Federal 

Election 

Commission 

Annual Report 1986 

Federal Election Commission 

Washington, D.C. 20463 
Commissioners 

Scott E. Thomas, Chairman 

Thomas J. Josefiak, Vice Chairman 

Joan D. Aikens 

Lee Ann Elliott 

Danny L. McDonald 

John Warren McGarry 

Ex Officio Commissioners 

Donnald K. Anderson, Clerk of the House 

Walter J. Stewart, Secretary of the Senate 

Statutory Officers 

John C. Surina, Staff Director 

General Counsel 

The Annual Report 1986 was written and published by the Commission's Information Services Division. 
FEDERAl ElECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 1, 1987 

The President of the United States 

The U.S. Senate 

The u.s. House of Representatives 

Dear Sirs: 

We submit for your consideration the 12th annual report 

of the Federal Election Commission, as required by the 

Federal Election Campaign Act of 1971, as amended. The 

Annual Report 1986 describes the activities performed by 

the Comm1ss1on 1n carrying out its duties under the Act. 

It also includes a number of legislative recommendations 

adopted by the Commission in February 1987. 

Respectfully, 

Scott E. Thomas 

Chairman 
4 

Presidential Election Campaign Fund 

Tax Checkoff 

(as of December 31, 1986) 

Calendar Year Tax Returns 

Indicating Checkoff , Check-Off Dollars 

Deposited In Fund 

RepaJments to 

und 

Disbursements 

from Fund 

Year-End Fund 

Balance 2 

1975 not available $31 ,656,525 $0 $2,590,502 $59,551,245 3 

1976 27.5% 33,731,945 0 69,467,521 23,805,659 

1977 28.6% 36,606,008 1,037,029 521,124 60,927,571 

1978 25.4% 39,246,689 163,725 6,000 100,331 ,986 

1979 27.4% 35,941,347 23,474 1,050,000 135,246,807 

1980 28.7% 38,838,417 1,094,098 101,427,116 73,752,205 

1981 27.0% 41,049,052 202,288 630,256 114,373,289 

1982 24.2% 39,023,882 58,400 1,070 153,454,501 

1983 23.7% 35,631,068 21,899 11,786,486 177,320,982 

1984 23.0% 35,036,761 505,807 120,149,768 92,713,782 

1985 23.0% 34,712,761 61,840 1,617,842 125,870,541 

1986 not available 35,753,837 61,641 5,596 161,680,423 

Source: FEC Press Office handout, "Presidential Fund-Income Tax Check-Off Status," based on information provided by the U.S. 

Department of Treasury and the Internal Revenue Service. 

,These percentages are based on returns processed during a fiscal year. The percentages, therefore, are not directly comparable 

to the calendar year figures. 

2Fund balances for 1975 and 1976 have not been verified. 

3The fund balance•at the end of 1975, the first year money was disbursed, includes dollars checked off in 1973 and 1974. Tax 

forms in 1973 gave taxpayers the opportunity to check off tax dollars for 1972 and 1973. 

Revised Regulations 

As in past Presidential election cycles, the Commission began redrafting its public funding rules to 

resolve issues that had emerged during the previous election. The agency also wanted to make revisions that would improve the efficiency of the 

matching fund and audit processes and ease the 

burden of complying with the law. Draft rules, 

which covered both primary matching funds and 

general election funding, were published for public 

comment in the Federal Register on August 5, 

1986.2 (The notice of proposed rulemaking also 

sought comments on bank loans, an area affecting 

both Presidential and Congressional candidates. 

For a summary of the agency's work on bank 

loans, see "Regulations," Chapter 2.) 

The notice specifically requested comments on 

several areas of the public financing provisions: 

• Debt settlement and extensions of credit; 

• Administration of the matching fund program; 

• Statements of net outstanding campaign obligations; 

• Administrative costs of seeking media reimbursement; 

• Definition of a qualified campaign expense; 

and 

• Repayment issues. 

After reviewing comments received on the notice, 

the agency held a hearing on the proposed public 

funding rules on December 3, 1986, at which the 

treasurer of the Reagan-Bush '84 General Election 

Committee presented testimony. The Commission 

continued to discuss possible revisions to the regulations during public meetings in December and 

planned to publish final rules in 1987. 

251 Fed. Reg. 28154. 
Table of Contents 

Page 

Introduction 1 

Chapter 1 

Presidential Public Funding 3 

1984 Public Funding: Audits and Repayments 3 

Preparations for 1988 3 

Legal Issues 5 

Chapter 2 

Administration of the Law 9 

Disclosure 9 

Assistance to Committees and the Public 11 

Review of Reports 12 

Regulations 12 

Enforcement 14 

Legal Issues 18 

Clearinghouse on Election Administration 28 

Chapter 3 

Campaign Finance Statistics 31 

Chapter 4 

The Commission 37 

Commissioners 37 

Administrative Activities 37 

FEC Budget, Fiscal Year 1986 38 

FEC Budget, Fiscal Year 1987 38 

Personnel and Labor Relations 39 

Chapter 5 

Legislative Recommendations 41 

Appendices 

1 . Biographies of Commissioners and 

OO~ffi ~ 

2. Chronology of Events, 1986 59 

3. FEC Organization Chart 63 

4. FEC Offices 65 

5. Statistics on Commission Operations 69 

6.. The FEC's Budget 73 

7. Revised Regulations on Contribution 

Um~ ~ 

8. Computer Indexes 79 

9. Clearinghouse Studies 83 

10. FEC Federal Register Notices, 1986 85 
Introduction 

During 1986, the Commission oversaw the campaign financing of the 1986 Congressional elections 

and continued to fulfill its other duties mandated 

under the law. One major accomplishment was the 

agency's overhaul of the regulations on contribution 

limits. Only after careful scrutiny of public comments and months of deliberation did the FEC 

approve the revisions, which resolve issues that 

had arisen since the regulations were first 

prescribed in 1977. The agency intends to 

announce the effective date of the new rules in 

spring 1987. 

In carrying out its mandated duties, the Commission also began to prepare for the 1988 Presidential public funding program. Plans for administering 

the program were well under way in 1986. 

A number of significant legal issues were 

addressed during the year as the agency fulfilled its 

statutory responsibility to issue advisory opinions 

and to defend and enforce the law. Of particular 

interest was the landmark decision by the Supreme 

Court in FEC v. Massachusetts Citizens for Life, 

which ruled on constitutional issues and interpreted 

certain legal definitions. 

The agency had to make major reductions in programs that were not mandated by law when, in 

January 1986, it was confronted with severe budget 

cuts. The Gramm-Rudman-Hollings Deficit Reduction Act coupled with a prior cut in personnel funds 

reduced the FEC's fiscal year 1986 appropriation 

by $858,000, almost 7 percent. Although the 

agency froze employment levels, curbed general 

support services, limited outreach efforts and 

reduced funding for Clearinghouse projects, these 

savings measures did not cover the full amount of 

the budget reductions. The balance of the cuts was 

achieved by reducing the computerized disclosure 

program. The Commission decreased the amount 

of historical data available on line and cut back on 

the computer entry of itemized information taken 

from 1986 reports. The agency anticipated, 

however, that an adequate appropriation for fiscal 

year 1987 would enable the Commission to begin 

capturing much of the 1986 data that had not been 

computerized. And, in-house data processing of 

some reported information helped offset the cutbacks. 
3 

Chapter 1 

Presidential Public 

Funding 

This chapter describes the Commission's Presidential activity during 1986, first reporting on the 1984 

public funding program, then describing preparations for the 1988 program. The chapter ends with 

summaries of recent advisory opinions concerning 

the pre-candidacy activities of possible 1988 

Presidential candidates. 

1984 Public Funding: Audits 

and Repayments 

The Federal campaign finance law requires the 

agency to audit all publicly funded Presidential candidates to ensure that Federal funds are spent in 

compliance with the law. If they are not, the campaign may have to repay public funds to the U.S. 

Treasury. The Commission determines repayments 

by using a formula based on the ratio of Federal 

funds to total funds received by the campaign. 

In conducting audits of the 1984 primary candidates, Commission auditors: verified each campaign's total reported receipts and disbursements; 

examined the required supporting documentation; 

analyzed campaign debts and obligations; reviewed 

the campaign's compliance with the contribution 

and expenditure limits; and applied other audit 

procedures to ascertain whether repayment of public funds was required. As a result of these audits, 

the Commission requested the return of $1,070,274 

in public funds by the end of 1986. 

The first table below summarizes matching fund 

activity of the 1984 primary campaigns that 

received public funding. The second table presents 

information on the status of the Presidential Election Campaign Fund, the source of public funding 

which consists of dollars voluntarily checked off by 

taxpayers on their Federal income tax returns. 

Matching Fund Activity of Publicly Funded 

1984 Presidential Primary Campaigns 

(as of December 31, 1986) 

Candidate 

Gross 

Matching 

Funds 

Received 

Total 

Repaymenta 

Made 1 

Net 

Matching 

Funds 

Received 

Reubin Askew $976,179 $5,074 $971,105 

Alan Cranston 2,113,736 4,140 2,109,596 

John Glenn 3,325,383 0 3,325,383 

Gary Hart 5,333,785 1,296 5,332,489 

Ernest Hollings 821,600 15,606 805,994 

Jesse Jackson 3,053,185 0 3,053,185 

Sonia Johnson 193,735 0 193,735 

Lyndon LaRouche 494,146 0 494,146 

George McGovern 612,735 67,727 545,008 

Walter Mondale 9,494,921 29,640 9,465,281 

Ronald Reagan 10,100,000 344,893 9,755,107 

Totals $36,519,405 $468,376 $36,051,029 

1Repayments of primary matching funds are returned to the 

Presidential Election Campaign Fund. See table below. 

Preparations for 1988 

During 1986, the Commission laid the groundwork 

for the 1988 public financing program, the first 

Presidential election under the public funding provisions in which the incumbent President would not 

be a candidate. This promised to increase the num- · 

ber of primary candidates requesting matching 

funds and, as a result, to increase the agency's 

workload.1 

Preparation for 1988 involved, in part, resolution 

of issues that arose during the 1984 elections. 

Through litigation and regulatory review, the Commission grappled with a number of questions, 

including bank loans, application of the expenditure 

limits and the definition of qualified campaign 

expense. 

1The number of primary candidates receiving matching 

funds in previous election years was: 15 in 1976, 10 in 1980 

and 11 in 1984. The agency estimates that from 16 to 20 candidates will participate in the 1988 matching fund program. 
5 

Publications 

In December 1986, the Commission approved a 

revised edition of the Guideline for Presentation in 

Good Order, a publication that gives a detailed 

explanation of the matching fund process and provides campaigns with step-by-step instructions on 

the preparation of matching fund submissions. The 

new edition incorporates draft revisions to the public funding regulations. Although not prescribed by 

the end of 1986, these regulatory revisions were 

approved by the Commission and were expected to 

be included in the final rules.a Guideline revisions 

also reflect the agency's past experience in 

processing matching fund submissions. 

For example, in order to certify funds within four 

days, the Commission automatically holds back a 

certain percentage of the amount requested in each 

submission. This hold back takes into account possible errors and omissions in the request. Because 

submissions for 1984 matching funds were highly 

accurate, containing a low percentage of nonmatchable contributions (i.e., a low error rate), the Guideline provides that the automatic reduction in the 

amount of matching funds certified for a campaign's current submission will be based on the 

error rates of the past three submissions (instead of 

the past four); alternatively, if the campaign has not 

yet made three submissions, the automatic hold 

back will be 1 0 percent (rather than 15 percent). 

The Commission will later adjust the certified 

amount after verifying the submission. 

The Commission also worked on updating 

another publication aid-the Financial Control and 

Compliance Manual for Presidential Primary Candidates Receiving Public Funding. The Manual 

presents one system that helps a campaign comply 

with the law and, at the same time, enables it to 

produce management reports for planning campaign strategy. Publication of the new edition is 

planned for spring 1987. 

Staff 

Finally, in order to handle the increased workload 

of a Presidential election cycle, the agency planned 

to use fiscal year 1987 funds to hire more auditors, 

who would participate in every phase of the public 

funding program, and to supplement permanent 

staff with temporary clerks to help process matching fund submissions. As a way of increasing staff 

without cost to the agency, the Commission also 

arranged with the General Accounting Office (GAO) 

to have auditors detailed to the FEC on a nonreimbursable basis, beginning in spring 1988. This 

arrangement with GAO proved successful during 

the 1984 Presidential cycle, when GAO auditors 

contributed to the smooth operation of the public 

funding program. 

Legal Issues 

This section summarizes two 1986 advisory opinions that addressed proposed pre-candidacy activities of two possible contenders for the 1988 Republican Presidential nomination. 

PAC Established by 

Possible Future Candidate 

The Fund for America's Future, a PAC (political 

action committee) founded by Vice President 

George Bush to support Federal and non-Federal 

Republican candidates, asked the Commission 

whether its expenditures for certain 1986 activities 

in which the Vice President would participate would 

be allocable to a possible Presidential candidacy of 

the Vice President in 1988. The Fund noted that 

Vice President Bush had neither established a 

testing-the-waters committee nor authorized the 

Fund to make expenditures on behalf of a potential 

candidacy. 

Specifically, the Fund proposed the following 

activities: 1) public appearances by the Vice President on behalf of Republican candidates; 2) publications and solicitations which would include references to him; 3) steering committees organized to 

involve party officials and officeholders in the 

Fund's activities and to advise them on making 

3Certain issues were not resolved in time to be addressed 

in the new Guideline. A later, more comprehensive edition will 

be released when the new rules are completed. 
6 

contributions; 4) a program to organize volunteers 

to aid the Republican Party and Republican candidates; and 5) recruitment and financing of persons 

for the Michigan precinct delegate election in 

August 1986. 

In AO 1986-6, the Commission concluded that 

expenditures for the proposed activities would not 

be allocable as in-kind contributions to the Vice 

President's possible 1988 candidacy; therefore, 

they would not be subject to contribution limits. The 

activities would, however, have to be restricted. 

There could be no mention or promotion of Vice 

President Bush's possible 1988 candidacy. 

Moreover, the opinion's conclusion applied only to 

activities conducted by Vice President Bush before 

he qualified as a candidate. 

With respect to the fifth activity-the recruitment 

and financing of individuals to run as Michigan 

precinct delegates-the Commission said that the 

Fund's spending would not result in contributions 

or expenditures on behalf of Vice President Bush 

because the statute and FEC regulations govern 

only delegate selection activiti~s related to 

Presidential national nominating conventions. In this 

case, individuals seeking election as precinct 

delegates in 1986 would not necessarily seek positions as national or State convention delegates in 

1988. Furthermore, those seeking election as 

precinct delegates would not be identified on the 

ballot as supporting any potential Presidential candidate. Finally, elected precinct delegates would not 

choose national convention delegates. Rather, they 

would select delegates to a 1988 State party convention which, in turn, would elect the national convention delegates. 

Commissioners Thomas E. Harris and John Warren McGarry filed dissents from AO 1986-6. Commissioner Harris believed the Fund's disbursements 

for the proposed activities (described above) would 

result in expenditures on behalf of Vice President 

Bush and would trigger the requirement for him to 

register as a 1988 Presidential candidate. Both 

Commissioners stated that the delegate regulations 

(11 CFR 11 0.14) would apply to the proposed 

expenditures for the Michigan precinct delegate 

election. They contended that, because the rules 

apply "to all levels of a delegate selection 

·process," the precinct delegate election would be 

the first step in the Michigan delegate selection 

process. The two Commissioners, however, differed 

in their interpretations of the delegate rules. In 

Commissioner McGarry's view, the Fund's delegate 

expenditures would not trigger candidate status, as 

Commissioner Harris contended, but would 

nevertheless count against the public funding 

spending limits should the Vice President become a 

1988 Presidential candidate and receive matching 

funds. 

Testing-the-Waters Activities 

In AO 1985-40 (issued in 1986), the Commission 

considered several activities planned to help former 

Senator Howard Baker, Jr. determine whether to 

run as a 1988 Presidential candidate. The opinion 

concluded that proposed efforts by the Republican 

Majority Fund (RMF), a PAC "closely identified" 

with Mr. Baker, and by his testing-the-waters fund 

(the Fund) qualified as testing-the-waters activities 

under FEC regulations rather than as campaign 

activities that would trigger candidate status. The 

testing-the-waters exemption permits an individual 

to raise and spend money to determine whether to 

run for office without becoming a "candidate" 

under the law. Funds raised and spent to test the 

waters are not considered contributions or expenditures, although they are subject to the law's limits 

and prohibitions. If an individual who is testing the 

waters later becomes a candidate, funds raised and 

spent during pre-candidacy must be reported as 

contributions and expenditures. 

Mr. Baker's Fund planned to raise funds through 

solicitations sent by direct mail to contributors to 

Mr. Baker's former campaign committees and to 

RMF contributors. Although direct mail solicitations 

are usually considered campaign activity rather 

than testing-the-waters activity, the Commission 

determined that the Fund's proposal would qualify 

as testing-the-waters activity because: 1) the solicitations would clearly state that Mr. Baker had not 

yet determined whether to seek the 1988 Republi-
7 

can Presidential nomination; 2) the funds raised 

would be used for Mr. Baker's testing-the-waters 

activities; and 3) the funds would not be raised in 

amounts that would constitute amassing campaign 

funds. 

The Commission also determined that several 

activities proposed by RMF to help Mr. Baker test 

the waters would qualify as testing-the-waters 

efforts rather than as active campaigning provided 

they complied with certain restrictions described in 

the opinion. RMF planned to finance: 1) public 

appearances by Mr. Baker and his associates at 

party events; 2) hospitality suites held in conjunction with those appearances; 3) private meetings 

with Mr. Baker and party officials; 4) steering committees to encourage Mr. Baker to seek nomination; 

and 5) newsletter issues containing references to 

Mr. Baker and solicitations to promote his testingthe-waters efforts. 

RMF's expenses for these activities would result 

in "in-kind gifts" to the Fund (as opposed to "inkind contributions") but would nevertheless be subject to a $5,000 contribution limit. If Mr. Baker were 

to become a Presidential candidate, his campaign 

committee would have to report RMF's "in-kind 

gifts" as "in-kind contributions." They would count 

against the public funding spending limits should 

Mr. Baker accept primary matching funds. 

In his dissent from AO 1985-40, Commissioner 

Harris identified several of RMF's proposed activities as campaigning rather than testing-the-waters 

efforts. He believed that they should count toward 

the $5,000 threshold that triggers candidate status. 
9 

Chapter 2 

Administration of the Law 

This chapter opens with a description of 1986 

changes to the agency's computerized disclosure 

program and goes on to report on other aspects of 

the Commission's administration of the law, including a summary of 1986 work on FEC regulations 

and a discussion of significant legal issues. The 

chapter ends with a section on the Clearinghouse 

on Election Administration. 

Disclosure1 

Reductions to Computerized Disclosure 

As a result of the Gramm-Rudman-Hollings Deficit 

Reduction Act and a cut in personnel funds, the 

Commission sustained a loss of $858,000 from its 

fiscal year 1986 funding. (These budget cuts are 

fully explained in Chapter 4, "Fiscal Year 1986.") 

In revising the budget in January 1986 to reflect 

this loss of funds, the agency avoided instituting a 

reduction in force (RIF) because its implementation 

would have involved considerable out-of-pocket 

expenses. Instead, the Commission froze employment levels and cut back several programs. The 

largest cuts ($250,000) were borne by the computerized disclosure program, resulting in a reduction in the amount of campaign finance information 

accessible through the computer. The agency took 

this action for three reasons. First, the computerized disclosure program, unlike many other FEC 

programs, is not specifically mandated under the 

law. Second, because the agency had not yet hired 

the staff who, under normal funding, would have 

handled data entry, it could effect substantial savings by merely freezing the current employment 

level. Finally, the Commission was hopeful it could 

restore the program using 1987 funding. 

The Commission in fact saved $100,000 by not 

hiring temporary data staff to process information 

and saved an additional $150,000 by discontinuing 

computer-related contracts, including a contract for 

data entry. These cuts meant that the Commission 

did not have the resources to enter several 

categories of itemized transactions from 1986 

reports. For example, information on individual contributors was no longer entered into the data base. 

Because of reduced computer storage and 

memory, historical data from the 1977-78, 1979-80 

and 1981-82 election cycles were taken off line 

after being microfilmed. The agency also had to 

cancel the pre-election release of the Reports on 

Financial Activity, statistical studies that give 

detailed summaries of election activity. The canceled editions were to have covered the first 18 

months of the 1985-86 cycle. Another change 

affected the program providing on-line FEC campaign finance data to State election offices. The 

Commission had to institute a fee for this computer 

service which it had previously provided free of 

charge. States that had participated in the program 

chose to discontinue it. 

