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AKOOS837

December 29, 1994

MEMORANDUM

TO:

FROM:

RON HARRIS

PRESS OFFICER

PRESS OFFICE ,. ~\L- -

ROBERT J. COSTA ~~ ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

'"' .

r--·.

'--

.""-.....

'- ".

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

BUSH-QUAYLE '92 GENERAL COMMITTEE, INC. AND

BUSH-QUAYLE '92 COMPLIANCE COMMITTEE, INC . ._- ---------------._----_._-- -"------_._---- ._--------_.. -------- -----------_.------.

Attached please find a copy of the Final Audit Report

and related documents on Bush-Ouayle '92 General Committee,

Inc., and Bush-Quayle '92 Compliance Committee, Inc., which

was approved by the Commission on December 27, 1994.

Informational copies of the report have been received by

all parties involved and the report may be released to the

pUblic .-

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure'

Reports Analysis Division

FEC Library
•

REPORT OF THE AUDIT DIVISION

ON

Bush-Quayle '92

General Committee, Inc.

and

Bush-Quayle '92

Compliance Committee, Inc.

December 27, 1994

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
TABLE OF CONTENTS

BUSH-QUAYLE '92 GENERAL COMMITTEE, INC. AND

BUSH-QUAYLE '92 COMPLIANCE COMMITTEE, INC.

Page

Executive Summary

Final Audit Report

Background

Findings

Legal Analysis

Transmittal to Committee

Transmittal to Candidate

Chronology

1

3

3

5

47

55

57

59
FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

AKOOS818

REPORT OF THE AUDIT DIVISION

ON

BUSH-QUAYLE '92 GENERAL COMMITTEE, INC.

AND BUSH-QUAYLE '92 COMPLIANCE COMMITTEE, INC.

EXECUTIVE SUMMARY

Bush-Quayle '92 General Committee, Inc. (the General

Committee) and Bush-Quayle '92 Compliance Committee, Inc. (the

Compliance Fund) registered with the Federal Election Commission

on August 3, 1992 and October 28, 1991, respectively. The

General Committee was the principal campaign committee and the

Compliance Fundl/ was an authorized committee of President George

Bush and Vice President Dan Quayle, candidates for the 1992

presidential and vice-presidential election.

The audit was conducted pursuant to 26 U.S.C. 59007(a) which

requi~es the Commission to audit Presidential campaigns receiving

public funds in the general election.

The audit findings were presented to the General Committee

and the Compliance Fund at the exit conferences held on October

7, 1993 and in the interim audit report approved by the

Commission on April 4, 1994. The General Committee's and

Compliance Fund's responses to the audit findings have been

included in this report.

In the final audit report, the Commission made an initial

determination that the General Committee pay the U.S. Treasury

$21,109 in connection with General Committee checks that were

never cashed and income resulting from public funds (in this

case, a gain on an insurance settlement). The Commission also

made an initial determination that the Compliance Fund pay the

U.S. Treasury $8,666 in connection with Compliance Fund checks

that were never cashed.

!/ Presidential campaigns rece1v1ng federal funding are

permitted to establish compliance funds, which are special

accounts used to pay for certain specified expenses,

including legal and accounting expenses incurred to comply

with the campaign finance law. They are funded with private

contributions. Compliance fund spending does not count

against the expenditure limits that apply to federally funded

campaigns. 11 CFR 100.8(b)(lS), 9002.11(b)(S) and

903S.1(c)(1).

Page 1, Approved 12/27/94
-2-

These and other matters are summarized below.

Expenditure Limitation - 2 U.S.C. 441a(b)(1)(B) and (c).

The final audit report noted that the General Committee had

exceeded the spending limitation by a total $553,258.

Recognizing that reimbursements permitted from the Compliance

Fund would eliminate any excessive amount and resulting

repayment, the Audit staff suggested that the Compliance Fund

reimburse the General Committee and provide the FEC with

supporting documentation.

Use of Government Conveyance for Campaign Related Travel - 11 CFR §9004.7(a) and (b). The interim report recommended that,

absent a demonstration to the contrary, the General Committee pay

the United States Air Force (USAF) $545,345, representing an

apparent "underpayment" for campaign related trips on USAF

aircraft. In response, the General Committee provided

documentation which demonstrated that, under the circumstances,

it had reimbursed the USAF on a reasonable basis.

Reporting of Debts and Obligations - 2 U.S.C. §434(b)(8), 11

CFR §104.11(a) and (b). The General Committee did not disclose

$1,052,098 in obligations owed to 24 vendors. Further, the

Compliance Fund did not disclose $235,587 in obligations owed to

eight vendors. Although the General Committee and the Compliance

Fund disagreed with the basis for this finding, amended reports

were filed to correct the problems.

Disclosure of Occupation and Name of Employer - 2 U.S.C.

§§434(b)(3)(A), 431(13)(A), 432(i), and 11 CFR §104.7 (a) and

(b). A sample review of contributions received by the Compliance

Fund revealed that its reports did not include occupation and

name of employer for 68 per cent of the items tested. In

addition, language in several of the solicitations did not meet

the "best efforts" standard for notifying the contributor that

the reporting of the information is required by law. The interim

report recommended that the Compliance Fund contact all

contributors who did not provide the required information and

file amended disclosure reports. The Compliance Fund contended

that it had satisfied the "best eftorts" standard; thus, it did

not contact its contributors nor file amended reports.

Gain on Insurance Settlement - 11 CFR §9007.2(b)(4). The

General Committee was required to repay the U.S. Treasury $2,086,

the value of a gain on an insurance settlement for misplaced

computer equipment. The payment has been made.

Stale-dated Checks - 11 eFR §9038.6. Finally, the General

Committee and the Compliance Fund were required to pay the u.s.

Treasury $19,023 and $8,666, respectively, representing the value

of checks that were never cashed. These payments have been made.

Page 2, Approved 12/27/94
FEDERAL ELECTION COMMISSION

AK005783

WASHINGTON, D.C. 20463

REPORT OF THE AUDIT DIVISION

ON

BUSH-QUAYLE'92 GENERAL COMMITTEE, INC.

AND BUSH-QUAYLE '92 COMPLIANCE COMMITTEE, INC.

I. Background

A. Audit Authority

This report is based on an audit of the Bush-Quayle '92

General Committee, Inc. (the General Committee) and Bush-Quayle

'92 Compliance Committee, Inc. (the Compliance Fund). The audit

is mandated by Section 9007(a) of Title 26 of the United States

Code. That section states that "after each presidential election,

the Commission shall conduct a thorough examination and audit of

the qualified campaign expenses of the candidates of each

political party for President and Vice President."

Also, Section 9009(b) of Title 26 of the United States

Code states, in part, that the Commission may conduct other

examinations and audits as it deems necessary to carry out the

functions and duties imposed on it by this chapter.

In addition to examining the receipt and use of Federal

funds, the audit seeks to determine if the campaign has materially

complied with the limitations, prohibitions and disclosure

requirements of the Federal Election Campaign Act of 1971, as

amended.

B. Audit Coverage

The audit for the General Committee covered the period

from its inception of reported activity, August 3, 1992, through

February 28, 1993. In addition, the Audit staff conducted limited

reviews through June 30, 1994. During the audit period, the

General Committee reports reflect an opening cash balance of $-0-,

total receipts of $56,176,459, total disbursements of $55,099.,833,

and a closing cash balance of $1,076,626 at February 28, 1993.

The audit for the Compliance Fund covered the period

from its inception of reported activity, October 24, 1991, through

June 30, 1993. During this period, the Compliance Fund reports

reflect an opening cash balance of $-0-, total receipts of

Page 3, Approved 12/27/94
-2-

$4,602,536, total disbursements of $3,486,479, and a closing cash

balance of $1,116,057.

C. Campaign Organization

The General Committee registered with the Federal

Election Commission on August 3, 1992. The Compliance Fund

registered with the Federal Election Commission on October 28,

1991. The Treasurer of both committees, from inception to date,

is J. Stanley Huckaby.

During the period audited, the campaign established

offices in 46 states; in addition to its national headquarters

office located in washington, D.C. The campaign's current offices

are in Alexandria, virginia. .

To handle its financial activity, the General Committee

used 13 bank accounts. From these accounts the campaign made

approximately 11,700 disbursements.

To handle its financial activity, the Compliance Fund

used eight bank accounts. From these accounts the Compliance Fund

made approximately 1,100 disbursements. Approximately 32,500

contributions were received from 24,500 individuals. These

contributions totaled $4,200,000.

The General Committee received $55,240,000 in funds from

the united states Treasury on August 26, 1992. Other receipts

include a $250,000 loan from the Compliance Fund to finance

expenses prior to August 21, 1992, $807,354 in refunds and rebates

from vendors, and proceeds from the sale of assets, received

through September 30, 1993.

D. Audit Scope and Procedures

In addition to a review of the committees' expenditures

to identify the qualified and non-qualified campaign expenses

incurred by the campaign, the audit covered the following general

categories for the General Committee and/or the Compliance Fund:

1. The receipt of contributions or loans in excess of the

statutory limitations;

2. the receipt of contributions from prohibited sources,

such as those from corporations or labor organizations;

3. proper disclosure of contributions from individuals,

political committees and other entities, to include the

itemization of contributions when required, as well as,

the completeness and accuracy of the information

disclosed (see Finding III.A.); ..

Page 4, Approved 12/27/94
-3-

4. proper disclosure of disbursements including the

itemization of disbursements, when required, as well as

the completeness and accuracy of the information

disclosed;

5. proper disclosure of campaign debts and obligations (see

Findings II.B. and III.B.);

6. accuracy of total reported receipts, disbursements and

cash balances as compared to campaign bank records;

7. adequate recordkeeping for campaign transactions;

8. accuracy of the Statement of Net Outstanding Oualified

Campaign Expenses filed by the campaign to disclose its

financial condition (see Attachment 1);

9. compliance with spending limitations (see Finding

IV.A.); and

10. other audit procedures that were deemed necessary in the

situation.

As part of the Commission's stanpard audit process, an

inventory of the committees' records was conducted prior to audit

fieldwork. This inventory was conducted to determine if the

committees' records were materially complete and in an auditable

state. It was concluded that the records were materially

complete.

unless specifically discussed below, no material

non-compliance with Statutory and Regulatory requirements was

detected. It should be noted that the Commission may pursue

further any matters discussed in this report in an enforcement

action. Finally, this report constitutes notice of potential

funds repayable pursuant to 11 CFR §9007.2(a)(2).

II. Findings and Recommendations - Non-repayment Matters

Bush-Quayle '92 General Committee, Inc.

A. Use of Government Conveyance for Campaign Related

Travel

Section 9004.7(a) of Title 11 of the Code of Federal

Regulations states that notwithstanding the provisions of 11 eFR

part 106, expenditures for travel relating to a Presidential or

Vice Presidential candidate's campaign-by any individual,

including a candidate, shall, pursuant to the provisions of 11

eFR 9004.7(b), be qualified campaign expenses and be reported by

the candidate's authorized committee(s) as expenditures.

Page 5, Approved 12/27/94
-4-

Section 9004.7(b)(1) through (6) of Title 11 of the

Code of Federal Regulations states for a trip which is entirely

campaign-related, the total cost of the trip shall be a qualified

campaign expense and a reportable expenditure.

For a trip which includes campaign-related and

non-campaign related stops, that portion of the cost of the trip

allocable to campaign activity shall be a qualified campaign

expense and a reportable expenditure. Such portion shall be

determined by calculating what the trip would have cost from the

point of origin of the trip to the first campaign-related stop

and from the stop through each subsequent campaign-related stop

to the point of origin. If any campaign activity, other than

incidental contacts, is conducted at a stop, that stop shall be

considered campaign-related.

For each trip, an itinerary shall be prepared and such

itinerary shall be made available for Commission inspection.

For trips by government conveyance or by charter, a

list of all passengers on such trip, along with a designation of

which passengers are and which are not campaign-related, shall be

made available for Commission inspection.

If any individual, including a candidate, uses

government conveyance or accommodations paid for by a government

entity for campaign-related travel, the candidate's authorized

committee shall pay the appropriate government entity an amount

equal to the first class commercial air fare plus the cost of

other services, in the case of travel to a city served by a

regularly scheduled commercial service; or the commercial charter

rate plus the cost of other services, in the case of travel to a

city not served by a regularly scheduled commercial service.

Travel expenses of a candidate's spouse and family when

accompanying the candidate on campaign-related travel may be

treated as qualified campaign expenses and reportable

expenditures. If the spouse or family members conduct

campaign-related activities, their travel expenses shall be

qualified campaign expenses and reportable expenditures.

President Bush and Vice President Quayle, frequently

accompanied by staff, media personnel, u.S. Secret Service

agents, campaign employees, and other "guests", made campaign

related trips on aircraft provided by the united States Air

Force. In most cases, trips made by the President were

identified and billed as Air Force I, whereas, trips made by the

Vice President were identified and billed as Air Force II.

Further, there were several instances when the First Lady

Page 6, Approved 12/27/94
-5-

(Barbara Bush), staff and advance personnel!/ made

campaign-related trips on aircraft provided-by the united states

Air Force. These trips were usually identified and billed as

"Airlift Operations."

The billings for the above trips originated in the

Office of the Director of Airlift Operations, United states Air

Force and were authorized by the White House Military Office. In

most cases, the billings included a manifest which identified the

passengers aboard each flight, a summary memorandum which

identified the political (campaign-related) passengers, the

airfare charged per individual, and the total amount to be

reimbursed to the United states Treasurer/Air Force for

campaign-related travel. The billings were forwarded to the

White House Administrative Office and then onto the General

Committee, accompanied by a memorandum requesting reimbursement

for campaign-related trips.

Virtually all flight destinations were cities served by

regularly scheduled commercial service. Thus, in accordance with

11 C.F.R. §9004.7(b)(5), the General Committee was required to

reimburse (the united states Treasurer/Air Force) the cost of

first class commercial airfare plus the cost of other services.

The Audit staff analyzed the billings noted above in an

effort to determine if the airfares charged to the General

Committee were equivalent to the first class airfares available

on the date of the trip. Further, the analysis would determine

if the total amount paid by the General Committee for its use of

government conveyance was in accordance with 11 C.F.R.

59004.7(b). For purposes of this review, the Audit staff

selected the lowest unrestricted and non-discounted first class

airfare, not subject to any type of conditional purchase/booking

agreements, available on the date of the trip.~/

Based on this review, the General Committee "underpaid"

the united states Treasurer/Air Force approximately $545,345.

This amount was included in accounts payable on the NOQCE

Statement contained in the interim audit report.

Subsequent to the exit conference, representatives of

the General Committee stated they paid the amount billed and did

not know why a difference exists, but the matter would be

reviewed.

!/

~I

Typically these individuals traveled to destinations to

coordinate and organize campaign events in advance of the

actual event.

Fare information obtained from General Services

Administration - Transportation Audit Division (PIPPS - Passenger Interline Pricing/Prorate System).

Page 7, Approved 12/27/94
-6-

It should be noted that the amount calculated as

"underpaid" represented a net difference between the amount paid

by the General Committee and the correct billable amount as

determined by the Audit staff. Further, the calculated

underpayment was, for the most part, due to the united states Air

Force billing at an airfare that was less than the rate

determined by the Audit staff.

In the interim audit report the Audit staff recommended

that the General Committee either:

o

o

demonstrate that the United states Air Force was

not underpaid in the amount of $545,345; or

make a payment to the United states Air Force in

the amount of $545,345.

In response to the interim audit report, the Treasurer

stated, "An investigation undertaken by the Committee indicates

that the airfare billed by the White House and paid by the

Committee was proper."

Further, the Assistant Treasurer states,

"On July 5, 1994, I spoke with Chris Vein,

who worked in the White House Travel Office

during the 1992 campaign •..Mr. Vein

explained that, on the day of travel, the

white House Travel Office would determine

the fi rst-class ai rfare between t.he ci ties

on the itinerary using the SABRE computer

reservation system and that the office used

only unrestricted, first-class airfares.

In an effort to confirm the airfares used

by the White House Travel Office, the

Committee recently contacted a travel agent

and American Airlines. The Committee was

informed, however, that outdated fares were

not available for more than a few months

back. The Committee is thus in a position

of receiving two different fare quotes, but

has not yet been able to confirm

either.... " Finally, the Treasurer states,

"[t]he White House Travel Office and the

audit staff each used first class airfare

for their calculations, the Committee is at

a loss to explain the discrepancy.

However, since first class airfare was in

fact billed and paid, the Committee

respectfully submits that no further action

should be taken with respect to this

issue."

Page 8, Approved 12/27/94
-7-

Based on the General Committee's response, the Audit

staff re-examined a portion of the campaign-related flights. The

results of this review indicate that, in most cases, the General

Committee paid an amount equal to or greater than a published

unrestricted first class airfare; however, the airfare was

discounted. The Audit staff's original calculation was based on

unrestricted and non-discounted first class airfares that were not

subject to conditional purchase agreements.

The regulation at 11 C.F.R. §9004.7(b)(5) requires that

first class commercial air fare plus the cost of other services be

used as a basis to determine the amount paid to the government

entity, apparently in an attempt to equate a non-scheduled trip

aboard government conveyance to that of a scheduled commercial

flight with the same origin and destination points, along with an

equivalent level of service. In the Audit staff's opinion, travel

encumbered with conditions such as those stated above does not

equate with the unrestricted use of government conveyance,

therefore, the reimbursement for less than an unrestricted and

non-discounted first class rate with no conditions attached-rs

contrary to the intent of the regulation.

Nonetheless, because of (1) the specific facts presented

above, (2) the inherent difficulty presented to committees in

determining first class rates in the context of the reimbursement

requirement at 11 C.F.R. §9004.7(b)(4), and (3) prior Commission

determinations in this area3/ it appears that the amount paid by

the General Committee satisfies the regulatory provision as

currently written.

B. Reporting of Debts and Obligations

Section 434(b)(8) of Title 2 of the United States Code

requires that each report shall disclose the amount and nature of

outstanding debts and obligations owed by or to such political

committee.

Section 104.11(a) of Title 11 of the Code of Federal

Regulations states, in part, that debts and obligations owed by or

to a political committee which remain outstanding shall be

continuously reported until extinguished.

Section 104.11(b) of Title 11 of the Code of Federal

Regulations states, in part, that a debt or obligation, the amount

of which is $500 or less, shall be reported as of the time payment

is made or not later than 60 days after such obligation is

incurred, whichever comes first. A debt or obligation, the amount

of which is over $500 shall be reported as of the date on which

the debt or obligation is incurred, except that any obligation

See the Final Audit Report on Americans for Harkin, Inc.,

approved by the Commission on March 15, 1994, pages 7-10.

