficient funds to retire all 

debts. The Commission also initially determined 

that the Fulani committee repay $1,434, the 

portion of matching funds that defrayed nonqualified expenses that were unrelated to the 

campaign. Another initial repayment determination of $193 represented the amount of staledated checks that remained outstanding. The 

committee made all repayments prior to the 

Commission's initial determinatians.4 

• The Arrangements Committee of the Republican National Committee for the 1988 Republican Nominating Convention. The Commission made an initial determination that the 

committee repay $25,066 in interest earned on 

invested public funds. This amount represented 

total interest earned less income tax paid. The 

final report noted that the committee had 

already made this repayment. The Commission 

also initially determined that the committee 

repay $93,056 to the Treasury, the amount by 

which the committee exceeded the $9.220 

million convention spending limit. The committee contested this determination in a written 

response, which the Commission will consider 

when making a final repayment determination. 

• 1988 Democratic National Convention Committee. Far from exceeding the convention 

spending limit, the committee had $64,390 left 

over after all expenses had been paid. In the 

final audit report, the Commission initially 

determined that the committee repay the 

amount of unspent funds to the Treasury. As of 

January 1990, the committee had not repaid 

any funds, and the Commission had not made 

a final determination. 

4 The Commission's initial repayment determination 

became tina~ on January 11, 1990. \ 
16 

Enforcing Contribution and 

Spending Limits 

In addition to requiring committees to repay federal 

funds when spending limits are exceeded, the Commission may impose civil penalties. In an enforcement case resolved in 1989, MUR 2073,5 the 

agency imposed a $50,000 penalty on a 1984 

Presidential primary campaign for, among other 

offenses, failing to allocate over $200,000 in expenses to the Iowa spending limit and consequently 

·· exceeding the lowa·limit by over $100,000. The 

candidate also exceeded, by $67,000, the $50,000 

limit on campaign spending from personal funds 

that applies to candidates who receive public funds. 

Excessive expenditures from personal funds included direct contributions, credit card charges, 

loans and payment of telephone bills. 

The committee also accepted $37,920 in excessive contributions. Although the committee claimed 

that the excessive portions had been either reattributed to other donors or refunded, the written 

reattributions were undated, making it impossible to 

determine how much time had elapsed before the 

excessive amounts had been remedied. The refunds took an average of 263 days, well beyond a 

reasonable time. Excessive contributions in the form 

of letters of credit from individuals amounted to 

$104,600. Further excessive contributions resulted 

from alleged returns on an investment that never 

took place, since the investor never deposited the 

committee's check. Again, the committee took an 

unreasonable time to reimburse the investor: 140· 

days for a $15,000 check and 245 days for a 

$30,000 check. 

5 MURs, or Matters Under Review, are discussed under 

Enforcing the Law, Chapter 3. 
17 

Chapter 3 

Administration of the Law 

As the agency responsible for administering the 

Federal Election Campaign Act, the Commission 

oversaw eight special elections during 1989, more 

than any other year. The Commission also gained 

additional responsibilities under the Ethics Reform 

Act of 1989, as explained below. 

New Legislation 

The Ethics Reform Act of 1989 (P.L. 101-194), 

which was signed into law by President Bush on 

November 30, 1989, included changes that affected 

the Commission and the federal campaign law. 

Repeal of Grandfather Clause 

The Ethics Reform Act of 1989 phased out the 

"grandfather clause" contained in Section 439a of 

the Federal Election Campaign Act. That section 

prohibits candidates from converting excess campaign funds to personal use. Under the "grandfather 

clause," however, the prohibition on personal use 

did not apply to Members of Congress holding 

office on January 8, 1980. 

Under the 1989 amendments, all Members of 

Congress will eventually be prohibited from converting excess campaign funds to personal use. The 

amendment will affect Members in two stages: 

• Members of the 1 02nd Congress (which begins 

January 1991) or earlier Congresses who were 

previously covered by the grandfather clause 

are not prohibited, once they retire, from 

converting excess funds to personal use, but 

only up to a limit. They may not convert 

"excess amounts totaling more than the amount 

equal to the unobligated balance on hand" on 

November 30, 1989. 

• The personal use exemption will be completely 

eliminated when the 1 03rd Congress convenes 

in January 1993. 

Prohibition on Honoraria 

Under the Ethics Reform Act of 1989, Members 

of the House of Representatives and officers and 

employees of the federal government are prohibited 

from receiving honoraria (payments received for a 

speech, appearance or article), effective January 1, 

1991. If such a payment is directed to charity, it is 

not considered "received" as long as the payment 

does not exceed $2,000 and the Member, officer or 

employee, or his or her ''family" or dependent 

relatives, do not derive any financial benefit from 

the selected charity. ("Family" means parents, 

bothers, sisters, spouse and children.) 

To conform with this new prohibition, the Federal 

Election Campaign Act's provision on honoraria (2 

U.S.C. §441 i) was amended to apply only to 

Senators and officers and employees of the U.S. 

Senate. 

Personal Financial Disclosure by Candidates 

The Ethics Reform Act of 1989 also amended the 

Ethics in Government Act of 1978, which requires 

candidates for federal office to file reports on their 

personal finances. Under the 1989 amendments, 

nonincumbent House and Senate candidates will 

file their personal financial reports with the FEC, 

instead of with the House or Senate. Incumbent 

House and Senate candidates will continue to file 

personal financial reports with the House Committee 

on Standards of Official Conduct and the Senate 

Select Committee on Ethics, as appropriate. (The 

FEC has recommended technical amendments to 

the law.) 

Public Disclosure 

Data Processing 

The Commission has kept pace with the growing 

public interest in political finance, this year releasing 

statistics on the entire 1988 election cycle earlier 

than any previous cycle. In February 1989, the 

Press Office released statistical studies covering the 

entire cycle of the 1988 Congressional campaigns; 

party committee studies appeared in March, and 

PAC information was released in April. Statistics 

based on pre-election reports on the 1989 special 

elections were out before the elections had taken 

place. 

Early release of data was possible because of 

faster computer entry of itemized information from 
18 

political committees' financial reports. FEC Data 

staff entered more transactions more quickly: data 

entry for 95 percent of the 1988 year-end reports 

was completed in 18 days. 

In connection with the 1989-1990 election cycle, 

the Commission began to capture detailed information on contributions of $200 and above from 

individuals. The previous threshold had been $500. 

The agency decided to augment contributor data to 

assist the FEC in monitoring contribution limits and 

to help researchers interested in patterns of contributions. 

Public Records 

A strong disclosure program-one providing as 

much information and research assistance as 

possible-prompts candidates and committees to 

comply with the law. They know that reporters, 

interest groups and opposing candidates scrutinize 

their reports and the computer printouts on their 

activities, looking for possible errors and violations 

of the law. The center for this type of research is 

the Public Records Office. There, the FEC offers a 

selection of indexes generated from its data base 

and personalized research assistance. 

Public Records staff help the public locate the 

documents and research tools they need. Using the 

office's research space and copying equipment, 

visitors have access to numerous materials, including: reports and statements filed by the regulated 

community, made available within 48 hours of the 

Commission's receipt; standard computer indexes, 

updated daily; FEC Reports on Financial Activity, 

the final statistical studies of an election cycle; 

advisory opinions; enforcement files (closed MURs); 

audit reports; and Commission meeting agenda 

documents. Requests for materials are also handled 

over the phone. Callers ordering documents on a 

regular basis set up running accounts, a convenient 

way to pay the reasonable fees for copying and 

computer services. 

As an additional service, the Public Records 

Office stocks FEC publications, including Court 

Case Abstracts, a summary of litigation related to 

the Federal Election Campaign Act. The office also 

keeps on hand several reference tools. New in 

1989 was Federal Elections 1988, 1 the fourth in a 

series of official vote counts that provide an accurate, historical record of federal election results. 

Press Office 

During 1989, the Press Office continued to promote 

disclosure by issuing releases and answering questions from the media on campaign activity. The 

office also handles requests made under the 

Freedom of Information Act. An established resource for. the Washington-basedmedia, the Press 

Office has gradually reached out to media located 

outside the D.C. area. By 1989, reporters from 

outside the D.C. area accounted for 50 percent of 

telephone inquiries. This local activity boosted 

demand 'tor Press Office assistance. The office 

received more calls in 1989 than in any other 

nonelection year. 

Also in 1989, the office used improved technology to target local media in districts holding special 

elections. Using the fax machine, the office transmitted releases on the finances of competing candidates-before election day. (Faster computer entry 

also made this possible, as explained above.) Local 

media used this up-to-date material in broadcasts 

and newspaper articles. Nevertheless, the staff time 

needed to fax information (e.g., four hours to fax 

special election data to all the media outlets in the 

Dallas/Fort Worth area) limits the use of this innovation. 

Another technological advance-the office automation system mentioned in the first chapter-accelerated Press Office response to callers seeking 

campaign finance data. Staff used their new desktop terminals to locate data in minutes. 

As the official spokespersons for the FEC, Press 

Office staff release information on all agency activities, including newly closed enforcement cases 

(MURs). During 1989, the office revised the standard MUR press release to make it a more usable 

1 Available for purchase through the National Technical 

Information Service. 
19 

tool for the media. With additional information on 

specific alleged violations, the final outcome and 

the amount of any penalties imposed, reporters 

could better evaluate which MURs were newsworthy 

and should be explored. 

The Press Office also publicizes and coordinates 

subscriptions to the FEC's Direct Access Program, 

which is covered below. 

Outside Access to FEC Data 

Subscribers to the Direct Access Program (DAP) 

nearly doubled during 1989. Over 200 subscribers 

now have access to FEC campaign finance data on 

their personal computers. 

The FEC's state access program also provided 

on-line access to campaign finance data. The 

general public could request printouts of FEC 

indexes in 21 state offices around the country. 

The Commission also continued its program of 

disseminating campaign finance information to the 

academic community. The agency expanded its 

holdings in the national data archive at the InterUniversity Consortium for Political and Social Research in Ann Arbor, Michigan. Through the Consortium, member universities and research institutes 

may obtain free copies of FEC data files covering 

the election cycles 1978 through 1988. To date, 

more than 60 institutions have obtained FEC 

information in this way. 

Assistance and Outreach 

Telephone Assistance 

The Commission has developed a strong outreach 

program to help those who must comply with the 

campaign finance law. The heart of the program is 

the toll-free information line (800-424-9530). Anyone 

needing information or guidance on the law simply 

has to call the FEC. Information Services staff _ 

answer thousands of questions on the toll-free and 

local lines each year. Their answers are grounded 

in the statute, regulations and advisory opinions. 

Reporting Assistance 

Callers needing help with reporting may use the 

toll-free line to speak directly with the reports 

analyst responsible for reviewing the caller's report. 

Analysts conduct detailed reviews of all reports filed 

and are specialists in questions regarding reporting 

and related compliance matters. (See also Review 

of Reports, below.) 

In keeping with its emphasis on disclosure, the 

agency sends committee treasurers reminders of 

upcoming deadlines three weeks before the due 

date of a report. The FEC newsletter, the Record, 

also alerts readers to reporting requirements and 

briefs them on new advisory opinions, regulations 

and litigation. All treasurers automatically receive 

the Record, but anyone may order a free subscription. 

Publications 

The agency also produces and distributes free 

publications and video tapes that explain the law. In 

1989, the Commission revised its Campaign Guide 

for State and Local Party Committees and introduced two new brochures. Ten Questions from 

Candidates answers questions commonly asked by 

new candidates, and Sale and Use of Campaign 

Information explains the restricted use of contributor 

information taken from reports. Another new 

publication, Explanation and Justifications for FEC 

Regulations: 1975-Present, provides a reference 

tool for attorneys and others who work with the law 

in depth. The indexed volume brings together the 

official texts explaining the Commission's regulations, which accompany all rules when they are 

submitted to Congress. 

Conferences and Visits 

Candidates, committee staff and others involved 

with the campaign finance law can discuss their 

problems with Commissioners and staff at FEC 

conferences, which include basic as well as more 

advanced workshops on the law. At the 1989 

conferences, held in Philadelphia and San Francisco, Internal Revenue Service staff were available 

to answer questions on tax-related issues. The San 
20 

Francisco conference, cosponsored by the California Secretary of State, also included a workshop 

explaining California's newly enacted campaign 

finance law. Attendance was high at both conferences, with 300 people participating. 

For the first time, the Commission used a third 

party to collect conference fees, pay expenses and 

take care of other administrative details that would 

otherwise fall on the cosponsoring state office. This 

arrangement not only proved cost effective but also 

offered the Commission more flexibility in choosing 

conference sites. Because of federal accounting 

practices, the Commission needs an outside agency 

to handle conference finances. Using a third party 

meant that the Commission could conduct a conference, such as the Philadelphia one, without the 

help of a state cosponsor. 

In a new outreach venture, public affairs specialists traveled to three cities to meet with staff 

members of political committees. Specialists spent 

two days in each city-Denver, Atlanta and Dallas-answering questions and reviewing areas of 

the law specific to the needs of the participants. 

Review of Reports 

The review of campaign finance reports assists the 

FEC in its promotion of disclosure and also encourages compliance with the law. Reports analysts 

check each report for accuracy and compliance with 

the law. When necessary, they notify committees of 

Reports Review Activity 

apparent problems. These letters (called requests 

for additional information or RFAis) offer committees 

the opportunity to correct their reports voluntarily or 

to provide further information related to compliance 

problems discovered during review. A committee's 

cooperation often resolves a problem that might 

otherwise result in an enforcement action by the 

Commission. 

The accompanying table summarizes the review 

process from 1985 through 1989. 

Advisory Opinions 

Anyone involved in an activity governed by the 

campaign finance law may formally request the 

Commission's advice through the advisory opinion 

process. Advisory opinions clarify the law for the 

person who requests the opinion as well as for 

those in the same situation as the requester. In 

addition, advisory opinions sometimes bring to light 

areas of the law that need further clarification. The 

Commission frequently incorporates the guidance 

given in advisory opinions into revised regulations. 

Selected advisory opinions issued in 1989 are 

summarized in Chapter 4, Legal Issues. 