Commenting on the budget cuts in a memorandum to the Commissioners, the Staff Director 

observed: 

Over the past several years, this agency has 

made great strides in improving the accuracy, 

timeliness and comprehensiveness of, and 

access to, our disclosure information. Reversing that trend is a severe step not lightly proposed. Many members of the general public, 

the press corps, academics and committees 

themselves have come to rely upon availability 

of this detailed information. Absent this data 

capture, the public will be denied the level of 

detail available in the past. 

Campaign finance information remained available 

in hard copy (the reports themselves), and computerized information from previous election cycles 

was accessible on microfilm. The negative impact 

of the reductions to the computerized disclosure 

program was offset to some extent by certain program enhancements, which are described in the 

section below. Finally, committed to restoring the 

program, the agency allocated fiscal year 1987 

funds to capture much of the itemized information 

from 1986 campaign reports and to resume com- ,See also "Use of Reported Contributor Information," 

page 27. 
10 

plete data entry with respect to the 1987-88 election cycle. 

Enhancements to Computerized Disclosure 

Staff of the Data Systems Development Division 

revised their procedures for processing information 

taken from 1986 reports in order to salvage certain 

core information. While coding and entering summary data taken from reports, FEC staff included 

additional information usually processed at a later 

stage. As a result, the FEC was able to provide 

augmented information within 48 hours of the 

receipt of reports. This change contributed to a series of press releases that not only contained virtually all the information that would have been incorporated in the canceled pre-election Reports on 

Financial Activity, but also provided the data more 

quickly. Moreover, a press release covering campaign activity through mid-October was issued just 

before the November 4 election. Enhancements to 

in-house data processing also enabled the agency 

to develop two new computer indexes, the K and L 

lndexes,2 which provided cumulative summary 

information on campaigns and committees for the 

1985-86 election cycle. 

Direct Access Program 

Many of the enhancements to the data base 

described above were also available through the 

Direct Access Program. Designed for individuals 

and groups with personal computers, this service 

provides subscribers with on-line access to certain 

campaign finance data. 

As the program has grown-from 8 subscribers 

to 44-the Commission has tried to tailor Direct 

Access to the needs of its clients. Their suggestions for organizing data in useful formats were 

considered when the agency developed the new K 

and L Indexes (see above) and added them to the 

program. The program was also expanded to 

include a capability that helps users search for the 

exact names of particular committees (TEX7). In 

response to subscribers' requests, the Commission 

extended the hours during which the system is 

available. Users themselves contributed to the quality of the data by quickly identifying errors, helping 

agency staff to focus on verifying information more 

quickly. At an October 1986 meeting with FEC 

staff, subscribers said they were generally satisfied 

with the program and made further suggestions for 

refinements. The Commission hopes to implement 

many of these suggestions under the new computer contract (see Chapter 4), which will reduce 

the cost to subscribers by 50 percent (from $50 per 

hour to $25). 

Serving the Public 

Students constitute one of several segments of the 

public the Commission has traditionally served by 

providing campaign finance information and 

guidance on the law. During 1986, however, the 

agency responded in a unique way to the needs of 

students. Staff from the Data Systems Development 

Division prepared a data file and series of exercises as a learning tool for undergraduate students. 

In response to a request from the American Political Science Association, FEC staff developed a program that assists students' analysis of FEC campaign finance data and answers questions 

commonly posed in the field of political science. 

The user can also create charts to see if any patterns or trends emerge. The American Political 

Science Association plans to make the teaching 

program available to colleges and universities in 

summer 1987. 

Also new in 1986 was a publication prepared by 

the Public Records Office, the Combined Federal/State Disclosure Directory, which identifies 

individuals and organizations on the state and 

national level who are responsible for disclosing 

public information on campaign finance. 

In addition to issuing press releases, the Press 

Office briefed a number of foreign press representatives, helping them to understand the Federal 

campaign finance law. Their interest, as well as the 

American media's, focused on the 1988 Presidential elections. Local reporters outside the Washing2FEC computer indexes are described in Appendix 8. ton area increasingly contacted the Press Office as 
11 

they became familiar with the office's resources 

and services. 

In February 1986, both the Press Office and the 

Public Records Office moved to the FEC's new 

headquarters, which offered improved research 

facilities to media representatives and the public. 

Assistance to Committees 

and the Public 

During 1986, the Commission continued to assist 

committee staff and the interested public in a variety of ways. 

Telephone Assistance 

Using the toll-free number (800/424-9530) or local 

lines, anyone may obtain information about the law 

from the public affairs specialists, who answer 

questions and provide research assistance. For 

help in reporting, committee workers may speak to 

the analyst who reviews the committee's reports. 

(See "Review of Reports," below.) 

Advisory Opinions 

Advisory opinions provide more formal legal 

guidance. Any person may request an opinion by 

writing a letter asking the Commission's advice on 

how the law applies to a specific, factual situation. 

The opinions are drafted by FEC attorneys and are 

discussed and voted on by the Commissioners in 

public meetings. Advisory opinions are also a 

source of guidance for persons other than the 

requester since, once issued, opinions may be 

relied upon by others in very similar situations. 

Several of the 42 opinions issued in 1986 are discussed in the "Legal Issues" sections of this chapter and Chapter 1 . 

1986 Conferences and 

Speaking Engagements 

FEC conferences and public appearances by staff 

are still another way the Commission tries to 

respond to the needs of political committees and 

individuals interested in learning about the law. 

Additionally, these events give Commissioners and 

staff an opportunity to hear the concerns of those 

who must comply with the law. 

The Commission had to curtail its 1986 outreach 

program because of limited travel funds. Of the 70 

speaking engagements accepted by Commissioners 

and staff during 1986, most of them-about 

50-took place in the Washington,. D.C. area, at 

minimum expense to the agency. Staff appearances outside Washington were generally limited to 

those which could be legally funded by the sponsoring organization. (The agency may accept travel 

reimbursements only from groups qualifying as nonprofit organizations under 26 U.S.C. Section 

501 (c)(3) of the Internal Revenue Code and from 

State and local government agencies.) 

The Commission further reduced the cost of outreach by sharing the expenses of conferences with 

State agencies. One-day conferences were cosponsored in Michigan, Ohio and Minnesota during 

1986. Participants could select workshops targeted 

to their area of interest-candidate campaigns, 

PACs or party committees. 

The agency also held conferences in the 

Washington area. Taking advantage of its new, 

larger public facilities, the Commission conducted 

two conferences for Congressional campaign committees, each offering both introductory and 

advanced workshops. The agency sponsored 

another local conference in cooperation with 

George Mason University. This June conference, 

held on the University's campus, focused exclusively on the needs of corporations and labor 

organizations. 

Publications 

FEC publications, reviewed by attorneys and other 

agency staff, educate political committees on the 

requirements of the law. The most recent publications were two brochures produced in 1986, Committee Treasurers and Filing a Complaint. The 

agency also published two special editions of its 

newsletter, the Record. A February issue presented 

a series of graphs summarizing campaign finance 
12 

activity for the 1983-84 election cycle,a while a 

September issue provided a manual on how to 

report receipts. During 1986, the agency won its 

third publication award from the National Association of Government Communicators, this time for 

FEC: The First Ten Years, published in 1985. 

Review of Reports 

The Commission reviews all campaign finance 

reports to ensure accurate and complete disclosure 

of financial activity and to encourage compliance 

with the law's reporting provisions. 

When a reports analyst finds an error on a 

report, he or she sends the committee a letter 

requesting additional information-called an RFAI. 

The committee has an opportunity to amend the 

report voluntarily. The agency encourages committees who receive RFAis to call the analyst who 

signed the letter. Cooperation between a committee 

and the Commission often results in the settlement 

of a potential compliance matter without further 

action. During its deliberations on compliance matters, the Commission considers as a mitigating factor the steps a committee has taken to correct a 

mistake. 

Regulations 

During 1986, the Commission continued its efforts 

to clarify the campaign finance law through revised 

regulations, focusing on the public funding rules, 

described in Chapter 1, and the rules governing 

contributions and bank loans, examined below. This 

section also reports on an agency determination on 

a rulemaking petition submitted by Common Cause. 

(Chapter 4 describes new regulations on standards 

of conduct for FEC employees.) 

Contribution Limits, 

11 CFR 110.1 and 110.2 

On November 20, 1986, the Commission voted to 

amend Sections 110.1 and 11 0.2 of its regulations 

3These graphs appear in Chapter 3 of the Annual Report 

1985. 

Reports Review Activity 

1982 1983 1984 1985 1986 

Number of 

committees 

reviewed 2,807 5,510 3,906 6,454 5,062 

Number of reports 

reviewed 20,598 39,837 30,154 46,905 34,055 

Number of reports 

receiving RFAia 4,633 5,319 6,292 7,414 6,554 

Presidential 5 78 246 117 53 

Senate 444 392 496 276 528 

House 2,106 1,403 2,302 1,374 2,414 

Party 399 413 714 858 702 

Nonparty (PACs) 1,658 2,989 2,494 4,729 2,841 

Other 21 44 40 60 16 

and send them to Congress in January 1987. 

These final rules clarify the scope of the contribution limits and resolve several issues that have 

arisen since the regulations were first prescribed in 

1977. Before approving the revisions, the Commission reviewed written comments on numerous possible changes to Sections 110.1 and 110.2 and, in 

October 1985, held a public hearing. The final rules 

and their explanation and justification were transmitted to Congress on January 6, 1987, and were 

published in the Federal Register on January 9.4 

They became effective on April 8, 1987. 

Major amendments to the new rules are summarized in Appendix 7. 

Contribution Limits, 

11 CFR 110.3- 110.6 

In July 1986, the Commission asked for public 

comment on possible revisions to Sections 110.3 

through 110.6 of its regulations.s The proposed 

revisions to these regulations, like the final revi452 Fed. Reg. 760. 

ssee the Notice of Proposed Rulemaking published in the 

July 30, 1986, Federal Register (51 Fed. Reg. 27183). 
13 

sions to 11 0.1 and 11 0.2, were intended to promote 

clarity and comprehensiveness. The July notice 

contained draft rules and raised specific issues for 

comment. In conjunction with this effort, the agency 

held a public hearing on September 17 at which 

three witnesses presented testimony. 

The Commission planned to continue work on the 

draft regulations during 1987, evaluating the comments and making refinements to the draft rules in 

preparation for final revisions. 

Summarized below are some of the issues on 

which the Commission invited comment. 

• Indicia of Affiliation (110.3(a)). Affiliated committees share one contribution limit on contributions received and made. The agency sought 

comments on appropriate criteria for determining affiliation between political committees. 

• Subordinate Party Committee Limits (110.3(b)). 

Since a State party committee and its subordinate party committees are presume to be 

affiliated, they share a single contribution limit 

unless the subordinate committee can prove its 

independence from the State committee. The 

agency asked for comments on what criteria 

should be used to determine whether a subordinate party committee is independent and 

thus entitled to a separate limit. 

• Transfers (110.3(c)). The Commission invited 

comments on transfers between various types 

of candidate committees (e.g., previous State 

to current Federal; inactive to active). 

• Earmarked Contributions (110.6). Concerning 

earmarked contributions, the Commission 

asked whether the term "conduit" should be 

defined; whether corporate and labor PACs 

(separate segregated funds) should be permitted to act as conduits of earmarked contributions; and whether the rules should apply to 

contributions earmarked to noncandidate committees. The Commission also sought comments on the reporting of earmarked contributions, and it invited suggestions to help clarify 

when a conduit exercises direction or control 

over an earmarked contribution and thereby 

becomes a co-contributor, with the contribution 

counting against both the conduit's and the 

original contributor's limits. 

Bank Loans 

Prompted by enforcement cases and litigation, the 

Commission decided to re-examine its rules on 

bank loans. Under the statute and FEC regulations, 

a loan from a bank to a candidate or committee is 

not considered a contribution if it is made "in the 

ordinary course of business." One aspect of this 

standard is that a bank loan must be "made on a 

basis which assures repayment." 

The Commission had to consider when a loan 

was made on this basis when resolving recent 

internal enforcement cases. This phrase was also 

at issue in three court cases concerning the 1984 

Presidential primary campaign of John Glenn. In 

FEC v. Bank One, filed in September 1986, the 

Commission claimed that loans made by four banks 

to the Glenn campaign constituted prohibited contributions because they were not made on a basis 

which assured repayment-specifically, the banks 

did not require sufficient collateral from the campaign to guarantee repayment of the loan. Plaintiffs 

in Ameritrust Company National Association v. FEC 

and John Glenn Presidential Committee v. FEC (both 

filed in July 1986) contended that the campaign 

loans were made on a basis which assured repayment. Consolidated in November 1986, the three 

suits were still unresolved at the year's end.& 

To help resolve this issue by clarifying its regulations, the Commission published an August 1986 

notice of proposed rulemaking asking for public 

comments on three possible interpretations of the 

statutory phrase "made on a basis which assures 

repayment."7 Fourteen groups responded to the 

notice, including the Federal Deposit Insurance 

Corporation (FDIC), the Federal Home Loan Bank 

Board and several banking institutions and associations. Agency attorneys reviewed these comments 

&The suits were filed in the U.S. District Court for the 

Southern District of Ohio, Eastern Division. 

7The rulemaking notice also sought comments on public 

funding issues (see Chapter 1). It was published in the Federal 

Register on August 15, 1986 (51 Fed. Reg. 28154). 
14 

and met with staff from two bank regulatory agencies, the Office of the Comptroller of the Currency 

and the FDIC. 

Based on this work, the Commission decided to 

explore bank loans further and on January 22, 

1987, published a second Federal Register notice 

seeking additional comments.s 

Rulemaking Petition on "Soft Money" 

In April 1986, the Commission denied a petition for 

rulemaking filed by Common Cause.9 The petition 

had requested that the Commission amend its 

regulations to address the alleged improper use of 

"soft money" in Federal elections. "Soft money" 

was defined in the petition as funds ostensibly 

raised and spent for State and local elections and 

therefore not reportable under the Federal campaign finance law. Such funds could contain donations that are prohibited or excessive under Federal 

law and, if ultimately used to influence Federal 

elections, could result in legal violations. 

Before reaching its decision, the agency took 

several steps to solicit public comments on the use 

of "soft money" in Federal elections. In January 

1985, the agency published a notice soliciting public comment on the Common Cause petition and, in 

December 1985, again requested comments in a 

notice raising a broad range of legal and factual 

questions posed by Common Cause and other 

interested parties.1o The agency received several 

written responses and again provided an opportunity for comment at a public hearing held on January 29, 1986. 

After reviewing the public comments and evaluating the implications of the proposed revisions, the 

Commission concluded, in April 1986, that evidence 

of improper use of "soft money" in Federal elections was insufficent to justify the stringent rules 

suggested in the Common Cause petition. In the 

Federal Register notice denying the petition, the 

agency held that the examples offered to support 

Common Cause's views did not "constitute concrete evidence" that "soft money" had been misused. To the contrary, the agency found that "other 

evidence presented during the proceeding indicate[d] that many transfers to the state and local 

levels were made from federal funds and were 

reported to the Commission." 

On June 30, 1986, Common Cause filed suit 

against the agency in the U.S. District Court for the 

District of Columbia. Common Cause asked the 

court to 1) declare that the Commission's denial of 

its rulemaking petition was contrary to law and 2) 

order the Commission to reconsider the petition. 

The case was still pending at the end of 1986. 

Coordination with the 

Internal Revenue Service 

In accordance with 2 U.S.C. §438(1), the Commission seeks comments from the IRS on each 

rulemaking arising under the Federal Election Campaign Act or the public financing statutes. A copy 

of each Notice of Proposed Rulemaking or other 

documents seeking public comment is forwarded to 

the IRS Chief Counsel for consideration by the 

Legislation and Regulations Division. The Commission then reviews any comments the IRS makes 

and responds accordingly. When appropriate, the 

Commission also researches IRS Revenue Rulings 

that may be applicable to an FEC rulemaking. 

Enforcement 

The Enforcement Process 

Possible violations of the Federal campaign finance 

law are brought to the Commission's attention 

either internally-through its own monitoring procedures (and referrals from other government agencies)-or externally-through formal complaints 

originating outside the agency. Potential violations 

become MURs, Matters Under Review, and receive 

MUR numbers. 

The law requires that all phases of the MUR 

process remain confidential until a case is closed 

and put on the public record. The respondents 

s52 Fed. Reg. 2416. 

951 Fed. Reg. 15915, April 29, 1986. 

1osee 50 Fed. Reg. 477, January 4, 1985, and 50 Fed. Reg. 

51535, December 18, 1985. 
15 

(those alleged to have violated the law) are 

afforded a reasonable opportunity to demonstrate 

that no action should be taken against them. The 

Commission first decides whether there is "reason 

to believe" a violation of the law has occurred. A 

"reason to believe" finding means that the agency 

will investigate the matter. If, after investigation, the 

Commission believes there is sufficient evidence to 

show that there is "probable cause to believe" a 

violation has occurred, the agency must try to 

resolve the matter informally through a conciliation 

agreement with the respondent. (Conciliation may 

also be initiated by the respondent before this 

stage of the enforcement process.) If unable to 

reach agreement, the agency may try to enforce 

the matter through litigation. 

In an effort to help all parties understand the 

enforcement process, the Commission published a 

new brochure, Filing a Complaint. 

The table below compares the MUR caseload 

over the past several calendar years. 

Caseload of MURs 

Dismissals of Complaints 

During 1986, the courts ruled on several suits that 

challenged the agency's dismissal of complaints in 

enforcement matters. At issue in three of these 

cases was the Commission's rejection of the 

General Counsel's recommendation-either by a 

four-vote majority of Commissioners or by a deadlocked vote-with the result that the complaint was 

dismissed. 

As a result of one of these suits, Common Cause 

v. FEC (/), the Commission adopted a new policy 

concerning the dismissal of MURs. On October 23, 

1986, the Commission voted to issue a statement 

of reasons whenever a majority of Commissioners, 

in dismissing a complaint, reject the recommendation contained in the General Counsel's report. A 

statement of reasons documents the rationale for 

the Commission's decision to dismiss a MUR. 

Guidelines approved on February 5, 1987, direct 

the Office of General Counsel to submit a draft 

statement to the Commissioners, who are given an 

opportunity to review and, if necessary, to amend 

the draft. The agency will place statements of 

1980 1981 1982 1983 1984 1985 1986 

Cases pending at 

beginning of year 152 214 113 93 78 172 137 

Cases opened 

during year 255 66 113 103 283 257 191 

External 

Internal 

133 

122 

24 

42 

78 

35 

42 

61 

163 

120 

51 

206 

120 

71 

Cases closed 

during year 193 167 133 118 189 292 185 

External 

Internal 

91 

102 

64 

103 

67 

66 

58 

60 

103 

86 

97 

195 

80 

105 

Cases pending at 

end of year 214 113 93 78 172 137 143 
16 

reason on the public record within 30 days after the 

corresponding MURs are closed. 

The Common Cause suit and the other cases 

arising from the Commission's determinations in 

MURs are summarized below. 

Orloski v. FEC. On July 11, 1986, the U.S. Court of 

Appeals for the District of Columbia Circuit affirmed 

a district court decision that the Commission's dismissal of a complaint was not contrary to law. 

In a complaint filed with the agency, Mr. Richard 

Orloski claimed that a picnic sponsored by a senior 

citizens group was a political event that influenced 

the election of his 1982 general election opponent, 

Congressman Donald Ritter. Because the picnic 

was an alleged campaign-related event, Mr. Orloski 

contended that 1) corporate funding for the picnic 

constituted prohibited contributions to his opponent 

and 2) sponsorship of the event by the senior 

citizens group caused the group to become a political committee, subject to the requirements of the 

Federal Election Campaign Act. 

The Commission determined that the picnic was 

not a political event and was not subject to the prohibitions and requirements of the Act because 1) 

there was no express advocacy of Congressman 

Ritter's election and 2) there was no solicitation of 

contributions to his campaign. Accordingly, the 

Commission dismissed the complaint. 

The appeals court affirmed the Commission's 

decision as reasonable and, furthermore, rejected 

Mr. Orloski's challenges to FEC compliance procedures. 

Common Cause v. FEC (1). Like the Orloski case, 

this suit also arose from a public appearance by a 

candidate. A complaint filed by Common Cause 

concerned a speech President Reagan delivered to 

the Veterans of Foreign Wars in Chicago two days 

after he had received the Republican Party's nomination in August 1984. During his speech, President Reagan did not expressly mention his candidacy; nor did he solicit contributions to his 

campaign. The Reagan administration viewed the 

Chicago trip as official business and paid the travel 

costs with government funds. Common Cause 

alleged that the travel costs were campaign-related 

and therefore should have been paid for and 

reported by the Reagan Presidential committee. 

In its report to the Commissioners, the FEC's 

Office of General Counsel recommended that the 

Commission find "reason to believe" the Reagan 

campaign had violated the law by failing to report 

these expenses. The Commission, however, 

decided by a four-to-two vote to find "no reason to 

believe" the law had been violated and dismissed 

the complaint. Consistent with past practice, the 

Commission did not issue a formal statement of 

reasons for its decision. 