Page 9, Approved 12/27/94
-8-

incurred for rent, salary or other regularly reoccurring

administrative expense shall not be reported as a debt before the

payment due date.

During our review of selected disbursements, the Audit

staff noted that obligations, owed to 24 vendors, totaling

$1,052,098 were not disclosed. These obligations related to

expenses incurred for telephone charges, telemarketing, media,

events, research, travel reimbursements, direct mail, delivery,

air travel, and lodging.

At the exit conference, the General Committee was

provided with a schedule of debts and obligations that were not

reported. The Treasurer stated that he did not consider any

obligations as debts for reporting purposes until the invoice had

been received by the Accounting Department and approved for

payment by the appropriate personnel.

A written response from the General Committee, dated

October 22, 1993, asserted that the invoices were processed and

paid in a timely manner. Further, the response explained that the

General Committee reported debts and obligations ,based on the date

the invoices were received, and provided explanations as to why

certain invoices were not received timely. For example, the

original invoice was misplaced and a replacement copy was obtained

at a later date from the creditor; in certain instances, invoices

were issued to the White House Administrative Office, who then

later forwarded the invoices to the General Committee.

The regulatory standard is the date of incurrence not

the date the invoice is received in the General Committee's

Accounting Department. Although the information provided may

explain the delay in the General Committee's actual receipt of a

particular invoice, such explanation does not, in the Audit

staff's opinion, remove or modify the regulatory requirement that

these debts be disclosed as of the date incurred.

In the interim audit report the Audit staff recommended

that the General Committee file amended reports to correct the

public record.

In response to the interim audit report, the Treasurer

states that the standards used by the Audit staff in reviewing

debts and obligations "misapplies the regulations" and, as

applied, would "place an unreasonable burden on political

committees." The Treasurer specifies that the "regulation

expressly defines the debt or obligation as 'a loan, written

contract, written promise or written agreement to make an

expenditure'."

The Treasurer contends that the regulation cited is not

relevant because the aforementioned transactions were "generally

Page 10, Approved 12/27/94
-9-

undertaken without a 'written' agreement specifying precise

charges in advance and therefore do not fall into the categories

listed in the regulation."

In addition, the Treasurer maintains that the General

Committee promptly paid and/or reported debts and obligations in

accordance with its policy, which in the opinion of the Treasurer,

created no financial benefit. According to the Treasurer, the

issue was the timing of disclosure.

In conclusion, the Treasurer states that the General

Committee has begun to prepare amended reports to disclose the

transactions.

The General Committee indicated that the Audit staff

considered all debts over $500 as reportable, as of the date

incurred, regardless of when the invoice was received. It should

be noted that the interim audit report does not suggest that the

General Committee should have reported all debts (over $500) as of

the date incurred. The debts in question were determined to have

been incurred during a reporting period and outstanding at the end

of that specific period.

It is the opinion of the Audit staff that the scope of

the regulation at 11 C.F.R. §104.11(b) is not limited to loans,

written contracts, written promises and written agreements but,

inclusive of all debts and obligations including those mentioned

above. Therefore, contrary to the interpretation of the General

Committee, the regulation cited does apply to the transactions at

issue.

As stated above, the regulatory standard is the date of

incurrence not the date the invoice is received in the General

Committee's Accounting Department. In the Audit staff's opinion,

the General Committee's response sufficiently explains why the

above debts were not disclosed, however, the explanation does not

modify the regulatory requirement that the aforementioned debts

are required to be disclosed.

The General Committee indicated amended reports would be

ready for filing in the near future. Amendments were filed on

September 7, 1994, which materially corrected the disclosure

errors.

III. Findings and Recommendations - Non-repayment Matters

Bush-Quayle '92 Compliance Committee

A. Disclosure of Occupation and Name of Employer

Section 434(b)(3)(A) of Title 2 of the United States

Code states that each report shall disclose the identification of

each person (other than a political committee) who makes a

contribution to the reporting committee during the reporting

page 11, Approved 12/27/94
-10-

period, whose contribution or contributions have an aggregate

amount or value in excess. of $200 within the calendar year,

together with the date and amount of any such contribution.

Section 431(13)(A) of Title 2 of the United States Code

defines the term "identification" as, in the case of any

individual, the name, the mailing address, and the occupation of

such individual, as well as the name of his or her employer.

Section 432(i) of Title 2 of the United States Code

states, in part, that when the treasurer of a political committee

shows that best efforts have been used to obtain, maintain, and

submit the information required by this Act for the political

committee, any report or any records of such committee shall be

considered in compliance with this Act.

Section 104.7(a) and (b) of Title 11 of the Code of

Federal Regulations states when the Treasurer of a political

committee shows that best efforts have been used to obtain,

maintain and submit the information required by the Act for the

political committee, any report of. such committee shall be

considered in compliance with the Act. The Treasurer will not be

deemed to have exercised best efforts to obtain the required

information unless he or she has made at least one effort per

solicitation either by a written request or by an oral request

documented in writing to obtain such information from the

contributor. For purposes of 11 eFR 104.7(b), such effort shall

consist of a clear request for the information (i.e., name,

mailing address, occupation, and name of employer) which request

informs the contributor that the reporting of such information is

required by law.

The Audit staff conducted a sample review of receipts

from individuals to determine if for contributions requiring

itemization, the requisite information was adequately disclosed.

An error rate of 68% was noted with respect to the disclosure of

occupation and name of employer on reports filed.

Although the solicitation devices did contain a request

for the contributor's occupation and name of employer, the notice

was incorrect: "The Federal Election Commission requires us to

ask the following information:" (emphasis added). The Regulations

require it to state "the reporting of such information is required

by law". Therefore, it is the opinion of the Audit staff that the

Compliance Fund has not met materially the best efforts provision

of 11 C.F.R. §104.7.

This matter was discussed at·the exit conference.

Representatives of the Compliance Fund did not comment.

Subsequent to the exit conference the Treasurer stated

that the Compliance Fund has not contacted its contributors in

order to obtain the missing information.

Page 12, Approved 12/27/94
-11-

In the interim audit report the Audit staff recommended

that the Compliance Fund contact all contributors who have not

provided the required contributor information and file amended

disclosure reports to correct the public record. Further, the

Audit staff stated that such a request should include the

appropriate notice that "the reporting of such information is

required by law".

In response to the interim audit report the Treasurer

states that the Compliance Fund complied with the "best efforts"

provisions of 11 C.F.R. §104.7(b). The Treasurer explains that

the Compliance Fund contacted each contributor and requested their

name, mailing address, occupation, name of employer and notified

the contributors that "the Federal Election Commission requires us

to ask the following information."

Further, the Treasurer states the Compliance Fund

altered the language on its contributor solicitations in response

to a July 1, 1992 memorandum issued by the Commission. The

revised notification to its contributors stated, "It]he Federal

Election Commission requires us to report the following

information." The Treasurer claims the Audit staff determined

that the "best efforts" provisions were not met because the

Compliance Fund used the phrase "Federal Election Commission

requires" as opposed to "the law requires."

The Treasurer contends that the "best efforts"

provisions were met for several reasons. First, the Treasurer

states that the distinction between "the Federal Election

Commission" and "the law" is insignificant because "the . regulations properly promulgated by the Commission have the force

of law." Secondly, the Treasurer maintains that no specific

reason is identified in the interim report as to why the language

used by the Compliance Fund was "deficient." The Treasurer . continues, "It]he regulation does not require that specific words

be used, only that contributors be informed of the substance of

the message." Finally, the Treasurer claims the Audit staff's

"interpretation would constitute a material change in the

regulation that cannot properly be implemented without a

rulemaking proceeding."

In the opinion of the Treasurer, the Compliance Fund's

interpretation of the regulation was reasonable and the adopted

language was consistent with the "best efforts" requirements.

As stated by the Treasurer, the regulation at 11 C.F.R.

§104.7 does not require that specific words be used, only that

contributors be informed of the substance of the message. The

substance of the message is that the reporting of a contributor's

name, mailing address, occupation, and name of employer is

required by law.

Page 13, Approved 12/27/94
-12-

Although the Compliance Fund has put forth several

arguments in support of its position that its actions satisfied

the best efforts provision in effect at the time of the

solicitations, the language used by the Compliance Fund; "The

Federal Election Commission requires us to ask the following

information"; does not inform the contributor that the reporting

of the information is required by law.

The Compliance Fund did not contact all contributors who

did not provide the required contributor information as

recommended in the interim audit report. Consequently, no

amendments containing information regarding these contributors

were filed.

B. Reporting of Debts and Obligations

Section 434(b)(8) of Title 2 of the United States Code

requires that each report shall disclose the amount and nature of

outstanding debts and obligations owed by or to such political

committee.

Section 104.11(a) of Title 11 of the Code of Federal

Regulations states, in part, that debts and obligations owed by or

to a political committee which remain outstanding shall be

continuously reported until extinguished.

Section 104.11(b) of Title 11 of the Code of Federal

Regulations states, in part, that a debt or obligation, the amount

of which is $500 or less, shall be reported as of the time payment

is made or not later than 60 days after such obligation is

incurred, whichever comes first. A debt or obligation, the amount

of which is over $500 shall be reported as of the date on which

the debt or obligation is incurred, except that any obligation

incurred for rent, salary or other regularly reoccurring

administrative expense shall not be reported as a debt before the

payment due date.

During our review of selected disbursements, the Audit

staff noted that 16 obligations, owed to eight vendors, totaling

$235,587 were not disclosed. The obligations related to expenses

incurred for long distance telephone, direct mail, printing of

fundraising solicitations, computer consulting, and limousine

rental.

At the exit conference, the Compliance Fund was provided

with a schedule of debts and obligations that were not disclosed.

The Treasurer stated that the Compliance Fund did not consider any

obligations as debts for reporting purposes until the invoice had

been received by the Accounting Department and authorized for

payment by the appropriate personnel.

In a written response, dated October 21, 1993, the

Treasurer asserted that the Compliance Fund paid invoices in a

timely manner, usually within a few days of receipt. Further, the

Page 14, Approved 12/27/94
•

-13-

Treasurer explained that as soon as invoices were received check

authorizations were prepared and items were promptly submitted for

payment.

The regulatory standard is the date of incurrence not

the date the invoice is received in the Compliance Fund's

Accounting Department.

In the interim audit report the Audit staff recommended

that the Compliance Fund file an amendment to correct the public

record.

In response the Treasurer incorporated by reference the

General Committee's response discussed at Finding II.B., Reporting

of Debts and Obligations (see pages 8-10).

As noted at Finding II.B., the response sufficiently

explains why the above debts were not disclosed; however, the

explanation does not nullify the regulatory requirement that the

aforementioned debts be disclosed.

The Compliance Fund indicated amendments would be ready

for filing in the near future. Amendments were filed on September

7, 1994, which materially corrected the disclosure errors.

IV. Findings and Recommendations - Repayment Matters

Bush-Quayle '92 General Committee, Inc.

A. Expenditure Limitation

Sections 441a(b)(1)(B) and (c) of Title 2 of the united

states Code state, in relevant parts, that no candidate for the

office of President of the United states who is eligible under

section 9003 of Title 26 to receive payments from the Secretary of

the Treasury may make expenditures in excess of $20,000,000 as

adjusted for the increase in the Consumer Price Index.

Section 9004.4(a) of Title 11 of the Code of Federal

Regulations limits the use of such payments to expenditures for

the following purposes: to defray qualified campaign expenses; to

repay loans or to otherwise restore funds used to defray qualified

campaign expenses; to restore funds expended in accordance with 11

CFR 9003.4 for qualified campaign expenses incurred prior to the

beginning of the expenditure report period; and winding down costs

in accordance with 11 CFR 9004.4(a)(4)(i) and (ii).

Section 9003.4(a) of Title 11 of the Code of Federal

Regulations states, in relevant part, that a candidate may incur

expenditures before the beginning of the expenditure report period

if such expenditures are for property, services or facilities

which are to be used in connection with his or her general

election campaign. Examples cited include expenditures for:

Establishing financial accounting systems, organizational

planning, and polling.

Page 15, Approved 12/27/94
-14-

The expenditure limitation for the 1992 general election

for the office of President of the United States is $55,240,000.

Our analysis of expenditures subject to the limitation

indicated, based on information made available during fieldwork,

that the limitation had been exceeded by $1,994,906. This

information was provided to the Treasurer and certain information,

as described below, was presented timely by the Treasurer prior to

the issuance of the interim audit report.

Also presented below are the General Committee's

response to the interim audit report, the Audit staff's comments

related thereto, adjustments made by the Audit staff to reported

expenditures subject to the limitation, and an updated version of

our analysis of expenditures subject to the limitation contained

in the interim audit report (see pages 34 & 35 of this report).!/

1. Due to Primary Committee

a. Security Deposit For

Headquarters Office

On September 23, 1992, the General Committee

paid the Primary Committee $252,573. Of this amount, $57,009

represented a transfer of a security deposit for rented office

space. According to a letter from the management company

concerning the security deposit held, the actual amount of the

outstanding deposit was $66,769. The difference, $9,760 ($66,769 - 57,009), is owed to the Primary Committee.

In response to the interim audit report, the

General Committee issued a check for $9,760 to the Primary

Committee.

b. Apparent General Election Expenses Paid

by the Primary Committee

During the review of primary Committee vendor

files, the Audit staff identified $1,641,246 in disbursements in

payment for goods and services which appear to have benefited the

general election campaign. Goods and services relative to

polling, focus group surveys, direct mail including list rentals,

materials including shipping ($1,305,652); print media services

($130,789); leased office space ($40,228); and equipment

~/ The General Committee was also advised in the interim

audit report, that absent a demonstration that the

expenditure limitation had not been exceeded, the Audit

staff would recommend that the Commission make an initial

determination that the General Committee repay $1,994,906

to the United States Treasury pursuant to 26 U.S.C.

§9007(b)(2).

Page 16, Approved 12/27/94
-15-

($164,577) were noted. It should be noted that the Candidate's

date of ineligibility was August 20, 1992, the date on which he

received his party's nomination. State primary elections/caucuses

were held through June 9, 1992.

(1) Polls/Focus Group Surveys, Direct Mail,

Campaign Materials - $1,305,652

PollS/FocuS Group Surveys

Vendors conducted polls and focus group

surveys. The majority of the invoices relative to such activity

were dated between June 26, 1992 and August 31, 1992. The

questionnaires for the polls and surveys dealt with, for the most

part, positions and/or past records of both President Bush and the

Democratic nominee Bill Clinton. Further, many questions included

references to Ross Perot.

A California Statewide Poll contained

questions such as "Here are some races that will be on the ballot

in California this November ..... For President: George Bush, Bill

Clinton, Ross Perot, Don't know, Refused/NA." "For each

candidate, please rate THE PROBABILITY that you might vote for him

or her this November. Ross Perot, Bill Clinton, George Bush."

The majority of the questions centered around the above named

candidates.

It should be noted, that for the most

part only the November Presidential election was addressed in the

questionnaire. There was one question for Bush voters, Clinton

voters, and Perot voters asking if they voted for George Bush or

Michael Dukakis in the 1988 presidential election.

Interviews were conducted with 600

individuals in Monmouth County, New Jersey on July 27, 1992. In

addition, there was a recontact of 500 individuals on August 14,

1992. The original interviews (July 27) contained questions such

as:

Do you feel things in the country are

generally going in the right

direction;

Do you approve or disapprove of the

way George Bush is handling his job as

President;

I'd like you to rate some people in

the news ~today -Gedrg~ Bush, -Bill

Clinton, Dan Quayle, Al Gore, Tom

Rean, Nicholas Brady, etc.;

Page 17, Approved 12/27/94
-16-

If the presidential election were held

today, would you vote for - George

Bush, Bill Clinton, Ross Perot, Don't

know, Refused/NA.

The questions then centered around

issues, such as, the budget deficit, the economy, creating more

jobs, taxes, foreign trade, etc. and asked who would do the best

job handling it as President. The choices were George Bush, Bill

Clinton, Don't know, or Refused/NA.

The recontact interviews (August 14)

contained the same questions, plus additional questions about

George Bush and Bill Clinton.

The Treasurer, speaking on behalf of the

Primary Committee, has commented with respect to most of the

expenditures noted above. For the most part, he stated that

polls/focus group surveys taken in July/August 1992 focused on

issues, and were pre-convention expenditures that could have been

paid by the Primary Committee.

Direct Mail

Direct mail pieces featured pictures of

both President Bush and Bill Clinton, along with their positions

on certain matters and their past records. There were no

requests for funds.

The Marilyn Quayle package contained a

letter from Mrs. Quayle dated August 4, 1992, a poster, bumper

stickers and a position paper. The letter addresses kicking off

our campaign to re-elect President Bush in a few weeks. It gives

President Bush's position on a number of issues, and comments on

Bill Clinton's economic game plan. It also gives a special

Volunteer Hotline number active through Labor Day. One side of

the position paper features a picture of President Bush,

addresses issues and accomplishments, while the reverse side

features a picture of Bill Clinton, and comments on issues and

accomplishments.

A direct mail piece, mailed August 3,

1992, and August 6, 1992, contains a picture of Bill Clinton and

addresses his record as Governor of Arkansas.

The Colorado Victory Self Mailer

features 5 pictures of President Bush and 4 pictures of Bill

Clinton and addresses each candidate's·position on specific

issues such as taxes, the deficit, crime, the economy, health

care, defense and foreign policy.

According to the General Committee, the

purpose of direct mail letters and voluntaer cards was to recruit

volunteers and to generate excitement for the Convention and, if

Page 18, Approved 12/27/94
-17-

mailed, shipped, or distributed before August 21, 1992, the

associated costs represented a primary expense.

Campaign Materials

Materials were purchased and shipped to

various state offices in July/August 1992, including, but not

limited to, flags, tee shirts, bumper stickers, hats, pins,

signs, and brochures. According to the Primary Committee's

response to the exit conference, the Primary Committee paid for

materials purchased on or before August 20, 1992. Materials

purchased after August 20, 1992, were paid by the General

Committee. Charges for shipping the above material were paid by

the Primary Committee if shipped on or before August 20, 1992.

Whereas, delivery charges for the same type of material shipped

on August 21, 1992, were paid by the General Committee.

The General Committee further stated

that campaign materials purchased and shipped to state offices

before the Convention also represented primary expenses.