1985 1986 1987 1988 1989 

Committees Reviewed 6,454 5,062 6,158 5,865 7,581 

Reports Reviewed 46,905 34,055 39,312 35,471 39,793 

Reports Receiving RFAis 7,414 6,554 4,314 5,328 5,436 

Regulations 

FEC regulations explain the statute's requirements 

in detail. The Commission revises its rules to give 

increased guidance to committees, focusing espe-
21 

cially on areas that have proved troublesome. In 

1989, the agency prescribed a comprehensive set 

of revised regulations on affiliation, transfers and 

earmarked contributions. The Commission also continued to work on revisions in other areas. 

A new Regulations Committee, formed by 1989 

Chairman Danny L. McDonald, contributed to the· 

revision process. Commissioners Thomas J. Josefiak and Scott E. Thomas comprised the committee, which oversaw the agency's goals in the 

redrafting of regulations. 

Contribution Limits and Prohibitions 

November 24, 1989, was the effective date for a 

number of changes to the rules on contributions. 

Amendments to 11 CFR 110.3 through 110.6 

clarified the following areas: 

• The shared contribution limits that apply to 

affiliated committees and organizations, the 

factors indicating affiliation, and transfers of 

funds between affiliated committees; 

• The contribution limits that apply to political 

party committees and transfers of funds be- · 

tween party committees; 2 

• Transfers of funds between the previous and 

current federal campaign committees of the 

same candidate, between the campaign committees of a candidate seeking more than one 

federal office and between the federal ·and 

nonfederaf campaign committees of the same 

candidate; 

• Contributions made in the name of another; 

• The annual limit on contributions from individuals; 

• The definition of a conduit of earmarked contributions and the reporting of earmarked contributions. · · 

The Explanation and Justification to the amendments, published in the August 17 Federal Register 

along with the final rules themselves, explained the 

significance of the changes and discussed some 

aspects of the rules that the Commission decided 

not to change. (See 54 Fed. Reg. 34098.) Summaries of the changes appeared in the October and 

November 1989 issues of the Record. 

Trade Association Solicitations 

Effective June 28, 1989, a revised rule clarified one 

aspect of trade association solicitations for contributions to their separate segregated funds. Under the 

new rule a trade association may not solicit the 

restricted class of a nonmember parent corporation 

even if a subsidiary of the parent is an association 

member. (The restricted class of a corporation 

comprises the executive and administrative personnel, the stockholders and the families of both 

groups.) By the same token, a trade association 

may not solicit the restricted class of a nonmember 

subsidiary even if the parent is a member. The 

amended rule at 11 CFR 114.8(f) appeared in the 

March 15 Federal Register (54 Fed. Reg. 10622). 

Foreign Nationals 

The statute prohibits foreign nationals from making 

contributions in connection with local, state and 

federal elections to public office. In 1989, the Commission approved final revisions to the foreign national rules to make clear that the prohibition 

extends to expenditures by foreign nationals as well 

as to contributions. The revisions, which were 

transmitted to Congress on No'(ember 24, also 

clarified that foreign nationals may not, even indirectly, participate in election-related decisions made 

by corporations, labor organizations, political committees and other persons, including decisions 

concerning contributions and expenditures. This 

prohibition stems from several advisory opinions 

·concerning domestic corporations owned by foreign 

nationals. (See the Legal Issues section of this 

chapter.) 

The final rules at 11 CFR 110.4 and their Explanation and Justification were published in the. 

Federal Register on November 24 (54 Fed. Reg. 

48580). They will become effective once they have 

been before Congress for 30 legislative days. 2 See also the section on party committee contribution 

limits in Chapter 4. , 
22 

Allocation of Federal and 

Nonfederal Expenses 

Activity that influences federal elections must be 

financed with funds subject to the limits, prohibitions 

and reporting requirements of federal law. When 

activities influence both federal and nonfederal 

elections, committees may finance a portion of the 

expenses from a nonfederal account, which may 

contain funds not permissible under federal law. 

The Commission has been working on regulations 

to provide clearer guidelines on how committees 

should allocate .mixed federal/nonfederal expenses. 

During 1988, the agency received numerous 

public comments on possible approaches the 

Commission could take in drafting allocation rules. 3 

In 1989, the Commission decided to find out how 

mixed federal/nonfederal expenses were actually 

being allocated by party committees, the group 

most affected by allocation rules. A questionnaire, 

which was sent in February to the state chairmen 

of the major parties, asked what amounts and 

percentages of total funds they allocated to the 

federal side. The questionnaire also sought other 

information that would help the Commission develop realistic allocation regulations. With regard to 

the national committees of the major parties, the 

Commission sent letters to their fundraising representatives seeking information on the role of the 

national parties in fundraising for nonfederal accounts. 

On December 14, 1989, the Commission discussed three proposals for final allocation regulations. Each proposal stipulated how committees 

would allocate expenses for different types of 

activities: (1) administrative expenses and generic 

voter drives; (2) fundraising programs through which 

both federal and nonfederal funds are collected; 

and (3) exempt party activities.4 Included in these 

proposals were: 

• Different allocation formulas for each type of 

activity; 

• Different fixed or minimum percentages, used 

to determine the federal portion of an expense 

in election and nonelection years; 

• Methods of paying mixed expenses; 

• Disclosure of additional information on allocated 

activity and transfers invo•ving nonfederal accounts; and 

• Solicitation notice requirements for nonfederal 

fundraising. 

The Commission will continue its work on proposed allocation rules in 1990. 

Debt Settlement 

Proposed debt settlement rules were outlined in a 

Notice of Proposed Rulemaking published on December 6, 1988. (See 53 Fed. Reg. 49193.) The 

proposed rules, to be contained in a new Part 116, 

would ensure that neither initial extensions of credit 

nor debt settlements result in prohibited contributions by corporate creditors or in excessive contributions by noncorporate creditors. 

During a two-day hearing in February 1989, 

several witnesses commented on the proposed 

rules. Party committee representatives raised the 

issue of possible conflicts between the Commission's jurisdiction over debt settlement and the 

federal bankruptcy code. (This is also one of the 

issues addressed in Chapter 4.) The Commission 

plans to further consider the proposed debt settlement rules in 1990. 

3 For a summary of the Commission's previous activity in 

developing allocation rules, see the Annual Report 1988, 

pp. 17-18. 

4 Exempt activities are those that state and local party 

committees may finance without making contributions or 

expenditures on behalf of the federal candidates benefiting 

from the activity. The three types of exempt activities are: 

slate cards, campaign materials and Presidential voter 

drives. 
23 

Bank Loans 

The Commission sought comments on proposed 

rules affecting bank loans made to candidates and 

political committees in a 1989 Notice of Proposed 

Rulemaking. (See 54 Fed. Reg. 31286, published 

July 27.) Under the statute, a loan from a bank is 

not a contribution if it satisfies certain criteria, 

among which is the requirement that the loan "be 

made on a basis which assures repayment.. .." 2 

U.S.C. §431 (8)(B)(vii}(ll). This phrase became a 

critical point in the Commission's consideration of 

bank loans in enforcement cases and advisory 

opinions. The agency decided to provide additional 

guidance by clarifying its regulations. 

The Notice suggested three possible methods of 

assuring that a bank loan would be repaid. A candidate or committee could secure a loan using traditional types of collateral. Alternatively, a committee 

could use nontraditional collateral, such as the 

future receipt of public funds or contributions. 

Finally, in the absence of any collateral, the candidate or committee would have to demonstrate that 

the unsecured loan was made on some other basis 

that assured repayment. 

The Notice also included draft reporting forms to 

help the Commission monitor committee loans and 

to improve public disclosure. The proposed forms 

would require committees to provide details on 

collateral and require lenders to confirm that the 

loan complied with certain standards. 

Caseload of MURS 

1985 1986 1987 1988 1989 

Pending at Beginning of Year 172 137 143 171 220 

Opened During Year 257 191 261 236 218 

Closed During Year 292 185 233 187 237 

Pending at End of Year 137 143 171 220 201 

Enforcement 

The Enforcement Process 

Possible violations of the law are brought to the 

Commission's attention through its own monitoring 

procedures or through formal complaints originating 

outside the agency. Potential violations become 

Matters Under Review (MURs) and are assigned 

case numbers. 

All phases of the enforcement process must 

remain confidential until a case is closed and put 

on the public record. Respondents are given a 

reasonable opportunity to demonstrate that no 

action should be taken against them. If the Commission decides there is "reason to believe" a 

violation of the law has occurred, it investigates the 

matter. In gathering evidence, the Commission may 

issue orders and subpoenas that require individuals 

to answer questions or produce documents. When 

necessary, the agency may ask a federal district 

court to enforce FEC orders and subpoenas. If the 

Commission believes there is sufficient evidence to 

show "probable cause to believe" the respondent 

violated the law, the agency must try to resolve the 

matter through a conciliation agreement. If concili-
24 

ation fails, the agency may file suit against the 

respondent in a federal district court. 

The accompanying table shows the Commission's 

caseload of MURs from 1985 through 1989. Two 

MURs that were closed in 1989 are summarized in 

Chapter 4 (Party Committee Contributions and 

Expenditures). Another 1989 MUR, this one involving a Presidential campaign, is summarized in the 

last section of Chapter 2 (Enforcing Contribution 

and Expenditure Limits).· 

Penalties.and .Injunctions 

The U.S. Court of Appeals for the Ninth Circuit 

upheld a $25,000 penalty imposed on Harvey 

Furgatch for failing to report independent expenditures for two newspaper advertisements and for 

failing to include the required disclaimer on the ads. 

The March 8, 1989, decision, however, vacated a 

district court order permanently enjoining· Mr. 

Furgatch from future similar violations of the law. 

(An injunction is an enforcement remedy that 

permits the agency to obtain prompt judicial relief 

against the person enjoined from violating the law if 

the person again commits the same violations.) 

In affirming the civil penalty and rejecting Mr. 

Furgatch's claim that it was too high, the appeals 

court pointed out that the statute permits the courts 

to impose an amount equal to the expenditures 

involved in the violation-in this case $25,000, 

since the ads cost $25,008. (See 2 U.S.C. 

§437g(a)(6)(B).) The appeals court said that a 

district court could issue an injunction "only if there 

is a likelihood of future violations." While the 

appeals court found "ample support in the 

record...that Furgatch is likely to commit future 

violations of the Act," it held that the record did not 

justify a permanent injunction. Accordingly, the 

appeals court directed the district court to limit the 

injunction "to a reasonable duration." 

The Commission petitioned for a rehearing on the 

remand issue, claiming that a permanent injunction 

was consistent with the appeals court's own observation that Mr. ·Furgatch was likely to commit future 

violations of. the law. The FEC further argued that 

§437g(a)(6)(B) authorizes a "permanent" injunction 

"upon a proper showing that the person involved 

has committed" a violation. The court of appeals, 

however, denied the Commission's petition. 

On November 20, 1989, the U.S. District Court 

for the Southern District of California limited the 

injunction to eight years and specified that it applied only to the provisions Mr. Furgatch had 

violated. 

Clearinghouse on Election 

Administration 

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

research and information on the administration of 

federal elections. This section covers 1989 Clearinghouse activities. 

Voting System Standards 

The· Clearinghouse approached completion of a 

long-term project on computer-based voting systems 

with the release of draft voluntary standards for 

these systems. A notice requesting public comments on the draft standards appeared in the 

Federal Register on August 8, 1989 (54 Fed. Reg. 

32479). 

In 1984, Congress approved funding for the Commission to develop voluntary voting system standards in response to calls for assistance from 

states confronted by voting system failures and 

increasingly complex voting system technology. The 

standards and related test specifications were 

drafted to help election authorities ensure the 

accuracy and reliability of computerized voting 

systems. The standards may also assist manufacturers in developing or modifying voting systems. 

The voluntary standards cover the three types of 

computerized systems now in use: punchcard, in 

which a computer reads spaces punched out of a 

ballot card by the voter; marksense, in which the 

computer reads marks made by the voter on a 

ballot card; and direct recording electronic, in which 

the computer tabulates votes recorded by a voter 

on an electronic ballot through touch or by pushing 

buttons. 
25 

The Federal Register notice also sought comments on: (1) a plan for election authorities to 

implement the voluntary standards; (2) an escrow 

plan developed as a way to protect vendors' 

software and other proprietary information while 

allowing voting officials to have controlled access, 

when necessary; and (3) a plan for the independent 

test authorities to evaluate voting systems against 

the standards. 

The Commission will issue the final voluntary 

standards and the companion documents concern-

.··········· ing their implementation after the ··Clearinghouse 

has reviewed comments on the draft and made appropriate revisions. 5 The Clearinghouse will then 

work on related management guidelines covering 

the acquisition and use of computer-based voting 

systems. The office will also develop advisory ballot 

logic test scenarios that may be used by independent test authorities and, in consultation with the 

National Institute of Standards and Technology, will 

draft criteria to assist in the selection of competent 

test authorities. 

Voting Accessibility 

An April 1989 Clearinghouse report to Congress 

showed improved access to polling places for 

elderly and handicapped voters. Of the nearly 

152,000 polling places throughout the country, 79 

percent complied with accessibility standards, an 

increase of 6 percent (some 6,000 sites) since 

1986, despite more stringent criteria. Among the 

reasons why 28,527 sites did not meet the standards were: inadequate parking; stairs with no 

ramps; and obstructed passageways and other 

barriers. 

The 1989 report was the second one issued 

since the enactment of the Voting Accessibility for 

the Elderly and Handicapped Act of 1984. The Act 

stipulates that voter registration and polling places 

for federal elections be accessible to the physically 

disabled and requires the Commission to report to 

Congress on progress made toward this goal. Each 

state files a survey form with the Clearinghouse, 

which, in turn, analyzes the responses. The first 

report was released in April 1987; the law requires 

the Commission to issue reports every two years 

through 1995. 

Advisory Panel Meeting 

The draft of voluntary voting system standards was 

among the topics addressed at the annual meeting 

of the Clearinghouse Advisory Panel ·held in Washington, D.C., on August 23-25. Composed of 

election officials from around the country, the Panel 

also discussed the detection and prosecution of 

election crimes, 1988 voter participation, the U.S. 

Postal Service's change of address program, 

pending federal legislation on elections and future 

election administration projects. 

Publications 

Ballot Access. This four-volume 1989 publication is 

a comprehensive, state-by-state guide to ballot 

access requirements for primary and general 

elections, both Presidential and Congressional. It 

covers requirements for major, minor, independent 

and write-in candidates. 

Election Directory 89190. This updated Directory 

lists the addresses and phone numbers of state 

and federal officials involved in running elections. 

The Directory also includes, as a help to voter 

registration officials, the local election offices which 

process notices canceling prior registrations. 