Common Cause challenged this dismissal by filing a suit against the FEC with the U.S. District 

Court for the District of Columbia in March 1985. In 

its suit, Common Cause said that the Commission 

should have considered the "totality of the circumstances" surrounding the Chicago speech rather 

than have focused solely on whether the speech 

expressly advocated President Reagan's election 

and whether contributions had been solicited. 

In its opinion of June 25, 1986, the court considered the legal standard which had been applied by 

the FEC in its dismissal of the complaint (i.e., no 

express advocacy and no solicitation of contributions). The court found this standard a reasonable 

interpretation of the statute. Nevertheless, because 

the Commission, in adopting this standard, did not 

rely on the reasoning presented in the General 

Counsel's report, the court stated that "[t]he 

absence of a contemporaneous statement of the 

Commission's reasons for dismissing the complaint 

precludes effective judicial review." The court 

therefore remanded the case to the FEC for "a 

statement of reasons demonstrating how the Commission applied such legal standards to the facts 

before it." 

On August 19, 1986, the Commission decided 

not to appeal this decision but to accept the 

remand and issue reasons for its decision. Three of 

the Commissioners who voted to find "no reason to 

believe" issued statements of reasons. The Commissioner who cast the fourth vote, Frank P. 
17 

Reiche, was no longer a member of the Commission. 

Common Cause, however, was not satisfied with 

the Commission's statements, claiming that they 

"failed to provide any coherent and reasoned 

explanation of why the Commission dismissed ... the complaint." As a result, on December 17, 1986, Common Cause again filed suit 

against the FEC, a case still pending at the end of 

1986. 

Democratic Congressional Campaign Committee 

(DCCC) v. FEC. The complaint at issue in this case 

concerned $10,000 spent by the National Republican Congressional Committee (NRCC) to distribute 

a series of mailings in the First Congressional District of Rhode Island during 1985. The mailings 

encouraged readers to petition the House Ethics 

Committee to investigate certain newspaper 

charges concerning the personal finances of Congressman Fernand St Germain (D-RI). DCCC's 

complaint alleged that NRCC had violated the election law by failing to allocate the $1 0,000 payments as coordinated party expenditures on behalf 

of Congressman St Germain's Republican opponent. (National party committees may make limited 

expenditures on behalf of Federal candidates in 

general elections.) 

As in the Common Cause complaint, the General 

Counsel's report recommended the Commission 

find "reason to believe" the law had been ·violated. 

In this complaint, however, the Commission could 

not reach agreement, lacking the four affirmative 

votes necessary to make an official determination. 

(Three Commissioners voted to find "reason to 

believe" that NRCC had violated the law, two Commissioners voted against the finding and one Commissioner abstained from voting.) The Commission's dismissal of DCCC's complaint, therefore, 

resulted from a deadlocked vote. 

In July 1986, DCCC filed suit against the Commission with the U.S. District Court for the District 

of Columbia, claiming that the FEC's dismissal was 

contrary to law. 

In arguing its case, the Commission took the 

position that the dismissal of a complaint resulting 

from a lack of four affirmative votes is not reviewable by the courts. In such cases, the FEC contended, the agency's disagreement precludes any 

action that can be evaluated by the courts. 

In its October 3, 1986, decision, the court 

rejected the FEC's argument that the case should 

be dismissed, stating that the DCCC still had "the 

right [under the statute] to seek review of an 

adverse outcome." The court determined that, 

because the mailings conveyed an electioneering 

message, NRCC's payments were subject to the 

party expenditure limits. Declaring that the FEC's 

dismissal of the complaint was contrary to law, the 

court ordered the agency to rectify its decision 

within 30 days. 

The Commission appealed this decision and also 

asked the court to set aside the October 3 order 

until the appeals court issued a decision. The court 

agreed to delay the order on October 30, 1986. In 

its motion to stay the order, the agency noted that 

the district court judge had himself observed that 

the question of whether the courts have the 

authority to review a dismissal resulting from a 

deadlocked vote " ... is such an important one that 

I believe the Court of Appeals will have to decide 

that issue." At the end of 1986, the case was still 

pending. 

Common Cause v. FEC (//). In this suit, Common 

Cause claimed that the FEC had acted contrary to 

law in dismissing a complaint which alleged that 

five nonconnected political action committees (i.e., 

PACs not connected to a corporation or union) had 

violated two provisions of the law. 

One provision prohibits a political committee that 

has not been authorized by a candidate (such as a 

PAC) from including "the name of any candidate in 

its name." 2 U.S.C. §432(e)(4). The PACs had used 

President Reagan's name in the names of their 

special fundraising projects. For example, one 

PAC's solicitation asked recipients to send checks 

to "Reagan for President in '80." The Commission 

found no reason to believe that the PACs had vio-
18 

lated the law because the projects did not constitute separate political committees; instead, they 

were merely subcommittees of their respective 

PACs. The project names, therefore, were not restricted by the provision. 

The U.S. District Court for the District of Columbia, in a December 30, 1986, decision, found that 

the Commission had acted contrary to law in dismissing this portion of the complaint; stating that 

''whatever names the committees presented to the 

public for identification must also constitute a 

'name' within the meaning of section 432(e)(4)." 

The court ordered the agency to conform to this 

judgment within 30 days. 

Common Cause also alleged in its complaint that 

the PACs had coordinated their expenditures with 

the Reagan campaign and had thereby made contributions to the campaign, not independent expenditures. According to Common Cause, the alleged 

coordination of the PAC expenditures resulted in 

excessive contributions to the Reagan campaign. 

(See also "Invalid Independent Expenditures" 

under "Legal Issues" later in this chapter.) 

The General Counsel's report recommended that 

the Commission find reason to believe that all five 

PACs had made excessive contributions. (The "reason to believe" finding is required before the 

agency can investigate alleged violations.) The 

Commission found reason to believe three of the 

PACs had violated §441a(a). With respect to the 

other two PACs, however, the Commission voted 

three-to-three, thus effecting an automatic dismissal 

of this portion of the complaint against the two 

committees. 

After investigating the possibility of coordination 

by the first three PACs, the General Counsel 

reported that, although there were indications that 

the PAC's expenditures might have involved coordination, there was insufficient evidence to prove that 

the PACs had directly coordinated their expenditures. Upon the General Counsel's recommendation, the Commission therefore dismissed the complaint. 

The district court rejected Common Cause's 

claims that the Commission had failed to conduct a 

thorough investigation of the three PACs and that 

the agency had interpreted "coordination" too narrowly. Stating that the General Counsel's report 

"sets forth rational reasons for terminating the 

investigation," the court also found that the Commission's "extensive investigation failed to produce 

evidence of any direct requests or scheming" 

between the PACs and the Reagan campaign. In 

ruling that the FEC's interpretation of coordination 

was not contrary to law, the court said "the opportunity for coordination is a separate question from 

whether it was utilized." 

With respect to the Commission's tie vote which 

automatically dismissed the portion of the complaint 

alleging coordination by the other two PACs, the 

court did not agree with the FEC's argument that 

such dismissals are beyond judicial review. 

Because the FEC's action differed from the 

General Counsel's recommendation, the court 

ordered the agency to provide a statement of reasons explaining the basis for finding no reason to 

believe the violation had occurred and for not pursuing an investigation. On January 16, 1987, the 

Commission filed a notice of appeal from this decision. 

Legal Issues 

The Supreme Court, in December 1986, ruled that 

the law's ban on independent expenditures by certain nonprofit corporations was unconstitutional. 

This section first highlights the major points of that 

decision and goes on to summarize a variety of 

other legal issues addressed in 1986 litigation and 

advisory opinions. See also the section above, 

which summari~es court cases related to dismissals 

of MURs, and Chapter 1, which reports on advisory 

opinions related to Presidential activity. 

Independent Expenditures 

by Nonprofit Corporations 

In FEC v. Massachusetts Citizens for Life, Inc., the 

Supreme Court of the United States decided, by a 

5 to 4 vote, that the law's prohibition on corporate 

expenditures is unconstitutional as applied to 
19 

independent expenditures11 made by a narrowly 

defined type of nonprofit corporation. The Court's 

December 15, 1986, decision affirmed an appeals 

court ruling. 

Scope of Ruling. Acknowledging that "the class of 

organizations affected by our holding today will be 

small," the Court delineated the type of corporation 

which would be permitted to make independent 

expenditures under this ruling. "MCFL has three 

features essential to our holding that it may not 

constitutionally be bound by §411 b's restriction on 

independent spending." These three criteria are as 

follows: 

1. The organization must be formed "for the 

express purpose of promoting political ideas, and 

cannot engage in business activities. If political fundraising events are expressly denominated as 

requests for contributions that will be used for political purposes, including direct expenditures, these 

events cannot be considered business activities." 

2. The organization must have "no shareholders 

or other persons affiliated so as to have a claim on 

its assets or earnings." 

3. The organization must not have been established by a business corporation or a labor union 

and must adopt a policy "not to accept contributions from such entities." 

Background. The suit concerned material published 

and distributed to the general public by the Massachusetts Citizens for Life (MCFL), a nonprofit, 

nonstock corporation. The September 1978 publication, called the "Special Election Edition," urged 

readers to "vote pro-life" and, in listing Massachusetts Federal and non-Federal candidates, 

identified each as either supporting or opposing 

MCFL's position on three pro-life issues. The "Spe-

,,An independent expenditure is an expenditure for a communication that expressly advocates the election or defeat of a 

clearly identified candidate but that is not made at the request 

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

authorized candidate committee. Furthermore, an independent 

expenditure must be made without any consultation or coordination with a candidate or authorized committee. 2 U.S.C. 

§431(17). 

cial Edition" also featured photographs of candidates who agreed with MCFL on all three issues 

(and one candidate who was publicly known to hold 

a pro-life position). 

The Commission had argued that the publication 

constituted a partisan communication and that 

MCFL, by distributing the material to the general 

public, had made corporate expenditures in violation of 2 U.S.C. §441b. In a June 1984 decision, 

the district court held that MCFL's spending did not 

constitute prohibited expenditures under §441 b. 

Alternatively, the court stated that the provision was 

unconstitutional, as applied. On July 31, 1985, the 

appeals court overturned the lower court's decision 

that MCFL's publication costs were exempt from 

the prohibition on corporate spending but agreed 

with the district court on the constitutionality issue, 

ruling that the provision violated MCFL's First 

Amendment rights. The appeals court concluded 

that "application of section 441 b to indirect, 

uncoordinated expenditures by a non-profit ideological corporation expressing its views of political candidates violates the organization's First Amendment 

rights." 

MCFL in Violation of §441b. The Supreme Court 

unanimously affirmed the appeals court ruling that, 

as the FEC had argued, MCFL's expenditures were 

in violation of §441 b. In making this determination, 

the Court rejected MCFL's arguments to the contrary. 

MCFL had contended that, in making its expenditures, it had not provided anything to a candidate. 

Because of this, its spending was not within the 

reach of §441 b(b)(2), which defines "expenditure" 

to include anything of value provided to a candidate 

or political committee. The Court, in holding that 

§441 b's scope is broader than MCFL's interpretation, stated that legislative history "clearly confirms 

that §441 b was meant to proscribe expenditures in 

connection with an election." 

The Court also rejected MCFL's argument that its 

publication costs did not constitute prohibited 

expenditures because the material did not 

"expressly advocate" the election of candidates. 
20 

Citing its opinion in Buckley v. Valeo, the Court 

noted it had previously concluded "that a finding of 

'express advocacy' depended upon the use of language such as 'vote for,' 'elect,' 'support,' etc." 

Buckley, 424 U.S. 1, 44, n. 52 (1976). Applying this 

test to MCFL's publication, the Court stated: "Just 

such an exhortation appears in the 'Special Edition.' The publication not only urges voters to vote 

for 'pro-life' candidates, but also identifies and provides photographs of specific candidates fitting that 

description. The Edition cannot be regarded as a 

mere discussion of public issues that by their 

nature raise the names of certain politicians. 

Rather, it provides in effect an explicit directive: 

vote for these (named) candidates. The fact that its 

message is marginally less direct than 'Vote for 

Smith' does not change its essential nature." 

MCFL had also argued that its publication was a 

"Special Edition" of its regular newsletter and 

therefore payments for issuing the material were 

exempt from the definition of expenditure under the 

statute's exception for news stories, commentaries 

and editorials distributed through periodical publications and other news media. 2 U.S.C. §431(9)(B)(i). 

The Court did not need to rule on whether MCFL's 

newsletter qualified for the press exemption 

because it considered the "Special Edition" a campaign flyer rather than an issue of the newsletter. 

"No characteristic of the Edition associated in any 

way with the normal MCFL publication." The Court 

emphasized that it was essential to make a distinction between regular publications and campaign 

flyers "since we cannot accept the notion that the 

distribution of such flyers by entities that happen to 

publish newsletters automatically entitles such 

organizations to the press exemption." 

Section 441b's Infringement on Free Speech. In 

determining whether §441 b was unconstitutional as 

applied to MCFL's independent expenditures, the 

Court first examined the provision's effect on political speech protected by the First Amendment. 

The FEC had argued that, although §441 b prohibited MCFL from making expenditures from its 

corporate treasury funds, the law provided another 

avenue for MCFL to exercise political speech: It 

could establish a separate segregated fund (also 

called a political action committee or PAC) and 

make contributions and expenditures using money 

specifically solicited for the fund. The Court maintained that "even to speak through a segregated 

fund, MCFL must make very significant efforts," 

and mentioned in particular the recordkeeping and 

solicitation requirements the law imposes on such 

funds. In conclusion, the Court stated: "These additional regulations may create a disincentive for 

such organizations to engage in political 

speech ....The fact that the statute's practical 

effect may be to discourage protected speech is 

sufficient to characterize §441 b as an infringement 

on First Amendment activities." 

Section 441b Unconstitutional, as Applied. In ruling 

that §441 b is unconstitutional as applied to MCFL's 

activities in this case, a decision from which four 

Justices dissented, the Court first explained that 

"[w]hen a statutory provision burdens First Amendment rights, it must be justified by a compelling 

state interest." The Court disagreed with the Commission's arguments that §441 b's prohibition on 

MCFL's expenditures was justified. 

ment rights, it must be justified by a compelling 

state interest." The Court disagreed with the Commission's arguments that §441 b's prohibition on 

MCFL's expenditures was justified. 

The FEC had noted the long legislative history 

supporting §441 b's prohibitions on corporate 

activity and argued that the courts have consistently ruled that those restrictions are justified by 

the governmental interest in protecting the election 

process from the effects of the accumulation of 

wealth. After examining the legislative history and 

past Supreme Court decisions, the Court concluded 

that this governmental interest is valid with respect 

to expenditure restrictions applied primarily to 

profit-making corporations but not to corporations 

such as MCFL, "formed to disseminate political 

ideas." The Court, therefore, found no compelling 

justification for treating business corporations and 
21 

MCFL alike "in the regulation of independent 

spending." 

The Court also rejected the FEC's argument that 

§441 b serves to prevent a corporation such as 

MCFL from spending individuals' money for political 

purposes that they might not support. The Court 

pointed out that individuals who contribute to MCFL 

do so because they support its political aims and 

expect that the organization will spend the funds 

"in a manner that best serves the shared political 

purposes of the organization and the contributor." 

In responding to the Commission's argument that 

a contributor, while supporting the political views of 

MCFL, may not wish donations to be used to support or oppose particular candidates, the Court said 

that this problem could be resolved by "simply 

requiring that contributors be informed that their 

money may be used for such a purpose." 

Finally, the FEC had maintained that, if the 

§441 b prohibition were not applied to expenditures 

by corporations such as MCFL, then the political 

process would be in danger of corruption, since 

business corporations and labor unions could funnel undisclosed treasury funds into a nonprofit 

organization to be converted to political spending. 

In rejecting this argument, the Court cited 2 U.S.C. 

§434(c), which requires groups that are not political 

committees to report information on their independent expenditures once they exceed $250 in one 

year. In reporting under this provision, a group 

must include the identification of persons funding 

independent expenditures if they contribute an 

aggregate of over $200 during a year. "These 

reporting obligations provide precisely the information necessary to monitor MCFL's independent 

spending activity and its receipt of contributions," 

the Court stated. Furthermore, the Court pointed 

out that "should MCFL's independent spending 

become so extensive that the organization's major 

purpose may be regarded as campaign activity, the 

corporation would be classified as a political committee," subject to the restrictions and extensive 

reporting requirements the law applies to such entities. 

In conclusion, the Court ruled that §441 b's restriction on independent spending "is unconstitutional as applied to MCFL, for it infringes protected 

speech without a compelling justification for such 

infringement." However, the Court did not directly 

rule on the constitutionality of §441 b's restrictions 

on "commercial enterprises," since that was not at 

issue in this suit. 

Justice William J. Brennan, Jr., who wrote the 

majority opinion, was joined by Justices Thurgood 

Marshall, Lewis F. Powell, Jr. and Antonin Scalia 

and, in part, by Justice Sandra Day O'Connor. 

Dissents from Court Ruling on Unconstitutionality. 

Chief Justice William H. Rehnquist, joined by 

Justices Byron R. White, Harry A. Blackmun and 

John Paul Stevens, dissented from "the conclusion 

that the statutory provisions are unconstitutional as 

applied to [MCFL]." Chief Justice Rehnquist 

observed that the differences between business 

corporations and corporations like MCFL "are 'distinctions in degree' that do not amount to 'differences in kind' ....As such, they are more properly 

drawn by the legislature than the judiciary ....Congress expressed its judgment in §441 b that the 

threat posed by corporate political activity warrants 

a prophylactic measure applicable to all groups that 

organize in the corporate form. Our previous cases 

have expressed a reluctance to fine-tune such judgments; I would adhere to that counsel here." 

In his judgment, "[t]he three part test gratuitously 

announced in today's dicta ... adds to a welldefined prohibition a vague and barely adumbrated 

exception certain to result in confusion and costly 

litigation.'' 

Other Corporate Activity 

In addition to the MCFL suit, above, several advisory opinions concerned corporate involvement in 

Federal elections. 

Corporate Sponsored Candidate Appearances. The 

issue of candidate appearances-whether or not an 

appearance is campaign-related-arose, not only in 

the Orloski and Common Cause (I) suits (discussed 
22 

earlier in the "Enforcement" section), but also in 

two 1986 advisory opinions, both issued to the 

National Conservative Foundation, a nonprofit corporation. 

In its first request for an opinion, the Foundation 

explained that it planned to hold a public convention no later than July 1987. Certain individuals, 

some of whom would be qualified or potential 1988 

Presidential candidates, would present speeches on 

conservative issues at the convention. 

In AO 1986-26, the Commission said that the 

Federal Election Campaign Act prohibits the corporate financing of campaign-related appearances 

by candidates unless the appearances fall within 

certain exceptions contained in the Act and regulations. The regulations permit corporations to sponsor candidate appearances, but only before restricted audiences, not before the general public, 

as the Foundation had proposed. Qualified nonprofit, nonpartisan organizations may also stage 

nonpartisan candidate' debates. Neither of these 

exceptions, the opinion stated, applied to the Foundation's proposed activity. 

Candidate appearances that are not related to 

the campaign, however, may be sponsored by a 

corporation since nonpolitical appearances are not 

subject to the law. The Commission was unable to 

determine whether the proposed candidate appearances were noncampaign-related because the advisory opinion request lacked sufficient facts. 

The Foundation again requested the Commission's advice concerning the convention, this time 

altering its proposal concerning candidate appearances. In its second request, the Foundation proposed holding a "candidate debate," inviting both 

Democrats and Republicans who were or might be 

1988 Presidential candidates. Each individual would 

appear separately, making a speech and answering 

audience questions afterwards. 

In AO 1986-37, the agency determined that the 

Foundation's planned format did not qualify as a 

candidate debate because, instead of candidates 

participating in the traditional face-to-face debate, 

each would address the convention separately. Noting that a nonpartisan candidate debate is the only 

legal way a corporation may sponsor public 

campaign-related appearances by candidates, the 

opinion went on to state that the Foundation could 

not sponsor the event because, as proposed, the 

candidate's public appearances would be 

campaign-related: speakers would be invited on the 

basis of their actual or possible candidacies, and 

they could address the convention on any topic, 

including the advocacy of their candidacies. 

Broadcast Time Donated by Media Corporation. In 

AO 1986-35, later vacated, the Commission 

decided that Congressman Howard Coble could not 

accept broadcast time donated by WGGT-TV, an 

incorporated commercial station, for the purpose of 

airing political ads prepared by the campaign. The 

station had offered free 30-second spots to all 

House candidates in the Sixth Congressional District of North Carolina, subject, however, to preemption by paying advertisers. The opinion stated that 

the incorporated station would be making a prohibited in-kind contribution to the candidates by 

offering the free time. Although Commission regulations exempt media news stories, commentaries 

and editorials from the definition of contribution (as 

long as the facility is not owned or controlled by a 

candidate or political party), the opinion concluded 

that the offer of free time to air candidate-prepared 

ads would not qualify as a legitimate press function. 