The Audit staff has considered the

General Committee's position with respect to the above. It is

our opinion that the cost of the polls/focus group surveys,

direct mail, and campaign materials benefited the candidate's

general election efforts, and therefore, should have been paid by

the General Committee.

(2) Print Media - $130,789

Tne Primary Committee's media vendor

placed advertisements in 5 newspapers and 3 publications which

appear to have benefited the candidate's general election

efforts. In addition, the media vendor paid for a national focus

group survey conducted on August 12, 1992.

On July 29, 1992, the same full page

advertisement appealing for the votes of Ross Perot's supporters,

appeared in the USA Today, Dallas Morning News, Orlando Sentinel,

Denver Post, and the Orange County Register. The advertisement

included the following:

"His message has reached many

receptive ears. And his recent

decision not to run has left a void.

That's why in these days following his

withdrawal, I'm asking for your vote.

Give me the chance to earn it. Over

the n~xt few months, study-the two

remaining candidates. study our

positions on issues like welfare

reform. Fighting crime and drugs.

Upholdin9 family values. Creating

jobs and balancing the budget."

Page 19, Approved 12/27/94
-18-

Further, the Primary Committee paid for

an advertisement which appeared in the Fall '92 (October) issue of

the Louisiana Trooper and Mississippi Trooper. Although generic

in nature, the ads addressed President Bush's anti-crime program.

However, the ads stated they were "paid for by the Bush-Quayle '92

General Committee, Inc." In addition, the Primary Committee also

paid for an advertisement in the Christian American,

September/October 1992 issue, comparing traditional family value

positions of President Bush and Bill Clinton. The ad also stated

it was paid for by the Bush-Quayle '92 General Committee, Inc.

Finally, the media vendor contracted with

Market strategies to conduct national focus group surveys on

August 12, 1992, in Towson, Maryland. According to the invoice,

the focus groups were (1) conducted among two groups of 13

participants each, (2) primarily straight focus groups with

storyboard ad testing, and (3) primarily composed of individuals

who leaned toward Bill Clinton or were undecided, and a few who

favored President Bush.

With respect to the advertisement

appealing to Ross Perot's supporters a representative of the

Primary Committee stated: "This ad was to recruit support from

former Perot supporters, after he withdrew his candidacy. It was

part of on-going efforts to build support and attract volunteers

to the campaign."

With respect to the advertisement which

appeared in the above mentioned publications, the General

Committee reimbursed the Primary Committee for the production

costs and placement fees.

Finally, with respect to the focus group

surveys, the General Committee stated that the costs was a

pre-convention expense.

It is the oplnlon of the Audit staff that

the above advertisements and focus group survey placed through the

Primary Committee's media vendor and paid by the Primary Committee

benefited the candidate's general election efforts, and therefore,

should have been paid by the General Committee.

(3) Leased Office Space - $40,228

In instances, the Primary Committee

leased office space in a state during that state's primary

election, closed the office after the date of the primary and then

re-opened the same office or an office at another location in

July/August, 1992. Lease payments up to and including August 20,

1992, were paid by the Primary Committee and after August 20,

1992, by the General Corr~ittee.

Page 20, Approved 12/27/94
-19-

For example, the Primary Committee's

Connecticut office space was leased for the period February 28,

1992 to March 28, 1992. The Connecticut state primary was held on

March 24, 1992. The Primary Committee re-opened an office from

July 20, 1992 to November 19, 1992. Lease payments were made by

the Primary Committee for the period July 20, 1992 through August

20, 1992. The General Committee made the lease payments for the

remainder of the lease (August 21, 1992 through November 19,

1992).

A representative of the General Committee

stated: "state offices were opened for two basic purposes - to

support activity relating to a specific primary election, caucus,

or convention, and to serve as branch offices of the national

campaign. The state offices served in this second capacity

throughout the primary period up to August 20, independent of

individual state primaries."

It is the Audit staff's opinion that

establishing state offices in the July/August 1992 time period

benefited the candidate's general election efforts. Expenses

associated with these leases should have been paid by the General

Committee.

(4) Equipment - $164,577

During July and August of 1992, t·he

Primary Committee purchased and/or leased computer components and

related software. The equipment was shipped to either a state

office or to the national office. If the equipment was purchased

before August 21, 1992, it was paid for by the Primary Committee.

If equipment was leased, the Primary Committee paid the lease

payments up to and including August 20, 1992. The General

Committee paid these expenses subsequent to August 20, 1992.

Further, if at the time the equipment was leased, the Primary

Committee purchased supplies such as laser toner, fax refills,

etc. and had the equipment and supplies shipped to a state, the

Primary Committee paid the entire cost of supplies and shipping

even though the lease expense was pro-rated.

For example, the Primary Committ~e leased

a computer and a laser printer for the period July 30, 1992

through August 29, 1992. At the same time, the Primary Committee

purchased laser toner and fax refills. The vendor shipped

everything to the Phoenix, AZ office. The Primary Committee paid

$796 representing (a) lease expense - July 30th through August

20th - ($213), (b) the entire cost of the laser toner ($240) and

fax refills ($240), and (c) shipping charges ($104). The General

Co.mittee paid only a pro-rated share of the ~ease expense

($8?).

It is the 0p1n1on of the Audit staff

that, in the above example, the leased equipment and supplies

benefited only the candidate's general election efforts,

Page 21, Approved 12/27/94
-20-

therefore, the entire cost should have been paid by the General

Committee. Further, it is also our opinion that any equipment

purchased in July/August 1992, except for purchases related to the

Convention, benefited the candidate's general election efforts and

should have been paid for by the General Committee.

It is the position of the General

Committee that expenditures incurred prior to August 20, 1992 were

appropriately paid by the Primary Committee, while expenditures

incurred after the completion of the nominating convention were of

course paid by the General Committee.

Interim Audit Report Recommendation:

With respect to Section IV.A.1.b. the

Audit staff recommended that the General Committee submit

documentation which demonstrated the following with respect to

each expenditure:

polling/focus group surveys - explain and document how

the results of each poll/focus group survey was used in

connection with the candidate's campaign for nomination,

as opposed to being considered used for the candidate's

campaign for election. For example, the report

discusses the California Statewide Poll. Explain and

document how the results of this poll, that contains

questions concerning the three candidates and the

November presidential election, can be considered in

connection with the candidate's campaign for nomination.

direct mail - explain and document how direct mail

pieces which target volunteers and provide a Volunteer

Hotline number active through September 7, 1992 can be

viewed in connection with the candidate's campaign for

nomination and not in connection with the candidate's

campaign for election. Further, explain and document

how direct mail pieces which include a picture of only

Bill Clinton and discuss his record as Governor of

Arkansas can be considered in connection with the

candidate's campaign for nomination. Similar

explanations should be provided for all other direct

mail pieces noted in this finding.

campaign materials - explain and document how the

campaign materials discussed at A.1.b.(1) above were

used in connection with the candidate's campaign for

nomination. Further, explain and document how the cost

of materials, shipped on August 20, 1992, and received

for distribution in a state on or after August 21, 1992

can be considered in connection with the candidate's

campaign for nomination.

Page 22, Approved 12/27/94
-21-

print media/focus group survey - explain and document

the relationship between the July 29, 1992 advertisement

and the candidate's campaign for nomination. The ad

contains a request for the votes of former Perot

supporters. Since, the next election in which votes

were to be cast would have been the 1992 general

election, explain how a request for these votes relates

to the candidate's campaign for nomination. Further,

explain and document how the results of a national focus

group survey, conducted August 12, 1992, that was

primarily composed of individuals who leaned toward Bill

Clinton can be considered in connection with the

candidate's campaign for nomination.

leased office space - explain and document how the

opening of campaign offices in the July/August 1992 time

period and equipping such offices with computers, fax

and copying machines, etc. are in connection with the

candidate's campaign for nomination and not in

connection with the candidate's campaign for election.

equipment - explain and document how equipment

purchased/leased was used in connection with the

candidate's campaign for nomination. Such explanation

should include the specific use of the equipment.

Further, explain and document the apparent inconsistent

treatment of equipment purchased versus the same type of

equipment leased. For example, equipment purchased on

August 15, 1992, is considered (by the Primary

Committee) a primary expense. Where as, equipment

leased from August 15, 1992 through September 15, 1992,

is pro-rated as follows, August 15, 1992 through August

20, 1992 - Primary Committee, and August 21, 1992

through September 15, 1992 - General Committee.

In response to the interim audit report

the General Committee states, in part,

The report questions four categories of

expenditures that should be attributed to

the General Committee and not the Primary

Committee. All of the expenditures were

incurred prior to August 20, 1992, when

president Bush accepted the Republican

nomination to run for President. Some of

the polls, surveys and materials addressed

the comparison between President Bush and

the Democratic nominee, Bill·Clinton.

Bec.use the experiditures "appear to have

benefitted the general election campaign,"

the report concludes that they should have

been paid by the General Committee.

Page 23, Approved 12/27/94
-22-

The report reaches this conclusion because

"it has applied the wrong standard for

determining whether an expenditure was a

qualified primary campaign expenditure.

The Presidential primary Matching payment

Account Act defines a 'qualified campaign

expense' as any payment 'incurred by a

candidate, or by his authorized committee,

in connection with his campaign for

nomination for election, and ... neither

the incurring nor payment of which

constitutes a violation of any law ...' 26 U.S.C. § 9032(9) (emphasis added). The

Commission's regulations track this

definition, defining, in relevant part, a

qualified campaign expense as an expense

'incurred by or on behalf of a candidate • • . through the last day of the candidate's

eligibility ••. made in connection with

his or her campaign for nomination .••' 11 C.F.R. § 9032.9(a) (emphasis added).

The Commission has in the past used a

bright-line test based on the date of a

candidate's nomination, not a subjective

review of content, to allocate expenses

between the primary and general elections."

"The expenses challenged in the Report meet

the test for qualified primary campaign

expenses. First, President Bush's

eligibility as a primary candidate ended on

August 20, 1992, when the Republican Party

nominated him as its candidate for

President. See 11 C.F.R. §§ 9033.5 and

9032.6(a). The expenses were incurred

prior to his nomination while President

Bush was still an eligible primary

candidate. Second, there is no suggestion

that these expenditures violated any law.

Finally, as explained more fully below, the

expenditures were made 'in connection with'

the President's 'campaign for nomination.'

There is no requirement that an

expenditure's exclusive effect be to

benefit the campaign for nomination. See

Adv. Ope 1978-99, Fed. Election Camp. Fin.

Guide (CCH) , 5387, at 10,396 (1979)

(campaign materials ordered and received

only one day before the primary election,

which were both used in the primary

election and the general election, may be

treated as primary campaign expense).13/tl

[Footnote #13 omitted]

pag.e 24, Approved 12/27/94
-23-

"Indeed, the Commission has previously held

that expenditures having an obvious benefit

to the general election campaign may

nonetheless be attributed to a primary

campaign. For example, in auditing the

1984 primary campaign of President Reagan,

the Commission considered whether certain

advertising production expenses incurred by

the Reagan-Bush primary committee were

properly allocated for advertisements that

aired both during the primary and the

general election periods. The Commission

did not challenge payments by the primary

committee for broadcast time prior to the

convention, even though the very same

advertisements were aired again after the

convention during the general election."

"Based upon this well-reasoned precedent,

the Committee used August 20, 1992 -- the

date that President Bush accepted the

nomination of the Republican Party -- to

allocate expenses between the primary and

general committees.!!/

[Footnote #14 omitted]

The Report ignores this traditional

approach and substitutes instead a

subjective determination, almost two years

after the expenditures were incurred, about

whether the general campaign benefitted

from the expenditure."

"As explained in the attached affidavit of

Mary Matalin, the Committee's Deputy

Campaign Manager for Political Affairs

(Exhibit 4), virtually every expenditure

made by a successful primary candidate will

also benefit the candidate's general

election campaign. The reason that

political parties hold a series of

primaries and then a convention is to

select a candidate that can win the general

election in November. A candidate must

therefore convince the delegates that he or

she can do just that: Win in November.

Thus, from the very beginning of their

campaigns, primary candidates take polls

and conduct focus groups asking, inter

alia, who the respondents would vote for

""Ifthe general election w·ere held today.'

See, ~, Matalin Decl. at ,r 18 and

Page 25, Approved 12/27/94
-24-

Attachment A. Candidates publicly attack

their counterparts in the opposing party.

Id. at Attachment B (sample news articles).

They argue to the voters that their

policies are better than the policies of

the other party's candidates. In general,

the candidates seek to build support among

all voters -- not just those registered

with their own party -- so that they can

credibly claim to their party's convention

delegates that they would, if nominated,

win in November."

"The run-up to the Republican National

Convention in 1992 provides a particularly

good illustration of this point. After the

Democratic Convention, Bill Clinton took a

commanding 20-point lead in the public

opinion polls. Matalin Decl. at 8. The

effect was to shake the confidence of some

members of the Republican party about the

ability of President Bush and Vice

President Quayle to win the November

election. Prominent Republicans, such as

George will and Tommy Thomas, made public

calls for President Bush to change his Vice

Presidential candidate or even to step down

himself to open the Convention to another

candidate. Id. At best, this dissension

was undermining the ability of President

Bush to generate the enthusiasm necessary

for a favorable Convention atmosphere or to

forge a political platform of his

choice.1S/"

[Footnote #15 omitted]

"The most effective way for President Bush

to counter such criticism was to show that

he could beat Bill Clinton in November.

Matalin Decl. at 13. That meant, most

importantly, raising his standings in the

polls with all voters, not just delegates

to the Republican Convention. The campaign

therefore took polls and surveys to

ascertain why the Bush-Quayle ticket was

lagging in the polls and generated

advertisements and promotional materials

designed to bolster those ratings as well

as to build overall excitement during the

Convention. Id. Thus, polls that analyzed

the issues important to voters in the

November election, advertisements that

addressed Bill Clinton, and appeals to Ross

Page 26, Approved 12/27/94
-25-

Perot's supporters were all an integral

part of the President's pre-Convention

strategy. Id. at 14. So long as these

expenditureS-were 'in connection with' the

campaign for nomination, it is, we

respectfully submit, simply irrelevant that

these efforts may have also benefitted the

general election campaign.16/

[Footnote #16] - In addition, the

expenditures at issue could not be

allocable to the general election campaign.

They were not made 'for use during the

expenditure period' as required by 11

C.F.R. Sect. 9003.4(a)(I) because President

Bush was not a 'candidate' as required

under 11 C.F.R. Sect. 9002.2 until after

August 20, 1992."

"Moreover, the Report seems to assume that,

at some easily determinable time, President

Bush had 'locked up' the Republican

nomination, and needed to do no more 'in

connection with' his campaign for the

nomination. As Ms. Matalin's affidavit

shows, however, the delegates of many

states were not legally 'bound' to cast

their votes for President Bush. Moreover,

since the days of Lincoln, an integral part

of the nomination process has been the

drafting and adoption by the delegates of a

party platform. Many platform issues were

in dispute until it was adopted on the

floor of the Convention."

"By abandoning the bright-line approach,

the Commission would force political

campaigns to make subjective

determinations, subject to later

second-guessing, concerning the relative

impact of a given expenditure on the

primary versus the general election. Such

a change in interpretation of the

regulations would cripple a campaign. For

example, under the approach suggested by

the Report, polls, recruiting efforts, and

campaign speeches in states immediately

after their respective primaries might be

viewed as sufficiently connected to the

general election to be attributable to the

general election committee.!2/

[Footnote #17 omitted]

Page 27, Approv~d 12/27/94
-26-

[Because] of this uncertainty and because

of restrictions on general election

expenses prior to the nomination, a

campaign could avoid these problems only by

shutting down in each state after each

primary and shutting down completely after

'locking up' the nomination. Indeed, an

incumbent running unopposed arguably would

be prevented from campaigning at all until

after the nomination. Since the advent of

the federal campaign laws, this has never

been the practice; nor should it be now.

The consequences of such conduct would be,

as Ms. Matalin states, 'political suicide.'

Matalin Decl. at ,r 14.18/"

[Footnote #18 omitted]

"Turning to the specific expenditures cited

in the report, their connection with the

nomination should be clear:

a. Polling/Focus Group Surveys: The

polls and surveys discussed in the report,

which were completed before the Convention,

sought to ascertain voters' feelings about

various candidates, including George Bush,

Bill Clinton, and Ross Perot, and about a

variety of issues, including the budget

deficit, taxes, and foreign policy.

Similarly, direct mail pieces sent in early

August addressing the records of President

Bush and Bill Clinton were designed to

generate enthusiasm and to counter the

attacks on President Bush and Vice

President Quayle from inside the party in

late July and early August.

b. Direct Mail: The report asks the

primary Committee to explain how the direct

mail pieces, mailed before the Convention,

'can be viewed in connection with the

candidate's campaign for nomination and not

in connection with the candidate's campaign

for election.' Report at 28. Again, we

respectfully submit that the report sets

forth the wrong standard. While a

qualified primary campaign expense must be

made in connection with the bid for

nomination, it is irrelevant if that effort

also benefits the general election

page 28, Approved 12/27/94
-27-

campaign. Nevertheless, as Ms. Matalin's

Declaration shows, these expenditures

clearly were made in connection with the

campaign for nomination. Matalin Decl. at

14.

with respect to the nomination, the direct

mail pieces sought to recruit volunteers

and generate excitement leading up to the

Convention. Likewise, items that addressed

Bill Clinton and his record as Governor of

Arkansas were part of the response to the

dissension among the Republican ranks

during the pre-Convention build-up. The

primary Committee was seeking to establish

for the benefit of the delegates that the

Bush-Quayle ticket could and would win the

November election.

c. Campaign Materials: Shipments of

campaign materials made on or before August

20, 1992, were paid for by the Primary

Committee. While shipments after that date

were paid for by the General Committee.

See Adv. Ope 1975-9, Fed. Election Camp.

Fin. Guide (CCH) 5110 at 10,035 (1975).

This approach is consistent with the

bright-line cutoff based upon the date of

ineligibility used by the Commission in the

past•••. Campaign materials were shipped

across the country in a constant stream

throughout the primary season. These

materials were used to campaign for

primaries and caucuses and then to generate

support leading up to the Convention. It

would not be possible objectively to set a

date when these same materials somehow

became a general election expense."

d. "Print Media/Focus Group Survey: The

July 29, 1992 advertisement, including the

appeal to former'Perot supporters, again

constituted part of the attempt to build

president Bush's support in advance of the

Convention so that the delegates would

enthusiastically support him at the

Convention. Matalin Decl. 13. Likewise,

focus group surveys played an important pa~tin the development of the campaign's

pre-convention strategy. Id.

e. Leased Office Space: The campaign

offices served an important role throughout

the primary campaign season and in the

page 29, Approved 12/27/94
-28-

pre-convention preparation by supporting

efforts of and disseminating information

from the national campaign headquarters.