FEC Journal of Election Administration. The Summer 1989 Journal provided a comprehensive 

examination of the the role of the federal government in elections. A series of articles described the 

federal agencies responsible for different aspects of 

the election process, including: the principal election 

committees in Congress; two offices within the 

Department of Justice; two offices within the Bureau 

of the Census; an office in the Department of 

Defense; and both the FEC and the Clearinghouse. 

5 The Commission approved final voluntary standards on 

January 25, 1990. 
26 

The issue also published voting results for the 

1988 Presidential election and an article on voter 

participation. 

The Journal, which provides a convenient order 

form for Clearinghouse studies, is available free 

upon request. 
27 

Chapter 4 

Legal Issues 

This chapter summarizes a number of campaign 

finance issues addressed in the year's litigation, 

advisory opinions and enforcement cases (MURs). 

(The Chapter 3 Enforcement section discusses 

litigation on enforcement-related issues, and Chapter 2 summarizes a MUR involving a Presidential 

campaign.) 

Expenditures by Nonprofit 

Corporations 

The Commission and the courts have continued to 

explore the application of the Supreme Court's 

1986 decision in FEC v. Massachusetts Citizens for 

Life (MCFL). 1 In that suit, the Court ruled on the 

constitutionality of 2 U.S.C. §441 b, the provision in 

the Federal Election Campaign Act that prohibits 

corporate contributions and expenditures. In a fiveto-four vote decision, the Court concluded that 

"§441 b's restriction of independent spending is 

unconstitutional as applied to MCFL," 2 a small, 

informally organized, incorporated group. The Court, 

however, limited the reach of its decision, describing as essential to its ruling several characteristics 

of MCFL: (1) it was a nonprofit ideological corporation that did not engage in business activities; (2) it 

was not established by a business corporation; and 

(3) it had a policy of not accepting contributions 

from businesses or labor unions. 

Michigan Chamber of Commerce 

The MCFL ruling was implicated in Austin v. 

Michigan State Chamber of Commerce,3 which the 

Supreme Court heard in 1989. The Commission 

filed an amicus curiae brief asking the Court to 

1 479 238 (1986). 

2 An independent expenditure is an expenditure for a 

communication which expressly advocates the election or 

defeat of a clearly identified candidate but which is not 

made in cooperation or consultation with, or at the request 

or suggestion of, or with the prior consent of any candidate 

or his or her authorized committees or campaign agents. 2 

u.s.c. §431 (7). 

3 U.S. No. 88-1569 (argued October 31, 1989). 

u.s. 

overturn a September 1988 appeals court decision.4 

The U.S. Court of Appeals for the Sixth Circuit 

found that a Michigan law was unconstitutional as 

applied to the Michigan State Chamber of Commerce. The law prohibits corporations from making 

independent expenditures with general treasury 

funds. Relying on MCFL 's constitutional limitation on 

applying §441 b, the appeals court found that the 

Michigan law could not constitutionally be applied to 

the State Chamber's independent expenditures 

even though it received at least 75 percent of its 

funds from business corporations and served 

business interests. The Commission's brief argued 

that the appeals court decision undermined the 

§441 b limits that Congress placed on the use of 

corporate wealth to influence the outcome of federal 

elections. The Supreme Court heard oral argument 

on October 31, 1989, but had not issued an opinion 

by the end of the year. [Ed. Note: On March 27, 

1990, the Supreme Court upheld the constitutionality of the Michigan law, reversing the appeals court 

decision by a 6-3 vote.] 

National Organization for Women 

In another MCFL-related case, FEC v. National 

Organization for Women (NOW), the U.S. Court of 

Appeals for the District of Columbia Circuit agreed 

to the FEC's motion to hold proceedings in abeyance until the Supreme Court ruled on the Michigan 

Chamber suit. In its appeal, the Commission asked 

the court to reverse a May 11 , 1989, district court 

decision.5 The U.S. District Court for the District of 

Columbia had ruled that NOW, a nonprofit corporation, did not violate §441 b by using its treasury 

funds to pay for direct mailings. The letters, which 

were sent to the general public, mentioned several 

Senate candidates running for reelection in 1984. 

The FEC argued that the mailings contained electioneering messages and therefore could not be 

financed from the corporation's treasury. The district 

court, however, cited MCFL in concluding that a 

4 856 F.2d 783 (6th Cir. 1988). 

5 713 F.Supp. 428 (D.D.C. 1989). 
28 

communication must expressly advocate the election or defeat of a candidate in order to be subject 

to the §441 b prohibition on corporate spending. In 

the court's view, NOW's mailings did not contain 

express advocacy because they "fail[ed] to expressly tell the reader to go to the polls and vote 

against particular candidates" and were "suggestive 

of several plausible meanings." Although the district 

court did not reach the issue, NOW also relied 

upon MCFL to claim that §441 b could not constitutionally be applied to its independent expenditures. 

Corporate Support of PAC 

Under the Federal Election Campaign Act, a corporation is permitted to pay for ''the establishment, administration, and solicitation of contributions to a 

separate segregated fund (PAC) to be utilized for 

political purposes." 2 U.S.C. 441b(b)(2)(C). The 

corporation's costs are not considered contributions 

or expenditures. This exemption was the subject of 

1989 litigation and advisory opinions. 

Stern v. FEC 

Philip Stern asked the U.S. District Court for the 

District of Columbia to review the Commission's 

dismissal of an administrative complaint he had 

filed with the agency. Mr. Stern claimed that the 

separate segregated fund of General Electric (GE/ 

PAC) made contributions to candidates that were 

unlawful because they were made for "lobbying 

rather than for political purposes." He contended 

that the exemption in the Act permitting corporations to set up separate segregated funds "for 

political purposes" precluded using such funds for 

other purposes. Consequently, GE's payment of its 

PAC's administrative expenses resulted in prohibited corporate expenditures. He argued that GE/ 

PAC's pattern of supporting incumbent candidates 

in safe seats was evidence that its contributions 

and expenditures were made to influence legislation, not to influence elections, since the Congressmen were assured of re-election. In dismissing the 

complaint, the Commission followed the advice of 

the General Counsel, who noted that nothing in the 

law prohibits the use of PAC funds for any lawful 

purpose. 

On August 31, 1989, the court found that the 

Commission did not act contrary to law in dismissing the complaint, ruling that GE/PAC's contributions to the campaign committees of federal candidates clearly satisfied the "political purposes" 

requirement. Finding it unnecessary to decide 

whether PAC funds could be used for "any lawful 

purpose," as the Commission had contended, the 

court nevertheless described the Commission's 

position as a reasonable interpretation of the law. 

PAC Contributions Matched with Charitable 

Donations 

In Advisory Opinions 1989-7 and 1989-9, the Commission permitted corporations to use general treasury funds to match employees' contributions to their 

PACs with donations to charity. The matching payments to charities qualified as exempt solicitation 

expenses, payable with corporate treasury funds. 

The Commission concluded that this process would 

not result in a prohibited exchange of treasury 

funds for contributions under 11 CFR 114.5(b) 

because contributing employees would not receive 

any financial or tangible benefits, such as a tax 

break. 

Although the 1989 opinions closely resembled 

advisory opinions issued in previous years (AOs 

1986-44, 1987-18 and 1988-48), they evoked dissents from two Commissioners. Chairman Danny L. 

McDonald and Commissioner Scott E. Thomas 

believed that the matching plans would indirectly 

compensate employees who contributed to the 

PAC. Commissioner Thomas said that, at a minimum, the corporations should be subject to the 

one-third rule at 11 CFR 114.5(b)(2), which would 

limit a matching donation to one-third the amount of 

the PAC contribution. Chairman McDonald viewed 

the plans as a prohibited exchange of corporate 

funds for contributions and therefore concluded that 

a corporation could not spend any treasury funds to 

match PAC contributions. 
29 

Corporations Owned by Foreign 

Nationals 

Section 441 e of the Federal Election Campaign Act 

prohibits foreign nationals from making direct or 

indirect contributions in connection with elections to 

any public office: state and local as well as federal. 

The definition of foreign national includes a corporation organized under the laws of a foreign country 

or having its principal place of business in a foreign 

country. (See 22 U.S.C. §611 (b).) In two 1989 advisory opinions, the Commission considered whether 

domestic corporations wholly owned by foreign 

corporations could make nonfederal contributions to 

state and local candidates. (See also the summary 

of changes to FEC rules on foreign nationals in the 

Regulations section of Chapter 3.) 

Foreign-Financed Corporation 

In AO 1989-20, the Commission prohibited Kuilima 

Development Company, Inc., a Hawaiian corporation, from making contributions in state and local 

elections because it was predominantly funded by a 

Japanese parent corporation. The Commission 

concluded that such contributions would, in effect, 

be contributions from the foreign national parent 

through its subsidiary, Kuilima. Moreover, even if 

the source of Kuilima's funds were not foreign, the 

company would still be prohibited from making 

contributions because of its foreign directors and 

officers. In previous advisory opinions, the Commission permitted a domestic corporation owned by a 

foreign corporation to make political contributions 

only if no foreign national director or officer participated in the corporation's decisions to make contributions. Because all of Kuilima's directors and 

officers were Japanese, it appeared that Kuilima 

could not satisfy that condition. 

Domestically Financed Corporation 

The situation was different in AO 1989~29. GEM of 

Hawaii, Inc., was a!so owned by a Japanese 

parent, but it generated income through domestic 

sales. Because the source of its funds was not 

foreign, GEM was permitted to make nonfederal 

contributions to state and local candidates through 

its PAC, on the condition that no foreign nationals, 

including two of the three directors of the company, 

participated in decisions concerning contributions. 

However, because the PAC contained corporate 

funds, it could not make any federal contributions. 

GEM would have to set up a federally regulated 

separate segregated fund for that purpose. 

Commissioners McDonald and Thomas dissented 

and expressed their opinion that GEM and its 

foreign national parent should be treated as one 

entity in view of the statute's affiliation rules and 

the foreign national control of GEM's board of 

directors. They concluded that GEM could not make 

nonfederal contributions to state and local candidates through a political committee. 

Jurisdiction Over Debt 

Settlements 

Under · FEC regulations, a committee may settle a 

debt to a corporate creditor for less than the 

amount owed only if certain conditions are met. 

Otherwise, the debt results in a prohibited corporate 

contribution to the debtor committee. To ensure 

compliance with FEC rules, the corporation or 

committee must file a debt settlement statement for 

Commission review. (See 11 CFR 114.10 and FEC 

Directive No. 3.) The FEC's jurisdiction over a 

committee's debts was at issue in a court case and 

an advisory opinion. 

Bankruptcy Court 

The Commission filed an amicus curiae brief asking 

a bankruptcy court to dismiss a Chapter 11 petition 

filed by a political committee, Fund for a Conservative Majority (FCM). Both the FEC and the· U.S. 

Trustee argued that granting relief to political 

committees under Chapter 11 could result in 

several abuses, including corporate contributions 

from vendors. The FEC also argued that Chapter 

11 was inapplicable because of the FEC's statutory 

jurisdiction over debt settlements by political committees~ · 
30 

On May 8, 1989, the U.S. Bankruptcy Court for 

the Eastern District of Virginia (Alexandria Division) 

denied the motion to dismiss the case. The court 

acknowledged the deference the courts have shown 

the FEC's exclusive jurisdiction over the federal 

campaign finance law but stated that bankruptcy 

petitions remained within the jurisdiction of the 

bankruptcy court. Observing that the Commission's 

regulations on debt settlement "appear to facilitate 

'monitoring' by the FEC rather than form a mandatory debt resolution mechanism," the court acknowledged that the result might be different if the FEC 

adopted different rules.6 The court noted nevertheless "the need for the FEC to participate in the 

case" and invited the agency to review and comment on FCM's Chapter 11 debt settlement plan. 

State Court 

In Advisory Opinion 1989-2, the Commission said 

that the committee of a Congressional candidate 

could pay a corporate creditor an amount determined by a state court as long as the committee 

complied with the FEC debt settlement rules and 

filed a debt settlement statement with the FEC. The 

committee was concerned that, if the court required 

it to pay most or all of its remaining funds to the 

creditor that had filed suit, the settlement would 

unlawfully discriminate against the committee's 

other creditors. The opinion stated the FEC's longheld view that state law governs whether an alleged debt exits, the amount of a debt and those 

responsible for paying. (See AO 1975-1 02.) The 

state court, therefore, would be the proper forum 

for determining these questions. 

In her concurring opinion, Commissioner Lee Ann 

Elliott said that, while she found the opinion's conclusion consistent with FEC rules, she did not 

believe that the current rules and debt settlement 

procedures "provide proper protection for creditors, 

or present an orderly method for reviewing all of a 

committee's outstanding debts." 

6 The agency did take action with regard to proposed 

rules on debt settlements. See the section on Regulations in 

Chapter 3. 

Preemption of State Law 

Potential conflicts between the Federal Election 

Campaign Act (the Act) and state campaign finance 

laws were considered in three 1989 advisory opinions. The Act and FEC rules "supersede and 

preempt provisions of State law with respect to 

election to Federal office." 2 U.S.C. §453. The 

advisory opinions cited legislative history as evidence that Congress intended the Act to be the 

sole source of regulation of federal campaign 

financing. In all three opinions, the Commission 

decided that federal law preempted state provisions 

to the extent that they inhibited federal campaign 

activity. 

New Hampshire Limits on Party Spending 

A newly enacted New Hampshire law waives 

certain ballot access requirements (fees and petition 

signatures) if candidates agree to comply with 

campaign spending limits. Under the state law, 

coordinated party expenditures, which are expressly 

authorized under §441 a(d) of the Act, would count 

against a federal candidate's spending limit. In AO 

1989-25, the Commission concluded that the Act 

preempted the state law to the extent it would limit 

§441 a(d) party expenditures. The opinion further 

stated that payments for party support that are 

exempt from the Act's definition of "expenditure" 

were also not subject to the New Hampshire limits. 

Indiana Prohibitions on Contributions 

Another newly enacted state law prohibits vendors 

under contract to the Indiana State Lottery Commission from making contributions to candidates for 

statewide elected office for three years following the 

awarding or renewal of the contract. The law also 

prohibits the Lottery Commission from contracting 

with persons who have made contributions to candidates for statewide office three years before the 

contract is awarded. 