In an unusual proceeding, the Commission reconsidered and vacated the opinion after receiving a 

letter from the National Association of Broadcasters, which argued that the opinion contradicted 

the Federal Communications Commission's (FCC's) 

interpretation of the Communications Act. FCC 

regulations indicate that the Communications Act 

allows broadcasters the option of providing free air 

time to candidates as long as the stations provide 

"equal opportunities" to other candidates. 

In reconsidering the opinion, the Commission discussed two possible conclusions: 

• The donation of a free 30-second spot would 

result in a prohibited corporate contribution 

since the activity would not fall under the news 
23 

commentary exemption. Furthermore, the 

FCC's interpretation of the Communications 

Act would not bind the FEC in the interpretation of the Federal Election Campaign Act. 

• The donation of free air time would be a news 

commentary, exempt from the definition of contribution, provided that the commentary time is 

not used as a vehicle for the broadcasting station to make contributions or expenditures in 

connection with the nomination or election of 

any person to Federal office. 

However, the issue remained unresolved because 

the Commission was unable to approve a new opinion by a four-vote majority. 

Employee Contribution Plans 

Corporate Program. In its advisory opinion request, 

Armstrong World Industries, Inc. outlined a plan 

under which the corporation would encourage its 

executives to make contribution pledges to selected 

candidates and committees. Armstrong also 

planned to act as a conduit for earmarked contributions from employees, transmitting the contributions 

in one bundle to a selected candidate. 

The Commission concluded in AO 1986-4 that 

Armstrong could carry out its proposed activities 

only by establishing a political committee (a 

separate segregated fund or, as it is more commonly called, a PAC). Otherwise, the plan would 

result in prohibited corporate contributions and 

expenditures. Although a corporation may make 

partisan communications to its executives by 

recommending they support a particular candidate, 

a corporation may not act as a conduit for earmarked contributions. If earmarked contributions 

were solicited as planned, then they would count 

against the contribution limits of both the separate 

segregated fund and the contributor, since Armstrong planned to exercise direction and control 

over the contributor's choice of the recipient candidate. 

Noncorporate Program. In AO 1986-41, the Commission considered another contribution plan, this 

one proposed by an unincorporated group, Air 

Transport Association of America. The Association 

planned to pay additional compensation to certain 

employees to enable them to make contributions. 

The Commission concluded that this plan would 

violate 2 U.S.C. §441f, which states that "[n]o person shall make a contribution in the name of 

another person." 

Campaign Activity of Unregistered Firms 

Two court cases decided in 1986 concerned organizations not registered as political committees 

whose political activity caused them to incur reporting obligations under the Federal campaign finance 

law. 

FEC v. National Congressional Club and Jefferson 

Marketing, Inc. In this suit, the Commission claimed 

that Jefferson Marketing, Inc. (JMI), a corporation 

providing media services to campaigns, was so 

closely tied to the National Congressional Club 

(NCC), a political committee, that the two operated 

as a single entity. As a result, the FEC contended 

that NCC violated the law's reporting requirements 

by failing to disclose JMI's receipts and disbursements. Evidence of the joint operation of the two 

organizations included JMI's financial dependence 

on NCC, NCC's control over JMI's voting stock and 

the involvement of NCC's treasurer in JMI's decisions. 

NCC and JMI conceded that they had operated 

as one committee and, with the FEC, agreed to a 

consent order issued by the U.S. District Court for 

the District of North Carolina on May 15, 1986. The 

order stipulated that the defendants had violated 

the law by failing to report JMI's activity and 

imposed a $10,000 civil penalty. Under the consent 

order, NCC had 90 days to amend its FEC reports 

to reflect JMI's financial activity. NCC and JMI also 

agreed to take steps to establish themselves as 

separate entities. 

FEC v. Californians for Democratic Representation 

(CDR). This case concerned a slate mail program 

undertaken by CDR, a nonprofit organization. (See 
24 

also the summary of an advisory opinion on slate 

cards under "Exceptions to Contribution Limits," 

below.) CDR distributed to the general public slate 

mailings that endorsed Federal candidates as well 

as non-Federal candidates and ballot measures. 

Candidates could purchase advertising space at fair 

market value, but CDR also listed-at no chargecandidates who did not purchase space. 

On January 9, 1986, the U.S. District Court for 

the Central District of California found that the 

costs incurred by CDR for listing Federal candidates free of charge constituted expenditures on 

behalf of those candidates. Accordingly, the court 

ruled that CDR had violated the law by failing to 

register and report as a political committee when 

those expenditures exceeded $1 ,000. The court 

also found that CDR's mailings did not carry the 

advertising notice required by law. In response to 

these violations, the court imposed a $15,000 civil 

penalty on CDR and denied a later motion by CDR 

to have the penalty reduced. 

Excessive Contributions 

The court cases summarized below addressed both 

the donation and the acceptance of contributions 

that exceeded the law's limits. 

Invalid Independent Expenditures. In a suit decided 

on May 16, 1986, FEC v. National Conservative 

Political Action Committee (NCPAC), a district court 

ruled that payments reported by NCPAC as 

independent expenditures actually constituted 

excessive in-kind contributions because the 

"independence" of the expenditures was invalidated by coordination between NCPAC and the 

candidate benefiting from the expenditures. (See 

also Common Cause v. FEC (//), summarized earlier 

under "Enforcement.") 

In an effort to defeat Senator Daniel Patrick Moynihan (D-NY) in the 1981-82 election cycle, NCPAC 

spent $73,755, reporting the payments as independent expenditures in opposition to the Senator. 

In making the expenditures, NCPAC relied heavily 

on the services of a political consultant. The same 

consultant was also retained by Bruce Caputo, who 

was seeking the Republican Party's nomination for 

Senator Moynihan's seat. 

The U.S. District Court for the Southern District 

of New York found that Senator Moynihan and Mr. 

Caputo were, "for all practical purposes, opponents" during the primary season. The court further 

noted that the consultant's role in both "the 

NCPAC and Caputo efforts was far more significant 

than that of a vendor of advertising services or a 

polling company .... [The consultant] was NCPAC's 

key strategist. ... Simultaneously, he served as the 

chief architect of Bruce Caputo's campaign." The 

court concluded that NCPAC, by using the same 

consultant under these circumstances, had, in fact, 

coordinated its expenditures with the Caputo campaign and that the "expenditures must [therefore] 

be deemed contributions to the Caputo campaign" 

rather than independent expenditures. On June 13, 

1986, the court imposed a $15,000 civil penalty on 

NCPAC and ordered it to file amended reports 

within 30 days. 

Acceptance of Excessive Contributions. In two other 

1986 suits concerning excessive contributions, the 

courts ruled on the responsibility of committee 

treasurers to exercise "best efforts" in determining 

the legality of contributions. The courts, however, 

issued conflicting rulings on this point. 

FEC v. Dramesi for Congress Committee and FEC 

v. Re-Elect Hollenbeck to Congress Committee both 

concerned a $5,000 contribution made by the New 

Jersey Republican State Committee to each defendant candidate committee for their 1982 primary 

election campaigns. At the time, the State Committee had not yet qualified as a multicandidate committee and could therefore contribute only $1 ,000 

per election to each candidate instead of $5,000 

per election. On learning of the State Committee's 

excessive contributions, the FEC initiated enforcement proceedings against the State Committee, the 

two candidate committees and their treasurers. 

When it failed to reach settlements with the 

Dramesi and Hollenbeck Committees, the Commission filed suits against them. 
25 

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

of New Jersey found that the Dramesi Committee's 

treasurer had knowingly accepted an excessive 

contribution from the State Committee and ordered 

the treasurer to pay a $5,000 civil penalty. (The 

court had previously entered a $5,000 default judgment against the Dramesi Committee on May 2, 

1986.) In its ruling of July 25, 1986, the court 

observed that, under FEC regulations, the treasurer 

of a political committee must make "best efforts" 

to determine the legality of a contribution instead of 

assuming that a contribution is legal. The court 

noted that the treasurer could have made this 

determination by consulting the FEC's Index of 

Multicandidate Political Committees, "readily available to the defendants." 

On the other hand, in the Hollenbeck case, the 

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

that the Hollenbeck Committee should not be held 

liable for the State Committee's excessive contribution. In its June 16, 1986, decision, the court said 

that the contribution "would appear to be legal to 

any reasonable treasurer .... '' 

Contribution Limits in the General Election 

In two 1986 advisory opinions, the Commission 

applied the law's contribution limits to general election campaigns. 

General Election Contributions Spent Before Primary. 

In AO 1986-17, the Commission permitted a candidate to spend, before the primary election, contributions that had been designated for the general 

election. This permission, however, was limited to 

special circumstances. Specifically, the Commission 

said the Mark Green Committee could, when 

necessary, make advance payments for services 

and goods that would be provided to the Committee once Mr. Green became a general election candidate. (For example, primary candidates must 

sometimes make deposits several months before 

the general election in order to reserve television 

time for general election ads. This is particularly 

true in States holding their primary elections in late 

summer or early fall.) The opinion cautioned that 

contributions designated for a prospective general 

election could not be used for any expenses related 

to the primary campaign. Furthermore, if Mr. Green 

were to lose the primary, the Committee would 

have to refund the general election contributions, 

even if already spent, since the candidate would 

have no separate limit for that election. 

Commissioner Thomas E. Harris dissented from 

the decision, stating: "This result contravenes the 

general scheme of the statute of separate contribution ceilings for each election." He predicted that 

the opinion would "prove very confusing in application" and that compliance actions would arise from 

the failure of defeated primary candidates to refund 

general election funds already spent. 

On another issue, the opinion concluded that, 

because New York State law does not grant State 

party committees the authority to nominate a candidate, a party convention held to designate a party 

candidate for nomination is not considered a 

separate "election" with a separate contribution 

limit. Instead, the convention is considered part of 

the primary election process. (By contrast, see 

summary of AO 1986-21 under "Reporting by 

Committee of Unopposed Candidate," below.) 

Contributions to Candidates Running in Two Simultaneous Elections. AO 1986-31 addressed a unique 

situation. On November 4, 1986, North Carolina 

held both a special election to fill the remainder of 

deceased Senator John East's term (which expired 

on January 3, 1987) and a regularly scheduled 

general election for the new term of the same 

Senate seat. Each major party nominated one candidate to run in both elections. Thus, the two nominated candidates were simultaneously running for 

different terms of the same Senate seat. The 

Democratic Senatorial Campaign Committee 

(DSCC) asked how the law's contribution limits and 

coordinated party expenditure limits would apply to 

the Democratic Senatorial nominee for both general 

elections. 

The Commission concluded, in AO 1986-31, that 

separate contribution limits under 2 U.S.C. §441a(a) 

applied to the candidate's special and general elec-
26 

tion campaigns; persons could contribute up to the 

limit for each election. The opinion further concluded that contributions, even if designated for 

one of the elections, could be used for either. 

Moreover, the candidate could use the same principal campaign committee for both elections. 

The Commission, however, could not reach a 

majority decision on whether the special $17,500 

limit on national party contributions to Senate candidates, provided under 2 U.S.C. §441 a(h), applied 

collectively to the regular and special elections or 

to each election separately. Similarly, the Commissioners were divided on the question of whether a 

single coordinated party expenditure limit under 2 

U.S.C. §441a(d)(3) applied to each election 

separately. 

In a concurring opinion, Commissioner Thomas J. 

Josefiak stated that he agreed with the Commission's unanimous decision that the §441a(a) contribution limits should be applied separately but 

regretted that the Commission could not reach the 

same conclusion regarding the §441 a(h) national 

party contribution limits and §441a(d) coordinated 

party expenditure limits. 

Commissioners Joan D. Aikens and Lee Ann 

Elliott filed a concurring opinion in which they 

agreed with the legal analysis and reasoning in 

Commissioner Josefiak's concurring opinion. 

Exceptions to Contribution Limits 

Three advisory opinions issued in 1986 discussed 

categories of receipts that are not considered contributions and therefore are not subject to the law's 

limits. 

Committee's Slate Card Program. In AO 1986-29, 

the Commission considered a slate card program 

proposed by a registered committee, the Pete Stark 

Re-Election Committee. The Committee planned to 

develop and circulate a slate card supporting Congressman Stark and one other Federal candidate in 

addition to several non-Federal candidates. The 

Committee proposed to pay for the slate card, 

seeking proportional reimbursement from featured 

candidates but also listing candidates who did not 

wish to pay. 

The Commission noted that the law exempts 

from the definitions of contribution and expenditure 

payments made by a campaign for campaign 

materials that refer to other candidates ("coattail 

support"). In order to qualify for this exemption, the 

Committee would have to distribute the slate card 

through volunteers or mail the material using lists 

developed by the Committee or the other candidates involved, but without the assistance of a 

commercial vendor. 

On the other hand, the opinion said that if the 

Committee used outside lists or used a commercial 

vendor for the mailing, then the portion of the costs 

allocable to the other Federal candidate would constitute an in-kind contribution from the Committee 

to that candidate. Moreover, the slate card would 

have to bear a proper advertising notice. The Commission also noted that Federal law would not 

preempt California provisions requiring the Committee to supply certain information on listed State and 

local-but not Federal-candidates. 

Funds Donated for Party Office Facility. Under the 

statute and FEC regulations, donations to a 

national or State party committee for the purpose of 

constructing or purchasing an office facility are not 

considered contributions or expenditures (provided 

the facility is not acquired for the purpose of 

influencing the election of any candidate in any particular election). Furthermore, building fund donations are not subject to the law's limits or prohibitions. 

According to FEC regulations, a committee that 

has qualified as a "political committee" may 

deposit in its account only those contributions that 

have been solicited according to certain guidelines. 

The solicitation must inform contributors that their 

contributions will be used in Federal elections and 

are therefore subject to the law's limits and prohibitions. Because solicitations for building fund donations do not meet these conditions, AO 1986-40 

said donations would have to be deposited in a 

separate account. However, because the building 
27 

fund account would not meet the definition of 

"political committee," donations would not have to 

be reported under Federal law. 

In responding to another question raised by the 

West Virginia Republican State Executive Committee, the opinion stated that Federal law would 

preempt any West Virginia statute that prohibited 

the acceptance of corporate donations for a party 

building fund since the Federal Election Campaign 

Act clearly permits such donations. 

Commissioner Josefiak dissented from AO 

1986-40's conclusion that a building fund account 

"operates within a federal preemption of state election law .... " In his view, if Congress had intended 

the building fund exemption to preempt State laws' 

jurisidiction in this area, "it would have done so by 

specific statutory language." 

Sale of Campaign Asset. In AO 1986-14, the Commission permitted the Dan Burton for Congress 

Committee to sell a campaign van at fair market 

value without the proceeds being considered a contribution from the purchaser to the campaign. The 

opinion said that the Committee would have to 

refrain from conveying any political message in 

connection with the sale and that it could not lease 

or repurchase the van afterwards. 

The Commission distinguished this opinion from 

several previous advisory opinions in which political 

committees wanted to sell fundraising items or 

campaign materials, or to pursue commercial ventures which, over an indefinite period of time, would 

produce revenue for campaign expenditures. In 

those cases, the Commission determined that the 

sales would result in contributions from the purchasers. In the situation presented by the Burton 

Committee, the Commission considered several 

points to be significant: The van was a depreciated 

asset; it was used in previous elections; and it 

would be sold in a single, isolated transaction. 

In a concurring opinion, Commissioner Harris 

said that, in his view, the Commission has given 

inconsistent advice in this area. He suggested the 

agency draft clarifying regulations, listing five factors the Commission could apply in determining 

when to treat the proceeds of committee sales as 

contributions. 

Reporting by Committee of 

Unopposed Candidate 

In AO 1986-21, the Commission decided that, 

because the Utah Democratic Party's State convention had authority to nominate a candidate under 

Utah State law, the convention constituted an 

"election." (Compare with AO 1986-17 under 

"General Election Contributions Spent Before 

Primary," above.) Even though Mr. Owens was 

unopposed, the opinion said that the Wayne Owens 

for Congress Committee had to file a pre-election 

report for the nominating convention. 

Use of Reported Contributor Information 

During 1986, the Commission and the courts dealt 

with the law's prohibition on the commercial use of 

information contained in campaign finance reports 

filed with the agency. The Federal Election Campaign Act states that "any information copied from 

reports or statements may not be sold or used by 

any person for the purpose of soliciting contributions or for commercial purposes, other than using 

the name and address of any political committee to 

solicit contributions .... " 2 U.S.C. §438(a)(4). 

FEC v. American International Demographic Services, Inc. In this suit, the U.S. District Court for the 

Eastern District of Virginia found that American 

International and its Vice President, Ernest Halter, 

had illegally used FEC information for commercial 

purposes. 

The defendants' violation of the law involved their 

use of two FEC computer tapes containing 

individual contributor information that had been disclosed on reports filed by political committees. The 

tapes had been purchased by Mr. Halter's wife on 

behalf of a political committee she had established. 

Mr. Halter transferred the two FEC tapes to a list 

management company, which used the tapes, 

along with other tapes, to create four mailing lists 

that the company marketed to list brokers. 
28 

After examining the evidence, the court found 

that "the defendants willfully violated the Act," 

enjoined them from using FEC information for commercial purposes and fined them $3,500. 

Public Data Access (PDA). In AO 1986-25, the 

Commission considered the proposed use of FEC 

contributor information by PDA, a for-profit corporation. PDA used reports filed by 1984 Congressional 

campaigns to compile 1,135 lists that categorized 

individual contributors by Congressional district and 

by employer. The lists included, for each contributor, the name, city and zip code and the amount he 

or she had contributed. PDA noted that it would 

include a warning against the commercial use of 

the information on each page. 

In responding to PDA's proposal, the Commission explained that the law's ban on the use of 

FEC information was enacted to protect individual 

contributors from being victimized by list brokering. 

The agency concluded that, since PDA was 

organized as a for-profit corporation, its sale of the 

lists would "presumably" be for commercial purposes (a presumption not negated by PDA's statement that it planned to sell the lists at or near 

cost). Accordingly, PDA's proposed use of FEC 

information would be prohibited. In reaching this 

decision, the Commission considered several factors: 

• PDA's intended use of contributor information 

would not be merely incidental to the sale of 

its lists but would be the primary focus of the 

activity. 

• Although PDA planned to market the lists primarily to researchers and journalists, it would 

nevertheless sell the lists to "all who wished to 

buy them." 

• The lists, which incorporated nearly all the 

information on contributors reported by committees, would have a commercial value since 

PDA's proposed format and content were 

essentially indistinguishable from lists marketed by list brokers for commercial purposes. 

Clearinghouse on 

Election Administration 

Congress charged the Commission with the responsibility to conduct research on the administration of 

Federal elections. The FEC's National Clearinghouse on Election Administration has assumed this 

duty, serving as a central exchange point for 

research and information. This section reports on 

work completed by the Clearinghouse during 1986. 

See also Appendix 9, which reports on the status 

of other publications and research compendia 

produced by the office. 

Voting Accessibility Act 

Congress granted the Commission new responsibilities under the Voting Accessibility for the Elderly 

and Handicapped Act (Public Law 98-435), signed 

by President Reagan on September 28, 1984. The 

Act stipulates that voter registration sites and polling places for Federal elections must be accessible 

to handicapped and elderly individuals. 

Under this Act, the Commission must gather certain information on the accessibility of polling 

places from each State and consolidate the information in periodic reports to Congress. These 

reports are due the year following each election 

year from 1986 through 1994. To this end, the 

Clearinghouse, the FEC office assigned responsibility for this project, developed a survey form to collect data on States' implementation of the Act. In 

designing a form to be used for all five elections, 

the Clearinghouse consulted with State officials, 

several interested organiz~tions and its own Advisory Panel. 

In November 1986, the final version of the form 

was sent to each State's chief election officer for 

completion. After analyzing the responses, the 

Clearinghouse will provide a tally of inaccessible 

polling places and the reasons for their inaccessibility in a report to Congress due April 30, 1987. 

Computerizing Election Administration 

Because the vast majority of State election offices 

are either using computers or considering their use, 
29 

the Clearinghouse embarked on a three-phase 

study to guide election officials in applying computer technology to administrative functions. 

The office published the core volume of the study 

in 1986: Volume II, A General Model. Representing 

the culmination of 10 years of research, the publication contains a model system for computerizing 

every phase of election administration. The design 

is divided into discrete modules which permit users 

to adopt separate elements, later expanding the 

system without restructuring what is already in 

place. As the publication guides the reader through 

election-related activities, it gives complete 

documentation for the computerization of each task. 

In short, it offers users a practical and efficient way 

to computerize their election management functions 

to save time, trouble and expense. 