For example, efforts by the campaign to

stay in contact with Convention delegates,

provide them current information about the

campaign, and garner their support for

particular platform items were often

coordinated with local campaign offices.

Matalin Decl. at 14. Similarly, these

offices helped support the more general

efforts to generate enthusiasm for the

Convention. Id.

f. Equipment: Again, the equipment being

used by the campaign, both nationally and

across the country, was part of the effort

to prepare for and generate excitement for

the convention as well as the efforts to

counter the Republican attacks on the

Bush-Quayle ticket. With respect to the

treatment of leased versus purchased

equipment, there is no inconsistency.

Leases were pro-rated between the two

committees on the basis of the August 20,

1992, date of ineligibility. Purchased

equipment was sold to the General Committee

pursuant to the practice set forth in

footnote 14 above.

As a final matter, even under the

excessively restrictive standard proposed

by the Commission, many of the primary

expenses challenged in the report would

still constitute qualified primary

expenditures. For example, the palm cards

printed by the Todd/Allen Printing Co. were

shipped to and distributed at the

Convention. Similarly, the

'Accomplishment' brochures printed by

Corporate Press were also used at the

Convention. A detailed exposition

concerning the expenses is included as

Attachment H to the Davis Declaration."

Analysis of the General Committee's response to the Interim Audit

Report

In addition to the above text, the

General Committee provided a declaration from Keith A. Davis

(Assistant Treasurer) and Mary Matalin (Deputy Campaign Manager

for Political Affairs), along with copies of various news

page 30, Approved 12/27/94
-29-

articles. The declarations and news articles, in part, explain

and attempt to justify the General Committee's and the Primary

Committee's payment of expenses in question.

In its response, the General Committee

maintains that it has properly allocated expenses between the

candidate's primary and general election campaigns. In the Audit

staff's opinion, no basis exists to pro rate expenses paid by the

Primary Committee which benefited the candidate's general election

campaign. Based on documentation made available, all expenses

identified by the Audit staff should have been paid in their

entirety by the General Committee.

The General Committee stresses that the

Commission, in consideration of the final audit report for the

1984 Reagan Bush Primary Committee, held that expenditures having

an obvious benefit to the general election campaign may

nonetheless be attributed to a primary campaign. Indeed, the

Commission made a determination that certain polling expenses, as

well as voter registration expenses made in a state after that

state's primary/caucus were made in connection with the

candidate'S campaign for nomination and therefore a qualified

campaign expense.

However, it should be noted that the 1984

Reagan Bush Primary Committee also acknowledged making four

expenditures, totaling approximately $64,000, that were

subsequently reimbursed by the 1984 Reagan Bush General Committee.

These expenditures were for telemarketing and phone deposits

incurred and initially paid by the 1984 Reagan Bush Primary

Committee prior to the 1984 convention.

The General Committee also argues that

after the Democratic Convention, the Democratic nominee took a

commanding 20 point lead in the public opinion polls which caused

dissension within the Republican party. It further states, the

most effective way for President Bush to counter such criticism

was to show he could beat Bill Clinton in November. That meant

raising his standing in the polls with all voters not just

delegates to the Republican Convention.

The General Committee further stated

polls that analyzed the issues important to voters in the November

election, advertisements that addressed Bill Clinton and appeals

to Ross Perot's supporters were in connection with the campaign

for nomination, it is, (the General Committee states) simply

irrelevant that these efforts may have also benefited the general

election campaign.

It is the 0plnlon of the Audit staff that

the expenditures for polls which analyzed issues important to

voters in the November election, advertisements that addressed

Bill Clinton, and the appeals to Ross Perot's supporters can only

be viewed as made for the Candidate's campaign for election. The

page 31, Approved 12/27/94
-30-

polls, advertisements, and appeals represent initial attempts to

determine campaign strategy, identify potential voters, not for

nomination or Convention enthusiasm, but as the General Committee

states "Win in November".

The General Committee asserts that the

interim audit report assumes that at some easily determinable

time, President Bush had "locked up" the Republican nomination,

and needed to do no more "in connection with" his campaign for

nomination. According to Ms. Matalin "the delegates of many

states were not legally 'bound' to cast their votes for President

Bush." The General Committee further states that by abandoning

the bright-line approach, the Commission would force political

campaigns to make subjective determinations. Such a change in

interpretation of the regulations would cripple a campaign. For

example, under the approach suggested by the interim audit report,

polls, recruiting efforts and campaign speeches in states

immediately after their respective primaries might be viewed as

sufficiently connected to the general election.

It should be noted that the interim audit

report does not address a point in time that President Bush had

"locked up" the nomination. It merely addresses expenditures

incurred, for the most part, during the July/August 1992 time

period. The approach suggested by the interim audit report will

not cripple a campaign, nor will it require a campaign to shut

down. It does not question expenditures made immediately after a

states' primary. As stated above, it does question expenditures

incurred during a defined time period (for the most part

July/August 1992). The regulations at 11 C.F.R. § 9003.4(a)

envision such expenditures during this period:

"A candidate may incur expenditures before

the beginning of the expenditure report

period, as defined at 11 CFR 9002.12, if

such expenditures are for property,

services or facilities which are to be used

in connection with his or her general

election campaign and which are for use

during the expenditure report period. Such

expenditures will be considered qualified

campaign expenses. Examples of such

expenditures include but are not limited

to: Expenditures for establishing financial

accounting systems, expenditures for

organizational planning and expenditures

for polling."

Further, in support of its position that

the expenditures were made in connection with the President's

campaign for nomination and that there is no requirement that an

expenditure's exclusive effect be to benefit the campaign for

nomination, the General Committee references Advisory Opinion

1978-99.

Page 32, Approved 12/27/94
-31-

In that Advisory Opinion, a non-publicly

financed committee, not subject to any spending limitations,

requested an 0plnlon as to the correct reporting of a debt

incurred, prior to the date of the primary election, for campaign

materials used before and after the primary election. The

Commission concluded that the full balance owed may, if the

committee wishes, be treated as a primary debt.

The General Committee also cites Advisory

Opinion 1975-9, to support its "bright-line cutoff" approach. As

stated above, the General Committee's position is that the

expenses related to shipments of campaign materials made on or

before August 20, 1992 were properly paid by the Primary

Committee, while post-8/20/92 shipments were properly paid by the

General Committee.

Advisory Opinion 1975-9 is in response to

a Title 2 committee questioning whether a primary election in

which there is only one candidate seeking the nomination is an

election for purposes of the contribution and spending limitations

of 18 U.S.C. §608. The Commission concluded that those

expenditures made solely to defray expenses incurred with respect

to the primary election would not be chargeable to the unopposed

candidate's expenditure limits in the general election.

It is the opinion of the Audit staff that

neither opinion cited is relevant. Advisory Opinion 1978-99 did

not address a situation where spending limitations were

applicable. In Advisory Opinion 1975-9, the Commission clarified

the application of contribution and expenditure limitations in the

case of an unopposed candidate. -

The single most relevant question is, did

the expendi tures benefi t the Primary Commi ttee' s campai-gn for

nomination or the General Committee's campaign for election? We

believe the general election campaign received the benefit of the

expenditures discussed in this report for the following reasons:

First, as previously stated, certain

expenditures by the 1984 Reagan Bush primary Committee were

questioned by the Audit staff. However, the 1984 Reagan Bush

Primary Committee determined that the actual benefit of

expenditures, totaling in excess of $64,000, was to the 1984

Reagan Bush General Committee even though the expenditures were

incurred prior to the Convention. Therefore, in our opinion, the

pertinent question is what committee/campaign benefited from the

expenditure, as opposed to when the expenditure was incurred. The

Gene-ral -Committee"-s- argume-nt'sthatthe -pol1swere coIiduc'ted in

order. to counter dissension within the Party or with delegates

and, therefore, were primary election expenditures, are not

persuasive. We do believe, however, that such polls/focus groups

resulted in information necessary to develop campaign strategies

for the general election.

Page 33, Approved 12/27/94
-32-

Second, in our 0plnlon, advertisements

which targeted Ross Perot's supporters can only be viewed as a

general election expense and not as the General Committee

contends, an attempt to build support in advance of the Convention

so that delegates would enthusiastically support President Bush.

The advertisements were, in our opinion, an attempt to influence

voters in the November general election. The advertisements

stated " •.. I'm asking for your vote. Give me the chance to earn

it. Over the next few months, study the two remaining candidates.

Study our positions on issues... " The use of the words "over the

next few months" can only mean the period of time between when the

ads ran (July 29, 1992) and the November election, and not the

eighteen day period between July 29th and the start of the

Republican Convention. Further, the statement, " ••• asking for

your vote", in the Audit staff's opinion, targets the November

general election. The identity of the two remaining candidates is

obvious.

Third, as in the case of polls and the

focus group surveys, expenditures for campaign materials, leased

office space, and equipment are the types of activity envisioned

by the Regulations as start-up costs. Such expenditures can be

made with funds borrowed from the Primary Committee prior to the

start of the expenditure report period, provided that the amount

borrowed be repaid (by the General Committee) within 15 days of

receipt of payments by the Candidate under 11 C.F.R. §9005. (See

11 C.F.R. §9003.4(b».

Further, as noted above, the General

Committee's position with respect to polls, advertisements, and

appeals to Ross Perot's supporters as well as its contention that

it is "simply irrelevant" that the expenditures may have benefited

the general election is without merit.

The "benefit" to the general election,

whether intentional or not, cannot be dismissed as "simply

irrelevant".

Finally, during our review of information

provided by the General Committee in its response to the interim

audit report, the Audit staff re-examined certain expenditures.

For the most part, these included consulting fees and travel

expenses not related to a specific poll, survey, or focus group;

the· cost of palm cards used at the Convention; and a survey

conducted just prior to the North Dakota primary. As a result of

our review, the above expenses, totaling $59,494, are now viewed

as qualified campaign expenses of the Primary Committee and the

amount of general election expenses paid by the Primary Committee

stands at $1,581,752 ($1,641,246 - 59,494).

On December 8, 1994, during its

consideration of the Primary Committee's final audit report, the

Commission determined that it would allow 50 percent of the

page 34, Approved 12/27/94
-33-

apparent general election expenses paid by the Primary Committee

to be considered primary election related (see Attachment 2).

2. Due to Compliance Fund - Sale of

Equipment to BCE Corporation

After the November election, a Bill of Sale was

executed between the General Committee, the Compliance Fund, and

the BCE Corporation (BCE) for the buy-back of computer equipment,

originally purchased from BCE. According to the Bill of Sale

agreement, BCE was to make two payments of $39,350 each, one on

November 6, 1992, the other on December 6, 1992. As of April 1,

1994, only one of the payments has been received and it was

deposited into an account maintained by the General Committee.

Since BCE re-purchased equipment owned by both the General

Committee and the Compliance Fund, the Audit staff calculated that

portion of the proceeds due each committee. As a result, the

General Committee owes the Compliance Fund $7,870, for its share

of assets sold (see Finding IV.A.3).

In response to the interim audit report, the

General Committee issued a check to the Compliance Fund for

$7,870.

3. Accounts Receivable as of September 30, 1993 - Payment Due From Sale of Equipment to BCE

Corporation

As stated above, the General Committee, Compliance

Fund, and BCE entered into an agreement concerning the re-purchase

of computer equipment. BCE was to make two payments of $39,350

each, on November 6, 1992, and on December 6, 1992. According to

the agreement the committees may collect interest up to 1.5% per

month on any amount unpaid after December 6, 1992. As of

September 30, 1993, the payment (due 12/6/92) remained unpaid.

The Audit staff calculated the General Committee's portion of this

payment to be $36,703 (including interest). According to Counsel

for the General Committee, the payment ($39,350 plus interest)

remains in dispute.

In response to the interim audit report, the

General Committee states, in part,

"The amount of this debt was in

dispute at the time the Report was issued.

After making extensive efforts for more

than a year to resolve the matter, the

Committee filed a complaint to recover the moni~s owed on Febrtiary 15, 1994. ·See

Bush-Quayle '92 General Committee, Inc. v.

BCE Corporation of Rockville, Inc., Civ.

No. 1965-94 (D.C. Superior ct.) (Judge

Mitchell-Rankin). Davis Decl. at 12. To

bring the matter to resolution and avoid

page 35, Approved 12/27/94
-34-

further legal expense, BCE and the

Committee have recently agreed to settle

litigation for a payment of $10,000 by BCE

to the Committee and a cancellation of a

$7,200 invoice from BCE to the Committee."

In the opinion of the Audit staff, the resolution

of this matter is reasonable and the accounts receivable amount

has been adjusted accordingly.

Shown below is the calculation of expenditures

subject to the limitation, which has been revised to reflect the

Commission'S determination of December 14, 1994 (see Finding

IV.A.1.b):

Total Reported Expenditures Subject

to the Limitation as of 6/30/94

Add: Due to Primary Committee

Due to Compliance Fund

Gain on Insurance Settlement

Expenditures Misclassified as

Exempt Legal and Accounting

Less: Accounts Receivable at

6/30/94

Due from Primary Committee

Reimbursement from Compliance Fund

Offsets to Operating Expenditures

Misclassified as Transfers from

Authorized Committees

Adjusted Expenditures Subject to the

Limitation

Expenditure Limitation

Amount in Excess of the Limitation

Less: Expenditures that may,be

Reimbursed by the Compliance

Fund (Total Available

$1,409,208) i/

$55,224,618

779,708 !/

7,870

2,086 £/

127,792 ~/

185,704 ~/

329 !/

160,000 ~/

2,783

55,793,258

55,240,000

553,258 ~/

553,258

Adjusted Amount in Excess of the

Spending Limitation

page 36, Approved 12/27/94

$ o
~/

£/

~/

1./

-35-

FOOTNOTES TO RECAP OF EXPENDITURES SUBJECT TO THE LIMITATION

Represents. amounts due the Primary Committee for additional

security deposits ($9,760 - see Finding IV.A.1.a.); apparent

general expenses paid by the Primary Committee ($807,249 - see Finding IV.A.1.b.). The General Committee reimbursed the

Primary Committee for $37,301 of the aforementioned expenses

on September 30, 1993 and October 14, 1993. Further, the

amount owed for additional security deposits ($9,760) was

paid on July 6, 1994.

Represents amounts due the Compliance Fund for proceeds from

sale of equipment ($7,870). The $7,870 was paid on July 6,

1994.

This adjustment is necessary to offset an erroneous reduction

to expenditures subject to the limitation that occurred when

the full amount of an insurance settlement was applied as an

offset to operating expenditures (see Finding IV.D.).

Represents expenditures reported by the General Committee

as Exempt Legal and Accounting expenses for the period 1/1/94

through 6/30/94. These expenses should have been reported as

operating expenditures subject to the limitation.

Represents outstanding receivables at 6/30/94: BCE ($10,000 - this amount was the result of a settlement of a dispute with

BCE concerning the amount due; see Finding IV.A.3.);

Republican party of Texas ($2,091); and, Saatchi & Saatchi

($173,613).

Represents amounts due from the Primary Committee for

increase in insurance premiums ($329 paid on July 6, 1994).

Represents amounts reimbursed by Compliance Fund for

expenditures that could have been paid by the Compliance Fund

(see footnote i). The Compliance Fund actually reimbursed

$260,000, however, $160,000 was reported as transfers (line

18) and not as offsets to operating expenditures (line 20a).

Consequently, reported expenditures subject to the limit are

overstated and an adjustment is required.

In addition to the adjustment explained at footnote i/

involving expenditures ·which could be paid by the Compliance

Fund, the NOQCE statement at Attachment 1 contains an

estimate for winding down expenses for the period 7/1/94

through 6/30/95, totaling $122,700. This amount may be paid

by the Compliance Fund and is not·included herein.

The Audit staff identified expenditures, totaling $1,669,208,

paid by the General Committee through 6/30/94 that could

have been paid by the Compliance Fund. As of 6/30/94, the

Compliance fund had reimbursed the General Committee

$260,000.

Page 37, Approved 12/27/94
-36-

Based on the above, it appears that the

General Committee has exceeded the limitation at 2 U.S.C.

§441a(b)(1)(B) in the amount of $553,258. However, the Audit

staff has adjusted expenditures subject to the limit for

$553,258 to recognize a portion of the remaining reimbursement

permitted from the Compliance Fund. As a result, any excessive

amount and resulting repayment were eliminated.

It is the opinion of the Audit staff that the

Compliance Fund should reimburse the General Committee for

$553,258, and provide evidence of such reimbursement(s).

B. Apparent Non-qualified Campaign Expenses

Section 9002.11 of Title 26 of the United States Code

defines, in part, the term "qualified campaign expense" as an

expense incurred. by an authorized committee of the candidates of a

political party for the offices of President and Vice President to

further the election of either or both of such candidates to such

offices.

Section 9007(b)(4) of Title 26 of the United States Code

states, in part, that if the Commission determines that any

portion of the payments made to eligible candidates of a political

party under section 9006 was used for any purpose other than to

defray qualified campaign expenses, the Commission shall notify

such candidates of the amount so used, and such candidates shall

pay to the Secretary of the Treasury an amount equal to such

amount.

Section 9003.5 of Title 11 of the Code of Federal

Regulations states, in relevant part, that each candidate shall

have the burden of proving that disbursements made by his or her

authorized committee(s) are qualified campaign expenses as defined

at 11 CFR 9002.11. The candidate and his or her authorized

committee(s) shall obtain and furnish to the Commission at its

request any evidence regarding qualified campaign expenses made by

his or her authorized committee(s). For disbursements in excess

of $200 to a payee, the candidate must present documentation of

the payee, amount, and purpose of the disbursement.

Insufficient Documentation

On October 21, 1992, the General Committee made a

$38,507 payment to the Ohio Republican party. Information related

tQ this disbursement describes the purpose as "Ohio Partial

Payment" and "partial payment - Phones". In response to the Audit

staff's request for add'itional documentation, the General

Committee stated that:

"The General Committee paid $38,506.53 to

the Ohio Republican Party as the

Committee's allocable share of telephone

page 38, Approved 12/27/94
-37-

bank work. The Ohio Republican Party

paid the balan~e. To date (October 20,

1993), we have not received a copy of the

script for this telephone program, but it

was the policy of the Committee to pay an

allocable share of state telephone

programs, based on the number and content

of the questions."