In AO 1989-12, the Commission responded to a 

request by a sole proprietor whose contributions to 

a U.S. Senate candidate could be affected by the 

Indiana law. The opinion first concluded that, 
31 

because no Indiana statute excluded U.S. Senate 

candidates from the definition of "a candidate for 

statewide elected office," the new law would apply 

to contributions to them. The opinion went on to 

conclude that both prohibitions were preempted by 

federal law with respect to contributions to federal 

candidates. The first Indiana prohibition would bar 

contributions from persons not otherwise prohibited 

from making contributions under the Act. The 

second prohibition would also restrict federal 

campaign finance activity by imposing a commercial 

penalty on Lottery Commission vendors who wished 

to make contributions to a Senate candidate. 

Massachusetts Prohibition on Contributions 

In AO 1989-27, the Commission considered 

whether the Act would preempt a Massachusetts 

law regulating the solicitation and receipt of contributions by state and local government employees. 

The opinion was requested by a candidate for the 

U.S. House of Representatives who was a professor at a Massachusetts State college. The opinion 

concluded that the Act did not preempt that portion 

of the state law that prohibits a candidate/employee 

(including a federal candidate) from personally 

soliciting or receiving contributions since Congress 

did not intend the federal preemption to extend to 

state laws regulating the political conduct of state 

employees. 

However, the Act did preempt application of the 

Massachusetts law prohibiting the political committee of an employee/federal candidate from soliciting 

or accepting contributions from certain groups 

(persons known by the employee to have an 

interest in matters related to the employee's job). 

Here, the state law intruded into an area Congress 

intended the Act to cover: the source of federal 

campaign funds. The Act also superseded application of the Massachusetts law prohibiting the 

solicitation and receipt of contributions conducted 

by the political committee but under the direction of 

the employee/federal candidate. Such an application 

of state law improperly encroached upon the 

conduct of a federal election campaign by persons 

other than the employee himself. 

Commissioner Scott E. Thomas dissented from 

AO 1989-27. He believed that the distinction drawn 

between the candidate's own political activity and 

that of the candidate's committee was not supported by legislative history and was based on 

reasoning which "appears to be internally inconsistent." In his view, the federal statute would not 

preempt the "narrow restrictions" the state's "little 

Hatch Act" placed on the committee's receipt of 

contributions. 

Party Committee Contributions 

and Expenditures 

The Commission has pursued a number of enforcement cases (MURs) involving alleged violations by 

party committees. Two enforcement cases that 

originated from the FEC's review of party committee 

reports are summarized below. 

Contribution Limits 

MUR 2924 concerned allegedly excessive contributions made by a major party's Senate campaign 

committee to candidates running for the House of 

Representatives and by the party's House campaign committee to Senatorial candidates. The 

Senate campaign committee had contributed to 

House candidates over and above the contributions 

made by the House campaign committee and the 

national party committee. Similarly, the House 

campaign committee had made contributions to 

Senate candidates over and above those made by 

the national and Senate campaign committees. 

Under the law, a party's national committee and 

House campaign committee each have separate, 

rather than shared, limits on contributions to House 

candidates ($5,000 per candidate, per election). 

The national committee and the Senate campaign 

committee, however, share a special limit on 

contributions to Senate candidates ($17,500 per 

candidate for the entire election cycle). At the time 

this MUR was considered, the statute and FEC 

regulations were silent concerning: 
32 

• Whether the House campaign committee had 

its own $5,000 limit for contributions to Senate 

candidates, or whether it had to aggregate its 

contributions with those made by the national 

committee and the Senate campaign committee; and 

• Whether the Senate campaign committee had 

a separate limit for House candidates, or 

whether it had to aggregate its contributions 

with those made by either the national committee or the House campaign committee. 

In the absence of any applicable statutory or 

regulatory provisions, the Commission found no 

reason to believe that the party committees had 

exceeded the limits. 

(New regulations, effective November 1989, now 

clarify that the House campaign committee and the 

national committee have separate per election limits 

on contributions to House, Senate and Presidential 

candidates. The revised rules also make clear that 

the national committee and the Senate campaign 

committee have separate per election limits on 

contributions to House and Presidential candidates, 

even though they share the $17,500 limit on 

contributions to a Senate candidate made during 

the six-year Senate election cycle.) 

Expenditures Paid by Nonfederal Account 

Under FEC rules, a party committee active in both 

federal and nonfederal elections may set up two 

accounts. The federal account alone is registered 

as a political committee and must comply with 

federal requirements. The nonfederal account is 

subject to relevant state law, but is prohibited from 

funding any federal activity. 

In MUR 2588, the Commission imposed a $9,500 

civil penalty on a state party committee for violating 

this rule (11 CFR 1 02.5(a)(1 )(i)). The committee's 

report showed a $62,823 debt owed to the nonfederal account for its partial payment of a coordinated 

party expenditure. (Section §441 a(d) of the Act 

permits party committees to make limited expenditures on behalf of candidates in addition to making 

contributions.) The party committee contended that 

the funds in the nonfederal account were permissible under the Act since state law also banned 

corporate and labor contributions. The General 

Counsel's Report, however, disagreed, noting that 

the state law did not limit contributions, in contrast 

to federal law. The party committee also argued 

that the violation was mitigated by the committee's 

voluntary disclosure, but the General Counsel's 

Report pointed out that the committee had experienced similar compliance problems in the previous 

election cycle-problems that had resulted in an 

FEC audit and enforcement action. The Commission found probable cause to believe the committee 

had violated the law by spending nonfederal funds 

to support federal candidates. The conciliation 

agreement included the civil penalty mentioned 

above. 
Indiana, 4th 

D Jilt Long* 

R Dan Heath 

Alabama, 3rd 

D Glen Browder* 

R John Rice 

Wyoming (at large) 

D John Vinich 

R Craig Thomas * 

Florida, 18th 

D Gerald Richman 

R I. Ros-Lehtinen * 

California, 15th 

D Gary Condit * 

R Clare Berryhill 

Texas, 12th 

D Preston Geren * 

R Bob Lanier 

Mississippi, 5th 

D Gene Taylor* 

R Tom Anderson 

Texas, 18th 

D Craig Washington * 

D Anthony Hall 

0 $200,000 $400,000 $600,000 $800,000 $1,000,000 

*Winner. 

33 

Chapter 5 

Campaign Finance 

Statistics 

Contributions and Party Expenditures 

for 1989 Special Elections 

- Individual Contributions 

- Nonparty Committee Contributions 

I Party Contributions 

Candidate Contributions 

Party Expenditures 

'"" 

.____ __.I 
34 

Contributions to 1989 Special Election ..Democrats 

Candidates from State Parties ..Republicans Outside the Home State * 

lndiana Alabama Wyoming Florida California Texas 

4th 3rd (at large) 18th 15th 12th 

$80,000 

$70,000 

$60,000 

$0 .........- Mississippi t Texas t 

5th 18th 

*The bars represent contributions from state party committees from the following states: Arkansas, California, Colorado, 

Florida, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New 

Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Washington and 

Wisconsin. 

t No out-of-state party contributions were reported. 
Millions of Dollars 

110 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 86 88 90 86 88 90 86 88 90 86 88 90 86 88 90 86 88 90 

Democrats Republicans Democrats Republicans Democrats Republicans 

Incumbents Challengers Open Seat Candidates t 

35 

Receipts of House Candidates 

for Each Year of Election Cycle* 

Election Year 

- Nonelection Year 

*An election cycle consists of the year before a regularly scheduled election (nonelection year) and the year of the election 

(election year). Only 1989 data are shown for the 1990 cycle. 

t Includes candidates running in special elections to fill vacant seats. 
36 

Receipts of 1990 Senate Candidates -1985-86 

1987-88 

Millions ~ i 1989 of Dollars 

30 

5 

0 Democrats Republicans Democrats Republicans Democrats Republicans 

(16) (15) * (13) (16) (6) (4) 

Incumbents Challengers t Open Seat Candidates* 

* Doug Coates (IN-R) was appointed in 1989 and therefore had no earlier activity. 

t Onlyone Democratic challenger and one Republican challenger were active in 1987-88. Their receipts were too small to 

be represented on this graph. 

*There are three open seat Senate races in 1990: Colorado, Idaho and New Hampshire. 
37 

1989 National Party Activity - Opening Cash 

-Receipts 

I Disbursements 

Closing Cash 

----:J- Debts 

Millions of Dollars 

5 

0 Democratic Republican 

National Committees 

Democratic Republican 

Senatorial Campaign 

Committees 

Democratic Republican 

Congressional Campaign 

Committees 
38 

Nonelection Year Receipts of Democratic 

Party Committees Republican 

Millions of Dollars 

50 

30 

20 

10 

0 

1981 1983 1985 1987 1989 1981 1983 1985 1987 1989 1981 1983 1985 1987 1989 

National Committees Senatorial Campaign Congressional Campaign 

Committees Committees 
39 

PAC Campaign Finance Activity 

for Each Year of Election Cycle * 

Election Year 

- Nonelection Year 

Receipts 

Millions of Dollars 

86 88 90 86 88 90 86 88 90 86 88 90 86 88 90 

Coporate labor Nonconnected Trade/Member­ Othert 

ship/Health 

120 

100 

80 

60 

40 

20 

0 

Contributions to Candidates 

Millions of Dollars 

86 88 90 86 88 90 86 88 90 86 88 90 86 88 90 

Coporate labor Nonconnected Trade/Member­ Othert 

ship/Health 

60 

40 

20 

0 

*An election cycle consists of the year before a regularly scheduled election (nonelection year) and the year of the election 

(election year). Only 1989 data are shown for the 1990 cycle. 

t "Other" category consists of PACs formed by corporations without capital stock and PACs formed by incorporated cooperatives. 
40 

Number of PACs, 1975-89 * D Corporate 

e Nonconnected 

.#. Trade/Membership/Health 

~Labor 

• Othert 

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

and PACs in the "Other" category. 

t "Other" category consists of PACs formed by corporations without capital stock and PACs formed by incorporated cooperatives. 
41 

Chapter 6 

Legislative 

Recommendations 

Public Financing 

Presidential Election Campaign Fund (revised 

1990) 1 

Section: 26 U.S.C. §6096 

Recommendation: Congress should amend the 

Revenue Act to ensure that sufficient funds will be 

in the Presidential Election Campaign Fund to cover 

the outlays anticipated in 1992 and prevent future 

imbalances between the Fund's receipts and the 

Fund's payouts to Presidential candidates and party 

convention committees. The present system, 

wherein a non-indexed, $1 tax check-off mechanism 

must fund inflation-indexed payments, is approaching insolvency. Since 1974 (the index year for 

payments), inflation has increased payments by 

over 250 percent. 

Among the alternative remedies for this imbalance, Congress should consider: 

• Periodically adjusting the amount designated on 

the income tax return to correspond to the 

index for payments from the Fund; 

• Changing the system to an entitlement program 

wherein the amount of payments would be 

determined solely by the statutory eligibility 

criteria; or 

• Changing the system to a traditional appropriated account or, should the check-off system 

be retained, permitting special appropriations to 

compensate for a projected shortfall. 

Explanation: As previously reported, unless the 

system is changed, the Fund balance is likely to be 

inadequate to meet the entitlements of candidates 

for the 1992 Presidential election. Even if a shortfall 

is avoided in the '92 cycle, a deficiency in the Fund 

is a certainty by the 1996 elections. 

If Congress wishes to retain the check-off mechanism, it should index the tax check-off to correspond to the index on Fund payments to Presidential candidates. Automatic indexing could be simplified to require a change on tax form 1 040 (individual income tax return} only when inflation warranted 

an increase of a full or a half dollar. This would 

preclude annual changes and prevent absurdly 

precise amounts from being printed on the form. 

Enforcement of Nonwillful Violations (1990) 

Section: 26 U.S.C. §§9012, 9042 

Recommendation: Congress should amend the 

Presidential Election Campaign Fund Act and the 

Presidential Primary Matching Payment Account Act 

to make it clear that the Commission has authority 

for civil enforcement of nonwillful violations of the 

public funding provisions. 

Explanation: Section 9012 of the Presidential 

Election Campaign Fund Act and section 9042 of 

the Presidential Primary Matching Payment Account 

Act provide only for "criminal penalties" for knowing 

and willful violations of the spending and contribution provisions and the failure of publicly funded 

candidates to furnish all records requested by the 

Commission. The lack of a specific reference to 

nonwillful violations of these provisions has raised 

questions regarding the Commission's ability to 

enforce these provisions through the civil enforcement process. 

In some limited areas, the Commission has 

invoked other statutes and other provisions in Title 

26 to carry out its civil enforcement of the public 

funding provisions. It has relied, for example, on 2 

U.S.C. §441 a(b) to enforce the Presidential spending limits. Similarly, the Commission has used the 

candidate agreement and certification processes 

provided in 26 U.S.C. §§9003 and 9033 to enforce 

the spending limits, the ban on private contributions, and the requirement to furnish records. 

Congress may wish to consider revising the public 

financing statutes to provide explicit authority for 

civil enforcement of these provisions. 

1 The date "1990" indicates that the recommendation was 

adopted for the first time in 1990. Recommendations 

without the date were initially adopted in previous years and 

reaffirmed by the Commission in 1990. 
42 

Eligibility for Public Financing (revised 1990) 

Section: 26 U.S.C. §§9003, 9033 

Recommendation: Congress should reexamine the 

eligibility requirements for publicly funded Presidential candidates. In particular, two areas merit special 

attention: (1) the need to raise the threshold 

amount of matchable contributions required to 

qualify for Presidential primary matching funds; and 

(2) the need to ensure that candidates who have 

previously violated laws related to the public funding process will not be eligible for public funding. 

Explanation: Congress should consider raising the 

threshold amount required to qualify for primary 

matching payments. The Federal Election Commission has administered the public funding provisions 

in four Presidential elections. The statute provides 

for a cost-of-living adjustment (COLA) on the overall 

primary spending limitation, which has more than 

doubled since 1976. There is, however, no corresponding adjustment to the threshold requirement. It 

remains exactly the same as it was in 1976. An 

adjustment to the threshold requirement would 

ensure that funds continue to be given only to 

candidates who demonstrate broad national support. 

To reach this higher threshold, Congress could 

increase the number of states in which the candidate must raise the qualifying amount of matchable 

contributions; and/or increase the total amount of 

qualifying matchable contributions that must be 

raised in each of the states. 