The first study, Volume I, Current Applications, 

was published in 1985. It provides a brief introduction to using computers-the benefits of automation, some pitfalls to avoid and a guide to help 

define information needs. The last volume in the 

series, to be published in 1987, will suggest several 

strategies for implementing an election management system. It will, for example, discuss such 

options as shared versus in-house computer equipment, data bases and funding alternatives. 

Voting System Standards 

The Clearinghouse continued to develop voluntary 

standards for States' assessment of two types of 

computerized voting systems, punchcard and marksense, in terms of their reliability, security and performance. 

The first volume addresses minimum standards 

for the hardware components of these devices and 

covers such topics as the speed and accuracy of 

ballot processing and the maintenance and durability of equipment. Although the hardware standards 

were completed in 1985, the office made several 

valuable changes based on preliminary data from 

actual hardware tests. This document, currently in 

use by States, will be published in bound form 

together with a volume on direct electronic voting 

systems. The publications will reflect an overall 

reorganization of the project in order to consolidate 

testing criteria for all voting systems offered in the 

marketplace. 

In 1986, the Clearinghouse concentrated on completing the software standards and held meetings to 

review draft standards with the contractor, vendors 

and consultants in the field, the Advisory Panel and 

the Voting System Standards Committee. The standards are proposed to ensure that the software is 

reliable, accurate, testable and secure. 

Finally, the office began developing management 

guidelines for the two voting systems. In addition to 

meeting with the Standards Committee on this 

project, Clearinghouse staff researched materials 

on training, election testing and certification procedures for the punchcard and marksense voting systems. 

Absentee Voting 

The Clearinghouse contracted for a study on 

absentee voting in 1986 and also held a meeting 

with an advisory board to discuss research 

approaches that would be most helpful to election 

administrators. Board members decided that the 

project should address several aspects of absentee 

voting, including the issuance and return of ballots, 

and the certification and tabulation of voted absentee ballots. 

Clearinghouse Panels 

On September 22 and 23, 1986, two Clearinghouse 

panels met in Washington: the Advisory Panel and 

the Committee on Voting System Standards. Composed of State and local election officials, the 

panels met in joint sessions to discuss Clearinghouse projects; recent court cases on Federal and 

State elections; and new election-related legislation, 

including the Uniform and Overseas Citizens 

Absentee Voting Act. 

FEC Journal of Election Administration 

Recording developments in the field of election 

administration, the Journal recently offered articles 

on the Voting Rights Act, the Federal role in 

prosecuting voter fraud and the security of election 
30 

system computers. The periodical, free to the public, also keeps readers abreast of Clearinghouse 

activities and provides convenient order forms for 

the Clearinghouse studies summarized in 

Appendix 9. 
~00~--------------------------------------------------------------

1000 

500 

Corporate 

Non connected 

Trade/ 

Membership/ 

Health1 

Labor 

Year 

31 

Chapter 3 

Campaign Finance 

Statistics 

This chapter presents selected graphs that depict 

different aspects of Federal campaign finance 

activity through several election cycles. (See Chapter 1 for data on publicly funded 1984 Presidential 

campaigns.) 

Political Action Committees 

Chart I 

Number of PACs 

1For the years 1974 through 1976, the FEC did not identify subcategories of PACs other than corporate and labor PACs. 

Therefore, for these years, the category "trade/membership/health" represents all other PACs. 

2The "other" category includes PACs formed by corporations without capital stock and cooperatives. 
Chart II 

Support of Federal Candidates 

78 1------......11....---'---............. 

801-------------~-~-~ 

Millions of Dollars 

0 2 3 4 5 

Corporate 

PACs 

Labor 

PACs 

Nonconnected 

PACs 

821-----------------......11...~-~-~ 84 

861--------------------------~~----~--~ 

Health PACs 

PACs of 

Cooperatives 

PACs of 

Corporations 

Without Stock 

1-------------~--~--

Trade/Membership/ 82 1-----------

84 t--------------.-....~-

D Contributions 

• Independent Expenditurest 

78 

80 

86 

78 

80 

82 

84 

86 

78 

80 

82 

84 

86 

80 t---------'----

821------------~--~ 

r---------------------------------~--~ 

861---~--~--~--~---r--~~ 

80 1-------' 

82 1------------ 84 

86 t------------

78 

84 

78 

32 

1An independent expenditure is an expenditure for a communication expressly advocating the election or defeat of a clearly 

identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or 

suggestion of, any candidate or his or her authorized committees or agents. 
Party Committees 

Chart Ill 

House 

Candidates 

Republican 

80 

Democratic 82 

84 

86 

78 

80 

82 

84 

86 

78 

D Contributions 

• Party Expenditures1 

Senate 

Candidates 

Republican 

Democratic 

78 

80 

82 

84 

86 

78 

80 

82 

84 

86 

Support of Federal Candidates Millions of Dollars 

0 2 4 6 8 10 12 

Presidential 

Candidates 

Republican 

Democratic 82 

33 

1Party expenditures are special expenditures made by party committees on behalf of Federal candidates in connection with 

the general election; they are not considered contributions but are subject to limits. 
34 

House and Senate Candidates1 

Chart IV 

General Election House Democratic Candidates 

Sources of Funding Throughout Campaign 

Millions of Dollars 

120 ~~--·····~~~·--~········~~-···-~···~·-~~·-"··~-·~········-··~-·····-····················~·-· .. 

40 

20 

0 

1978 1980 1982 1984 1986 

Chart V 

General Election House Republican Candidates 

Sources of Funding Throughout Campaign 

Millions of Dollars 

120··--·..·-·······~·-·-·-..--.~·--·~---········-·············-····-···············..···········.. ······-····~~---·······-~--·-····~··-···············-···········-·····-···· 

Individual Contributions • and Other2 

• PAC Contributions 

D Party Expenditures3 

• Party Contributions 

1978 1980 1982 1984 1986 0 

1The graphs under this section cover major party House and Senate candidates running in the 1978-1986 general elections but 

shows their sources of funding for all e.lections (primary, runoff and general). 

2This category includes contributions from individuals, groups, and other candidate committees; loans; contributions and 

loans made by the candidate; rebates and refunds; and interest and dividends. 

3Party expenditures are special expenditures made by party committees on behalf of Federal candidates in connection with 

the general election; they are not considered contributions but are subject to limits. 
Chart VI 

General Election Senate Democratic Candidates 

Sources of Funding Throughout Campaign 

1984 1986 

Millions of Dollars 

120 

100 

80 

60 

40 

20 

0 

1978 1980 1982 

35 

Individual Contributions • and Other1 

• PAC Contributions 

D Party Expenditures2 

• Party Contributions 

Chart VII 

General Election Senate Republican Candidates 

Sources of Funding Throughout Campaign 

1978 1980 1982 1984 1986 

Millions of Dollars 

120 

100 

80 

60 

40 

20 

1This category includes contributions from individuals, groups and other candidate committees; loans; contributions and 

loans made by the candidate; rebates and refunds; and interest and dividends. 

2Party expenditures are special expenditures made by party committees on behalf of Federal candidates in connection with 

the general election; they are not considered contributions but are subject to limits. 
Millions of Dollars 

0 2 4 6 8 10 12 14 16 18 

1978 

1980 

1982 

1984 

•

~ 

~ 

. lillTiill 

For Presidential Candidates 

For Senate Candidates 

For House Candidates 

Against Presidential 

Candidates 

D Against Senate Candidates

• 1986 Against House Candidates 

36 

Independent Expenditures1 

Chart VIII 

Spending For and Against Federal Candidates 

1An independent expenditure is an expenditure for a communication expressly advocating the election or defeat of a clearly 

identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or suggestion 

of, any candidate or his or her authorized committees or agents. 
37 

Chapter 4 

The Commission 

Commissioners 

On October 3, 1986, the U.S. Senate confirmed 

President Reagan's nomination of Thomas J. Josefiak and Scott E. Thomas as FEC Commissioners. 

Commissioner Josefiak, who succeeded Commissioner Frank P. Reiche, had been a member of the 

Commission since August 9, 1985. (The President 

appointed Commissioner Josefiak under the recess 

appointment clause of the Constitution because 

Congress had already adjourned for the summer.) 

Commissioner Josefiak was officially sworn in on 

October 15. Commissioner Thomas, nominated by 

the President on September 26, 1986, succeeded 

Commissioner Thomas E. Harris, whose third term 

expired in April 1985, although he continued to 

serve until Commissioner Thomas was appointed. 

Commissioner Thomas, who was officially sworn in 

on October 14, had previously served as Executive 

Assistant to Commissioner Harris. 

Commission Chairman Joan D. Aikens and Vice 

Chairman John Warren McGarry served as officers 

during 1986. On December 16, 1986, Commissioner Thomas was elected 1987 Chairman and 

Commissioner Josefiak, 1987 Vice Chairman. Biographies of all Commissioners appear in Appendix 1. 

Administrative Activities 

Employee Conduct Regulations 

On September 29, 1986, the Commission published 

final rules governing standards of conduct for FEC 

Commissioners and employees (51 Fed. Reg. 

34440). The final rules, contained in 11 CFR Part 7, 

became effective on October 29, 1986. 

The intent of the new rules is to "facilitate the 

proper performance of Commission business and to 

encourage citizen confidence in the impartiality and 

integrity of the Commission." The regulations incorporate most of the agency's former Code of Ethics 

and generally follow model rules developed by the 

Office of Personnel Management. 

The first part of the rules, Subpart A, explains 

the purpose of the regulations and defines terms. It 

also sets forth procedures for reporting and handling suspected violations of the Ethics Act and 

specifies disciplinary and remedial actions that may 

be taken against violators. Finally, Subpart A 

describes the process by which employees are to 

be notified of the standards of conduct. 

Subpart B establishes the rules of conduct for 

Commissioners and staff, giving guidance in 

specific areas, such as: 

• Acceptance of gifts, entertainment and favors; 

• Political activity; 

• Outside employment or activities; 

• Membership in nongovernment organizations; 

• Business and financial interests; 

• Use of government information and property; 

and 

• Restrictions related to pending FEC enforcement actions-specifically, the confidentiality 

rule and the ban on ex parte communications. 

Subpart B also lists rules affecting the conduct of 

government employees contained in other statutes, 

such as the prohibition against the misuse of the 

government frank on mail. 

The rules of conduct for temporary FEC 

employees are addressed in Subpart C, while Subpart D contains administrative procedures for correcting violations by former employees of the Ethics 

Act's conflict-of-interest provisions. See 18 U.S.C. 

§§207(a)-(c). 

During November 1986, to comply with the 

employee notice requirement of Subpart A, the 

agency briefed all employees on the new rules and 

distributed both the regulations and explanatory 

information to the staff. 

New Computer Contract 

In May 1986, the Commission approved a six-year 

computer contract with a new firm. The contract will 

provide the agency with more services at less cost, 

reducing monthly computer expenses from $50,000 

to $42,753. Due to become operational in the early 

part of 1987, the new system is expected to 

enhance FEC information services. The Commission will be able to process more requests for campaign finance information on an overnight basis, 

and an expanded storage capacity will permit the 
38 

agency to restore financial information that had 

been removed due to budget cuts. (See "Disclosure," Chapter 2.) 

Because many of the agency's administrative 

functions are computerized, the new computer system will benefit the agency's internal operations as 

well. 

FEC Budget, Fiscal Year 1986 

Although the Administration had recommended an 

FY 1986 funding level of $12.756 million for the 

Commission, the agency actually received $11.898 

million due to cuts totaling $858,000. First, Congress reduced funding by $323,000 on the assumption that there was to be a government-wide pay 

cut of 5 percent-a cut that never took place. 

Second, in January 1986, the FEC budget was 

decreased by $535,000-a 4.5 percent reductionas a result of the Deficit Reduction Act of 1985 (the 

Gramm-Rudman-Hollings Act). Although the President had asked Congress to restore the $323,000 

in personnel funds, Congress did not act on that 

request. 

The delay in the agency's relocation from 1325 K 

Street to 999 E Street saved some money-

$237,000-due to the lower rental rate for the 

former building, but not enough to offset the impact 

of the two reductions. The agency still had to find 

ways to save some $621 ,000. Compounding the 

problem, a third of the fiscal year had already 

passed, leaving the Commission only eight months 

to absorb the loss. The FEC had to take action 

quickly. 

In deciding how to save money, the agency 

made certain assumptions. Activities not expressly 

mandated by the law would have to be targeted for 

more severe cuts than other programs. Moreover, 

since the FEC is a personnel-intensive agency, cuts 

would have to be made in personnel (personnel 

compensation represents about 70 percent of the 

entire budget). Rather than imposing a reduction in 

force or furlough, which would entail additional 

costs, the agency decided to freeze hiring at the 

then current level of 234 full-time equivalent (FTE) 

positions, 11 fewer than the 245 FTE ceiling. The 

agency projected that the hiring freeze would save 

about $226,000. To further reduce spending, the 

agency cut some $180,000 in general support costs 

such as travel, training, printing, postage, supplies 

and equipment purchases. These cutbacks limited 

the agency's outreach program (e.g., workshops, 

out-of-town speaking engagements). The Commission also canceled a contract to update a Clearinghouse publication, Election Case Law, and reduced 

a second Clearinghouse contract for a study on 

absentee voting, thus saving $62,500. 

The balance of the cut, roughly $150,000, was 

achieved by discontinuing contracts that assisted 

the computerized disclosure program. Budget cuts 

to the program actually totaled $250,000, since the 

agency saved $100,000 by not hiring additional 

data staff .to enter information from 1986 reports. 

This major budget reduction meant that the agency 

had to cut back on the amount of computerized 

information available to the public, a difficult decision for the Commission to reach but, under the circumstances, unavoidable. Because the program 

was not specifically mandated by law and because 

the agency had not yet increased computer staffing 

for 1986 election activity, the decision was fully 

consistent with the assumptions the agency had 

adopted in determining which programs to cut. 

Additionally, the agency believed it could minimize 

the negative impact of this reduction by using 

future funding to capture a large part of the data 

that had not been entered and to restore the program for the 1988 election cycle. Chapter 2 

describes the effect of the cutbacks on the disclosure program and the steps taken by staff to 

alleviate the impact of the reductions. 

FEC Budget, Fiscal Year 1987 

Unlike FY 1986, the Commission did not have to 

face the prospect of unanticipated budget cuts in 

FY 1987. Once Congress approved the agency's 

$12.8 million appropriation, the agency could plan 

its expenditures without fear of abrupt changes to 

its financial situation. 
39 

In requesting the FY 1987 appropriation during 

Congressional hearings held during February, 

March and April, Vice Chairman John Warren 

McGarry stated that the budget request "will give 

[the agency] limited flexibility to build on progress 

to date." Commissioner McGarry described the pattern in the growth of campaign spending that has 

emerged over the years. FEC experience has 

shown that Congressional elections following a 

Presidential year have cost as much as the prior 

Congressional and Presidential races combined. "If 

that pattern holds true," Commissioner McGarry 

explained, "1986 campaign finance activity will 

approximate that of 1984" and, in 1988, when 

there may be over 20 Presidential candidates seeking matching funds, "total spending will surely be 

astronomical." He pointed out that this increase in 

campaign finance activity would add to the Commission's workload, affecting all phases of agency 

operations. 

In a June 12, 1986, report recommending $12.8 

million in FY 1987 funds for the agency, the Committee on House Administration "note[d] with 

approval that over the last several years the Commission has made improvements in timeliness, 

despite an increased workload and relatively stable 

staffing levels." 

The Commission's management plans for FY 

1987 allocated funds to restore its computerized 

disclosure program (see Chapter 2); to increase 

staff to the 245 FTE ceiling, including the staffing 

up of the Audit Division to handle 1988 Presidential 

activity; and to reestablish other programs affected 

by the FY 1986 cutbacks. 

There was some uncertainty as to whether the 

Commission would receive supplemental funding to 

cover a portion of the 1987 pay increase of 3 percent and to offset the considerable expenses of the 

new government retirement program, effective 

January 1987. The Office of Management and 

Budget, however, agreed that additional FY 1987 

funds were necessary for the agency: $88,000 to 

cover half of the pay raise and $202,000 for the 

additional costs of the retirement system, bringing 

the agency's total proposed funding for the fiscal 

year to $13.090 million. The Commission was hopeful that Congress would respond to the Administration's request.1 

Personnel and Labor Relations 

Due to the hiring freeze and other FY 1986 budget 

cuts, the agency curtailed its recruitment efforts 

and external training program. Emphasizing inhouse training instead, the Commission briefed 

supervisors on the new Labor/Management agreement and also held an orientation for all staff members on the new standards of conduct rules (see 

section above). Moreover, a pilot program of regular joint staff-management discussions was begun 

in one division to promote communication between 

supervisors and staff. If the program proves successful, it may be used throughout the agency. At 

the end of 1986, the agency planned to resume 

personnel programs that had been cut, allocating 

FY 1987 funds for campus recruitment and additional external training. 

11n March 1987, the Commission reduced the amount of its 

request for FY 1987 supplemental ~unds. After a careful an~ . 

extensive review of its budget requirements, the agency antiCIpated that a supplemental of $83,000 would cover additional 

costs. 
41 

Chapter 5 

Legislative 

Recommendations 

As Congress begins to examine various proposals 

to modify the election law, it may wish to consider 

the Commission's 1987 legislative recommendations. The Federal Election Commission submits 

these suggestions in compliance with 2 U.S.C. Section 438(a)(9), which requires the agency to transmit each year to the President and Congress "any 

recommendations for any legislative or other action 

the Commission considers appropriate .... " The 

product of 11 years of experience, these recommendations cover a broad range of areas, including: draft committees, registration and reporting, 

enforcement, public financing of Presidential elections, contributions and fraudulent misrepresentation. 

Definitions 

Draft Committees 

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

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

Recommendation: Congress should consider the 

following amendments to the Act in order to prevent a proliferation of "draft" committees and to 

reaffirm Congressional intent that draft committees 

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

1. Bring Funds Raised and Spent for Undeclared 

but Clearly Identified Candidates Within the Act's 

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

include in the definition of "contribution" funds 

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

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

include within the definition of "expenditure" funds 

expended by persons on behalf of such a "clearly 

identified individual." 

2. Restrict Corporate and Labor Organization 

Support for Undeclared but Clearly Identified Candidates. Section 441 b(b) should be revised to 

expressly state that corporations, labor organizations and national banks are prohibited from making contributions or expenditures "for the purpose 

of influencing a clearly identified individual to seek 

nomination for election or election ... " to Federal 

office. 

3. Limit Contributions to Draft Committees. The 

law should include explicit language stating that no 

person shall make contributions to any committee 

(including a draft committee) established to 

influence the nomination or election of a clearly 

identified individual for any Federal office which, in 

the aggregate, exceed that person's contribution 

limit, per candidate, per election. 

Explanation: These proposed amendments were 

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

Appeals for the District of Columbia Circuit in FEC 

v. Machinists Non-Partisan Political League and FEC 

v. Citizens for Democratic Alternatives in 1980 and 

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

in FEC v. Florida for Kennedy Committee. The District of Columbia Circuit held that the Act, as 

amended in 1979, regulated only the reporting 

requirements of draft committees. The Commission 

sought review of this decision by the Supreme 

Court, but the Court declined to hear the case. 

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

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

believes that the appeals court rulings create a 

serious imbalance in the election law and the political process because a nonauthorized group 

organized to support someone who has not yet 

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

is subject to the Act's registration and reporting 

requirements and contribution limitations. Therefore, the potential exists for funneling large aggregations of money, both corporate and private, into 

the Federal electoral process through unlimited 

contributions made to nonauthorized draft committees that support a person who has not yet become 

a candidate. These recommendations seek to avert 

that possibility. 
42 

Registration and Reporting 

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. If the Commission received all documents, it would transmit on a daily basis file copies 

to the Secretary of the Senate and the Clerk of the 

House, 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 Cong., 1st Sess., at 122 

(1979)). 

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 
43 

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 approval 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. §§441 a and 441 b. The 

amounts involved are frequently substantial, and 

the creditors are often corporate entities. Concern 

has also been expressed regarding the possibility 

that committees could 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. 

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 $1 00,000 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. 
44 

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 this option 

when they have a high volume of activity. Under 

those circumstances, accounting and reporting are 

easier on a monthly basis because fewer transactions have taken place during that time. Consequently, the committee's reports will be more 

accurate. 

Principal campaign committees can also have a 

large volume of receipts and expenditures. This is 

particularly true with Senatorial campaigns. These 

committees should be able to choose a more frequent filing schedule so that their reporting covers 

less activity and is easier to do. 

Monthly Reports 

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

Recommendation: Congress should consider changing the reporting deadline for monthly filers to some 

earlier date in the month. 

Explanation: Throughout the years, reporters and 

the public have indicated they would like to see 

financial data earlier than 20 days after the close of 

books. In the fast-paced Presidential primary 

period, in particular, by the time the 20-day report 

is filed, it is already out of date. In some cases, 

several primary elections have even passed during 

this interim. An earlier report would give the public 

more timely information without unnecessarily burdening the staff of political committees. 