In the interim audit report the Audit staff recommended

that the General Committee provide documentation from the vendor

that (a) describes the purpose of the disbursement, (b)

identifies the other parties who made payments in connection with

this program, (c) identifies the questions (copy of the script)

and, (d) supports the amount allocated to each participant.

Absent such a demonstration, the Audit staff would recommend that

the Commission make an initial determination that the General

Committee make a payment of $38,507 to the United States Treasury

pursuant to 26 U.S.C. §9007(b)(4).

In response to the interim audit report, the General

Committee provided a signed declaration from the Chief Financial

Officer of the Ohio Republican Party. This declaration clarified

the purpose of the disbursements, identified the other parties

involved in the joint telephone bank work, the total cost and

allocable portions to the involved parties. Further, included

with the declaration was a script of the questions asked during

the telephone program.

It is the Audit staff's opinion that the documentation made

available demonstrates that the $38,507 disbursement to the Ohio

Republican party was a qualified campaign expense.

C. Stale-dated Checks

Section 9038.6 of Title 11 of the Code of Federal

Regulations states that if the committee has checks outstanding

to creditors or contributors that have not been cashed, the

committee shall notify the Commission of its efforts to locate

the payees, if such efforts have been necessary, and its efforts

to encourage the payees to cash the outstanding checks. The

committee shall also submit a check for the total amount of such

outstanding checks, payable to the United states Treasuiy.

The Audit staff reconciled the General Committee's

schedule of outstanding checks as of July 31, 1993 and identified

stale-dated checks totaling $21,970. In September/October 1993,

the General Committee reissued checks totaling $2,622.19, how~ver, no documentation wa. m~deav~ilable to demonstrate the

reissued checks had cleared the bank as of October 7, 1993.

At the exit conference, the General Committee was

provided a schedule of the stale-dated checks. Representatives

stated they would review this matter.

Page 39, Approved 12/27/94
-38-

Subsequent to the exit conference, the General

Committee provided documentation that demonstrated $2,622.19 in

reissued checks had cleared the bank and $324.76 represented

amounts not owed. Further, on October 21, 1993, the General

Committee made a payment to the United States Treasury of

$19,023.07.

Recommendation #1

The Audit Division recommends that Commission make an

initial determination that $19,023.07, representing the value of

stale-dated checks, is payable to the United States Treasury.

The payment was made on October 21, 1993.

D. Gain on Insurance Settlement

Section 9007.2(b)(4) of Title 11 of the Code of Federal

Regulations states, in part, that income resulting from use of

public funds shall be paid to the United States Treasury in an

amount equal.to the amount determined to be income, less any

Federal, state or local taxes on such income.

The General Committee rented a laptop computer from

American Computer Rental (ACR). At the expiration of the rental

period, the General Committee could not be locate the computer.

According to the General Committee, in order to fulfill the terms

of the agreement, the General Committee could either pay ACR the

value of the computer, as determined by ACR, or provide a

replacement.

On January 5, 1993, ACR invoiced the General Committee

$5,745. The General Committee forwarded this invoice to its

insurance company. On April 20, 1993, the General Committee

deposited a check, from its insurance company, in the amount of

$5,495 ($5,745 - 250 deductible). On May 21, 1993, the General

Committee purchased a replacement computer at a cost of $3,409.

It is the opinion of the Audit staff that the

difference between the amount received from the insurance company

($5,495) and cost of the replacement computer ($3,409) represents

income to the General Committee in the amount of $2,086.

It should be noted that the General Committee reported

the full amount of the insurance check, $5,495, as an offset to

operating expenditures [subject to the limitation]. The cost of

the replacement computer, $3,409, was reported as an expenditure

and charged to the limitation. As a result, the combination of

the two reporting transactions understate expenditure subject to

the limitation by $2,086 (see Finding IV.A., footnote c).

In the interim audit report the Audit staff recommended

that the General Committee demonstrate that the above

transactions did not generate income in the amount of $2,086.

page 40, Approved 12/27/94
-39-

Absent evidence to the contrary, the Audit staff will recommend

that the Commission make an initial determination that $2,086 is

repayable to the United states Treasury.

In response to the interim audit report the General

Committee made a payment to the United States Treasury of $2,086.

Recommendation #2

The Audit Division recommends that the Commission make an

initial determination that the General Committee make a repayment

of $2,086 to the United states Treasury. The repayment was made

on July 6, 1994.

v. Finding and Recommendation - Repayment Matter

Bush-Quayle '92 Compliance Committee

A. Stale-dated Checks

Section 9038.6 of Title 11 of the Code of Federal

Regulations states that if the committee has checks outstanding

to creditors or contributors that have not been cashed, the

committee shall notify the Commission of its efforts to locate

the payees, if such efforts have been necessary, and its efforts

to encourage the payees to cash the outstanding checks. The

committee shall also submit a check for the total amount of such

outstanding checks, payable to the United states Treasury.

The Audit staff reconciled the Compliance Fund's

reported disbursement activity to the bank activity through June

30, 1993, and identified 13 stale-dated checks totaling $8,666. Eleven of the 13 checks, totaling $8,391, represented

contribution refunds. The remaining two checks, totaling $275, represented payments relative to the purchase of furniture

and equipment.

At the exit conference the Audit staff provided

Compliance Fund representatives with a schedule of the

stale-dated checks. The representatives agreed that the checks

listed were 'stale-dated.

The Compliance Fund made a payment to the United States

Treasurer for $8,666 on October 21, 1993.

Recommendation #3

The Audit staff recommends that the Commission make an

initial determination that $8,666, representing the value of stale-dat~d checks, is payable to the United states Treasury.

The payment was made on October 21, 1993.

page 41, Approved 12/27/94
-40-

VI. Repayment Summary

Presented below is a recap of the amount due the United

states Treasury:

Finding IV.C. - Stale-dated checks

(General Committee)

Finding IV.D. - Gain on Insurance Settlement

Finding V.A. - Stale-dated checks

(Compliance Fund)

Sub-total

Amount Paid to U.S. Treasury

$19,023~/

2,086~/

8,666~/

29,775

29,775

Amount Due $ o

~/ These amounts have been paid by the General Committee or

the Compliance Fund when applicable.

page 42, Approved 12/27/94
Final Audit Report Attachment 1, Page 1 of 2

Bush-Quayle '92 General Committee, Inc.

Statement of Net Outstanding Qualified Campaign Expenses

As of June 30, 1993

Audit Analysis

Assets:

Cash in Bank

Accounts Receivable

Capital Assets

Due from Primary Committee

Due from Compliance Fund

Total Assets:

liabilities:

Accounts Payable

(actual disbursements 7/1/93 - 6/30/94)

Due to Primary Committee

Due to Compliance Fund

Payment to the U.S. Treasury

Gain on Insurance Settlement

Winding Down Expenses

Actual (7/1/93 - 6/30/94)

Estimated (7/1/94 - 6/30/95)

Total liabilities:

$ 391,010

524,482

2,115 QL

51,3859L

813,258 91.

121,785 e/

1,018,586 fL

312,403 91

2,086 bL

306,252

122,700

$1,782,250

$1,883,812

Net Outstanding Qualified Campaign Expenses: (Deficit)

Paqe 43, Appro¥ed 12/27/94

($101,562) J1
Final Audit Report Attachment 1, Page 2 of 2

Bush-Quayle '92 General Committee, Inc.

Footnotes to NOaCE:

a/ Represents an amount due from the U.S. Secret Service ($26,785 - received

7/20/93), an amount due from BCE per settlement ($10,000), amounts developed

during field work and agreed to by the General Committee (Saatchi & Saatchi -

$285,741 (received 10/7/93) and Republican Party of Texas - $2,091), and actual

refun ds/rebates received for the period 7/1/93 through 6/30/94 ($26,252). An

additional $173,613 in refunds was received from Saatchi & Saatchi on August 4,

1994 and September 22, 1994. The entire amount has been included as a receivable

due the General Committee, however, the possibility exists that a portion of the

$173,613 could relate to the Primary Committee. Further adjustments may be

necessary.

bl Represents capital assets not liquidated by the General Committee.

c/ Represents amounts due from the Primary Committee for increases in insurance

premiums ($329 - paid by the Primary on 7/6/94) and telephone deposits ($51,056

- received 10/25/93).

d/ The Audit staff applied expenditures totaling $813,258 [out of a total of $1 ,669,208]

paid by the General Committee through 6/30/94, that could have been paid by the

Compliance Fund (see Finding IV.A.). As of 6/30/94, the Compliance Fund has

reimbursed the General Committee $260,000.

e/ Represents amounts outstanding on 6/30/93 (Johnson & Higgins - $75,075 and

other payables - $46,710, paid 7/1/93 through 6/30/94.

!L Represents amounts due the Primary Committee for General Election expenses paid

by the Primary ($807,249 - see Finding IV.A.1.b.); additional security deposits

($9,760 - paid 7/6/94); and the purchase of Primary Committee assets ($201,577 -

paid 10/1/93 through 12/31/93).

91 Represents amounts due the Compliance Fund for non-exempt legal and

accounting expenses paid by the Compliance Fund ($304,533- - paid 11/5/93); and

proceeds from sale of equipment ($7,870 - paid 7/6/94).

h/ See Finding IV.D.

il The deficit noted ($101,562) once adjusted, agrees with the calculation

of expenditures in excess of the spending limitation ($0).

Expenditure Limitation (overage)

NoaCE - Deficit

Adjustments:

Estimated Winding Down Expenses

Capital Assets Not Liquidated

Repayment of Stale- Dated Checks

Adjusted NOaCE - Deficit

Page 44, Approved 12/27/94

$0

($101,562)

$122,700

($2,115)

($19,023)

$0
Final Audit Report

A·Ktl05785

Attachment 2

Page 1 of 1

Bush-Quayle '92 General Committee, Inc.

'Recap of General Election Expenses Paid by the Primary Committee

vendor

Market Strategies

Karl Rove + Company

The Tarrance Group

Spalding Companies

James R. Foster & Associates

Corporate Press, Inc.

Campaign Services Group

Western Wats Center

Todd/Allan Printing Co., Inc.

Strategic Planning

Direct Communication

Satellite Network Systems, Inc.

Direct Mail Systems, Inc.

Anjoy Research, Inc.

campaign Tel Ltd.

BCE Corporation of Rockville

Andrews Office Products

The Core Group

Depue & Associates

Radio Shack

Various - Office Space

November Co.

Amount

$ 133,164

301,551

25,920

122,512

4,500

39,031

43,056

44,873

6,299

20,104

22,000

81,660

19,726

25,000

357,692

150,644

2,317

5,184

5,021

481

40,228

130,789

Subtotal 1,581,752

Capital assets reimbursed by the General <4,556>

Committee

Subtotal 1,577,196

Expenses recognized by General Committee <37,301>

as general election related and reimbursed

by the General Committee.

Total $1,539,895

50% viewed as general election expenses paid $769.948

by the Primary Committee ($1,539,895 * 50%)

Total amount of general election .expenses $807,249

paid -by -the -Primary-Commrtte'e ('$7'6'9,94'8 +

$37,301)

Page 45, Approved 12/27/94
Page 46, ApprDved 12/27/94
Pt\

lO-~-4.~

FEDERAL ELECTION CO,"1MISSION

WASHINGTON, 0 C 204bJ

October 24 t 1994

MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

Robert J. Costa

Assistant Staff Director

Audit Division

.~...... }; .•J

John C. Surina\ {:p"I'

Staff Director

Lawrence M. Nobl'

Gene ral Counsel 1"'-

Kim Bright-Coleman I~ Associate General Counsel

///r

Kenneth E. Kellner,:~/~ . 1 , Asslstant Genera Counsel

Delanie DeWitt painter 1711f Attorney fJ/fJ

Jane Whang ('1.,J

Attorney 7'" - Proposed Final Audit Report on Bush-Quayle '92

General Committee, Inc. and Bush-Quayle '92

Compliance Committee (LRA #425/AR #94-14)

I. INTRODUCTION

The Office of General Counsel has reviewed the proposed

Final Audit Report on the Bush-Quayle '92 General Committee,

Inc. ("GEe· or the ·Committee") and Bush-Quayle '92

Compliance Committee ("GELAC") submitted to this Office on

August 15, 1994. The following memorandum summarizes oue

comments on the proposed Report. We concur with

findings in the proposed Final Audit Report which are not

discussed separately in the following memorandum.l/ If you

have any questions concerning our comments, please contact

!/ Parenthetical references are to the placement of findings in

the proposed report. The Commission's discussion of this document

is not exempt from disclosure under the Commission's Sunshine

Regulations and the document should be considered in open session.

11 C.F.R. S 2.4.

Page 47, Approved 12/27/94
Memorandum to Robert J. Costa

Final Auoi t Repor·t - Bush-Quayle ' 92

General and Compliance Fund

(LRA *425/AR *94-14)

Page 2

Delanie DeWitt Painter, the lead attorney assigned to this

audit.

II. PAYMENT OF GENERAL ELECTION EXPENSES BY PRIMARY

COMMITTEE (IV. A. 1.)

The Primary Committee paid for expenses totaling

$1,641,246 which benefited the candidate's general election

campaign, including polling, focus group surveys, direct

mail, list rentals, shipping and materials, print media

services, leased office space, and equipment. These

expenditures were incurred prior to the candidate's date of

ineligibility but after the state primary elections and

caucuses.2/ The Audit Division states that there is

insufficient information to divide portions of specific

expenditures between the primary Committee and the GEC. ·The

Audit staff concludes that all expenses should have been paid

by the GEC, and recommends that the GEC pay the Primary

Committee $1,613,705 for these expenditures.3/ This payment

increases the GEe's expenditures subject to the limitation

resulting in a repayment of $154,443. While we concur with

most of the Audit Division's conclusions and the proposed

initial repayment determination for expenditures in excess of

the limitation, our analysis of this issue differs from that

of the Audit Division.!/

Expenditures made in connection with a primary

candidate's campaign for nomination prior to the candidate's

date of ineligibility are qualified campaign expenses

provided that the expenditures do not constitute a violation

of the law. 11 C.F.R. S 9032.9(a). Expenses incurred after

a candidate's date of ineligibility are non-qualified except

to the extent permitted under 11 C.F.R. S 9034.4(c)(3) for

winding-down costs. 11 C.F.R. S 9034.4(b)(3). The

Commission's regulations permit general election campaigns to

~/ State primary elections or caucuses were held through

June 9, 1992. The candidate'S date of ineligibility was

August 20, 1992.

3/ The GEC reimbursed the Primary Committee $37,301 of the

apparent general expenses paid by the Primary Committee in

the fall of 1993.

4/ We also concur with the repayment determination in the

proposed Final Audit Report for the gain on an insurance

settlement ($2,086). Moreover,· we agree with the payments

for stale-dated checks issu~d by the GEe ($19,023) and for

stale-dated checks of the Compliance Fund ($8,666). The GEe

and Compliance Fund have not challenged these determinations,

and have made payments to the United States Treasury totaling $29,775. The only repayment which is in dispute is the

$154,443 for expenditures in excess of the limitation.

Page 48, Approved 12/27/94
"emo[anaum ~o ~ODeI~ ~. ~os~a

Final Audit Report - Bush-Quayle '92

General and Compliance Fund

(LRA 1425/AR 194-14)

Page 3

incur expenses for property, services and facilities such as

polling, accounting systems, and organizational planning to

be used during the expenditure report period prior to the

beginning of the expenditure report period. 11 C.F.R.

S 9003.4(8)(1). This provision was "designed to permit a

candidate to set up a basic campaign organization before the

expenditure report period begins." Explanation and

Justification, 45 Fed. 43375 (June 27, 1980). While the

regulation enumerates examples of permissible expenditures

incurred prior to the expenditure report period such as

polling, these examples are not all-inclusive.

The Committee argues that the "Commission has in the

past used a bright-line test based on the date of a

candidate's nomination, not a subjective review of content,

to allocate expenses between the primary and general

elections." Response to Interim Audit Report dated July 6,

1994, at 11. Thus, the Committee allocated expenditures

between the primary and general elections based on whether

they were incurred before or after August 20, 1992, the date

that the candidate accepted the nomination. As support for

its position, the Committee argues that the Commission's

decision in the Reagan Bush '84 Primary Committee audit

permits the Primary Committee to fund .any general election

expenses as long as the expenses were incurred prior to the

candidate's date of ineligibility.SI See Final Audit Report

on Reagan Bush '84 Primary (approved July 7, 1986).

Moreover, the Committee contends that certain

expenditures were part of a "pre-convention strategy"

intended to combat dissension in the party, improve the

candidate's standing in the polls, and "build overall

excitement during the Convention." Response at 13-19. The

Matalin affidavit attached to the Committee's response

asserts that these expenditures were necessary to dispel

51 The Committee cites Advisory Opinion ("AO") 1978-99 to

support its contention that an expenditure need not

exclusively benefit the campaign for nomination to be a

qualified campaign expense. Response at 11. In AO 1978-99,

the Commis.ion permitted a committee to report 8 debt

incurred prior to the date of the primary election, for

materials to be used in both the primary and general

elections as a primary election debt. This opinion is not on

point. The determination of whether an expenditure may be

considered part of 8 committee's primary debt for Title 2

reporting purposes has no bearing on whether an expenditure

is a qualifi~d campaign expense of a publi~ly-£inanc~d

presidential campaign. Indeed, the Commission has more

recently confirmed that determining whether an expenditure is

related to the primary or general election is based on both

the timing and the purpose of the expenditure. See AO

1984-15.

Page 49, Approved 12/27/94
Memoranaum co MoOert J. ~osta

Final Audit Report - Bush-Quayle '92

General and Compliance Fund

(LRA #425/AR #94-14)

Page 4

dissension within the party and convince convention delegates

of the viability of President Bush's candidacy.6/ The

Committee further contends that the expenditures would not be

allocable to the general election under 11 C.F.R.

S 9003.4(a)(1), because they were not made for use during the

expenditure report period. Finally, the Committee asserts

that certain expenditures should be considered qualified

campaign expenses of the Primary Committee even under what

the Committee terms an "excessively restrictive standard."

Response at 18.

A "bright line test" based solely on the date that an

expenditure is incurred has never been applied by the

Commission. In relying on this test, the Committee focuses

on only one of the two key elements for assessing qualified

campaign expenses. It is not enough merely for an

expenditure to be incurred prior to the candidate's date of

ineligibility to be considered a qualified campaign

expenditure. To be qualified, an expenditure must also be

made in connection with a primary candidate's campaign for

the nomination. 11 C.F.R. S 9032.9(a). Thus, the correct

standard for determining whether an expenditure is a

qualified campaign expense relies on both the timing of the

expenditure and the nature of the expenditure. See AO

1984-15.