With regard to the candidate's past experience 

with the public funding process, neither of the 

Presidential public financing statutes places any 

limitation on eligibility for funding based upon a 

candidate's prior violations of law, no matter how 

severe. Public confidence in the integrity of the 

public financing system could be eroded if the 

Commission were compelled to provide public funds 

to candidates who have been convicted of felonies 

related to the public funding process. For example, 

if a candidate has been convicted of fraud with 

respect to raising funds for a campaign that was 

publicly financed, the Commission should not be 

required to certify funds for future campaigns. 

Congress may wish to add a requirement that an 

individual seeking public funds may not have been 

convicted of crimes related to the public financing 

process. Similarly, the Commission should not be 

required to certify funds to candidates who, in 

connection with past Presidential campaigns, have 

failed to make repayments or who have willfully 

disregarded audit procedures. Congress should 

amend the eligibility requirements to ensure that 

such candidates do not receive public financing for 

their Presid~ntial campaigns. 

Fundraising Limitation for Publicly 

Financed Presidential Primary Campaigns 

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

Recommendation: The Commission recommends 

that the separate fundraising limitation provided to 

publicly financed Presidential primary campaigns be 

combined with the overall limit. Thus, instead of a 

candidate's having a $1 0 million (plus COLA 2 ) 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 

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

adjustment (COLA), which the Department of Labor 

calculates annually. 
43 

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. 

State Expenditure Limits for Publicly 

Financed Presidential Primary Campaigns 

Section: 2 U.S.C. §441a 

Recommendation: The Commission recommends 

that the state-by-state limitations on expenditures 

for publicly financed Presidential primary candidates 

be eliminated. 

Explanation: The Commission has now seen four 

Presidential elections under the state expenditure 

limitations. Based on our experience, we believe 

that the limitations could be removed with no 

material impact on the process. 

Our experience has shown that the limitations 

have little impact on campaign spending in a given 

state, with the exception of Iowa and New Hampshire. In most other states, campaigns are unable 

or do not wish to expend an amount equal to the 

limitation. In effect, then, the administration of the 

entire program results in limiting disbursements in 

these two primaries alone. 

If the limitations were removed, the level of disbursements in these states would obviously increase. With an increasing number of primaries 

vying for a campaign's limited resources, however, 

it would not be possible to spend very large 

amounts in these early primaries and still have 

adequate funds available for the later primaries. 

Thus, the overall national limit would serve as a 

constraint on state spending, even in the early 

primaries. At the same time, candidates would have 

broader discretion in the running of their campaigns. 

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

expenditures in the early primary states. The use of 

the fundraising limitation, the compliance cost 

exemption, the volunteer service provisions, the 

unreimbursed personal travel expense provisions, 

the use of a personal residence in volunteer activity 

exemption, and a complex series of allocation 

schemes have developed into an art which when 

skillfully practiced can partially circumvent the state 

limitations. 

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. 

Given our experience to date, we believe that 

this change to the Act would be of substantial 

benefit to all parties concerned. 

Deposit of Repayments 

Section: 26 U.S.C. §9007(d) 

Recommendation: Congress should revise the law 

to state that: All payments received by the Secretary of the Treasury under subsection (b) shall be 

deposited by him or her in the Presidential Election 

Campaign Fund established by section 9006(a). 

Explanation: This change would allow the Fund to 

recapture monies repaid by convention-related 

committees of national major and minor parties, as 

well as by general election grant recipients. Currently the Fund recaptures only repayments made 

by primary matching fund recipients. 

Contributions and Expenditures 

Contributions and Expenditures to Influence 

Federal and Nonfederal Elections 

Section: 2 U.S.C. §§441 and 434 

Recommendation: Congress may wish to consider 

whether new legislation is needed to monitor 

political committees that engage in activities that 

influence both federal and nonfederal elections. 
44 

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 when committees 

engage in activities that support both federal and 

nonfederal candidates. In this regard, the Commission has attempted to clarify the rules on allocating 

disbursements between federal and nonfederal 

election activity. (The Commission issued a Notice 

of Proposed Rulemaking and conducted hearings.) 

The District Court for the District of Columbia, in 

Common Cause v. FEC, confirmed the Commission's long-standing view that allocation is the 

appropriate way to reconcile its mandate (to monitor 

excessive and prohibited funds) and the limits on 

its jurisdiction (to regulate money influencing federal 

elections but not state or local). In recent hearings, 

the Commission acknowledged that the allocation 

issue had been "clouded by allegations that the 

campaigns of both Presidential candidates raised 

large amounts of so-called 'soft money."' 3 In light of 

this public concern, Congress may wish to reevaluate the Commission's role in regulating political 

committees that support both federal and nonfederal candidates. 

Nonprofit Corporations 

Section: 2 U.S.C. §441 b 

Recommendation: In light of the decision of the 

U.S. Supreme Court in Federal Election Commission v. Massachusetts Citizens for Life, Inc. 

(MCFL), Congress may wish to amend 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. 

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. 

Since that time, the Commission has published a 

Notice of Proposed Rulemaking and has conducted 

hearings on whether regulatory changes are 

needed as a result of the Court's decision. Congress may wish to consider whether statutory 

changes are required as well. 

The Court found that certain nonprofit ·corporations were not subject to the 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 a major purpose of the corporation, and the organization would then become a 

political committee. 

Certification of Voting Age Population Figures 

and Cost-of-Living Adjustment 

Section: 2 U.S.C. §§441a(c) and (e) 

Recommendation: Congress should consider removing the requirement that the Secretary of Commerce certify to the Commission the voting age 

population of each Congressional district. At the 

same time, Congress should establish a deadline of 

February 15 for supplying the Commission with the 

remaining information concerning the voting age 

population for the nation as a whole and for each 

state. In addition, the same deadline should apply 

to the Secretary of Labor, who is required under 

the Act to provide the Commission with figures on 

the annual adjustment to the cost-of-living index. 

Explanation: In order for the Commission to compute the coordinated party expenditure limits and 

the state-by-state expenditure limits for Presidential 

candidates, the Secretary of Commerce certifies the 

3 Commissioner Thomas J. Josefiak, opening statement 

at FEC hearings on amendments to 11 CFR 106.1 concerning the allocation of disbursements between federal and 

nonfederal accounts, December 15, 1988. 
45 

voting age population of the United States and of 

each state. 2 U.S.C. §441a(e). The certification for 

each Congressional district, also required under this 

provision, is not needed. 

In addition, under 2 U.S.C. §441 a(c), the Secretary of Labor is required to certify the annual 

adjustment in 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. 

Election Period Limitations 

Section: 2 U.S.C. §441 a 

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. 

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. (See S. Cont. Rep. No. 93-1237, 

93rd Gong., 2nd Sess., 58 (1974) and Buckley v. 

Valeo, 424 U.S. 1, 51 (footnote 57)(1976).) This 

limitation has caused the Commission substantial 

problems in attempting to implement and enforce 

the contribution limitations.4 

Problems have arisen in enforcing the limitations 

where a candidate uses assets beJongingto a 

parent. In some cases, a parent has made a 

substantial gift to his or her candidate-child while 

cautioning the candidate that this may well decrease the amount which the candidate would 

otherwise inherit upon the death of the parent. 

The Commission recommends that Congress 

consider the difficulties arising from application of 

the contribution limitations to immediate family 

members. 

Acceptance of Cash Contributions 

Section: 2 U.RC. §441 g 

Recommendation: Congress may wish to 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. 

4 While the Commission has attempted through regulations to present an equitable solution to some of these 

problems (see 48 Fed. Reg. 19019 (April 27, 1983) as 

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

resolution is required in thfs area. 
48 

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. 

If the problem is, in part, one of semantics, it 

would 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. 

Seeking Injunctions in Enforcement Cases 

Section: 2 U.S.C. §437g{a){1) 

Recommendation: 5 Congress should amend the enforcement procedures set forth in the statute so as 

to empower the Commission 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. Under criteria expressly stated, the 

Commission should be authorized to initiate such 

civH action·in a·lJnited Siates~distrtct~coart·without ·· 

5 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 

during the last eight years which, in my opinion, would meet 

the four standards set forth in the legislative recommendation. Assuming a case was submitted which met these 

standards, I believe it would be inappropriate for the 

Commission to seek injunctive relief prior to a probable 

cause finding. 

First, the very ability of the Commission to seek an 

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

opens the door to allegations of an arbitrary and politically 

motivated enforcement action by the Commission. The 

Commission's decision to seek an injunction in one case 

while refusing to do so in another could easily be seen by 

candidates and respondents as politicizing the enforcement 

process. 

Second, the Commission might easily be flooded with 

requests for injunctive relief for issues such as failure to file 

an October quarterly or a 12-day pre-general report. 

Although the Commission would have the discretion to deny 

all these requests for injunctive relief, in making that 

decision the Commission would bear the administrative 

burden of an immediate review of the factual issues. 

Third, although the courts would be the final arbiter as to 

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

the Commission to proceed to seek an injunction during the 

final weeks of a campaign would cause a diversion of time 

and money and adverse publicity for a candidate during the 

most important period of the campaign. 

For these reasons, I disagree with the recommendation to 

expand the power of the Commission to seek injunctive 

relief except as presently provided for in the Act. 
49 

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 brought the action 

would enjoy the procedural protections afforded by 

the courts. 

Explanation: On certain occasions in the heat of the 

campaign period, the Commission has been provided with information indicating that a violation of 

the Act is about to occur (or be repeated) and yet, 

because of the administrative steps set forth in the 

statute, has been unable to act swiftly and effectively in order to prevent the violation from occurring. In some instances the evidence of a violation 

has been clear-cut and the potential for an impact 

on a campaign or campaigns has been substantial. 

The Commission has felt constrained from seeking 

immediate judicial action by the requirements of the 

statute which mandate that a person be given 15 

days to respond to a complaint, that a General 

Counsel's brief be issued, that there be an opportunity to respond to such brief, and that conciliation 

be attempted before court action may be initiated. 

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. Elec. Camp. Fin. Guide (CCH) para. 

9147 (D.N.H. 1980). The Commission suggests that 

the standards that should govern whether it may 

seek prompt injunctive relief (which could be set 

forth in the statute itself) are: 

1. There is a substantial likelihood that the facts set 

forth a potential violation of the Act; 

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. 

Disclaimers 

Disclaimer Notices 

Section: 2 U.S.C. §441 d 

Recommendation: Congress should revise the 

statute to require registered political committees to 

display the appropriate disclaimer notice (when 

practicable) in any communication issued to the 

general public, regardless of its purpose or how it 

is distributed. 

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 ot 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 
50 

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. 

Fundraising Projects Operated by Unauthorized 

Committees 

Section: 2 U.S.C. §432(e)(4) 

Recommendation: 6 Congress may wish to consider 

6 Commissioner Elliott filed the following dissent: I support 

the policy underlying this legislative recommendation and 

recognize the seriousness of the problem necessitating 

such a recommendation. However, the scope of the 

recommendation is far too broad and inflexible given the 

traditional fundraising events, especially those held by 

political parties and some unauthorized political committees. 

Party committees are not authorized committees and 

therefore would come under the general prohibitions 

included in the recommendation, precluding the use of a 

candidate's name for any activity of a party committee. 

Oftentimes, however, fundraising events conducted by a 

party committee incorporate the name of a well-known 

Member of Congress as a fundraising tool. Typically, the 

fundraising contributions are made in the form of checks 

made payable to the name of the event, e.g., "Happy 

Birthday, Senator Smith"; "Mike's Annual Barbecue"; "Sail 

With Senator Sanford"; "Roast Roberts." I do not believe 

Congress intends to preclude the use of the candidates' 

names in such activities, especially when the candidate is 

not only aware that his/her name is being used but approves and is actively participating in the event. 

I would propose that the candidate be entitled to authorize the use of his or her name for such an event or activity 

provided the authorization is written. Again, I recognize the 

seriousness and the need to address this issue; however, 

Congress should not exclude fundraising tools which have 

been traditionally used by political committees. 

Further, the impact of this recommendation has not been 

evaluated in the context of our joint fundraising regulations. 

amending the statute at 2 U.S.C. §432(e)(4) to 

clarify that a political committee that is not an 

authorized committee of any candidate may not use 

the name of a candidate in the name of any 

"project" or other fundraising activity of such committee. 

Explanation: The statute now reads that a political 

committee that is not an authorized committee 

"shall not include the name of any candidate in its 

name [emphasis added]." In certain situations 

presented to the Commission the political committee 

in question has not included the name of any 

candidate in its official name as registered with the 

Commission, but has nonetheless carried out 

"projects" in support of a particular candidate using 

the name of the candidate in the letterhead and 

text of its materials. The likely result has been that 

recipients of communications from such political 

committees were led to believe that the committees 

were in fact authorized by the candidate whose 

name was used. The requirement that committees 

include a disclaimer regarding nonauthorization (2 

U.S.C. §441d) has not proven adequate under 

these circumstances. 

The Commission believes that the intent behind 

the current provision is circumvented by the foregoing practice. Accordingly, the statute should be 

revised to clarify that the use of the name of a 

candidate in the name of any "project" is also 

prohibited. 

Fraudulent Solicitation of Funds 

Section: 2 U.S.C. §441 h 

Recommendation: The current §441 h prohibits 

fraudulent misrepresentation such as speaking, 

writing or acting on behalf of a candidate or committee on a matter which is damaging to such 

candidate or committee. It does not, however, 

prohibit persons from fraudulently soliciting contributions. A provision should be added to this section 

prohibiting persons from fraudulently misrepresenting themselves as representatives of candidates or 

political parties for the purpose of soliciting contribu-
51 

tions 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 

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. 

Explanation: 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, a single point of entry would enhance 

disclosure. Often the public and FEC staff have 

difficulty deciphering information from reports filed 

with the Clerk of the House and the Secretary of 

the Senate because these reports have been photocopied several times. A single point of entry 

would reduce the number of times a report had to 

be photocopied, thereby rendering it more legible 

and ensuring the placement of more accurate 

information on the public record. 

If the Commission received all documents, it 

would transmit on a daily basis file copies to the 

Secretary and the Clerk, as appropriate. 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, recommends that all reports be filed directly 

with the Commission (Committee Print, 96th Gong., 

1st Sess., at 122 (1979). 