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, 
45 

.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 this 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), 441a(a)(2) and 

441a(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 

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 Commission'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 multicandiate committee. Some committees 
46 

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. 

Public Disclosure at State Level 

Section: 2 U.S.C. §439 

Recommendation: Congress should consider relieving both political committees and State election 

offices of the burdens inherent in the current 

requirement that political committees file copies of 

their reports with the Secretaries of State. One way 

this could be accomplished is by providing a system whereby the Secretary of State (or equivalent 

State officer) would tie into the Federal Election 

Commission's computerized disclosure data base. 

Explanation: At the present time, 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 the 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 could 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. 

Enforcement 

Modifying "Reason to Believe" Finding 

Section: 2 U.S.C. §437g 

Recommendation: Congress should consider 

modifying the language pertaining to "reason to 

believe," contained in 2 U.S.C. §437g, in order to 

reduce the confusion sometimes experienced by 

respondents, the press and the public. One possible approach would be to change the statutory language from "the Commission finds reason to 

believe a violation of the Act has occurred" to "the 

Commission finds reason to believe a violation of 

the Act may have occurred." Or Congress may 

wish to use some other less invidious language. 

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. 
47 

Seeking Injunctions in Enforcement Cases 

Section: 2 U.S.C. §437g(a)(1) 

Recommendation:1 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 

civil action in a United States district court without 

awaiting expiration of the 15 day period for 

responding to a complaint or the other administrative steps enumerated in the statute. The person 

against whom the Commission 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 clearcut 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. 

!Commissioner Elliott filled 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 three 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 problable 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. 
48 

Public Financing 

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 $10 million (plus COLA2) 

limit for campaign expenditures and ·a $2 million 

(plus COLA) limit for fundraising (20 percent of 

overall limit), each candidate would have $12 million (plus COLA) limit for all campaign expenditures. 

Explanation: Campaigns that have sufficient funds 

to spend up to the overall limit usually allocate 

some of their expenditures to the fundraising 

category. These campaigns come close to spending the maximum permitted under both their overall 

limit and their special fundraising limit. Hence, by 

combining the two limits, Congress would not substantially alter spending amounts or patterns. For 

those campaigns which do not spend up to the 

overall expenditure limit, the separate fundraising 

limit is meaningless. Many smaller campaigns do 

not even bother to use it, except in one or two 

States where the expenditure limit is low, e.g., Iowa 

and New Hampshire. Assuming that the State limitations are eliminated or appropriately adjusted, this 

recommendation would have little impact on the 

election process. 

The advantages of the recommendation, 

however, are substantial. They include a reduction 

in accounting burdens and a simplification in 

reporting requirements for campaigns, and a reduction in the Commission's auditing task. 

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 Commision has now seen three 

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 

St~te, 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 dis­

~ursements in these States would obviously 

mcrease. With an increasing number of primaries 

~ying for a campaign's limited resources, however, 

1t 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 

exe~ption, the volunteer service provisions, the 

unre1mbursed personnel 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. 

2Spending limits are increased by the cost-of-living adjustment (COLA), which the Department of Labor calculates annually. 
49 

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. 

Expenditure Limits 

Certification of Voting Age Population Figures 

and Cost-of-Living Adjustment 

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

voting age population of the United States and of 

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

each Congressional district, also required under 

this provision, is not needed. 

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

adjustment in the cost-of-living index. In both 

instances, the timely receipt of these figures would 

enable the Commission to inform political committees of their spending limits early in the campaign 

cycle. Under present circumstances, where no 

deadline exists, the Commission has sometimes 

been unable to release the spending limit figures 

before June. 

Contributions 

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 

"per-election" 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 "perelection" 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. 
50 

Application of Contribution Limitations 

to Family Members 

Section: 2 U.S.C. §441a 

Recommendation: The Commission recommends 

that Congress examine the application of the contribution limitations to immediate family members. 

Explanation: Under the current posture of the law, a 

family member is limited to contributing $1,000 per 

election to a candidate. This limitation applies to 

spouses and parents, as well as other immediate 

family members. (SeeS. Conf. Rep. No. 93-1237, 

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

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

limitation has caused the Commission substantial 

problems in attempting to implement and enforce 

the contribution limitations.3 · 

Problems have arisen in enforcing the limitations 

where a candidate uses assets belonging to a parent. In some cases, a parent has made a substantial gift to his or her candidate-child while cautioning the candidate that this may well decrease the 

amount which the candidate would otherwise inherit 

upon the death of the parent. 

The Commission recommends that Congress 

consider the difficulties arising from application of 

the contribution limitations to immediate family 

members. 

Foreign Nationals 

Section: 2 U.S.C. §441e 

Recommendation: Congress should examine the 

§441 e prohibition on contributions by foreign 

nationals in connection with United States 

elections-Federal, State and local. In particular, 

Congress should consider three issues: 

1. Whether or not an American subsidiary of a 

foreign corporation should be allowed to make contributions directly (to State and local candidates) or 

to establish a separate segregated fund (SSF); and, 

if it does form an SSF, whether the activities of the 

SSF should be subject to special restrictions; 

2. Whether or not the statutory prohibition on 

contributions by foreign nationals is meant to cover 

volunteer activity by foreign nationals as well; and 

3. Whether or not the Act should continue to prohibit contributions by foreign nationals in connection with State and local elections. 

Explanation: These questions have presented 

problems for the Commission and candidates, particularly since the legislative history is unclear in 

this area. 

Several issues have arisen during the Commission's administration of this provision. First, the 

law, as interpreted by Commission advisory opinions, permits an American subsidiary of a foreign 

registered corporation to influence elections either 

through direct contributions to State and local elections or by forming a separate segregated fund that 

supports Federal candidates. With regard to SSFs 

established by American subsidiaries, Commission 

advisory opinions have stipulated that the foreign 

corporate parent may not be the direct or indirect 

source of contributions; nor may it influence the 

SSF's decisions or exercise any control over the 

SSF. Further, the opinions have reiterated the law's 

requirement that only U.S. citizens (and individuals 

holding green cards) may contribute to the SSF. 

In another advisory opinion, the Commission has 

interpreted the Act to mean that a foreign national 

may not volunteer his services to a campaign. The 

standard under Section 441 e bars contributions by 

a foreign national that are "in connection with" 

(rather than "for the purpose of influencing") a 

Federal election. It is unclear whether this distinction is intended to create a broader prohibition in 

the case of foreign nationals than for other activities under the Act. 

Finally, the Commission has recognized that it is 

difficult to enforce this provision with respect to 

3While the Commission has attempted through regulations 

to present an equitable solution to some of these problems (see 

48 Fed. Reg. 19019 (April 27, 1983) as prescribed by the 

Commission on July 1, 1983), statutory resolution is required in 

this area. 
51 

State and local elections. Since only Federal candidates and committees report to the Commission, it 

is difficult for a Federal agency to monitor campaign financial activity affecting State and local 

elections. 

Acceptance of Cash Contributions 

Section: 2 U.S.C. §441g 

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 $1 00 per 

candidate, per election. It does not address the 

issue of accepting cash contributions. Moreover, 

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

a candidate. 

Explanation: Currently this provision focuses only 

on persons making the cash contributions. 

However, these cases generally come to light when 

a committee has accepted these funds. Yet the 

Commission has no recourse with respect to the 

committee in such cases. This can be a problem, 

particularly where primary matching funds are 

received on the basis of such contributions. 

While the Commission, in its regulations at 11 

CFR 11 0.4(c)(2), has included a provision requiring 

a committee receiving such a cash contribution to 

promptly return the excess over $100, the statute 

does not explicitly make acceptance of these cash 

contributions a violation. The other sections of the 

Act dealing with prohibited contributions (i.e., Sections 441 b on corporate and labor union contributions, 441 c on contributions by government contractors, 441 e on contributions by foreign nationals, 

and 441 f on contributions in the name of another) 

all prohibit both the making and accepting of such 

contributions. 

Secondly, the statutory text seems to suggest 

that the prohibition contained in §441 g applies only 

to those contributions given to candidate committees. This language is at apparent odds with the 

Commission's understanding of the Congressional 

purpose to prohibit any cash contributions which 

exceed $100 in Federal elections. 

Fraudulent Misrepresentation 

Fundraislng Projects Operated by 

Unauthorized Committees 

Section: 2 U.S.C. §432(e)(4) 

Recommendation:4 Congress may wish to consider 

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 

"Commissioner Elliott filed the following dissent: I support the policy 

underlying this legislative recommendation and recognize the serious· 

ness 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. 
52 

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. §441 d) 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 contributions which are not forwarded to or used by or 

on behalf of the candidate or party. 

Explanation: The Commission has received a number of complaints charging 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. 

Honoraria 

Technical Amendments 

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

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 Sectio~ 441 i, should 

be modified to contain the definition itself. 

Explanation: Congress eliminated the $25,000 

annual limit on the amount of honoraria that could 

be accepted, but it did not take out these two sections, which only apply to the $25,000 limit. This 

clarification would eliminate confusion for officeholders and thereby help the Commission in its 

administration of the Act. 

Commission Information Services 

Budget Reimbursement Fund 

Section: 2 U.S.C. §438 

Recommendation: 

1. 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 
53 

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. 

2. The Commission recommends that costs be 

recovered for FEC Clearinghouse seminars, workshops, research materials and other services, and 

that reimbursements be used to cover some of the 

costs of these activities, including costs of development, production, overhead and other related 

expenses. 

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 1984, in 

return for services and materials it offered the public, the FEC collected and transferred $86,984 in 

miscellaneous receipts to the Treasury. In FY 1985, 

the amount was $92,018 and during the first three 

months of FY 1986, $24,232 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 is also the possibility that the Commission 

could recover costs of FEC Clearinghouse workshops and seminars, research materials, and 

reports that are now sold by the Government Printing Office and the National Technical Information 

Service. Approximately $15,000 was collected in FY 

1981 by GPO and NTIS on account of sales of 

Clearinghouse documents. 

There should be no restriction on the use of 

reimbursed funds in a particular year to avoid the 

possibility of having funds lapse. 
55 

Appendix 1 

Biographies of 

Commissioners and 

Officers 

Commissioners 

Joan D. Aikens, Chairman 

April 30, 19891 

Mrs. Aikens was one of the original members of the 

Federal Election Commission appointed in 1975. 

Following the Buckley v. Valeo decision of the 

Supreme Court and the subsequent reconstitution 

of the FEC, President Ford reappointed her to a 

five-year term. In 1981, Mrs. Aikens continued to 

serve until President Reagan named her to complete an unexpired term due to a resignation. In 

1983, President Reagan again reappointed Mrs. 

Aikens, this time for a six-year term. She served as 

Chairman between May 1978 and May 1979 and 

during 1986. 

Prior to her appointment to the Commission, Mrs. 

Aikens was an executive for a Pennsylvania public 

relations firm. From 1972 to 1974, she was president of the Pennsylvania Council of Republican 

Women and served on the board of the National 

Federal 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, Collegeville, Pennsylvania, where she 

received her B.A. and an honorary Doctor of Laws 

degree. 

John Warren McGarry, Vice Chairman 

April 30, 1989 

Mr. McGarry, a native of Massachusetts, graduated 

cum laude from Holy Cross College in 1952 and 

attended graduate school at Boston University. In 

1956, he obtained a J.D. degree from the Georgetown University Law Center. Mr. McGarry was 

assistant attorney general of Massachusetts, serving as both trial counsel and appellate advocate, 

from 1959 to 1962. Following his tenure in office, 

he combined private law practice with service as 

chief counsel for the Special Committee to lnvestigate Campaign Expenditures of the U.S. House of 

Representatives. This committee was created by 

special resolution every election year through 1972 

in order to oversee House elections. From 1973 

until President Carter appointed him to the Commission in October 1978, Mr. McGarry served as 

special counsel on elections to the Committee on 

House Administration of the U.S. Congress. He was 

reappointed as Commissioner for a six-year term in 

1983. Mr. McGarry served as Chairman of the 

Commission in 1981 and 1985. 

Lee Ann Elliott 

April 30, 1987 

Before her appointment to the Commission in 

December 1981, Mrs. Elliott served as vice president of the Washington firm Bishop, Bryant & 

Associates, Inc. From 1970 to 1979, she was 

associate executive director of the American Medical Political Action Committee, having served as 

assistant director from 1961 to 1970. Mrs. Elliottt 

was on the board of directors of the American 

Association of Political Consultants and 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 Chamber of Commerce of the United States. In 1979, she received 

the Award for Excellence in Serving Corporate Public Affairs from the National Association of Manufacturers. Mrs. Elliott, a native of St. Louis, Missouri, 

holds a B.A. from the University of Illinois. She also 

completed the Medical Association Management 

Executives Program at Northwestern University and 

is a Certified Association Executive. Mrs. Elliott 

served as Commission Chairman during 1984. 

Thomas E. Harris 

April 30, 1985 

Before serving on the Commission, Mr. Harris was 

associate general counsel to the AFL-CIO in 

Washington from 1955 to 1975. He had held the 

same position with the CIO from 1948 until it 

merged with the AFL in 1955. Before that, he was 

an attorney in private practice and with various 

1Term expiration date. government agencies. A native of Little Rock, 
56 

Arkansas, Mr. Harris is a 1935 graduate of Columbia University Law School. After graduation, he 

clerked one year for Supreme Court Justice Harlan 

F. Stone. 

Mr. Harris was originally appointed to the Commission for a four-year term and, when the agency 

was reconstituted in 1976, he received a three-year 

appointment. 111 1979, President Carter reappointed 

Mr. Harris for a six-year term. He was Commission 

Chairman from May 1977 to May 1978. Although 

his term expired in April 1985, he continued to 

serve as Commissioner until October 1986, when 

he was succeeded by Commissioner Thomas. 

Thomas J. Josefiak 

April 30, 1991 

Until his appointment as Commissioner in August 

1985, Mr. Josefiak served with 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 special counsel for Federal election law to the Committee on House Administration 

and, before that, served as legislative assistant to 

Congressman Silvio 0. Conte. A native of Massachusetts, Commissioner Josefiak holds a B.A. 

degree from Fairfield University, Connecticut, and a 

J.D. degree from Georgetown University Law 

Center. He was elected 1987 Vice Chairman. 

Danny L. McDonald 

April 30, 1987 

Mr. McDonald, as general administrator of the 

Oklahoma Corporation Commission, was responsible for the management of 1 0 regulatory divisions 

from 1979 until his appointment to the Commission 

in December 1981. He was secretary of the Tulsa 

County Election Board from 1974 to 1979 and 

served as chief clerk of the board in 1973. He also 

served as a member of the Advisory Panel to the 

FEC's National Clearinghouse on Election Administration. Mr. McDonald, a native of Sand Springs, 

Oklahoma, holds a B.A. from Oklahoma State 

University and attended the John F. Kennedy 

School of Government at Harvard University. He 

served as Commission Chairman during 1983. 

Scott E. Thomas 

April 30, 1991 

Mr. Thomas, who began serving as Commissioner 

in October 1986, had been executive assistant to 

Commissioner Harris and succeeded him as Commissioner. Commissioner Thomas had also served 

the agency as Assistant General Counsel for 

Enforcement after joining the FEC as a legal intern 

in 1975. A native of Wyoming, Commissioner 

Thomas holds a B.A. degree from Stanford University and 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. He 

was elected 1987 Chairman. 

Ex Officio Commissioners2 

Jo-Anne L. Coe 

Ms. Coe was elected Secretary of the Senate on 

January 3, 1985. Prior to her election, she was 

Senator Robert Dole's administrative director and 

also served intermittently as administrative director 

of the Senate Finance Committee during Senator 

Dole's chairmanship. In 1980, she was deputy campaign manager for the Dole for President committee and later served as an assistant to Elizabeth 

Hanford Dole, then director of public liaison for the 

Reagan for President Committee. From 1976 to 

1977, she was administrative assistant to the 

general counsel of the Commodity Futures Trading 

Commission. A graduate of William and Mary College in Virginia, Ms. Coe previously worked for 

Senator Dole from 1967 to 1975. 

Scott E. Morgan, attorney, continued to serve at 

the Commission as Special Deputy to the Secretary 

of the Senate. 

20uring January and February 1987, Walter J. Stewart 

became the new Secretary of the Senate and Donnald K. Anderson became the new Clerk of the House of Representatives. 
57 

Benjamin J. Guthrie 

Mr. Guthrie became Clerk of the House of 

Representatives in January 1983, after having 

served as Sergeant at Arms of the House from 

1980 to 1982 and as printing clerk and director of 

the House Legislative Processes Office from 1957 

to 1980. He joined the House staff after 11 years 

with the U.S. Government Printing Office. A World 

War II veteran, Mr. Guthrie was with the U.S. Signal Corps from 1942 to 1946, after graduating from 

the Maryland State Teachers College in Salisbury. 

Douglas Patton, attorney, continued to serve at 

the Commission as Special Deputy to the Clerk of 

the House. 

Statutory Officers 

John C. Surina, Staff Director 

Before joining the Commission in July 1983, Mr. 

Surina was assistant managing director of the Interstate Commerce Commission (ICC), where he was 

detailed to the "Reform 88" program at the Office 

of Management and Budget. In that role, he worked 

on projects to reform administrative management 

within the Federal government. From 1973 to 1980, 

Mr. Surina served the ICC in other capacities. 

Between 1972 and 1973 he was an expertconsultant to the Office of Control and Operations, 

EOP-Cost of Living Council-Pay Board. He was 

previously on the technical staff of the Computer 

Sciences Corporation. Mr. Surina joined the U.S. 

Army in 1966, completing his service in 1970 as 

executive officer of the Special Security Office. In 

that position, he supported senior U.S. delegates to 

NATO's civil headquarters in Brussels, Belgium. 

A native of Alexandria, Virginia, Mr. Surina holds 

a B.S. in Foreign Service from Georgetown University. He also attended East Carolina University in 

Greenville, North Carolina, and American University 

in Washington, D.C. 

Charles N. Steele, General Counsel3 

Mr. Steele became General Counsel in December 

1979, after serving as Acting General Counsel during November of that year and as Associate 

General Counsel for Enforcement and Litigation 

between April 1977 and October 1979. He received 

a B.A. from Harvard College in 1960 and an LL.B. 

from Harvard Law School in 1965. Before joining 

the Commission in 1976, Mr. Steele was a staff 

attorney with the appellate court branch of the 

National Labor Relations Board. 

3Mr. Steele resigned from the Commission effective March 

1987. On March 10, 1987, Lawrence M. Noble, Deputy General 

Counsel, was named Acting General Counsel. At the time of 

publication, the agency had not yet appointed a new General 

Counsel. 
59 

Appendix 2 

Chronology of 

Events, 1986 

January 

1-Chairman Joan D. Aikens and Vice 

Chairman John Warren McGarry begin 

one-year terms as Commission officers. 

9-ln FEC v. Californians for Democratic 

Representation, U.S. district court rules 

that defendant, in conducting a slate mail 

program, violated the law's registration 

and reporting provisions. 

20-Commission releases statistics on number of PACs. 

29-Commission holds public hearing on 

Common Cause's rulemaking petition 

concerning "soft money." See also April 

17. 

30-Commission announces cutbacks in computerized campaign finance data and 

reductions to other programs due to FY 

1986 budget cuts. 

31-Commission releases 1980-85 summary 

statistics on 1986 campaigns of Senate 

incumbents. 

-1985 year-end report due. 

February 

1-Commission publishes new brochure, 

Committee Treasurers. 

10-ln FEC v. American International Demographic Services, Inc., U.S. district court 

rules that defendant illegally used FEC 

campaign finance information for commercial purposes. 

18-Commission completes move to new 

location (begun on November 23, 1985). 

20-Commission testifies on FY 1987 budget 

request before subcommittee of House 

Administration Committee. 

26-Commission cosponsors election law 

conference in East Lansing, Michigan. 

March 

11-Commission transmits 1986 legislative 

recommendations to the President and 

Congress. 

19-Commission testifies on FY 1987 budget 

request before subcommittee of House 

Appropriations Committee. 

24-Commission cosponsors election law 

conference in Columbus, Ohio. 

April 

1-FEC Clearinghouse publishes Campaign 

Finance Law 86 and Designing Effective 

Voter Information Programs. 

9-Commission testifies on FY 1987 budget 

request before subcommittee of Senate 

Appropriations Committee. 

15-First quarter report due. 

17-Commission votes to deny Common 

Cause's petition for rulemaking on "soft 

money" and, on April 29, publishes reasons for decision in Federal Register 

notice. 

23-Commission testifies on FY 1987 budget 

request before Senate Rules Committee. 

28-Commission releases audit report on 

1984 Republican Presidential nominating 

convention committee.1 

May 

?-Commission cosponsors election law 

conference in Roseville, Minnesota. 

12-Commission releases statistics on 1986 

House and Senate campaigns covering 

January 1985 through March 1986. 