We believe that the decision in the Reagan Bush Audit,

which was based on the particular facts in that case, does

not support the Committee's position. See Final Audit Report

on Reagan Bush '84 Primary (approved Jury-7, 1986). In the

Reagan Bush audit, the Commission concluded that certain

specific expenditures for polling, consulting, and voter

registration incurred prior to the candidate's date of

ineligibility and apparently related to the general election

campaign could be considered qualified campaign expenses of

the primary committee. However, the Reagan Bush general

committee also reimbursed the primary committee $64,000 for

telemarketing expenditures incurred prior to the candidate'S

date of ineligibility, thus demonstrating that the timing of

an expenditure alone does not determine whether it is related

6/ The affidavit from Mary Matalin, the Committee's Deputy

Campaign Manager for Political Affairs, concerned campaign

developments and strategy during the summer of 1992. Ms.

Matalin stated that prior to the Republican convention,

President Bush was substantially behind the Democratic

nominee in the polls, and faced opposition from within his

own party~ including calls for him to changE his Vice

Presidential running mate, or to step down himself.

Ms. Matalin contends that because some delegates were not

legally bound to cast their votes for him, President Bush

ultimately had to convince convention delegates that if

nominated, he would be successful in the general election.

Page 50, Approved 12/27/94
n~WV&.QUUU&ll ~V l\U1JeJ.~ ~. \",U5(.(I

Final Audit Report - Bush-Ouayle '92

General and Compliance Fund

(LRA #42'S/AR #94-14)

page 'S

to the primary or general election. Final Audit Report on

Reagan Bush '84 Primary, (approved July 7, 1986). contrary

to adopting a "bright line" test, this precedent supports

examining all of the particular facts surrounding an

expenditure.

Moreover, matters concerning coordinated party

expenditures, which involve publicly-financed presidential

campaigns and expenditure limitations, are analogous to the

issue of qualified campaign expenses presented here. In

situations involving coordinated party expenditures, the

Commission has considered not only the timing, but also the

purpose of expenditures when determining to which election an

expenditure should be attributed. AO 1984-15. For example,

in AO 1984-15, the Commission considered whether the purpose

of expenditures was to influence the general election

campaign in order to determine if the expenditures were

coordinated party expenditures. The Commission noted that

while "timing is relevant," coordinated party expenditures

are not restricted to the time period between the nomination

and the general election, and it would be inconsistent with

the purpose of the limitation on coordinated expenditures to

"permit expenditures made prior to nomination but with the

purpose and effect of influencing the outcome of the

presidential general election to escape this limitation."

AO 1984-15.

It is possible that some of the expenditures at issue

were intended, in part, to build excitement for the

Convention and secure the candidate'S nomination. For

example, if, as the Committee contends, state offices were

actually used to disseminate information to delegates prior

to the convention, the expenditures for the offices may have

been, in part, qualified campaign expenses. Where an

expenditure benefits both the general and primary elections,

it would be an equally incorrect application of a "bright

line test" to allocate the entire expenditure to the general

election as it would be to allocate it to the primary

election. Rather, such an expenditure should be allocated

reasonably between both committees. For some of the

expenditures in this case, the Committee's arguments that the

expenditures were related to the convention could in fact

justify such an allocation if supported by evidence.

However, even for these expenditures, the evidence does not

justify an allocation of the expenditures between the Primary

Commi t tee and the" GEe othe r than tha t made by the Audi t

Division·II

7/ In order to support an allocation of a specific

expenditure between the GEC and the primary Committee, the

Committee would need to provide documentation such as

memoranda, invoices, or other documentation demonstrating the

extent that the activity in state offices related to

Page 51, Approved 12/27/94
Memorandum to Robert J. Costa

Final Audit Report - Bush-Quayle '92

General and Compliance Fund

(LRA *425/AR *94-14)

page 6

Most of the remalnlng expenditures at issue have no

apparent connection to the nomination, aside from the

Committee's assertion that they were part of a

"pre-convention strategy," but appear instead to be related

solely to the general election. For example, the Primary

Committee paid for a full page advertisement in five

newspapers on July 29, 1992, after Ross Perot announced he

would not run for President. The advertisement appealed for

the votes of Perot supporters in the upcoming election.

Although this advertisement appeared before the Republican

convention, the timing and nature of the advertisement

indicates that it was intended to sway Perot supporters for

the general election.

In addition, there is ample evidence that the

expenditures at issue were related to the general election.

Indeed, contrary to the Committee's contention, the

expenditures described in the report appear to be the kinds

of "set up" expenditures that fall within the scope of 11

C.F.R. S 9003.4(a)(I).8/ Many of the expenditures, incurred

in July and August 1992, appear intended to establish an

infrastructure of office space, equipment and materials to be

used in the forthcoming general electi~n campaign.9/ In

addition, the Primary Committee paid for polls related to the

general election that contained questions concerning the

November election and potential candidates George Bush, Bill

Clinton, and Ross Perot. Section 9003.4(a)(1) specifically

includes polling as a type of general election expense that

may be incurred prior to the beginning of the expenditure

report period.

Moreover, it appears that the direct mail and

advertising expenditures at issue here were related to

preparing for the general election rather than to the

primaries or the convention. The direct mail featured

pictures of Bush and Clinton and discussions of their

(Footnote 7 continued from previous page)

preparing for the Convention.

8/ The Audit Division correctly points out that the

expenditures at issue here were incurred during July and

August, 1992, a time period when start up expenditures for

the general election campaign were likely.

9/ These expenditures include the purchase of miscellaneous

campaign materials such as flags, hats, brochures and signs

which were shipped to various state offices in July and

August 1992; the re-opening in July and August 1992 of state

offices that had been closed since the primary election~ and

subsequently remained open through the general election; and

the purchase and lease of computer equipment, ·software and

Page 52, Approved 12/27/94
Memorandum to Robert J. Costa

Final Audit Report - Bush-Quayle '92 Gene~al and Compliance Fund

(LRA *425/AR *94-14)

Page 7

positions and records on issues. One "Marilyn Quayle" letter

sent on August 4, 1992 discussed kicking off the re-election

campaign, and provided a volunteer hotline number active

through Labor Day. The Committee has not demonstrated that

the advertisements at issue have any connection to the

Republican convention.10/

Finally, the Committee asserts that certain palm cards

and brochures were shipped to and distributed at the

Convention, and thus, were qualified campaign expenses of the

Primary Committee even under our "excessively restrictive

standard." Response at 18. while some questions remain

concerning the use of these expenditures, however, given the

Committee's identification of which specific brochures and

palm cards were used at the Convention, we believe that these

expenditures should be considered primary qualified campaign

expenses. Therefore, we recommend that the report exclude

the amount of these expenditures from the amount the GEC must

pay the Primary Committee, and accordingly reduce the GEC's

expenditures subject to the limitation, and the repayment

amount.

In conclusion, we believe that the Committee's proposed

"bright line" standard would enable a primary committee to

use private contributions and public matching funds to pay a

portion of the general election campaign expenses, thus

circumventing the general election expenditure limitation and

the law's prohibition on receipt of private contributions by

publicly funded general election candidates. 2 u.s.c.

S 441 a ( b ) (1 ) (B); 26 U. S •C.' S 9003 ( b ) (1) and (2). M0 r eover " such an interpretation is inconsistent with 11 C.F.R.

S 9003.4(a)(1), which permits general election campaigns to

incur expenses prior to the date of the nomination. This

regulation would not be necessary if all expenditures made

prior to the primary date of ineligibility were qualified

campaign expenses of the primary committee, even if the

expenditures related to the general election. This Office

does not advocate that the Audit staff question all

expenditures made prior to the date of ineligibility that may

have proven incidentally beneficial to the general election

campaign. However, where, as here, expenditures are made

within two months of the date of ineligibility and appear to

be primarily related to the general election, we believe the

expenditures should be subject to an analysis regarding their

allocation. Here, we believe that such an analysis supports

the Audit Division's allocation.

(Footnote 9 continued from previous page)

related supplies. The Primary Committee paid the costs for

these items through August 20, 1992 and the GEC paid the

exact same types of costs following that date.

Page 53, Approved 12/27/94
Memorandum to Robert J. Costa

Final Audit Report - Bush-Quayle '92

General and Compliance Fund

(LRA #425/AR #94-14)

page 8

III. GOVERNMENT CONVEYANCE (II. A.)

The Interim Audit Report recommended that the Committee

explain an apparent underpayment of $545,345 to the united

states Air Force for campaign-related use of its planes, or

pay this amount to the Air Force. The Committee contends in

its response to the Interim Audit Report that the campaign

used "the SABRE computer reservation system and that the

office used only unrestricted, first-class airfares." The

Audit staff's review of the fares indicates that the

Committee paid an amount comparable to a discounted,

unrestricted first class airfare.11/ Because the Committee did

attempt to comply with the regulations by obtaining and

paying first-class airfares, the proposed Final Audit Report

recommends that the Commission determine that the amounts

paid by the Committee satisfied 11 C.F.R. S 9004.7(b)(4).12/

We concur with this recommendation, as the Committee appears

to have determined and paid for available and valid first

class airfares.

10/ While direct mail and advertising are not specifically

IIsted as permissible expenditures by section 9003.4(a)(1),

we believe that that section should be interpreted to permit

a committee to incur expenses clearly related to setting up

the general election campaign, including direct mail and

advertising intended to influence potential supporters and

volunteers for the general election campaign.

11/ The Audit staff initially estimated an underpayment by

comparing the fares actually paid with a schedule of first class

fares prepared by the General Services Administration ("GSA").

12/ The Commission has previously approved paymen~ of airfare at

what appears to be discounted, unrestricted, first class rates.

See Final Audit Report on Americans for Harkin, March 15, 1994.

(Commission ..app.r.oveda.-,comm-i ttee-'s'-paymen"t-,,'~o-f·,·what-appe<a·red to be

discounted, fir$t class ra·tes to labor unions a·nd corpo-rations,

considering evidence of intended compliance, including submission

of an affidavit from travel agent that he quoted the "valid,

industry standard non-discounted first class airfare" t~ the

Commi t tee) . .

Page 54, Approved 12/27/94
FEDERAL ELECTION COM/\HSSION AKOO'S812

December 27, 1994

Mr. J. Stanley Huckaby, Treasurer

Bush-Ouayle '92 General Committee, Inc.

Bush-Ouayle '92 Compliance Committee, Inc.

228 South Washington Street

Suite 200

Alexandria, VA 22314

Dear Mr. Huckaby:

Attached please find the Final Audit Report on Bush-Ouayle

'92 General Committee, Inc. and Bush-Ouayle '92 Compliance

Committee, Inc. The Commission approved this report on December

27, 1994. As noted on page 3 of this report, the Commission may

pursue any of the matters discussed in an enforcement action.

In accordance with 11 CFR S9007.2(c)(1) and (d)(l), the

Commission has made an initial determination that the General

Committee and the Compliance Committee are required to repay to

the Secretary of the Treasury $21,109 and $8,666, respectively,

within 90 days after service of this report (March 30, 1995).

These amounts have been paid to the u.S. Treasury.

Should the Candidate dispute the Commission's determination

that a repayment is required, Commission regulations at 11 crR

S9007.2(c)(2) provide the Candidate with an opportunity to submit

in writing, within 30 calendar days after service of the

Commission's notice (January 30, 1995), legal and factual

materials to demonstrate that no repayment, or a lesser repayment,

is required. Further, 11 CFR S9007.2(c)(3) permits a candidate

who has submitted written materials to request an opportunity to

make an oral presentation in open session based on the legal and

factual materials submitted.

The Commission will consider any written legal and factual

materials submitted by the Candidate within the 30 day period in

making a final repayment determination. Such materials may be

submitted by ~ounsel if the Candidate so elects. If the Candidate

decides to file a response to the initial repayment determination,

please contact Kim L. Bright-Coleman of the Office of General

Counsel at (202) 219-3690 or toll free at (800) 424-9530. If the

Candidate does not dispute this initial determination within the

30 day period provided, it will be considered final.

Page 55, Approved 12/27/94
Letter to Mr. J. Stanley Huckaby, Treasurer

Page 2

The Commission approved Final Audit Report will be placed on

the public record on December 29, 1994. Should the Candidate have

any questions regarding the public release of this report, please

contact Ron Harris of the Commission's Press Office at (202)

219-4155.

Any questions the Candidate may have related to matters

covered during the audit or in the audit report should be directed

to Brian Dehoff or Tom Nurthen of the Audit Division at (202)

219-3720 or toll free at (800) 424-9530.

Sincerely,

H'-1 f.-/ (t Li. t L.~ I

I ...Robe rt J. cosi~a -:r'\.>/Assistant Staff Di rector

/' Audit Division

Attachment as stated

Pa~e 56, Approved 12/27/94
•

FEDERAL ELECTION CO,\!\;\1ISSION

VVASHf:"-;CTON. 0 C ~Ll4h \

AK005813

December 27, 1994

The Honorable George Bush

c/o Mr. J. Stanley Huckaby

Huckaby & Associates

228 South Washington Street

Suite 200

Alexandria, VA 22314

Dear Mr. Bush:

Attached please find the Final Audit Report on Bush-Quayl~

'92 General Committee, Inc. and Bush-Quayle '92 Compliance

Committee, Inc. The Commission approved this report on December

27, 1994. As noted on page 3 of this report, the Commission may

pursue any of the matters discussed in an enforcement action. .

In accordance with 11 CFR 59007.2(c)(I) and (d)(I), the

Commission has made an initial determination that you are required

to repay to the Secretary of the Treasury $29,775 within 90 days

after service of this report (March 30, 1995). This amount has

been paid to the u.S. Treasury.

Should you dispute the Commissions determination that a

repayment is required, Commission regulations at 11 CFR

S9007.2(c)(2) provide you with an opportunity to submit in

writing, within 30 calendar days after service of the Commission's

notice (January 30, 1995), legal and factual materials to

demonstrate that no repayment, or a lesser repayment, is required.

Further, 11 CFR 59007.2(c)(3) permits a candidate who has

submitted written materials to request an opportunity to make an

oral presentation in open session based on the legal and fa~tual

materials submitted.

The Commission will consider any written legal and factual

materials submitted by you within the 30 day period in making a

final repayment determination. Such materials may be submitted by

counsel if you so elect. If you decide to file a response to the

initial. repayment. dete rmination, please contact Kim L.

Bright-Coleman of the Office of General Counsel at (202) 219-3690

or toll free at (800) 424-9530. If you do not dispute this

initial determination within the 30 day period provided, it will

be considered final.

Page 57, Approved 12/27/94
Letter to the Honorable George Bush

Page 2

The Commission approved Final Audit Report will be placed on

the public record on December 29, 1994 .. Should you have any

questions regarding the public release of this report, please

contact Ron Harris of the Commission's Press Office at (202)

219-4155.

Any questions you may have related to matters covered during

the audit or in the audit report should be directed to Brian

Dehoff or Tom Nurthen of the Audit Division at (202) 219-3720 or

toll free at (800) 424-9530.

Sincerely,

,~/-I- f I[( l L l~)y- l ..'

Robert J. Co-sta ~~Assistant Staff Director

Audit Division

Attachment as stated

Page 58, Approved 12/27/94

'.
CHRONOLOGY

BUSH-QUAYLE '92 GENERAL COMMITTEE, INC AND

BUSH-QUAYLE '92 COMPLIANCE COMMITTEE, INC.

Pre-audit Inventory Commenced

Audit Fieldwork

Interim Audit Report to

the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

5/03/93

6/21/93-9/10/93

4/04/94

7/06/94

12/27/94

Page 59, Approved 12/27/94
\

'

.....

..'1 \ toJ 5:: r~~ i~j Stan Huckab,·

Treasurer

.. !_. ..·.h:_ ...

BUSH

ifI - pam

Q\WLE

March 1, 1995

,. r-- f" ,

("

-- ." '.. - .~-!.~

v\~ J\ ...·l r~. :: <.

I

-I .--

.....

"....

.....-

c

VIA HAND pELIVERY

Ms. Jane Whang

Office of the General Counsel

Federal Election Commission

999 E Street, N.W. ~ashi~g:o~, :.C. 2~~63

Re: General and Compliance Committee Audit Reports

--~~ '~'.:' .. --------Dear .-Ms_~ .. _wl1ang.:__ ~. --..--. --'-'--"-.--' -..------."..:------------.-....--.-..--.:.-...:..----~_. __....:'_.L~_~_ : __ .:.__ -,- _

......,:

This letter together with the attached exhibits

constitutes the response of Bush-Quayle '92 General Committee,

Inc. (the "Primary Committee-) and Bush-Quayle '92 Compliance

Committee, Inc. (the ·Compliance Committee-) (collectively, the

"Committees·) to the Audit Report of the Committees dated December

27, 1994 (the -Report-) .11 By letter dated January 30, 1995, the

Commission granted an extension of time until March 1, 1995, to

submit a response.

....

-.

Pu~suant to 11 C.F.R. § 9007.2(c) {2}, the Committee's

response is limited to demonstrating that "no repayment, or a

lesser repayment, is required. ft The Committee reserves the right

to respo~d to any issue raised by the Commission in other proceedings.~1 The repayment issues are addressed in the order

raised in the Report.

The Committee requests an opportunity to add=ess the

Commission in open session.

11 The Committees also incorporate by reference their response

dated July 6, 1994, to the Interim Audit Report.

~' :e~ta:n iss~es ~aised i~ the Report de ~~t a~pear tc

constitute "repayment issues," and accordingly are not addressed

in thlS Response.

P.O. Box 18998. Washington. D.C. 20036 F~ld (Of by Bush-Quaylc '92 Compliance Commlttee.ln,-

..,.., - Cri.MEJ'1' -ll!:J2__ Aj, ~A \ ' =t

Page of --
- -- \~~

Ms. Jane Whang

March 1, 1995

Page 2

I. FINDINGS AND RECOMMENDATIONS -- REPAYMENT MATTERS

BUSH-QUAILB '92 GENERAL COMMITTEB, INC.

~. Expenditure Limitation

1. Due to Primary Committee

a. Security Deposit for Headquarters Office

The audit indicated that the General Committee reimbursed the Primary Committee $57,009 for a security deposit on

rented office space. The correct amount should have been $66,769. :~ ~eSDonse to the inte~im audit reoort, the General Committee

reimbursed the Primary Committee fo~ the $9,760 difference . .......

'....

b. Apparent General Election Expenses Paid

by the Primary Committee

----.-----_.. _-.. :_._-!_.