Public Disclosure at State Level 

Section: 2 U.S.C. §439 

Recommendation: Congress should consider relieving both political committees (other than candidate 

committees) and state election offices of the burdens inherent in the current requirement that 

political committees file copies of their reports with 
52 

the Secretaries of State. One way this could be 

accomplished is by providing a system whereby the 

Secretary of State (or equivalent state officer) would 

tie into the Federal Election Commission's computerized disclosure data base. 

Explanation: At the present time, multicandidate 

political committees are required to file copies of 

their reports (or portions thereof) with the Secretary 

of State in each of the states in which they support 

a candidate. State election offices carry a burden 

for storing and maintaining files of these reports. At 

the same time, political committees are burdened 

with the responsibility of making multiple copies of 

their reports and mailing them to the Secretaries of 

State. 

With advances in computer technology, it is now 

possible to facilitate disclosure at the state level 

without requiring duplicate filing. Instead, state 

election offices would tie into the FEC's computer 

data base. The local press and public could access 

reports of local political committees through a computer hookup housed in their state election offices. 

All parties would benefit: political committees would 

no longer have to file duplicate reports with state 

offices; state offices would no longer have to 

provide storage and maintain files; and the FEC 

could maximize the cost-effectiveness of its existing 

data base and computer system. 

Such a system has already been tested in a pilot 

program and proven inexpensive and effective. 

Initially, we would propose that candidate committees and in-state party committees continue to file 

their reports both in Washington, D.C., and in their 

home states, in response to the high local demand 

for this information. Later, perhaps with improvements in information technology, the computerized 

system could embrace these committees as well. 

State Filing for Presidential Candidate 

Committees 

Section: 2 U.S.C. §439 

Recommendation: Congress should consider clarifying the state filing provisions for Presidential candidate committees to specify which particular parts of 

the reports filed by such committees with the FEC 

should also be filed with states in which the committees make expenditures. Consideration should be 

given to both the benefits and the costs of state 

disclosure. 

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 Commi$sion 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 politicalcommittees. 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. 
53 

Registration and Reporting 

False Contributor Information (1990) 

Section: 2 U.S.C. §434 

Recommendation: Congress may wish to amend 

the Act to make it unlawful to knowingly provide 

false contributor information to a political committee. 

Explanation: Under 2 U.S.C. §434, political committees are required to report certain information about 

their contributors to the Commission for public disclosure. Political committees usually must depend 

upon their contributors to provide truthful information 

for reporting to the Commission, yet no provision of 

the Act makes it unlawful for contributors to provide 

false information to the political committee. A 

statutory change would protect political committees 

that attempt to disclose campaign information 

accurately. 

Insolvency of Political Committees 

Section: 2 U.S.C. §433(d) 

Recommendation: The Commission requests that 

Congress clarify its intention as to whether the 

Commission has a role in the determination of insolvency and liquidation of insolvent political committees. 2 U.S.C. §433(d) was amended in 1980 to 

read: "Nothing in this subsection may be construed 

to eliminate or limit the authority of the Commission 

to establish procedures for-(A) ·the determination 

of insolvency with respect to any political committee; (B) the orderly liquidation of an insolvent 

political committee, and the orderly application of its 

assets for the reduction of outstanding debts; and 

(C) the termination of an insolvent political committee after such liquidation and application of assets." 

The phrasing of this provision ("Nothing...may be 

construed to...limit") suggests that the Commission 

has such authority in some other provision of the 

Act, but the Act contains no such provision. If 

Congress intended the Commission to have a role 

in determining the insolvency of political committees 

and the liquidation of their assets, Congress should 

clarify the nature and scope of this authority. 

Explanation: Under 2 U.S.C. §433(d)(1 ), a political 

committee may terminate only when it certifies in 

writing that it will no longer receive any contributions or make any disbursements and that the 

committee has no outstanding debts or obligations. 

The Act's 1979 Amendments added a provision to 

the law (2 U.S.C. §433(d)(2)) possibly permitting 

the Commission to establish procedures for determining insolvency with respect to political committees, as well as the orderly liquidation and termination of insolvent committees. In 1980, the Commission promulgated the ''administrative termination"· 

regulations at 11 CFR 1 02.4 after enactment of the 

1979 Amendments, in response to 2 U.S.C. 

§433(d)(2). However, these procedures do not 

concern liquidation or application of assets of 

insolvent political committees. 

Prior to 1980, the Commission adopted "Debt 

Settlement Procedures" under which the Commission reviews proposed debt settlements in order to 

determine whether the settlement will result in a 

potential violation of the .Act. If it does not appear 

that such a violation will occur, the Commission 

permits the committee to cease reporting that debt 

once the settlement and payment are reported. The 

Commission believes this authority derives from 2 

U.S.C. §434 and from its authority to correct and 

prevent violations of the Act, but it does not appear 

as a grant of authority beyond a review of the 

specific debt settlement request, to order application 

of committee assets. 

It has been suggested that review by the Commission of the settlement of debts owed by political 

committees at less than face value may lead to the 

circumvention of the limitations on contributions 

specified by 2 U.S.C. §§441a and 441b. The 

amounts involved are frequently substantial, and the 

creditors are often corporate entities. Concern has 

also been expressed regarding the possibility that 

committees Gould incur further debts after settling 

some, or that a committee could pay off one 

creditor at less than the dollar value owed and 

subsequently raise additional funds to pay off a 

"friendly" creditor at full value. 
54 

When clarifying the nature and scope of the 

Commission's authority to determine the insolvency 

of political committees, Congress should consider 

the impact on the Commission's operations. An 

expanded role in this area might increase the 

Commission's workload, thus requiring additional 

staff and funds. 

Waiver Authority 

Section: 2 U.S.C. §434 

Recommendation: Congress should give the Commission authority to grant general waivers or 

exemptions from the reporting requirements of the 

Act for classifications and categories of political 

committees. 

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. 

Moreover, a Presidential primary candidate who has 

triggered the $100,000 threshold but who is no 

longer actively seeking nomination should be able 

to reduce reporting from a monthly to a quarterly 

schedule. 

In some instances, the reporting problems reflect 

the unique features of certain state election procedures. A waiver authority would enable the Commission to respond flexibly and fairly in these 

situations. 

In the 1979 Amendments to the Act, Congress 

repealed 2 U.S.C. §436, which had provided the 

Commission with a limited waiver authority. There 

remains, however, a need for a waiver authority. It 

would enable the Commission to reduce needlessly 

burdensome disclosure requirements. 

Campaign-Cycle Reporting 

Section: 2 U.S.C. §434 

Recommendation: Congress should revise the law 

to require authorized candidate committees to 

report on a campaign-to-date basis, rather than a 

calendar year cycle, as is now required. 

Explanation: Under the current law, a reporter or 

researcher must compile the total figures from 

several year-end reports in order to determine the 

true costs of a committee. In the case of Senate 

campaigns, which may extend over a six-year 

period, this change would be particularly helpful. 

Monthly Reporting for Congressional 

Candidates 

Section: 2 U.S.C. §434(a)(2) 

Recommendation: The principal campaign committee of a Congressional candidate should have the 

option of filing monthly reports in lieu of quarterly 

reports. 

Explanation: Political committees, other than principal campaign committees, may choose under the 

Act to file either monthly or quarterly reports during 

an election year. Committees choose the monthly 

option when they have a high volume of activity. 

Under those circumstances, accounting and reporting are easier on a monthly basis because fewer 

transactions have taken place during that time. 

Consequently, the committee's reports will be more 

accurate. 

Principal campaign committees can also have a 

large volume of receipts and expenditures. This is 

particularly true with Senatorial campaigns. These 

committees should be able to choose a more 
55 

frequent filing schedule so that their reporting 

covers less activity and is easier to do. 

Monthly Reports 

Section: 2 U.S.C. §434(a)(3)(8) and (4)(8) 

Recommendation: Congress should change the 

reporting deadline for monthly filers from the twentieth to the fifteenth of the month. 

Explanation: Committees filing monthly reports are 

now required to file reports disclosing each month's ······

activity by the twentieth day of the following month. 

Particularly in the fast-paced Presidential primary 

period, this 20-day lag does not meet the public's 

need for timely disclosure. In light of the increased 

use of computerized recordkeeping by political 

committees, imposing a monthly filing deadline of 

the fifteenth of the month would not be unduly burdensome and would ensure timely disclosure of 

crucial financial data. 

Reporting Payments to Persons Providing 

Goods and Services 

Section: 2 U.S.C. §434(b)(5)(A), (6)(A) and (6)(8) 

Recommendation: The current statute requires 

reporting "the name and address of each...person 

to whom an expenditure in an aggregate amount or 

value in excess of $200 within the calendar year is 

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

the date, amount, and purpose of such operating 

expenditure." Congress should clarify whether this 

is meant, in all instances, to require reporting 

committees to disclose only the payments made by 

the committee or whether, in some instances, 1) 

the reporting committees must require initial payees 

to report, to the committees, their payments to 

secondary payees, and 2) the reporting committees, 

in turn, must maintain this information and disclose 

it to the public by amending their reports through 

memo entries. 

·· ·····

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), para. 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}, para. 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 General Election Candidates 

Receiving Public Financing, Federal Election Commission, pp. IV 39-44 (1984) (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. 

Verifying Multicandidate Committee Status 

Section: 2 U.S.C. §§438(a)(6)(C), 441 a(a}(2} and 

(a)(4) 

Recommendation: Congress should consider modifying those provisions of the Act relating to multicandidate committees in order to reduce the problems encountered by contributor committees in 

reporting their multicandidate committee status, and 

by candidate committees and the Commission in 

verifying the multicandidate committee status of 

contributor committees. In this regard, Congress 

might consider requiring political committees to 

notify the Commission once they have satisfied the 
56 

three criteria for becoming a multicandidate committee, namely, once a political committee has been 

registered for not less than 6 months, has received 

contributions from more than 50 persons and has 

contributed to at least 5 candidates for federal 

office. 

Explanation: Under the current statute, political 

committees may not contribute more than $1,000 to 

each candidate, per election, until they qualify as a 

multicandidate committee, at which point they may 

contribute up to $5,000 per candidate, per election. 

To qualify for this special status, a committee must 

meet three standards: 

• Support 5 or more federal candidates; 

• Receive contributions from more than 50 contributors; and 

• Have been registered as a political committee 

for at least 6 months. 

The Commission is statutorily responsible for 

maintaining an index of committees that have qualified as multicandidate committees. The index 

enables recipient candidate committees to determine whether a given contributor has in fact qualified as a multicandidate committee and therefore is 

entitled to contribute up to the higher limit. The 

Commission's Multicandidate. Index, however, is not 

current because it depends upon information filed 

periodically by political committees. Committees 

inform the Commission that they have qualified as 

multicandidate committees by checking the appropriate box on their regularly scheduled report. If, 

however, they qualify shortly after they have filed 

their report, several months may elapse before they 

disclose their new status on the next report. With 

semiannual reporting in a nonelection year, for 

example, a committee may become a multicandidate committee in August, but the Commission's 

Index will not reveal this until after the January 31 

report has been filed, coded and entered into the 

Commissi.on's computer. 

Because candidate committees cannot totally rely 

on the Commission's Multicandidate Index for 

current information, they sometimes ask the contributing committee directly whether the committee is a 

multicandidate committee. · 

Contributing committees, however, are not always 

clear as to what it means to be a multicandidate 

committee. Some committees erroneously believe 

that they qualify as a multicandidate committee 

merely because they have contributed to more than 

one federal candidate. They are not aware that 

they must have contributed to 5 or more federal 

candidates and also have more than 50 contributors 

and have been registered for at least 6 months. 

Agency Funding 

Statutory Gift Acceptance Authority (1990) 

Section: 2 U.S.C. §437c 

Recommendation: Congress should give the Commission authority to accept funds and services from 

private sources to enable the Commission to 

provide guidance and conduct research on election 

administration and campaign finance issues. 

Explanation: The Commission has been very restricted in the sources of private funds it may 

accept 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. 
57 

Budget Reimbursement Fund (revised 1990) 

Section: 2 U.S.C. §438 

Recommendation: The Commission recommends 

that Congress establish a reimbursement account 

for the Commission so that expenses incurred in 

preparing copies of documents, publications and 

computer tapes sold to the public are recovered by 

the Commission. Similarly, costs awarded to the 

Commission in litigation (e.g., printing, but not civil 

penalties) and payments for Commission expenses 

incurred in responding to Freedom of Information 

Act requests should be payable to the reimbursement fund. The Commission should be able to use 

such reimbursements to cover its costs for these 

services, without fiscal year limitation, and without a 

reduction in the Commission's appropriation. 

Explanation: At the present time, copies of reports, 

microfilm, and computer tapes are sold to the 

public at the Commission's cost. However, instead 

of the funds being used to reimburse the Commission for its expenses in producing the materials, 

they are credited to the U.S. Treasury. The effect 

on the Commission of selling materials is thus the 

same as if the materials had been given away. The 

Commission absorbs the entire cost. In FY 1989, in 

return for services and materials it offered the 

public, the FEC collected and transferred $113,466 

in miscellaneous receipts to the Treasury. During 

the first three months of FY 1990, $25,703 was 

transferred to the Treasury. Establishment of a 

reimbursement fund, into which fees for such 

materials would be paid, would permit this money 

to be applied to further dissemination of information. 

Note, however, that a reimbursement fund would 

not be applied to the distribution of FEC informational materials to candidates and registered political committees. They would continue to receive free 

publications that help them comply with the federal 

election laws. 

There should be no restriction on the use of reimbursed funds in a particular year to avoid the 

possibility of having funds lapse. 

Miscellaneous 

Draft Committees 

Section: 2 U.S.C. §§431 (8)(A)(i) and (9)(A)(i), 

441 a(a)(1) and 441 b(b) 

Recommendation: Congress should consider the 

following amendments to the Act in order to prevent 

a proliferation of "draft" committees and to reaffirm 

Congressional intent that draft committees are 

"political committees" subject to the Act's provisions. 

1. Bring Funds Raised and Spent for Undeclared 

but Clearly Identified Candidates Within the Act's 

Purview. Section 431 (8)(A)(i) should be amended 

to include in the definition of "contribution" funds 

contributed by persons ''for the purpose of influencing a clearly identified individual to seek nomination for election or election to Federal office .... " 

Section 431 (9)(A)(i) should be similarly amended 

to include within the definition of "expenditure" 

funds expended by persons on behalf of such "a 

cleariy identified individual." 