1During 1985, the Commission released audit reports on the 

following 1984 Presidential nominating committees: Dallas 

Republican host committee (6/20/85); Democratic convention 

committee (9/5/85); and San Francisco Democratic host committee (9/5/85). 
60 

15-ln FEC v. National Congressional Club 

and Jefferson Marketing, Inc., U.S. district court finds that defendants, by operating as one entity, violated the law's 

reporting provisions. 

16-ln FEC v. National Conservative Political 

Action Committee, U.S. district court 

rules that defendant's expenditures were 

not "independent" and therefore constituted excess contributions to a Federal 

candidate. 

29-30-Commission holds conference for candidates at FEC headquarters in Washington, D.C. 

June 

1-Commission publishes Annual Report 

1985. 

4-Commission releases statistics on 1984 

Presidential primary campaigns based on 

final Report on Financial Activity. 

6-Commission holds conference for candidates at FEC headquarters in Washington, D.C. 

10-New York holds special general election 

in 6th Congressional District. 

16-ln FEC v. Re-Elect Hollenbeck to Congress, U.S. district court finds that committee did not knowingly violate the law 

by accepting excessive contribution from 

a State party committee. 

20-Commission holds conference for corporations and labor organizations at George 

Mason University in Fairfax, Virginia. 

25-ln Common Cause v. FEC (1), district 

court orders agency to provide statement 

of reasons explaining decision to dismiss 

complaint (see also October 23). 

26-Commission releases audit report on 

1984 Presidential primary campaign of 

Gary Hart.2 See also July 10 and 

October 28. 

July 

1 0-Commission releases audit report on 

1984 Presidential primary campaign of 

President Ronald Reagan. 

11-ln Orloski v. FEC, U.S. court of appeals 

affirms district court decision that FEC's 

dismissal of complaint was not contrary 

to law. 

14-Commission releases statistics on number of PACs. 

15-Second quarter report due. 

25-ln FEC v. Dramesi for Congress Committee, U.S. district court rules that committee violated the law by knowingly accepting excessive contribution from a State 

party committee. 

30-Commission publishes Federal Register 

notice of proposed rulemaking on regulations governing affiliation and earmarked 

contributions. See also September 17. 

August 

5-Commission publishes Federal Register 

notice of proposed rulemaking on regulations governing bank loans and Presidential public funding. See also December 3. 

10-Commission releases party committee 

statistics covering January 1985 through 

June 1986. 

17-Commission releases statistics on 1986 

House and Senate campaigns covering 

January 1985 through June 1986. 

2The Commission released audit reports on the following 

matching fund recipients during 1984 and 1985: Reubin Askew 

(8/2/84); Ernest Hollings (9/10/84); George McGovern (2/11185); 

Sonia Johnson (6/25/85); Jesse Jackson (7/19/85); John Glenn 

(8/19/85); Alan Cranston (8/22/85); and Lyndon LaRouche 

( 1 0/29/85). 
61 

September 

1-FEC Clearinghouse publishes Computerizing Election Administration, Volume 

II: A General Model. 

?-Commission releases PAC statistics 

covering January 1985 through June 

1986. 

17-Commission holds public hearing on proposed rules governing affiliation and earmarked contributions. 

20-Hawaii holds special general election in 

1st Congressional District. 

22-23-FEC Clearinghouse Advisory Panel and 

Advisory Committee on Voting System 

Standards meet in Washington, D.C. 

29-Commission publishes Federal Register 

notice on final rules governing employee 

standards of conduct (effective October 

29, 1986). 

October 

1-Commission publishes new brochure, Filing a Complaint. 

3-U.S. Senate confirms President Reagan's 

nomination of Thomas J. Josefiak and 

Scott E. Thomas as Commissioners. 

-In Democratic Congressional Campaign 

Committee v. FEC, U.S. district court 

finds that agency's dismissal of complaint was contrary to law. 

15-Third quarter report due. 

23-Commission decides to issue statements 

of reason whenever a majority of Commissioners vote against the General 

Counsel's recommendation in a complaint. 

-Pre-general election report due. 

28-Commission releases audit report on 

1984 Presidential primary campaign of 

Walter Mondale. 

29-Commission's new rules on employee 

standards of conduct become effective. 

-Commission releases statistics on 

national party committees covering January 1985 through mid-October 1986. 

31-Commission releases statistics on 1986 

House and Senate campaigns covering 

January 1985 through mid-October 1986. 

November 

4-Eiection day. 

-North Carolina holds special general 

elections to fill Senate seat and 1Oth 

Congressional District seat. 

20:-Commission approves final rules on contribution limits and decides to transmit 

them to Congress in January 1987. 

December 

3-Commission holds public hearing on proposed public funding regulations. 

4-Post-general election report due. 

15-U.S. Supreme Court, in FEC v. Massachusetts Citizens for Life, Inc., rules that 

law's prohibition on corporate independent expenditures is unconstitutional as 

applied to narrowly defined type of nonprofit corporation. 

16-Commission elects Scott E. Thomas and 

Thomas J. Josefiak as 1987 Chairman 

and Vice Chairman, respectively. 

-Commission approves revisions to Guideline for Presentation in Good Order, a 

publication for Presidential primary campaigns receiving matching funds. 

30-ln Common Cause v. FEC (//), U.S. district court rules on agency's dismissal of 

a complaint. 
The Commissioners 

Joan D. Aikens, Chairman1 

John Warren McGarry, Vice Chairman2 

Lee Ann Elliott, Commissioner 

Thomas E. Harris, Commissioner3 

Thomas J. Joseflak, Commissioner 

Danny L. McDonald, Commissioner 

Scott E. Thomas, Commissioner 

Jo-Anne L. Coe, Ex Officio/Senate4 

Benjamin J. Guthrie, Ex Officio/House4 

I 

General Counsel Staff Director 

I 

Deputy Staff 

Director for 

Management 

Advisory 

Opinions ~ Administration IEnforcement 1- Data Systems 

Development ~ 

Litigation 1- Planning and 

Management IRegulations ~ 

- Commission ~ Audit Secretary 

Congressional 

I- 1-- and lntergovernmental Affairs 

Clearinghouse 

Information 

Public Disclosure 

Reports 

Analysis 

Personnel and 

~ Labor/Management Relations 

~ 1.... Press Office 

1.... 

63 

Appendix 3 

FEC Organization· Chart 

,Commissioner Thomas was elected 1987 Chairman. 

2Commissioner Josefiak was elected 1987 Vice Chairman. 

3Aithough his term expired in April 1985, Commissioner Harris continued to serve until succeeded by Commissioner Thomas in 

October 1986. 

40uring January and February 1987, Walter J. Stewart became the new Secretary of the Senate and Donnald K. Anderson became 

the new Clerk of the House of Representatives. 
65 

Appendix 4 

FEC Offices 

This appendix briefly describes the offices that 

make up the Commission. They are listed in alphabetical order. Local telephone numbers are given 

for offices that have extensive contact with the public. Commission offices can also be reached on the 

toll-free number, 800/424-9530. 

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 word processing, 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 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. The division conducts the statutorily 

mandated audits of all publicly funded candidates 

and committees. 

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. Finally, the division conducts internal 

audits of Commission activities. 

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 Federal election administration. (For a list of Clearinghouse studies, see 

Appendix 9.) Additionally, the Clearinghouse 

answers questions from the public on the electoral 

process. Local phone: 376-5670. 

Commission Secretary 

The Secretary to the Commission handles all 

administrative matters relating to Commission meetings, including agendas, 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 overseeing administration of 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 informing the agency 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 (DSDD) enters 

into the computer data base information from all 

reports filed by political committees and other entities. DSDD is also responsible for the computer 

programs that sort and organize campaign finance 
66 

data into indexes (described in Appendix 8). The 

indexes permit a detailed analysis of campaign 

finance activity and, additionally, provide a tool for 

monitoring contribution limitations. DSDD publishes 

the Reports on Financial Activity series of periodic 

studies on campaign finance and generates statistics for other publications. 

The division also provides computer support for 

the agency's administrative functions. These 

include management information and document 

tracking systems, along with personnel and payroll 

support. 

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 which have come 

before the Supreme Court. The office also drafts, 

for Commission consideration, regulations and advisory opinions, as well as other legal memoranda 

interpreting the Federal Election Campaign Act. 

Information Services 

In an effort to promote voluntary compliance with 

the law, the Information Division provides technical 

assistance to candidates and committees and 

others involved in elections. Staff research and 

answer questions on the Federal Election Campaign Act and FEC regulations, procedures and 

advisory opinions; direct workshops on the law; and 

publish a wide range of materials. Located on the 

second floor, the division is open to the public. 

Local phone: 376-3120. 

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. 

Library staff prepare an Index to Advisory Opinions 

and a Campaign Finance and Federal Election Law 

Bibliography, both available for purchase from 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. 

Public Records 

Staff from the Public Records Office answer questions and 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 

locate documents. The FEC encourages the public 

to review the many documents available, including 

committee reports, computer indexes (see Appendix 

8), closed compliance cases and advisory opinions. 

Local phone: 376-3140. 
67 

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, 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 number: 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. 
69 

Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Flies 

Total 

Fliers 

Existing 

In 1986 

Fliers 

Terminated 

as of 

12/31/86 

Continuing 

Fliers as of 

12/31/86 

Number 

of 

Reports 

and 

Statementsln 

1986 

Gross 

Receipts In 

1986 

Gross 

Expenditures 

In 1986 

Presidential 328 

Candidates 

Committees 

171 

157 

14 

2 

12 

314 

169 

145 

771 $2,366,751 $2,834,739 

Senate 

Candidates 

Committees 

926 

454 

472 

139 

92 

47 

787 

362 

425 

4,232 $178,456,620 $200,118,182 

House 

Candidates 

Committees 

4,393 

2,219 

2,174 

867 

602 

265 

3,526 

1,617 

1,909 

21,162 $205,348,851 $209,878,458 

Party 1 490 43 447 3,936 $297,976,679 $284,216,764 

Delegates 11 7 NA 20 0 $62 

Nonparty 

Labor committees 

Corporate committees 

Membership, trade and other committees 

4,591 

419 

1,901 

2,271 

434 

35 

157 

242 

4,157

384 

1,744 

2,029 

42,039 $206,960,774 $234,841,024 

Communication cost fliers 15 NA NA 256 NA $1,985,518 

Independent expenditures by persons other 

than political committees 7 NA NA 10 NA $622,972 

1Party financial figures are inflated by about 40 percent due to double reporting by some national level party committees. 
70 

Divisional Statistics for Calendar Year 1986 

Total 

Reports Analysis Division 

Documents processed 55,207 

Reports reviewed 34,055 

Telephone assistance and meetings 5,382 

Requests for additional information (RFAis) 6,221 

Second RFAis 

Names of candidate committees published 

1,974 

for failure to file reports 

Compliance matters referred to the Office 

50 

of General Counsel or Audit Division 113 

Data Systems Development Division 

Documents receiving Pass I coding 1 52,403 

Documents receiving Pass Ill coding 1 30,038 

Documents receiving Pass I entry 49,061 

Documents receiving Pass Ill entry 28,036 

Transactions receiving Pass Ill entry 127,888 

Public Records Office 

Campaign finance material processed 

(total pages) 1,419,681 

Requests for campaign finance reports 5,691 

Visitors 9,884 

Total people served 15,575 

Information phone calls 14,995 

Computer printouts provided 50,512 

Total income (transmitted to U.S. Treasury) 

Cumulative total pages of documents 

$82,130 

available for review 6,888,152 

Contacts with State election offices 

Notices of failure to file with State 

3,446 

election offices 724 

Information Services Division 

Telephone inquiries 63,973 

Information letters 89 

Distribution of FEC materials 

Prior notices (sent to inform filers 

10,572 

of reporting deadlines) 31,603 

Other mailings 1,439 

Visitors 

Public appearances by Commissioners and 

105 

staff 70 

State workshops 3 

Local workshops 3 

Publications 29 

Total 

Press Office 

Press releases 156 

Telephone inquiries from press 11,295 

Visitors to press office 1,654 

Freedom of Information Act (FOIA) requests 

Fees for materials requested under the FOIA 

139 

(transmitted to U.S. Treasury) $12,803 

Clearinghouse on Election Administration 

Telephone inquiries 2,197 

Information letters 227 

Visitors 135 

State workshops 10 

Publications 5 

Project conferences 6 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1986 6 

Requests received 45 

Issued, closed or withdrawn 2 47 

Pending at end of year 

Compliance cases (MURs) 

4 

Cases pending at beginning of 1986 137 

Cases opened 191 

Cases closed 185 

Cases pending at end of year 

Litigation 

143 

Cases pending at beginning of 1986 51 

Cases opened 32 

Cases closed 29 

Cases pending at end of year 54 

Cases won 22 

Cases lost 4 

Cases voluntarily dismissed 2 

Cases dismissed as moot 

Law Library 

1 

Telephone inquiries 1,934 

Visitors served 786 

1Computer 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. 

2Forty-two opinions were issued; five opinion requests were 

withdrawn or closed without issuance of an opinion. 
71 

Audits Completed by Audit Division 

1975-1986 

Total 

Presidential 55 

Presidential joint fundraising 1 6 

Senate 12 

House 112 

Party (national) 42 

Party (other) 101 

Nonparty (PACs) 64 

Total 392 

1Presidential joint fundraising committees are those established by two or more political committees, including at least 

one Presidential committee, for the purpose of raising funds 

jointly. 
73 

Appendix 6 

The FEC's Budget 

The Commission received $13.016 million in fiscal 

year 1985 funds, consisting of an appropriation of 

$12.9 million plus $116,000 in supplemental funds 

to cover part of the 1985 pay raise. The Commission returned to the Treasury $340,000, a portion of 

funds specially earmarked for one-time costs 

associated with the agency's relocation. The 

returned funds, slated to cover increased rent at 

the new facility, were not needed during FY 1985 

since the agency moved the following fiscal year. 

In FY 1986, however, funding was reduced: the 

Commission received $11.898 million for the fiscal 

year. Although the Administration had recommended a funding level of $12.756 million, Congress cut this amount by $858,000: a $323,000 

reduction represented a 5 percent pay cut, which, 

in fact, never materialized; a second reduction of 

$535,000 was the result of the Deficit Reduction 

Act of 1985. 

The table below compares functional allocations 

of budget resources for fiscal years 1985 and 1986. 

The two graphs that follow compare allocations of 

budget and staff by division for the fiscal years. 

FEC Budget 

Functional Allocation 

FY 1985 FY 1986 

Personnel compensation, 

including benefits $8,357,724 $8,326,544 

Travel 153,961 83,604 

Transportation/motor pool 6,324 12,062 

Commercial space 14,085 16,558 

Equipment rental 201,505 226,774 

Printing 272,300 267,055 

Contracts 1,031,919 822,482 

Administrative expenses 173,589 98,547 

Supplies 145,824 157,885 

Library materials 80,161 78,609 

Telephone, telegraph 374,482 315,110 

Postage 103,057 99,998 

Space rental 582,646 1,269,500 

Equipment purchases 809,030 41,881 

Training 28,568 12,911 

GSA, services, other 340,352 45,221 

Total $12,675,527 1 $11,874,7411 

1Totals do not include unexpended funds, which were 

returned to the U.S. Treasury. 
c::::J FY 1985 

-FY 1986 

Commissioners 

Staff Director2 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

lnformation2 

Public Disclosure 

Reports Analysis 

1The Press Office, formerly part of the Information Services Division, was transferred to the 

Staff Director's Office during the second half of FY 1985 (in April 1985). 

2Administration budget includes rent, supplies, services, etc. for the entire Commission. 

3This category represents the one-time costs of the agency's relocation. 

Divisional Allocation of Stafft 

5 10 15 20 25 

Percent of Staff 

0 30 

74 

Commissioners 

Staff Director1 

Office of General Counsel 

Administration2 

Audit 

Clearinghouse 

Data Systems Development 

lnformation1 

Public Disclosure 

Reports Analysis 

Relocation3 

Divisional Allocation of Budget 

0 5 10 15 30 

Percent of Budget 

20 25 

1The Commission averaged 241.8 full-time equivalent positions (FTE) in FY 1985 and 229.4 

in FY 1986. 

2The Press Office, formerly part of the Information Services Division, was transferred to 

the Staff Director's Office during the second half of FY 1985 (in April 1985). 
75 

Appendix 7 

Revised Regulations on 

Contribution Limits 

This appendix summarizes major provisions of 

amended FEC regulations on contribution limits, 

which were approved in 1986 and sent to Congress 

in January 1987. The final rules, along with their 

explanation and justification, were published in the 

January 9, 1987 Federal Register (52 Fed. Reg. 

760) and became effective on April 8, 1987. 

Contributions by Persons Other Than 

Multicandidate Committees: 11 CFR 110.1 

The revised rules clarify that the contribution limits 

described in this provision apply only to individuals, 

partnerships, unincorporated associations and politi· 

cal committees other than multicandidate committees. 

Designation of Contributions 

to Candidates: 11 CFR 110.1(b)(2) 

The election law establishes limits for contributions 

to candidate committees on a per election basis. 

Under the new regulations, a contribution applies 

toward the limit for the candidate's next election 

unless the contributor designates a specific election 

in writing. 

Designated Contributions. The new rules make clear 

that only the contributor (not the recipient) may 

designate a contribution for a specific election by 

writing the designation on the check or by providing 

a separate statement. Although contributors are not 

required to designate their contributions, the 

revised rules encourage them to do so. If a candidate committee solicits contributions for a particular 

election, the contributor's signature on a form 

returned with the contribution qualifies as a designation. 

Undesignated Contributions. The new rules state 

that an undesignated contribution counts against 

the limit for the candidate's next election, even if 

the next election is in a different election cycle. 

Redeslgnation/Reattribution of 

Contributions: 11 CFR 110.1 (b)(5) and (k)(3) 

Two principal changes in the rules specify when 

and how a contributor may redesignate a contribution for a different election or reattribute a joint contribution .1 

When to Redesignate and Reattribute Contributions. 

Candidate committees may seek a redesignation, a 

reattribution or a combination of both in a single 

written request to a contributor. The new rules provide that, under the following circumstances, a contributor may: 

1. Redesignate and/or reattribute a contribution if 

the contribution, either by itself or when added to 

the donor's other contributions, exceeds the limit 

for a particular election. 

2. Redesignate and/or reattribute a contribution 

which cannot be accepted because it was made 

after the election for which it was designated and 

there are no net debts outstanding for that election 

(see below); or 

3. Redesignate an undesignated contribution 

because the candidate wishes to count it toward a 

previous election with outstanding debts. (An 

undesignated contribution would normally count 

toward the donor's limit for the next election.) 

The new rules do not, however, permit the 

redesignation or reattribution of prohibited contributions (e.g., contributions from corporations and 

labor organizations). 

Finally, the amended rules make clear that a 

candidate committee does not have to obtain a 

written redesignation or reattribution when the committee accepts a legal contribution for one election 

but uses it in another. 

1The redesignation rules apply only to contributions to candidate committees because their limits on contributions apply on 

a per-election basis. (Noncandidate committees are subject to 

calendar year limits on contributions received.) However, the 

new reattribution rules for joint contributions apply to contributions to any type of committee. 
76 

Procedures for Making Redesignations and Reattributions. Like the previous rules, the amended regulations require a committee to deposit or return an 

illegal-appearing contribution within 10 days. Under 

the previous rules, a deposited contribution had to 

be refunded "within a reasonable period of time" if 

the committee could not determine its legality.2 The 

new rules, however, give a committee 60 days from 

its receipt of a contribution to obtain a redesignation or reattribution of the contribution. During this 

60-day period, the committee must: 

1. Determine whether the contribution is excessive or violates the net debt rule (see below); 

2. Request a redesignation and/or reattribution of 

the contribution in writing; and 

3. Receive the written redesignation and/or reattribution statement from the contributor(s). (In the 

case of joint contributions, each contributor's signature must be included on the written statement.) 

If a written redesignation or reattribution is not 

received within 60 days, the committee must refund 

the contribution (or excessive portion thereof). The 

new rules place two further restrictions on redesignations and reattributions: 

1. A contribution may be redesignated for a 

different election and a joint contribution may be 

reattributed only if this does not cause a contributor 

to exceed the limit for that election. 

2. A contribution may be redesignated for a 

previous election only to the extent that net debts 

outstanding remain for that election. 

Finally, the new rules provide guidelines for 

reporting redesignated and reattributed contributions and maintaining adequate records on them. 

See "Supporting Evidence" and "Conforming 

Amendments," below. 

Net Debts Outstanding: 

11 CFR 110.1(b)(3) 

The amended rules maintain the longstanding rule 

that a contribution designated for a particular election, but made after the election, may be accepted 

by a candidate committee only to the extent that 

the committee has net debts outstanding for the 

election. The new rules define "net debts outstanding" to consist of the candidate committee's total 

unpaid debts and obligations incurred with respect 

to a particular election minus cash on hand and 

receivables available to pay those expenses. The 

committee calculates its net debts outstanding as 

of the date of the election and readjusts this initial 

calculation as it receives additional funds for the 

election or pays its debts. 