.~

,-..

-.

I,"",

I

'- -.---- (-1') - -Polls/Fo<:ils-Group~.- Su.nr.eys.,_:Oir.e.c_t . _ Mail, campaign Materials - Sl,305,652 -

The Commission initially determined on December 8, 1994,

that 50 percent of each of a series of Primary Committee

expenditures totalling $1,539,895 challenged by the audit staff

should have been paid by the General Committee. The expenditures

include (i) polls/focus group surveys, direct mail, and campaign

materials; (ii) print media; (iii) leased office space; and (iv)

equipment. All of these expenditures were made prior to President Bus~'s date of ineligibility (-DO!-) of August 20, 1992, when he rece~ved the nomination of the Republican Farty.

The issues raised in the Report are the flip-side of the

same issues raised in the Audit Report for the Bush-Ouayle '92

Primary Committee, Inc. (the -Primary Committee"). Rather than

repeat the arguments and materials set forth therein, the General

Committee incorporates by reference the response of the Primary

Committee (included as Attachment A hereto) as well as the General

Committee's response to the Interim Audit Report. The General

Committee respectfully submits that the challenged expenditures

were treated properly as qualified primary campaign expenses and

that, regardless of the standard the Commission applies in the

future, the General Committee's approach was appropriate in light

of tr.e laws, regulations. and Commission opinions available at the

time. Furthermore, as explained in the declarations of Mary Ma:a~in and David Carney, the challenged expenditures were made in

connection with the ca~paign for nomlnatlon, even under t~e

bene:its test reflected in the Report.
..............,

Ms. Jane Whang ~a:-ch 1, 1995

Page 3

(2) Due to Compliance Fund - Sale of

Equipment to BCE Corporation

~s indicated in the Report, the General Committee has

reimbursed the Compliance Committee for the recommended amount.

(3 ) Accounts Receivable as of September 30, 1993 - Payment Du~~om

Sale of Equipment to BCE ~oration

The Report indicates that the matter has been reasonably

resolved, and no response from the Committee is required .

• •

The Report concludes that the General Committee exceeded ~. the expenditure limitation by $553,258 and recommends that the

__~.:..._..--.__ .--:_... ~_S:~~B~~~_X:C:~ _Co~~~_~~_~_ F~_~~,?_~s_e_ ~~~_. ~~e~.a~.~.~~_i.~~~e for this

amount. For tne reasons stated abOve and J.n the -J.n·corporat·ed··- ------------. -

materials, the Committees respectfully submit that the General

Committee did not exceed the expenditure limitation. Accordingly,

no reimbursement has been made by the Compliance Committee .

.. -.... ",,_,I B. Apparent Non-qualified Campaign Expenses - Ohio Fundraising Event

.......

'- .

The Commission concluded that the documentation E~b~itted by :he General Committee in respc~se to the interim a~dit report was sufficient to establish that the $38,507

disbursement to the Ohio Republican Party was a qualified campaign

expense. No further response is required at this time.

C. Stale-Dated ChecKs

The General Committee made the recommended repayment on

October 21, 1993, and no further response is necessary at this ~ir.le.

D. Gain on Insurance Settlement

Although the General Committee disagrees with the ::-~:ssion's :ir.ding tha~ the :~surance se::le~ent a~ issue

created income for the General Committee, as stated in the Report,

A.~.n. .... - 'C·"''1-''N''1' r~1· .. ~)--=,.­ c..... - ... -0 7 c:"'---L-- : c.:; .......---
Ms. Jane Whang

March 1, 1995

Page 4

the General Committee made the recommended repayment of $2,086 on

July 6, 1994.

II. PINDING AND RECOMMENDATION· RBPAYMENT MATTER

BUSH-QUAYLE '92 COMPLIANCE COMMITTBB

A. Stale-Dated Checks

As stated in the Report, the Compliance Committee made

the recommended payment to the United States Treasury on October 21, 1993.

.. ~:-:

..... '" .. - _. -'~-"' .."'....-..~-_. - _. __ ......_:-..._--- -.- ....

....

.-....

: ..._._ 0. • • ; .

~espectfu:ly submitte:,

cJ~HU~ Treasurer
,.;,.,.. _. ~. .'. '0' • ~'.' • ":f ••

..'"'"

DECLARATION

I declare under penalty of perjury that the foregoing is

true and correct to the best of my knowledge, information, and

belief. Executed in Washington, D.C. on this 1st day of March

1995.

C',; _. . . __ . ... .:.' • ._ •.

PSt~u~ .. ... .. __• _-:-'- :_~ . ...------ _

-',

..,.....
• .=. ....

FEDERAL ELECTIO!' CQ,\M"HSSIO""

DATE & TIME TRANSMITTED: MONDAX. JANUARy 2;, ]095 11·00

BALLOT DEADLINE: THURSDAY ..JANuARy 2~. ] 905 4'00

COMMISSIONER: AIKENS, ELLIOTT, McDONALD, McGARRY, ?OTTER, THO~~S

SUBJECT: 6USH-QUAYLE '92 PRIMARY COMMITTEE, INC.,

BUSH-CUAYLE '92 GENERAL COMMITTEE, INC., AND 8USH

QUAYL~ '92 COMPLIANCE COMMI~7EE, I~C. REQUESTS FOR

EXTE:~S!0:-;S OF TI:~:: :-0 RESPC:-:::J ':~ rI~';L AUDIT

REPORTS (LRA e 425). MEMORANDUM TO THE COMMISSION

DATED JANUARY 20. 19S5.

!"".'

" . ---.~~:.------. __ .. -.-.._.- .... !-.. -. - .... _- _ .. _._ ..... -- •

I approve the -re'commend"a-tron"("s")

I object to the recommendation(s)

COMMENTS:

r'

-. - -_...- ._-:---._-._-----

DATE: _ SIGNATURE: _

A definite vote is required. All ballots must D€ signed and dated.

Please return ONLY THE BALLOT to t~e Ccm~ission Se:~€tary.

Please return ballet no later than date and time sho~n above.

F~OM THE OfFICE Of THE SECRETARY OF THE COMMISSION
. - ..... '. .. ... ... .. ; ..-.......

KEJIlORANDUK

FEDERAL ELECTIO~ CO."1.'..\ISSIO~

January 20. 1995

TO:

THROUGH:

The Commission r..,. • , t

• 01 I

John C. surina,-~- . ...,.. Staff Director

Lawrence M. Noble

General Counsel

BY: Kim Bright-Coleman KJ(~ Associate General Counsel

'/A/ Kenneth E. Kellner;~'~ Assistant General ~ounsel . . -~'-' --.---;---._----..-... _--~~~~~:~ ~~~it t P;i ;;t;~~{lif·..-.-_.... -------.----.--.-------------

SUBJECT: Bush-Quayle '92 Primary Committee, Inc.,

Bush-Quayle '92 General Committee, Inc., and Bush

Ouayle '92 Compliance Committee, Inc. Requests for

Extensions of Time to Respond to Final Audit

Reports (LRA i 425)

....

._"'.

The Commission approved the Final Audit Reports on the

Bush-Quayle '92 Primary Committee, Inc. ("Primary

Committee"), the Bush-Ouayle '92 General Committee, Inc . ("GEe"), and the Bush Quayle '92 Compliance Committee, Inc.

("Compliance Fund") on December 27, 1994.

The Commission sent the Final Audit Reports to. the

Primary Committee, GEC and Compliance Fund on December 27,

1994. Thus, the Committees' written responses to the

Commission's initial repayment determinations are due on

January 30, 1994. In a letter dated January 11, 1995, the

Committees requested a 30 day extension of time, until March

1, 1995, to respond to the Final Audit Reports and initial

repayment determinations. Attachment 1.

The Commission made an initial de:ermination that ~he

Primary Committee must pay S8~1,850 to the United States

Treasury. This amount includes repayments of $485,631 for

matching funds received in excess of the Primary Committee's
.•. ..~. .~. -.... • . 0 .0 .... ~.'" , ... • • 0 _ ""0 """ _ ...

·Memorandum to the Commission

Requests for Extensions of Time

to Respond to Final Audit Reports

Bush-Ouayle '92 Committees (LRA t 425)

Page 2

entitlement, and $195,224 for apparent non-qualified campaign

expenses l/i and payments of $141,801 for apparent unresolved

excessive-contributions and $19,194 for stale-dated checks.

Because the Pri~ary Committee has already paid $160,995 for

the excessive contributions and stale-dated checks, the

amount now due is $680,855.

.......- -.:.";:-;-~

Moreover, the Commission made an initial determination

that the GEC and compliance Fund must pay a total of $29,775,

consisting of: $19,023 for GEe stale-dated checks; $2,086 for

a gain on an insurance settlement; and $8,666 for Compliance

Fund stale-dated checks. Because the GEe and Compliance Fund

have already paid these amounts to the United States

Treasury, the amount due is $0. In addition, the Final Audit

Report concluded the GEC made expenditures in excess of the

expenditure limitation totaling $553,258, but these

expenditures may be reimbursed by the Compliance Fund.

The Office of General Counsel recommends that the

Vj Commission grant the requested extensions of time. Although

the Committees' letter does not discuss the specific reasons

for the extension request, we believe that the request is

reasonable because Counsel for the Committees must prepare

0.' . re.sp0(1ses to two Final Audit Reports simultaneously.2/ _. ·~,::-__·_--~--·:·~-AeGordi.n-9-ly., __the_~~s.Q~~~~.~ .~ould'"·b1!· due" by close. of business . . on March 1, 1995. .. '.- ' - ..- - . _.. _

RECOKllBHDATIOHS

'-,

.......

I~

-J I

'-

-.

The Office of General Counsel recommends that the

Commission:

1. Grant the requests of the Bush-Quayle '92 Primary

Committee, Inc., the Bush-ouayle '92 General Committee, Inc.,

and the Bush Quayle '92 Compliance Committee. !~c. for an

additicnal 30 days to respond to the Final Audit Reports and

initial repayment determinations; and

2. Approve the appropriate letter notifying the

Committee of the Commission'S decision.

Attach.ents

Letter from Thomas O. Barnett dated January 11,

1995.

1/ This amount will be adjusted if the the GEe reimburses

the primary Committee for general election expenditures paid

:or by the p~imary Committee.

2/ We note that the Committees requested and were granted

extensions of time to respond to the Interim Audit Reports.
..':.~ ... .:-. ...~. ........":.-.; .......

COVINGTON & BURLING

1201 PtNNSY\.VAHIA AVENU£. H. W,

P. O. 80X 75ee

WA~HINGTON. D.C. 200404·7566

12021662·8000

THOMAS O. BARNETT

OO"CCT _.c. IZ~' o6Z·5AQ"

BY HAND

TC"C~U "OZI ea....'

'(,-0 •• ·s.~ .COV1..1040 ~"I

CA8U: cOY\....O

January 11, 1995

~~.... IIIIII.NoO

'CU""'OloC o"'~ ..

~C't.a Otl )IOI

....,..u ~"" OtTCI

....",1tUC OCt ..,..

tavIoMU 1060

~I.V'-ooofC » ...... ..-0

,I:I.C,..... » .. ..,...

.....

.. "

Kim L. Bright-Coleman

Office of the General Counsel

Federal Election Commission

999 E Street, N.W.

Washington, D.C. 20463

Re: Final Audit Reports -- Bush·Ouayle '92

Dear Ms. Bright-Coleman:

-.----------....- -.--_.:.. .:. - ..-...:..,-_Conf.irm~ng_Y9.ur co.nversation with Bobby Burchfield, . this letter constitutes-a:-formar -tequest--1:or- a '-3"O'~-day -extenrion --'--'-- .---- of time for Bush-Quayle '92 Primary Committee, Inc., Bush-Quayle

'92 General Committee, Inc., and Bush-Quayle '92 Compliance

Committee, Inc. (the ACommittees") to comment pn or respond to

the final audit reports dated December 27, 1994, for each of the

respective Committees. We calculate that the responses currently

are due January 30, 1995, and that a 30-day extension would

require the Committees to respond prior to or on March 1, 1995.

Sincerely, ........

-,

Thomas o. Barnett
• -l'~ '- .- :.

BEFORE THE FEDERAL ELBC;ION COMMISSION

In the Matter of }

)

Busb-Cusyle '92 Primar)· Committee, )

Inc., Bush-QUayle '92 General Committee, ) Agenda Document *95-82

Inc., and Bush-Quayle '92 Compli&nce )

Commlttee, Inc .• Proposed Final )

Repaymant Determinations and State:e.nt )

of Reason. (LRA 1425) • )

CERTIPICATION

I, Delore. Hardy, recording '.ecretary for the Federal

.. " ..... .;.... . -;

-__ ------.-.---.-----._~l~.~~~9~ ~?~8!.i?_n open meeting on Thursday, August 3, 1995, .. ._---_..._-------_.._----_._.._---_._.._-.._----._---_..- _.-

do he~eby certify that the Commission took tbe following

actions with respect to Agenda Document '95-82:

,-"

....-.

r2.

Fai!ed in a ~o~e of 3-3 to pass a ~o~io~

to approve tbe recommendations a8 submitted

in Agenda Document '95-82, subject to

including all 33 offices as primary q~alified caopaign expeoses.

Cocmissioners Aikens, Elliott, and Potter

voted affirmatively for the motion;

commdssionera McDonald, McGarry, and

Thomas dissented.

Failed in a vote of 3-3 to pass a motion to

approve the recommendations, a8 submitted i~ Agenda Document #95-82.

Co~is8ioDer8 McDonald, McGarry, and 7homas

voted a!firmatively for tbe motion,

Commissioners Aikens, Elliott, and Potter

dissented.

(continued)

ATTACElLE.'lT I """"'1 ___

F~6 (
Pederal Election CO~88ion

Certification for Busb-Quayle '92

Primary Committee, Inc., Busb·OUayle

'92 General Committe., Ine., and

Bush-QUayle '92 Compliance Committee,

Inc. - Propoaed Pinal Repayment

Determination. and Statament of

Reason. (LRA 1425) . Thursday, August 3, 1995

3. Decided by a vote of 6-0 to approve the

recommendations, as submitted in Agenda

Document 195-82, except reduce the

~ounts, as appropriate, by the cost of

the state offices which bad been included

in those numbers, purs~ant to the meeting

di.cu••ion.

Page 2

, .. ,-... ,. -.....:..¥:.

-;;•. ' .... .'. -~ - ., Commi.sioDK.~Aik.ena".Blliott, McDoaald,· .' ... --- -- ----.----------------- -McOi.rry;--Pot-ier--and--'1'hoaa-a--voted·--a-ff-i-rma----... ~_.~. _~

tively for the decision .

.Attest:

........

c--

I Date

U

I I

;

!!:'!~;-:' __1_+- - Page L of 2...
·... : ..... . ~- ..:.. .. '..:'.~

._~"

FEDERAL ELECT10~ (0'\'\\"15) _"

DATE' TIME TRANSMITTED: MONDAY. AUGUST 14, 1995 ------ 11 :00

BALLOT DEADLINE: THURSDAY, AUGUST 17, 1995 4:00

COMMISSIONER: AIKENS, ELLIOTT, McDONALD, M:GARRl, POTTER, THOMAS

SUBJECT: PROPOSED FINAL REPAYMENT DETERMINATIONS

A~~ STATEMENT OF REASONS - BUSH-OUAY~E

'92 PRIMARY COMMITTEE, INC. BUSH-QUAYLE

'92 GENERAL COMMITTEE, INC., AND BUSHQUAYLE '92 COMPLIANCE COMMITTEE, INC.

(LRA 1425). MEMORANDUM TO THE COMMISSION

DA~ED AUGUST 11, 1995.

- ..- -_.-. -.:::- : __ ... .. -. .. ------_._--- --------._----- .'..

....

,... '"

.-... '- COMMENTS:

1 approve the reco1lUllendation-(s)'

I object to the recommendation(s)

-------_.- ----_.--------

OATE: _ SIGN.~TURE:

-------------------

A d~:init~ vcte is ~eguired. All ball~ts must be signed and dated.

Please return O~LY THE EALL07 to the Ccm~:ssion Secretary.

Please r~~u:n ba~l=: no la:e: tha~ da~~ a-~ ti~~ sh~~n a~cve.

FFOM THE OFFIC~ C~ THE SE:RETAPY Of THE COMMISSION
·~.~':' .' "':-". -~

::'

Augus t 11, 1995

:. \ ". "

f\tCEIVEO

FEDERAL ELECTION

COMJl4'SSlON

SECRETARi4T

&uri II 3 \65 PH '95

Proposed Final Repayment Determinations and

Statement of Reasons - Bush-Quayle '92 Primary

Committee, Inc" Bush-Quayle '92 General Committee, I~:., and Bush-Quayle '92 Compliance Committee,

I:-.:. (Ltv. ;t <'25}

SUBJECT:

FROK:

THROUGH:

KEMORANDUM

TO: The

c

Lawrence M. Noble h)l1JJ ~~ l{,f~ General Couns,el r77

Kim Bright-Coleman ICt1~ AS5~:~ate Ge~eral Cbunsel

Kenneth E. ~ellner Ui~ ~J 14';C Assistant Qeneral counsel"1

Oelanie oe~i tt Painte r /)fjlJ L..l {tHe. Attorney \. r,v/

--~~'t--- :-----:-~ ---'--~~~~~t~wiaii9<:firV- ...'-' ._.~----- ---._:_.-.~- --_ .. -- -- -.---..----.------.. -- . ':.". :

'. I . INTRODUCTION

On August 3, 1995, the Co~ission approved the proposed

Statement of Reasons supporting final repayment and payment determinations on the Bush-Quayle '92 Primary Committee (~the

Primary Committee"), the Bush-Ouayle '92 General Committee,

Inc. (-the GEC-) and the Bush-Quayle '92 Compliance Committee, Inc. (the ~Compliance Fund") as submitted in

Agenda Docu~ent ~95-82. However, the Commission directed

this Office to make specific amendments related to the

Committees' state offices.ll Attached for the Commission's

approval is a~ amended dralt Statement of Reasons supporting

1/ The attached Statement is being circulated for the

Commission's vote in order for a certification containing the

final repay~ent determlna~ion flgures to be issued.
. .. :.~:- .... . ..... -.." ..... . ". . ' ..

Memorandum to the Commission

Final Deteraination

Bush-Quayle '92 Committees

Page 2

the revise= repayment de:erminatio~s.~ !n addition to the

s?ecific changes directed by the Commlssion, other minor

changes were made to make the draft cons:stent ~lth the

Commission's amendments.3/

In the event that the Commission objects to this draft,

we request that this document be placed on the open session

agenda for August 17, 1995.