2. Restrict Corporate and Labor Organization Support for Undeclared but Clearly Identified Candidates. Section 441 b(b) should be revised to 

expressly state that corporations, labor organizations and national banks are prohibited from 

making contributions or expenditures "for the 

purpose of influencing a clearly identified 

individual to seek nomination for election or 

election ... " to federal office. 

3. Limit Contributions to Draft Committees. The law 

should include explicit language stating that no 

person shall make contributions to any committee 

(including a draft committee) established to influence the nomination or election of a clearly identified individual for any federal office which, in 

the aggregate, exceed that person's contribution 

limit, per candidate, per election. 

Explanation: These proposed amendments were 

prompted by the decisions of the U.S. Court of 

Appeals for the District of Columbia Circuit in FEC 

v. Machinists Non-Partisan Political League and 
58 

FEC v. Citizens for Democratic Alternatives in 1980 

and the U.S. Court of Appeals for the Eleventh 

Circuit in FEC v. Florida for Kennedy Committee. 

The District of Columbia Circuit held that the Act, 

as amended in 1979, regulated only the reporting 

requirements of draft committees. The Commission 

sought review of this decision by the Supreme 

Court, but the Court declined to hear the case. 

Similarly, the Eleventh Circuit found that "committees organized to 'draft' a person for federal office" 

are not "political committees" within the Commission's investigative authority. The Commission 

believes that the appeals court rulings create a 

serious imbalance in the election law and the 

political process because a nonauthorized group 

organized to support someone who has not yet 

become a candidate may operate completely 

outside the strictures of the Federal Election Campaign Act. However, any group organized to support someone who has in fact become a candidate 

is subject to the Act's registration and reporting 

requirements and contribution limitations. Therefore, 

the potential exists for funneling large aggregations 

of money, both corporate and private, into the 

federal electoral process through unlimited contributions made to nonauthorized draft committees that 

support a person who has not yet become a 

candidate. These recommendations seek to avert 

that possibility. 

Honoraria (revised 1990) 

Section: 2 U.S.C. §§431 (8)(B)(xiv) and 441 i 

Recommendation: The Commission offers two 

suggestions concerning honoraria: 

1. Section 441 i should be placed under the Ethics 

in Government Act. 

2. As technical amendments, Sections 441 i(c) and 

(d), which pertain to the annual limit on receiving 

honoraria (now repealed), should be repealed. 

Additionally, 2 U.S.C. §431 (8)(B)(xiv), which 

refers to the definition of honorarium in Section 

441 i, should be modified to contain the definition 

itself. 

Explanation: In the Ethics Reform Act of 1989, 

Congress prohibited the receipt of honoraria by 

Members of the House of Representatives and 

officers and employees of the federal government. 

To conform with this new prohibition, Section 441 i 

was amended to apply only to Senators and 

officers and employees of the United States Senate. However, Congress had previously eliminated 

the $25,000 annual limit on the amount of honoraria that could be accepted, but it did not take out 

two sections, which only apply to the $25,000 limit. 

This clarification would eliminate confusion and 

thereby help the Commission in its administration of 

the Act. 
59 

Appendix 1 

Biographies of 

Commissioners and 

Officers 

Commissioners 

Danny L. McDonald, Chairman 

April 30, 1993 1 

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 previously 

served as FEC Chairman in 1983. 

Lee Ann Elliott, Vice Chairman 

April 30, 1993 

President Reagan reappointed Mrs. Elliott to her 

second term as Commissioner in 1987. Before her 

first appointment in 1981, Mrs. Elliott was vice 

president of a political consulting firm in Washington, D.C., Bishop, Bryant & Associates, Inc. She 

spent several years as associate executive director 

of the American Medical Political Action Committee, 

having previously served as assistant director. Mrs. 

Elliott was also on the board of directors of the 

American Association of Political Consultants and 

on the board of the Chicago Area Public Affairs 

Group, of which she is a past president. She was 

also a member of the Public Affairs Committee of 

the U.S. Chamber of Commerce. In 1979, she 

received the Award for Excellence in Serving 

Corporate Public Affairs from the National Association of Manufacturers. 

A native of St. Louis, Mrs. Elliott graduated from 

the University of Illinois. She also completed Northwestern University's Medical Association Management Executive Program and is a Certified Association Executive. She served as Commission Chairman in 1984 and was elected as the 1990 Chairman. 

Joan D. Aikens 

April 30, 1995 

One of the original members of the Commission, 

Mrs. Aikens was first appointed in 1975. Following 

the reconstitution of the FEC that resulted from the 

Supreme Court's Buckley v. Va/eo decision, President Ford reappointed her to a five-year term. In 

1981, President Reagan named Mrs. 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, Mrs. Aikens was 

reappointed by President Bush in 1990. She served 

as FEC Chairman in 1978 and 1986. 

Before her 1975 appointment, Mrs. 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, Mrs. Aikens has been active in a 

variety of volunteer organizations and is currently a 

member of the Commonwealth Board of the Medical College of Pennsylvania. She is also a member 

of the board of directors of Ursinus College, where 

she received her B.A. degree and an honorary 

Doctor of Law degree. 

Thomas J. Josefiak 

April 30, 1991 

Mr. Josefiak was appointed to the Commission in 

1985 and was the 1988 FEC Chairman. He previously served at the Commission as Special Deputy 

to the Secretary of the Senate. Before assuming 

that post in 1981, he was legal counsel to the 

National Republican Congressional Committee. His 

past experience also includes positions held at the 

U.S. House of Representatives. He was minority 

1 Term expiration date. special counsel for federal election law to the 
60 

Committee on House Administration and served as 

legislative assistant to Congressman Silvio 0. 

Conte. 

A native of Massachusetts, Mr. Josefiak graduated from Fairfield University, Connecticut, and 

holds a J.D. degree from the Georgetown University 

Law Center. 

John Warren McGarry 

April 30, 1995 

First appointed to the Commission in 1978, Mr. 

McGarry was reappointed in 1983 and 1989, 

serving as FEC Chairman in 1981 and 1985. He 

was elected as the 1990 Vice Chairman. Before his 

1978 Commission appointment, Mr. 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, Mr. McGarry was 

the Massachusetts assistant attorney general. 

After graduating cum laude from Holy Cross 

College, Mr. McGarry did graduate work at Boston 

University and earned a J.D. degree from Georgetown University Law School. 

Scott E. Thomas 

April 30, 1991 

Mr. Thomas was appointed to the Commission in 

1986 and was the 1987 Chairman. 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 the Assistant 

General Counsel for Enforcement. 

A Wyoming native, Mr. Thomas graduated from 

Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member of the bars for the District of Columbia, the 

U.S. Court of Appeals for the Ninth Circuit and the 

U.S. Supreme Court. 

Ex Officio Commissioners 

Donnald K. Anderson 

Mr. Anderson was appointed Clerk of the House of 

Representatives in 1987. Before his appointment, 

he was Majority Floor Manager under Speakers 

Carl Albert and Thomas P. O'Neill, Jr. A native of 

California, he began his career as a page in the 

86th Congress. He was appointed assistant enrolling clerk and clerk in the Finance Office by Representative Hale Boggs. Speaker John W. McCormack later appointed him assistant manager of the 

Democratic Cloakroom. 

Douglas Patton, attorney and Special Deputy to 

the Clerk of the House, continues to represent Mr. 

Anderson at the Commission. 

Walter J. Stewart 

Mr. Stewart was appointed Secretary of the Senate 

in 1987. He was previously employed by Son at, 

Inc., as vice president of government affairs. Before 

that, he served as Secretary for the Minority of the 

U.S. Senate and as executive director of the 

Senate Steering Committee. Other Senate offices 

held by Mr. Stewart include: counsel to the Senate 

Appropriations Committee; director of legislative 

affairs for the Majority Whip, administrative assistant 

to the Majority Leader for Senate Operations and 

chief of staff for Senatorial and Presidential delegations traveling to China, Russia and the Middle 

East. A native of Georgia, Mr. Stewart graduated 

from George Washington University and received 

an LL.B. from American University. He is a member 

of the District of Columbia Bar. 

David G. Gartner, attorney and Special Deputy to 

the Secretary of the Senate, continues to represent 

Mr. Stewart at the Commission. 

Statutory Officers 

John C. Surina, Staff Director 

Before joining the Commission in 1983, Mr. Surina 

was assistant managing director of the Interstate 

Commerce Commission, where he was detailed to 

the "Reform 88" program at the Office of Manage-
61 

ment and Budget. In that role, he worked on 

projects to reform administrative management within 

the federal government. He was also an expertconsultant 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. 

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. 
63 

Appendix 2 

Chronology of 

Events, 1989 

January 

1-Chairman Danny L. McDonald and Vice 

Chairman Lee Ann Elliott begin one-year 

terms as officers. 

13-FEC releases year-end figures on number of PACs. 

31-1988 year-end report due. 

February 

1-Commission releases Selected Court 

Case Abstracts, 1976-1988. 

10-FEC sends questionnaires on allocation 

methods to state party chairmen. 

15-1 6-FEC holds public hearings on proposed 

revisions to debt settlement regulations. 

24-ln Maine Right to Life Committee, Inc. v. 

FEC, district court rules that constitutional 

challenge to FEC rules on corporate 

communications was not ripe for court 

consideration. 

-FEC releases 1988 election cycle figures 

on House and Senate campaigns. 

March 

1-FEC releases first edition of Explanation 

and Justification for FEC Regulations, 

1975-Present. 

2 -FEC testifies on FY 1990 budget request 

before House Appropriations Subcommittee on Treasury, Postal Service and 

General Government. 

7-FEC testifies on FY 1990 budget request 

before House Administration Subcommittee on Elections. 

8-ln FEC v. Furgatch, appeals court affirms 

maximum civil penalty but instructs 

district court to limit vacated permanent 

injunction to reasonable time (see November 20). 

9-FEC releases final audit report on Pete 

du Pont's 1988 Presidential primary 

campaign (see June 28 and December 

1 4). 

16-FEC submits annual legislative recommendations to the President and Congress. 

27-FEC releases 1988 election cycle figures 

on party committee activity. 

28 -Indiana holds special general election in 

4th Congressional District. 

April 

3 -Chairman McDonald alerts Members of 

Congress to projected 1996 deficiency in 

Presidential Election Campaign Fund and 

consequences to public funding system. 

4 -Alabama holds special general election in 

3rd Congressional District (primary: 

February 14; runoff: March 7). 

6-FEC testifies on FY 1990 budget request 

before Senate Rules Committee. 

9 -FEC releases 1988 election cycle figures 

on PAC activity. 

12-FEC testifies on FY 1 990 budget request 

before Senate Appropriations Subcommittee on Treasury, Postal Service and 

General Government. 

24-FEC appoints acting Inspector General. 

26-Wyoming holds special general election 

(at-large House seat). 

28 -Clearinghouse reports to Congress on 

voting accessibility for elderly and handicapped. 

May 

1-In Austin v. Michigan State Chamber of 

Commerce, Supreme Court agrees to 

review constitutionality of state law banning corporate independent expenditures 

(see October 31 ). 

-In Go/and v. FEC and U.S., district court 

dismisses constitutional challenge to 

prohibition on contributions made in 

name of another. 

8 -Concerning bankruptcy petition filed by 

Fund for a Conservative Majority, bank-
64 

ruptcy court rules that FEC does not 

have sole civil jurisdiction over debt 

settlements by political committees. 

11 -In FEC v. NOW, district court rules that 

defendants' mailings did not violate ban 

on corporate expenditures because they 

did not contain express advocacy language. 

19-FEC releases 1988 election cycle figures 

on independent expenditures. 

25-FEC releases final audit report on Bruce 

Babbitt's 1988 Presidential primary campaign. 

30-ln Common Cause v. FEC (85-1130}, 

district court rules that agency's dismissal 

of complaint was reasonable except for 

one issue remanded to FEC for further 

consideration. 

June 

1 - FEC releases Annual Report 1988. 

- FEC releases Federal Elections 88, the 

official vote results for federal races. 

4-14-Delegation from FEC visits Soviet Union 

at invitation of Central Electoral Commission of the USSR (see September 13 

and November 2-11}. 

22 -FEC releases final audit report on Alexander Haig's 1988 Presidential primary 

campaign. 

28 -Amended regulations on trade associations become effective. 

-FEC hears presentation by Pete du Pont 

for President committee contesting 

agency's initial repayment determination 

(see December 14}. 

July 

13-FEC releases final audit report on Albert 

Gore, Jr.'s 1988 Presidential primary 

campaign. 

26-ln FEC v. Franklin, district court orders 

defendant to answer FEC's enforcementrelated questions within 75 days and 

orders FEC to keep responses confidential (see September 27}. 

27 -FEC publishes Notice of Proposed Rulemaking on bank loans. 

31 --Semiannual report due. 

August 

. 8 -Cieariogllouse publishes proposed standards for computerized voting systems. 

11 -FEC releases figures on 1990 Senate 

campaigns. 

15-FEC releases figures on 1989 activity of 

national party committees. 

23-25 -Clearinghouse Advisory Panel meets in 

Washington, D.C. 

. 25--FEC releases final report on financial 

activity of 1988 Presidential primary 

campaigns. 

29 -Florida holds special general election in 

18th Congressional District (primary: 

August 1; runoff: August 15}. 

31-ln Stern v. FEC, district court rules that 

Commission's dismissal of complaint 

alleging misuse of PAC funds was reasonable. 

September 

12-Texas holds special general election in 

12th Congressional District (primary: 

August 12}. 

-California holds special general election 

in 15th Congressional District. 

13-FEC releases report on June visit to 

USSR. 

14-15-FEC holds conference in Philadelphia. 

27 -In FEC v. Franklin, appeals court vacates 

protective order imposed on FEC and 

orders defendant to answer FEC's questions within 5 days. 
65 

October 

1-FEC completes office automation project. 

-FEC publishes two new brochures, 10 

Questions from Candidates and Sale and 

Use of Campaign Information. 

5 -Senate confirms reappointments of Commissioners Joan D. Aikens and John 

Warren McGarry. 

-FEC rejects objections to matching fund 

procedures by Pat Robertson's 1988 

Presidential primary campaign. 

12-13-FEC cosponsors conference in San 

Francisco. 

17 -Mississippi holds special general election 

in 5th Congressional District (primary: 

October 3). 

25-FEC releases final audit report on 1988 

Republican national convention committee. 

31 -FEC releases final report on 1987-88 

financial activity of House and Senate 

campaigns, party committees and PACs. 