The revised rules contain new provisions to 

explain how a candidate committee should handle 

a contribution designated for, but made after, an 

election for which the committee had no outstanding debts. Within 10 days of receiving the contribution, the treasurer must either deposit or return the 

contribution. If the contribution is deposited, the 

treasurer has 60 days from the receipt of the contribution either to refund it or to obtain a redesignation or reattribution (see procedures above). If a 

committee receives several contributions on the 

same date which, together, exceed the amount 

needed to retire the net debts outstanding, the 

committee may accept a proportionate amount of 

each contribution. Alternatively, the committee may 

accept some contributions in full and return, refund 

or seek redesignations for the others. 

Date a Contribution Is Made: 

11 CFR 110.1(b)(6) 

The amended rules specify that the "date a contribution is made" is the date the contributor relinquishes control over the contribution, i.e., the date 

the contribution is delivered to the committee or, if 

the contribution is mailed, the date of the postmark. 

A committee wishing to rely on a postmark for evidence of when a contribution is made must retain 

the envelope or a copy of it. An in-kind contribution 

is considered "made" on the date that the contrib2Under the new rules, a contribution is "returned" when the 

written instrument (e.g., the check) is sent back to the contributor instead of being deposited. A contribution is "refunded" 

when the committee deposits the contribution and later sends 

the contributor a check drawn on the committee's account. 
77 

utor provides the goods or services to the recipient 

committee. 

Contributions to Political 

Party Committees: 11 CFR 110.1(c) 

The new rules clarify that if a national party committee acts as the authorized committee of a 

Presidential nominee in the general election, the 

committee must keep separate accounts for its own 

financial activity and that of the Presidential candidate. Separate contribution limits apply to each 

account. 

Contributions by Partnerships: 

11 CFR 110.1(e) 

The partnership rules preserve the requirement for 

dual attribution of a partnership contribution to both 

the contributing partners and the partnership itself. 

The new rules make clear, however, that: 1) an 

incorporated partnership may not make contributions to Federal candidates; and 2) a corporate 

partner's portion of the partnership profits and 

losses must not be affected by the partnership's 

contributions. Moreover, under 11 CFR 110.1 (k), 

the revised rules exempt partnership contributions 

from the requirement that each contributing partner 

sign the written instrument or accompanying statement. (See "Joint Contributions," below.) 

Aggregation of Contributions: 

11 CFR 110.1(h) 

The new rules continue the Commission's longstanding rule on aggregation-namely, that certain 

kinds of political committees supporting the same 

candidate share a single contribution limit. For 

example, contributions to the candidate's principal 

campaign committee and to an unauthorized single 

candidate committee established on the candidate's 

behalf are subject to a single limit. 

. Contributions by Spouses: 

11 CFR 110.1(i) 

The amended rules make clear that the contribution 

limits apply separately to each spouse, even if only 

one spouse has an income. (See also "Joint Contributions," below.) 

Application of Limits to 

Particular Elections: 11 CFR 110.10) 

General Election Limits. When a general election is 

not held because the candidate is unopposed or 

the candidate received a majority of votes in the 

primary, the revised rules state that a separate contribution limit nevertheless applies to the general 

election. 

Primary Election Limits. When a primary election is 

not held because the candidate was nominated 

through a convention or caucus, the new rules provide that a separate contribution limit does not 

apply to the primary. Thus, a candidate committee 

must refund or seek redesignation of primary contributions which, when added to contributions made 

for the convention or caucus, cause the contributor 

to exceed the donor's $1,000 per election limit. 

Joint Contributions: 11 CFR 110.1 (k) 

Incorporating the former language of 11 CFR 

104.8(d), this new section requires that joint contributions include the signature of each contributor on 

the check or on an accompanying statement 

(although the new rules exempt partnership contributions from 'this requirement). Additionally, the 

new rules provide that, if the amount attributable to 

each contributor is not indicated on the contribution, the recipient committee must attribute the contribution equally among the contributors. 

Supporting Evidence: 11 CFR 110.1(I) 

The new rules require committees to retain, for 

three years, written records of designations, 

redesignations and reattributions . 

Contributions by Multicandidate 

Committees: 11 CFR 11 0.2 

The new rules under this section follow those for 

contributions by other persons (above) except for 

the provisions setting forth the different contribution 
78 

limits for multicandidate committees. However, the 

new provisions concerning reattribution of joint contributions are not contained in this section because 

multicandidate committees do not make joint contributions and do not seek to reattribute their contributions to other political committees. 

Conforming Amendments 

To make revisions to 11 CFR 110.1 and 110.2 consistent with other sections of the regulations, the 

agency also amended its rules at 11 CFR 100.7(c), 

1 00.8(c), 1 02.9, 103.3 and 1 04.8(d). For example, 

the amended rules make clear under 11 CFR 

102.9(e) that the contributor, not the recipient candidate committee, may designate a contribution for 

a particular election. 

The rules a political committee must follow when 

receiving contributions of questionable legality have 

been revised under 11 CFR 1 03.3(b) to reflect the 

new procedures for redesignating and reattributing 

contributions. This revised subsection explains that 

the treasurer of a political committee is responsible 

for: 1) examining all contributions received for any 

evidence of illegality; and 2) aggregating all contributions from the same contributor to determine 

whether they exceed the donor's contribution limits. 

The amended rules at 11 CFR 103.3(b) also 

describe the procedures that a treasurer must follow in handling: 1) contributions that appear to 

come from prohibited sources such as corporations 

and foreign nationals; 2) contributions that are not 

found to be illegal until after their receipt and 

deposit; 3) excessive contributions; and 4) contributions received for a particular election by a candidate committee with no debts for that election. 

These amended regulations prescribe specific time 

periods within which the treasurer must act. 

Under the amended 11 CFR 1 03.3(b), contributions of questionable legality may not be used for 

expenditures, and the treasurer must: 1) establish a 

separate account for such funds; or 2) maintain 

sufficient permissible funds to cover all potential 

refunds of contributions. 

Finally, new rules at 11 CFR 104.8(d) spell out 

procedures for reporting redesignated, reattributed, 

refunded and joint contributions. 
79 

Appendix 8 

Computer Indexes 

The Public Records Office, using the FEC's computer system, produces printouts of the major disclosure indexes described below. 

Note that headings followed by an asterisk(*) 

indicate that the index is also available through the 

Commission's Direct Access Program. 

Committee Names and Addresses 

The B Index includes the name and address of 

each committee, the treasurer's name, the committee ID number, the name of the connected organization (if any) and a notation if the committee is a 

"qualified" multicandidate committee, permitted to 

give larger contributions to candidates than other 

committees. There is a separate list for political 

action committees (PACs) and party committees. 

Another list arranges these committees by State. 

Candidate Names and Addresses 

The A Index is sorted by type of office sought 

(President, U.S. Senator, U.S. Representative) and 

alphabetically lists all candidates, including those 

not currently seeking election, whose committees 

have filed documents in the current election cycle. 

The printout lists, in addition to the candidate's 

name, his or her ID number, address, year of election and party affiliation. 

Current Election Candidate 

Names and Addresses 

The 415 Index is similar to the A Index (above) but 

lists only those candidates who have filed statements of candidacy for the current election cycle. 

Candidate Committees 

The Report 93 alphabetically lists Presidential, 

Senate and House candidates and includes, for 

each candidate, the ID number, address and party 

designation. Also listed are the name, address, ID 

number and treasurer's name of the principal campaign committee and of any other committees 

authorized by the candidate. 

Key Word in Committee Name* 

The TEXT capability permits the computer to search 

and list all committee titles that include a word or 

phrase designated by the user. 

Treasurer's Name 

The computer searches and lists all committee 

treasurers with the same last name (designated by 

the user), the names of their committees and the 

committee ID numbers. 

Multicandidate Committee Index 

This index lists political committees that have qualified as multicandidate committees and are thus 

permitted to contribute larger amounts to candidates than are other committees. Arranged in 

alphabetical order by name of committee, the list 

includes each committee's ID number, the date it 

qualified as a multicandidate committee and the 

name of its connected organization, if any. 

Chronology of 

New Committee Registrations 

The 3Y Index lists in chronological order the names 

of committees that have registered in the current 

election cycle. The list includes the date of registration and the committee's name, ID number, 

address and connected organization, if any. 

Recently Registered Committees 

The NULIST, printed weekly, lists the name, ID 

number, address and connected organization (if 

any) of committees that have registered during the 

previous week. 

Names of PACs and Their Sponsors 

The 35c Committee/Sponsor Index alphabetically 

lists the names of PACs along with their ID numbers and the names of their sponsoring or connected organizations. 
80 

Names of Organizations 

and Their PACs 

The 35o Sponsor/Committee Index alphabetically 

lists the names of organizations along with the 

names and ID numbers of their PACs. 

Categories of PACs 

The Report 140 lists PACs by the category they 

selected on their registration statements. 

Categories include: corporation, labor organization, 

membership organization, trade association, 

cooperative and corporation without capital stock. 

The list includes the PAC's name, ID number and 

connected organization. 

Committee Disclosure Documents* 

The C Index includes, for each committee, its name 

and 10 number; a list of each document filed (name 

of report, period receipts, period disbursements, 

coverage dates, number of pages and microfilm 

location); and total gross receipts and disbursements. 

Committee Ranking 

by Receipts or Expenditures 

The Report 933 provides a list of the names of 

committees ranked in order of the highest total 

gross receipts. Because committees' reporting 

schedules differ, however, totals may represent 

different time periods. 

Candidate Campaign Documents* 

The E Index provides the following information on 

each candidate:, 

1. Candidate name, State/district, party affiliation 

and candidate ID number, along with a list of all 

documents filed by the candidate (statement of candidacy, etc.). 

2. List of all documents filed by the principal 

campaign committee (report type, coverage dates, 

11nformation in items 1 through 4 comes from reports and 

statements filed by the candidate and his or her authorized committees, including joint fundraising committees. Items 5 through 

9 are based on data from reports filed by noncandidate committees and persons. 

period receipts and disbursements, number of 

pages and microfilm locations). 

3. List of all documents filed by other authorized 

committees of the same candidate (if any). 

4. List of joint fundraising committees authorized 

by the campaign. 

5. List of all PACs and other nonparty committees (e.g., other candidate committees) contributing 

to the candidate's campaign and the aggregate 

total of all such contributions to date. The list 

includes the name of the connected organization of 

a contributing PAC. Also listed are committees and 

individuals making expenditures for or against the 

candidate (including independent expenditures) and 

aggregate totals spent to date. 

6. List of all party committee contributions to the 

candidate along with coordinated party expenditures made on the candidate's behalf (2 U.S.C. 

§441a(d)). 

7. List of all persons and committees filing 

unauthorized delegate reports. 

8. List of all corporations and labor organizations 

reporting communication costs for or against the 

candidate. 

9. List of all unauthorized single candidate committees supporting or opposing the candidate and 

each committee's receipts and disbursements for 

the reporting period. 

Presidential Candidates 

The H Index on Presidential campaigns is similar to 

the E Index (above) but lists party and PAC contributions as reported by the Presidential candidates' 

authorized committees. 

Summary Data on 

Noncandidate Committees* 

The K Index permits the user to select a group of 

noncandidate committees using several criteria, 

such as type of committee (party, nonparty) and 

type of sponsoring organization (e.g., corporation, 

labor organization, trade association). For each 

committee in the group selected, the index lists 

election cycle totals to date from the summary 

pages of the committee's reports. The index also 
81 

includes the closing date and microfilm location of 

the latest report filed. 

Summary Data on 

Selected Candidates* 

The L Index, similar to the K Index (above), allows 

the user to select a group of candidates based on 

several criteria (e.g., type of election; incumbent/challenger status; party affiliation; State/district). For each candidate in the group selected, the 

index lists the election cycle totals to date for 

selected categories of receipts and disbursements 

taken from the detailed summary pages of reports 

filed by all committees authorized by the campaign 

(with the exception of joint fundraising committees). 

The index also lists the names of these authorized 

committees and the closing dates of their last 

reports. 

Itemized Contributions2 

The G Index identifies contributions of $500 or 

more received by a committee from individuals, the 

reports on which the transactions were disclosed 

and the microfilm locations of the reported entries. 

Individual Contributors2 

The Name Search capability permits a person to 

request a computer search for a specific last name 

in the national alphabetical list of contributors. The 

printout lists all persons with that last name and 

includes: the person's full name, address and occupation; the date, amount and recipient of the contribution; and the microfilm location of the reported 

entry. There is a substantial charge for this index, 

but the national list of contributors, periodically 

microfilmed, is available for review in the Public 

Records Office at no charge. 

20ue to cutbacks in the computerized disclosure program, 

this index was incomplete for the 1985-86 election cycle. 

Committee Contributions 

to Candidates* 

The D Index includes, for each committee, its 

name, ID number, name of connected organization 

and notation if it has "qualified" as a multicandidate committee. The index also lists all candidates 

supported or opposed by a committee, together 

with total aggregate contributions to, or expenditures on behalf of or against, each candidate. In 

the case of party committees, coordinated party 

expenditures (Section 441a(d)) are listed in place of 

independent expenditures. 

Dates of Specific 

Contributions/Expenditures 

The Detailed D Index itemizes the information on 

the D Index (above). It lists in chronological order 

each contribution and expenditure made on behalf 

of a candidate, along with the date, amount and 

microfilm location of the reported entry. The index 

can also search for specific candidates. 

Total Contributions to Candidates by 

Selected Committees 

The Combined D Index permits a person to select 

a group of committees for research. The computer 

will add together all of their contributions to candidates and print them in one list identifying the total 

amount contributed to each candidate by the group 

of committees. 

Other Indexes 

In addition to the above indexes, the Commission 

produces other types of computer indexes on a 

periodic basis (e.g., an index of corporate/labor 

communication costs). These periodic indexes are 

available in the Public Records Office for inspection 

and copying. 
83 

Appendix 9 

Clearinghouse Studies 

The National Clearinghouse on Election Administration released several new research projects in 1986 

and continued work on a number of other studies. 

These projects are described below along with 

previously released publications still available for 

purchase. The Clearinghouse also continued publishing its free periodical, FEC Journal of Election 

Administration, which contains forms for ordering 

Clearinghouse studies. 

Reports Completed in 1986 

Voting System Standards, Phase I, Standards for 

the Hardware Elements of Punchcard and Marksense Voting Systems is the first of a multiphase 

project to develop voluntary standards for computerized voting equipment. States and localities 

may adopt these standards in approving the use of 

voting equipment within their jurisdictions. The 

standards are intended to ensure the proper performance of several voting devices on the market. 

(See also "Projects Under Way.") 

Computerizing Election Administration 2: A 

General Model is the second volume in the computer application series. It builds on information 

presented in the first volume (see "Previously Completed Reports," below) and enables readers to 

design a computerized election management system by selecting modules from a general model. A 

third volume will complete the series (see section 

below). 

Campaign Finance Law 86 summarizes each 

State's campaign finance provisions and provides 

convenient quick-reference charts on major features. 

Designing Effective Voter Information Programs, a 

two-volume set, summarizes pertinent factors in the 

design of a voter information program, such as 

choice of media, message content and timetables. 

The series also discusses education programs for 

the schools. 

Projects Under Way 

Voting System Standards for Direct Recording Electronic Systems is a successive phase of the project 

to provide voluntary standards for voting equipment. This volume provides performance standards 

and test plans that can be adopted by States and 

local jurisdictions. 

Computerizing Election Administration 3: 

Implementation Strategies completes this series. 

(The first volume, published in 1985, is described 

below; the second volume, released in 1986, is 

summarized above.) The third volume discusses 

the implementation of a computerized voter registration system in a variety of environments, 

addressing capital funding and computer data 

bases. 

Absentee Voting contains information on Federal 

and State legislation and case law. It also 

addresses procedural and administrative aspects of 

absentee voting programs. 

Election Directory 87 is an update of the currently 

available 1985 directory (see below). 

Previously Completed Reports 

The publications described below remain available. 

Computerizing Election Administration 1: Current 

Applications is the first of a three-volume series to 

assist local election officials in automating their 

day-to-day activities. The first volume offers initial 

guidance by helping readers define their needs and 

also reports the results of a survey on computer 

applications conducted in 50 election jurisdictions. 

The first and second volumes are described in the 

sections above. 

Election Directory 85 lists names, addresses and 

telephone numbers of Federal and State election 

officials; identifies Federal and State repositories of 

Federal campaign finance reports; and lists 

addresses where voter registration officials should 

forward cancellations of prior registrations of new 

residents. 

Statewide Registration Systems 1 and 2 is a 

report on computerized voter registration systems. 

Volume 1 examines problems involved in 

implementing a statewide system and offers suggestions for overcoming them. Volume 2 describes 

in detail the forms, procedures, outputs and variations of a basic computerized system. 
84 

Mail Registration Systems discusses problems 

involved in implementing a mail registration system, 

describing how such systems operate and offering 

practical suggestions for overcoming difficulties. 

Contested Elections and Recounts, published in 

1978, is a three-volume analysis of the laws and 

procedures governing contested elections and 

recounts for Federal offices. Volume I examines 

issues and functions within the Federal government's purview and makes recommendations for 

improving the handling of contested elections at the 

Federal level. Volume II presents similar material at 

the State level, and Volume Ill summarizes State 

and Federal laws related to contested elections. 

Bilingual Election Services is a three-volume 

report on providing election services in languages 

other than English. Volume I summarizes such 

services since 1975. Volume II is a glossary of 

common election terms in English along with their 

Spanish and dialectal equivalents, and Volume Ill is 

a manual for local election officials that gives practical advice on identifying language problems and 

providing bilingual registration and balloting services. 

Election Administration, a four-volume set, covers 

planning, management and financial control concepts in local election administration. Volume I provides an overview of election functions and tasks 

and introduces the notion of a management cycle. 

Volume II focuses on planning, provides 

task/activity checklists and flow diagrams and discusses how tasks can be assigned. Volume Ill 

offers an acounting chart and shows how budgets 

can be prepared and costs monitored by applying 

the chart to each election function. Finally, Volume 

IV summarizes State code provisions on administrative and budgeting responsibilities. 

Federal Elections 82 and Federal Elections 84 

summarize, by State, office and candidate, the 

results of the elections for U.S. President (1984 edition), U.S. Senate and U.S. House of Representatives. 

The following publications also remain available. 

• Campaign Finance Law (1984, 1979 and 1978) 

• Election Case Law (1981, 1979 and 1978) 

• Voting System Vendors and Voting System 

Users (1981) 

• Reducing Voter Waiting Time (1976) 

• Analysis of Laws and Procedures Governing 

Absentee Registration and Absentee Voting in 

the United States, Volumes I and II (1975) 
85 

Appendix 10 

FEC Federal Register 

Notices, 1986 

Notice 1 Title 

Federt1/ 

R~fjster Pu Ileatlon 

Date 

Citation 

1986-1 Notice of Disposition of 4/29/86 51 Fed. Reg. 

Common Cause's 

Rulemaking Petition on 

"Soft Money" 

15915 

1986-2 Filing Dates for New York 5/20/86 51 Fed. Reg. 

Special Election 18500 

1986-3 Filing Dates for Hawaii 7/31/86 51 Fed. Reg. 

Special Election 27457 

1986-4 11 CFR Part 110: 7/30/86 51 Fed. Reg. 

Contribution and 

Expenditure Prohibitions 

and Limits; Notice of 

Proposed Rulemaking 

27183 

1986-5 11 CFR Parts 1 00, 106, 8/5/86 51 Fed. Reg. 

9001 et al.: Bank Loans 

and Public Financing of 

Presidential Primary and 

General Election 

Candidates; Notice of 

Proposed Rulemaking 

28154 

1986-6 Filing Dates for North 8/1/86 51 Fed. Reg. 

Carolina Special 

Elections 

27599 

1986-7 Clearinghouse on 9/3/86 51 Fed. Reg. 

Election Administration; 

Meeting of Advisory 

Panel 

31369 

1986-8 11 CFR Parts 100, 106, 9/26/86 51 Fed. Reg. 

9001 et al.: Public 

Financing of Presidential 

Primary and General 

Election Candidates; 

Extension of Comment 

Period 

34221 

1986-9 11 CFR Part 7: Standards 9/29/86 51 Fed. Reg. 

of Conduct for Agency 

Employees; Final Rule 

34440 

Notice Title 

Federal 

Register 

Publication 

Date 

Citation 

1986-10 11 CFR Parts 100, 106, 

9001 et al.: Public 

Financing of Presidential 

Primary and General 

Election Candidates; 

Announcement of 

Hearing Date 

11/13/86 51 Fed. Reg. 

41110 

1This appendix does not include Federal Register notices of 

Commission meetings published under the Government in the 

Sunshine Act.