--,-Supreme Court hears oral argument in 

Austin v. Michigan State Chamber of 

Commerce. 

November 

1-Chairman McDonald again notifies Congress of projected deficit in Presidential 

Election Campaign Fund. 

-Clearinghouse releases Ballot Access, 

Volumes 2-4, and Election Directory 891 

90. 

2-FEC releases final audit report on Lenora 

Fulani's 1988 Presidential primary campaign. 

2-11 -Delegation from Central Electoral Commission of USSR visits United States 

(see December 19). 

20-ln FEC v. Furgatch, district court, responding to appeals court instructions, 

limits injunction imposed on defendant to 

eight years. 

21 -FEC releases final audit report on 1988 

Democratic convention committee. 

24 -Amendments to regulations on affiliation, 

transfers, earmarking and other areas 

become effective. 

-FEC transmits to Congress final changes 

to rules on foreign nationals. 

30-President Bush signs Ethics Reform Act 

of 1989 (P.L. 101-194}, which amends 

FECA provisions on honoraria and 

personal use of excess campaign funds 

and which requires nonincumbent candidates to file personal financial statements 

with FEC. 

December 

1-FEC publishes revised Campaign Guide 

for Political Party Committees. 

9-Texas holds special general election in 

18th Congressional District (primary: 

November 7). 

14-FEC makes final determination that Pete 

du Pont for President committee repay 

$25,775 in matching funds. 

19 -Commission elects Lee Ann Elliott as 

1990 Chairman and John Warren 

McGarry as 1990 Vice Chairman. 

-FEC releases report on Soviet visit tc 

u.s. 
The Commissioners 

Danny L. McDonald, Chairman* 

Lee Ann Elliott, Vice Chairman t 

Joan D. Aikens, Commissioner 

Thomas J. Josefiak, Commissioner 

John Warren McGarry, Commissioner 

Scott E. Thomas, Commissioner 

Walter J. Stewart, Ex Officio/Senate 

Donnald K. Anderson, Ex Officio/House 

I I 

General Counsel Staff Director Inspector General 

Title 26 * and Ethics ~ 

Policy§ -

Enforcement 

Litigation 

I 

Deputy Staff 

Director for 

Management 

Administration 

Data Systems 

Development -

Planning and 

Management 

I 

-

~ 

1-

1-

Audit 

Clearinghouse 

Information 

Public Disclosure 

~ 

1-

1-

... 

Commission 

Secretary 

Congressional 

and lntergovernmental Affairs 

Personnel Policy 

and Labor/Management Relations 

Press Office 

- Reports Analysis 

*Commissioner Elliott was elected 1990 Chairman. 

tCommissioner McGarry was elected 1990 Vice Chairman. 

*The Presidential public funding laws are contained in Title 26 of the United States Code. 

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

67 

Appendix 3 

FEC Organization Chart 
69 

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 202-376-5140. 

Administration 

The Administration Division is the Commission's 

"housekeeping" unit and is responsible for accounting, procurement and contracting, space management, payroll, travel and supplies. In addition, 

several support functions are centralized in the 

office such as printing, document reproduction and 

mail services. The division also handles records 

management, inventory control and building security 

and maintenance. 

Audit 

Many of the Audit Division's responsibilities concern 

the Presidential public funding program. The division evaluates the matching fund submissions of 

Presidential primary candidates and determines the 

amount of contributions that may be matched with 

federal funds. As required by law, the division 

audits all public funding recipients. 

In addition, the division audits those committees 

which, according to FEC determinations, have not 

met the threshold requirements for substantial compliance with the law. Audit Division resources are 

also used in the Commission's investigations of 

complaints. 

Clearinghouse 

The National Clearinghouse on Election Administration, located on the seventh floor, assists state and 

local election officials by responding to inquiries, 

publishing research and conducting workshops on 

all matters related to election administration. Additionally, the Clearinghouse answers questions from 

the public and briefs foreign delegations on the 

U.S. election process. Local phone: 376-5670. 

Commission Secretary 

The Secretary to the Commission handles all administrative matters relating to Commission meetings, including agenda documents, Sunshine Act 

notices, minutes and certification of Commission 

votes. The office also circulates and tracks numerous materials not related to meetings, and records 

the Commissioners' tally votes on these matters. 

Commissioners 

The six Commissioners-three Democrats and three 

Republicans-are appointed by the President and 

confirmed by the Senate. Two ex officio Commissioners, the Secretary of the Senate and the Clerk 

of the House of Representatives, are nonvoting 

members. They appoint special deputies to represent them at the Commission. 

The six voting Commissioners serve full time and 

are responsible for administering and enforcing the 

Federal Election Campaign Act. They generally 

meet twice a week, once in closed session to 

discuss matters that, by law, must remain confidential, and once in a meeting open to the public. At 

these meetings, they formulate policy and vote on 

significant legal and administrative matters. 

Congressional, Legislative and 

Intergovernmental Affairs 

This office serves as primary liaison with Congress 

and Executive Branch agencies. The office is responsible for keeping Members of Congress informed about Commission decisions and, in turn, 

for keeping the agency up to date on legislative 

developments. 

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 
70 

indexes. 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. 

General Counsel 

The General Counsel directs the agency's enforcement activities and represents and advises the 

Commission in any legal actions brought against it. 

The Office of General Counsel handles all civil 

litigation, including several cases that have come 

before the Supreme Court. The office also drafts, 

for Commission consideration, advisory opinions 

and regulations as well as other legal memoranda 

interpreting the federal campaign finance law. 

Information Services 

In an effort to promote voluntary compliance with 

the law, the Information Services Division provides 

technical assistance to candidates, committees and 

others involved in elections. Responding to phone 

and written inquiries, members of the staff conduct 

research based on the statute, FEC regulations, 

advisory opinions and court cases. Staff also direct 

workshops on the law and produce guides, pamphlets and videos on how to comply with the law. 

Located on the second floor, the division is open to 

the public. Local phone: 376-3120; 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: 376-5312. 

Personnel and Labor/Management Relations 

This office handles employment, position classification, training and employee benefits. It also provides policy guidance on awards and discipline 

matters and administers a comprehensive labor 

relations program including contract negotiations 

and resolution of disputes before third parties. 

Planning and Management 

This office develops the Commission's budget and, 

each fiscal year, prepares a management plan 

determining the allocation and use of resources 

throughout the agency. Planning and Management 

monitors adherence to the plan, providing monthly 

reports measuring the progress of each division in 

achieving the plan's objectives. 

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: 376-3155. 
71 

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: 

376:3140. 

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 that explains the mistake and asks for clarification. 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: 376-

2480. 

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. 
73 

Summary of Disclosure Files 

Appendix 5 

Statistics on Commission 

Operations 

Total Filers 

Existing 

In 1989 

Filers 

Terminated 

as of 

12/31/89 

Continuing 

Filers 

as of 

12/31/89 

Number of 

Reports 

and 

Statements 

In 1989 

Gross Receipts 

in 1989 

Gross 

Expenditures 

in 1989 

Presidential Candidate 

Committees 

282 10 272 434 $7,140,220 $11 ,421 ,683 

Senate Candidate Committees 485 32 453 770 $85,254,826 $46,076,747 

House Candidate Committees 2,367 209 2,158 3,441 $86,912,532 $67,539,576 

Party Committees 461 49 412 1,038 $233,519,103 $227,563,898 

Delegate Committees 83 1 82 1 $0 $0 

Nonparty Committees 

labor committees 

Corporate committees 

Membership, trade and other 

committees 

4,407 

361 

1,878 

2,168 

229 

12 

82 

135 

4,178 

349 

1,796 

2,033 

14,094 

1,310 

7,183 

5,601 

$177,747,034 

$44,863,269 

$51 ,931 ,639 

$80,952,126 

$135,895,852 

$31 ,935,933 

$40,004,916 

$63,955,003 

Communication Cost Filers 176 NA NA 27 NA $89,312

Independent Expenditures by 

Persons Other Than Political 

Committees 

133 NA NA 18 NA $125,218 
74 

Divisional Statistics for Calendar Year 1989 

*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 

Reports Analysis Division 

Documents processed 33,902 

Reports reviewed 39,793 

Telephone assistance and meetings 6,438 

Requests for additional information (RFAis) 5,436 

Second RFAis 2,021 

Data coding and entry of RFAis and 

miscellaneous documents 11,509 

Names of candidate committees 

published for failure to file reports 2 

Compliance matters referred to Office 

of General Counsel or Audit Division 227 

Data Systems Development Division 

Documents receiving Pass I coding* 32,719 

Documents receiving Pass Ill coding • 31,581 

Documents receiving Pass I entry 28,529 

Documents receiving Pass Ill entry 31,828 

Transactions receiving Pass Ill entry 

• In-house 58,617 

• Contract 197,823 

Public Records Office 

Campaign finance material processed 

(total pages) 721,853 

Requests for campaign finance reports 7,709 

Visitors 14,235 

Total people served 18,944 

Information telephone calls 16,087 

Computer printouts provided 68,784 

Total income (transmitted to U.S. Treasury) $99,554 

Cumulative total pages of documents 

available for review 8,633,862 

Contacts with state election offices 3,794 

Notices of failure to file with state 

election offices 261 

Total 

Administrative Division 

Contracting and procurement transactions 1,969 

Pieces of outgoing mail processed 276,500 

Publications prepared for print 37 

Pages of photocopying 7,500,000 

Information Services Division 

Telephone inquiries 49,006 

Information letters 59 

Distribution of FEC materials 6,437 

Prior notices (sent to inform filers 

of reporting deadlines) 15,357 

Other mailings 16,817 

Visitors 71 

Public appearances by Commissioners 

and staff 65 

State workshops 2 

Publications 24 

Press Office 

Press releases 137 

Telephone inquiries from press 12,714 

Visitors to Press Office 3,209 

Freedom of Information Act 

(FOIA) requests 100 

Fees for materials requested under FOIA 

(transmitted to U.S. Treasury) $26,328 

Clearinghouse on Election Administration 

Telephone inquiries 2,742 

Information letters 69 

Visitors 49 

State workshops 15 

Publications 3 

Project conferences 12 
75 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1989 0 

Requests received 32 

Issued, closed or withdrawn • 29 

Pending at end of 1989 3 

Compliance cases (MURs) 

Pending at beginning of 1989 220 

Opened 218 

Closed 237 

Pending at end of 1989 201 

Litigation 

Cases pending at beginning of 1989 42 

Cases opened 18 

Cases closed 19 

Cases pending at end of 1989 41 

Cases won 16 

Cases lost 0 

Cases voluntarily dismissed 

Cases dismissed as moot 2 

Law Library 

Telephone inquiries 2,057 

Visitors served 937 

Audits Completed by Audit Division, 1975·1989 

Presidential 62 

Presidential Joint Fundraising 8 

Senate 13 

House 118 

Party (National) 44 

Party (Other) 110 

Nonparty (PACs) 70 

Total 425 

• Twenty-six opinions were issued; three opinion requests 

were closed without issuance of an opinion. 
77 

Appendix 6 

FEC Federal Register 

Notices, 1989 

Notice* Title Date 

Published Citation 

1989-1 Filing Dates for Alabama Special Election 1/19/89 54 Fed. Reg. 

2227 

1989-2 Filing Dates for Indiana Special Election 1/19/89 54 Fed. Reg. 

I ..... 2228 ............ 

1989-3 11 CFR Parts 110, 113, 114 and 116: Debts Owed by Candidates 2114/89 54 Fed. Reg. 

and Political Committees; Additional Public Hearing Date 6684 

1989-4 11 CFR Part 114: Trade Association Solicitation; Final Rule and 3/15/89 54 Fed. Reg. 

Explanation and Justificaion; Transmittal to Congress 10622 

1989-5 Filing Dates for Wyoming Special Election 3/29/89 54 Fed. Reg. 

12954 

1989-6 11 CFR Parts 1 00 and 11 0: Contributions and Expenditures, 6/7/89 54 Fed. Reg. 

Prohibited Contributions and Expenditures; Second Notice of Proposed Rulemaking 

24351 

1989-7 Filing Dates for Florida Special Election 6/20/89 54 Fed. Reg. 

25903 

1989-8 11 CFR Part 114: Trade Association Solicitation; Announcement of 6/28/89 54 Fed. Reg. 

Effective Date 27153 

1989-9 Filing Dates for California Special Election 6/30/89 54 Fed. Reg. 

27704 

1989-10 Filing Dates for Texas Special Election (12th CD) 7/12/89 54 Fed. Reg. 

29385 

* This appendix does not include Federal Register notices of Commission meetings published under the Government in the 

Sunshine Act. 
78 

Notice Title Date 

Published Citation 

-

1989-11 11 CFR Parts 100, 9004 and 9034: Loans From Lending Institutions 

to Candidates and Political Committees; Notice of Proposed Rulemaking 

7/27/89 54 Fed. Reg. 

31286 

1989-12 Voluntary Standards for Computerized Voting Systems; Notice of 

Proposed Standards 

8/8/89 54 Fed. Reg. 

32479 

1989-13 11 CFR Parts 100, 102, 110, 114 and 9034: Affiliated Committeees, 

Transfers, Prohibited Contributions, Annual Contribution Limitations 

and Earmarked Contributions; Final Rule and Explanation and 

Justification; Transmittal to Congress 

8/17/89 54 Fed. Reg. 

34098 

1989-14 Filing Dates for Texas Special Runoff Election (12th CD) 8/25/89 54 Fed. Reg. 

35388 

1989-15 Filing Dates for Mississippi Special Election 9/6/89 54 Fed. Reg. 

37020 

1989-16 Filing Dates for Texas Special Election (18th CD) 9/11/89 54 Fed. Reg. 

37503 

1989-17 Filing Dates for Texas Special Runoff Election (18th CD) 11/22/89 54 Fed. Reg. 

48318 

1989-18 11 CFR Part 110: Contributions and Expenditures, Prohibited 

Contributions; Final Rule and Explanation and Justification; Transmittal to Congress 

11/24/89 54 Fed. Reg. 

48580 

1989-19 11 CFR Parts 100, 102, 110, 114 and 9034: Affiliated Committees, 

Transfers, Prohibited Contributions, Annual Contribution Limitations 

and Earmarked Contributions; Announcement of Effective Date 

11/24/89 54 Fed. Reg. 

48580 

····~~· 

-&:U.S. GOVERNMENT PRINTING Oli'FICE; 1990 - 267-571 - 814/20320