II. REVISED STATEMENT Of' REASONS

On August 3, 1995, the Commission considered the draft

Statement c: Reasons and the Office of General Counsel's

recommendations. Specifically, in the draft Statement of

Reasons, this Office recommended that the Commission consider

the expenditures for leased office space, equip.ent and

materials associated with the 11 state offices discussed in

the Larson and Dudley declarations to be qualified primary

campaign expenses, but not revise the 50 / 50\ allocation of

expenditures related to the remaining 22 state offices. A

motion to :cnsider 100\ of the expenditures related to all 33

state offices to be qualified campaign expenditures of the

primary campaign failed by a three to three vote.

subsequently, a motion to approve this Office'S

recommmendations also failed by a three to three vote. The

affirmative vote of four.members is reqUired for the -- ----------- -Coma"i-s-s-ion--to -t-ake--any- ac-tion--under---the-Pre-s-iden-ti-al--Pr;-iaar-y---- -------------. ~~ Matching Payment Account Act or the Presidential Election

Campaign Fund Act. 2 u.s.c. S 437c(c). Therefore, the

amounts of expenditures for leased space, equipment and

materials related to all of the state offices4/ at issue

totaling $107,031 have been removed from the total amount of

non-qualif:ed campaign expenses.~/

Based on this change, the amount of non-qualified

campaign expenditures subject to repaymen~ has been reduced

to $409,12: and the P~imary Cc~mit~ge's ?=o rata :epayment

for t~e nc~-qualified campaign expenses r.as been reduced to

'_0

2/ Attach~ents 1-16 to the draft Statement were circulated to

the Commission with Agenda Document t95-82, and are incorporated by reference with the attached Statement. The certification of

the Cornmiss:on's vote on August 3, 1995 :s the only new attachment

to this memorandum. See Attachment 17.

3/ The attached draft is marked to indi:ate where amendments

nave been made.

4/ The expenditures re~ated to the natlonal headquarters are not

considered qual::ied campaign expenses.

5/ This !igure reflects the total amount of expenditures for

Teased spa:e, equlpment and materia~s pertaining to the state

offices. In the Final Audit Report, 50% of this amount was in~lu~ed as quali!:ed pr:~ary campai;~ expenses.
~~"'."-= .... '.

Memorandum to the Commission

Final Determination

Bush-Ouayle '92 Committees

Page 3

S:05,9i9. Mo~eover, :he amount c: matching funds that the

?:lmary Committee received in excess of its entitlement has

been reduced to $216,853, based cr. the increased qualified

=ampaign expenses. Therefore, we recommend that the

Commission make final repayment determinations in the reduced

amounts. The amount of the payment for stale-dated checKs

remains unchanged.

With respect to the GEC and Compliance Fund, the

expenditures subject to the GEe's o~erall expenditure :~~ita~ion have been reduced by a total of $333,172, which

reduces the amount in excess of the GEe's overall expenditure

::=itation to $220,086. The draft Statement cf Reasons

recommends that the Compliance Fund reimburse the GEe in the

amount of $220,086, and submit documentation of the

reimbursement to the Commission. The draft Stateaent of ~easons includes final determinations for the GEC's payment

for stale dated checks and income and the Compliance Fund's raymen~ for s~ale-dated checks. 7he amounts 0: these

payments have not changed, and no additional payment is due :~=~ the GE~ c: Compliance Fund.

.. ".. ~:~~:~

....:.

Therefore, the Office of Genera,l Counsel has prepared

the attached draft Statement of Reasons supportinq a final

determination that the primary Committee must repay $323,832

.-'. . ($106,9,79 ~.$216,.a?3) to the United Stat~& Treaeury. Thf£.'· :. • -- -~:-._- -- - --d raft -S-ta·teatfnt----of-"Re'a S on-s -al S 0-1nc lucte 8 -a'-- flna 1-·paya-.nt -- _._--" -_.."-.---"_. _... ---

~. determination of $19,194 for stale-dated checks, which the

Committee has already paid to the United States Treasury.

Moreover, the draft Statement of Reasons includes final

determinations that the GEe must pay $21,109 and the

Compliance Fund must pay $8,666 to the United States

Treasury. The GEe and Compliance Fund have paid these a:7.~t;r:ts . .........

III. RECOMMENDATIONS

'.0

The Off:ce of General Cour.se: ~ec~=~en~s t~at the

Commission:

'- ' 1. Make a final determination that the Bush-Quayle '92

Primary Committee, Inc. must repay $216,853 to the

United States Treasury pursuant to 26 u.s.c.

S 9038(b)(1)i

2. Make a final determination that the Bush-Quayle '92

Primary Co~~ittee, Inc. must repay $106,919 to the

United States Treasu~y pu~suant to 26 U.S.C.

S 9~38(bH2);

3. Make a final determlnation that the Bush-Quayle '92 P:~mary Co~~it~ee, ~~=. mus: pay 519,194 to the

United States Treasury pursuant to 11 C.F.R.

S 9:;38.E;

~. Make a final determination that the Bush-Quayle '92

General Commlttee, :r.c, must pay $19,023 to the
"~' \,0 -::. <'" __ •• .. •• ·0 '. ......-. •• 0 •• It· • _ •••••

Memorandum to the Commission

Final Determination

Bush-Quayle '92 Committees

page 4

United States Treasu:y pursuant to 11 C.F.R.

S 9007.6.

5. Make a final determination that the Bush-Ouayle '92

General Committee, Inc. must pay $2,086 to the

United States Treasury pursuant to 11 C.F.R.

S 9007.2(b)(4}.

6. Make a final determination that the Bush-Ouayle '92

Compliance Committee, Inc. must pay 58,666 to the

United States Treasury pursuant to 11 C.F.R.

S 9007.6.

7. Recommend that the B~sh-Quayle '92 Compliance Committee, Inc., reimburse $220,086 to the

Bush-Quayle '92 General Committee, Inc. and sub.it

documentation of the reimbursement to the

Commission within 30 days;

8. App:ove the Stateme~~ c: Reasons supporting the

Final Dete:minations; a~d

9. Approve the appropriate letter.

Attachment

Statement of Reasons _..._.__ ._..-._.- . .-_.-....- --- - ~_.

.

~.- .

:0

'., .,.,..... -. ':.~~
~-....'" .. ,~,,,,~,

BEFORE THE FEDERAL ELECTION COMMISSION

In the Matter of )

)

President George Bush, )

v:ce President Dan Ouayle )

?'..;sh-Quayle '92 Primary Committee, Inc., ) B~sh-Ouayle '92 General Committee, Inc., and ) E~sh-Quayle '92 Compliance Commlttee, Inc. ) F~~al Repayment Determinations )

STATEMENT or REASONS

- .-...,- .--~

~~"" :.

On , 1995, the Commission made a final

=~~errnir.a~:~~ t~a~ Preside~t Gec:;e Eus~ an= :~e Bush-Quayle 'S:

?:lmary Committee, Inc. ("the Primary Committee"} must repay

5323,832 to the United States Treas~ry. The Commission's

d~termination inclt!de~ a pro rata. repayment of nOQ:qu.alified .

-~; ----- ,---- campafgn-expens·e.~-ri~i·t-ed '-to~'~gen~i~1-'-ilecti'on ex~~n'~es- i~"·-f.ni·------·"_--' -- .-

a~ount of $106,979. In addition, the Commission determined that

the Primary Committee must repay matching funds received in

ex~ess of its entitlement in the amount of S216,853. Finally,

tr.e Commission made a final determination that the Primary

::~~:ttee m~s: pay $19,19~ for staie-da:ed ~hecks.ll 26 U.S.C.

SS 9038(b)(1) and (2); see also 11 C.F.R. SS 9038.2(b)(1) and

(~). The Primary Committee has already made a payment of

S19,194 for the stale-dated checks. Therefore, the Primary

.. Throughout this Statement of Reasons, "FE:A" refers to :~~ fedeca: E:ection Campaign Act of 1971, as a=ended, 2 ~.S.C. S 431-455, the "Matching Payment Act" refers to the ?:~sidentia: P=lmary Mat~hir.g Pal~e~t Ac:ou~: A:~, :5 ~.s.~.

S ;G31-90~2, and the "presidential Election Campaign Fund

A=:" refers to the Presidential Election Ca~pa:gn Fund Act, ~: U.S.C. S 9001-9013.
.-..... -~ ..

-2-

C:~~:ttee is ordered to repay S3~3,S;: t~ the United States

!:easury ~ithin 30 days of receipt 0: this determination. 11

C.F.R. S 9038.2(d)(2).

.................: ::.~~

t,.:,

Moreover, on , 1995, the Commission made a

final determination that President Ge~rge Bush, Vice President

Dan Quayle and the Bush-Quayle '92 General Committee, Inc. ("the

GEC") must pay $21,109 to the Unlted States Treasury,

representing a gain on an insurance settlement of $2,086 and

stale-dated checks totaling $19,023. 11 C.F.R. S 9007.6;

S 9~C:?2~b}(4~. ~he C~~m~ssion a:so ~ade a final determination

that the Bush-Quayle '92 Compliance Committee, Inc. ("the

Compliance Fund") must pay $8,666 for stale-dated checks. The

GEe and Compliance Fund have paid these amounts. Accordingly, , .. .. . . ... . --~~~- ._'-- ----no--acidl-ffonal- payment----f-iOii---tne-GEC---or--Coapi-t-ance----Puna -1-&--·-- ----------_. --~- ---

required. Moreover, the Commission recomaends that the

Compliance Fund reimburse $220,086 to the GEC and submit

~::4~entatic~ c: :he :eimburse~e~: :c :he C:~ission within 30

.......... days.

.,....

,~ I

.......

'.

:his Statement 0: Reasons se:s ::~tr. t~e legal and factual

bases for the final repayment de:erm:~ations and payment

determinations for the primary Commit:ee, GEe and Compliance

Fund. 11 C.F.R. S 9038.2(c)(4).

1. BACKGROUND

President George Bush (the "Cand:date"~ was a candidate for

the Republican presidential nomination in 1992. The Bush-Ouayle

'92 Primary Committee, Inc. ~as his a~thorized committee for the

primary campaign. The Primary Committee received $10,658,521 in
-3-

pub~ic funds ~;,der the Matching payment Act for ~se in the

p~imary campaign. President Bush's date of inel~gibility was

August 20, 1992, the date of his nomination as the Republican

party nominee. Folloving the Candidate's date of ineliqibility,

the Commission conducted an audit and examination of the primary

Committee's receipts, dlsbursements and qualified campaign

expenses, as Frovided in the Matching Payment Act and the

Commission's regulations. 26 u.s.c. S 9038(a)i 11 C.F.R.

S 9038.1(a)(1).

Preside~: Bush an~ ~ice Preside~: Ja~ Q~ay:e were the

;.-. .:, /:i

Republican party nominees for President and Vlce President for

the 1992 general election. The autAorized committee of

President Bush and Vice President Ouayle for the general . .... . ... . 9. ... .. ·--··---·---·-··;i'ecti-on··c-a-.paign-was·-the-Bush:..ouayle'92Gener-at-·co.m-fft-ee-;---·---··--·-------- .. ..

c..:

t ,.....

I

Inc., and the Bush Quayle '92 Compliance Committee, Inc. was the

campaign's legal and accounting compliance fund. The GEe

received $55,240,000 in federal funds for the general election

campaign under 26 U.S.C. S 9006. Pursuant to 26 U.S.C.

§ ~::~(a', t~e Cc~~iss:cn conducted a~ aud:~ a~= exa~ina:ior. of

the GEe and :ompliance Funds' receipts, disbursements, and

expenses.

The Commission approved the Interim Audit Reports on the

Pr:~ary Comrn::tee, GEC, and Compliance Fund on ~arch 24, 1994.

11 C.F.R. S§ 9038.1(c)(1), 9007.2(c)i Attachments 1 and 2. The

Interim Audit Reports contained the Commission's preliminary

calculations of the amounts due to the United S:ates Treasury.

The Primary Committee responded to the Interim Audit Report on
-4-

J~:V 6, 1994.2/ A~tachment 3. The GEe and Comp:iance Fund . - res~onded to the Interim Audit Report on the same date.

Attachment 4.

After considering the Committees' submissions in response

to the Interim Audit Reports, the Commission approved the Final

Audit Reports and initlal repayment determinations on

De:e:nber 27, 1994. See 11 C.F.R. 5S 9038.1(c~(3) and (d);

9007.2(c); Attachments 5 and 6. The Final Audit Report on the

Primary Committee concluded that the Primary Committee incurred

5:::,249 in ~cn-qua:~:ied cam~a~g~ expenses that benefited the

general election campaign.i/ The Commission made an initial

determination that the Primary Committee mU6t repay a pro rata

portion of these non-qualified campaign expenses totaling . . . .. .... ' . • ----------:------.-.------.--------•• ---.__•• .... __ --------- --_.- _a•••• • • .. _ ...... ••_. ••••• _

$195,224 to the United States Treasury.!/ 26 u.s.c. '<-

C' S 9038(b)(2); 11 C.F.R. S9038.2(b)(2). In addition, the Final

Audit Report contained an initial repayment determination in the

a~:~nt of S~65tE31 for matchinq funds that the ?:imary Committee

., r e c e i vedin ex ce S s 0 fitsentit1eme nt . 26 u. S . c. S 90 38 ( b ) ( 1 ) ;

.-"

2/ On May 3, 1994, the Commission granted requesta by the

Primary Committee and the GEC for 4S day extensions of time

to respond to the Interim Audit Reports.

3/ The GEe reimbursed $37,301 of this amount to the

C::=.:nittee.

4.' The Commission's regulations provide that the amount of

the repayment shall bear the same ratio to the total amount

o! the non-qualified campaign expenses as the amount of

matching funds certified bears to the total amount of

deposits of c~ntrib~:ions and wa:=hi~; !~~ds, as o! the

candidate's date of ineligibillty. 11 C.F.R.

S 9038.2(b)(21(iii). Thus, the Primary Committee's repayment ra~:~ fcr ncn-quallf:ed campaign expenses is 26.1~83\.
. ;.,,- .;" ......... :l..:.-"to:

'. :~:

-5-

::. C.F.?. S 9C3e.2(b}~:·'. Finally, ~he COOltlllSsion made an

initial determination that the Primary Committee must pay

$19,19~ to the Treasury for stale-dated checks pursuant to 11

C.F.R. S 9038.6. The Primary Committee made this payment prior

to the initial determination.~1

The Final Audlt Repcrt cn the GEC and Compliance Fund

con:ained initial deter::nations tha~ the GEe pay $21,109 to the

united States Treasury, representing a gain on an insurance

settlement of $2,086 and stale-dated checks totaling $19,023.

11 :.F.R. S§ 9007.2(b)(~:; 9007.6. :~e Commission also made an

i~:~:a: determination chat the Compliance Fund must pay $8,666

for stale-dated checks. The GEC and Compliance Fund have paid

these amounts. The Final Audi~ Report further conclud~q t~a~,

_. -.--:---- ·~~-e·-~~£'c~ex~e~ded its-·'o~'er~ii 'e'x'pe-ndlture 'fiJiifatlon by---'-----·.. -----------

$SS3,258.~1 The Commission, however, recognized that the

Compliance Fund could reimburse the GEe for the excessive amount

C. and el:mir.ate any result:~9 repaymen:. Thus, the Final Auc:t

, Report stated that the Compliance Fund should reimburse the GEe

and ~r~vide the CommlSS::~ . . '.:tn ccc~~e~ta:lC~ of the

Ln

.--..

reimbursement, but did not include an initial repayment

determination for this amount.

51 The primary Committee also made a payment to the United

States Treasury in the amour.t of S:~:,801 for unresolved

excess:ve contributions.

6/ The Com~ission cons~de:ej the a=:~nts of non-qualified

campalgn expenses paid by the Primary Committee related to

the general election to be general election expenditures and

applied them to the GEC's expenditure limitation.
-6-

The Primary Committee disputed the Commlssion's initial

repayment determinations in its ~ritten response submitted on

March 1, 1995.21 Attachment 7. In its response, the primary

committee requested the opportunity to make an oral presentation

before the Commission with respect to the repayment

ce:ermlnations pursuant to ~1 C.F.R. S 9038.2(c)(3). On March

:~, 1995, the Commission granted the Primary Committee's request

foc an oral presentation.

The GEe also filed a response on March ~, 1995, and

:~~uested a~ c~" p:ese~tat::~ pursuant to :: C.F.R.

§ ~007.2(c)(3).~/ Attachment 8. The Commission's Audit Division

analyzed both responses in a memorandum dated Kay 4, 1995.

A~tachment 9. On May 10, 1995, the Commission granted the GEe's \ ..".. ... . . " .. ... - -..-_-'---.- reque st--for"-a- 'fo-filt .0 r-al- ''-p'r-eseiitatloif-vi-tb---the--- p·rlilia-ry·- --.. -- ---------- -'_._--.-;-- --- ......

Committee.

The Primary Committee and the GEe made a joint oral

_~ ;:~sentation en May 17, 199~. Attachment 10. On May 24, 1995,

" the Primary Committee and GEC submitted additional materials

. .......

! .

:~~~:d:r.g ~a::ers addressed dur~~; ~~e ~:a: ~:esentation.

A~tachment 11. The Commission's ~udit Division analyzed the

a=ditional submission in a memorandum dated July 14, 1995.

Attachment 12.

7 I Th e Comm ission 9 ran ted both Co mm itte e s' e qu est 5 for 30

cay extensions of time to respond to the Final Audit Reports C~ January 26, :995.

e' The GE:'s :esponse ~~:::pc:atej the ?=~=ary Committee's

:esponse by reference, and primarily addressed the issue of

seneral election expenditures paid by the Primary Committee. :~:s lss~e does not result :~ a repay~ent by the GEC.
·~

.. '', .

-7-

7~e Cornm:ssi~~ ccnsi=ered all materia:s provided by the

~~~~ittees during the aucit and in response to the Interim Audit

Repor~s and the Final Audit Reports, including the oral

presentation, and documentation submitted by the Committees

following the oral presentation, in reaching its repayment

de:.ermlnatlons.

II. NON-QUALIFIED CAMPAIGN EXPENSES -- GENERAL ELECTION

EXPENDITURES PAID BY PRIMARY COKRITTEE

A. BACKGROUND

In the Final Audit Report on the Primary Committee l the

Commission made an initial repayment deter~~~ation of $19S,:2~

based on a pro rata portion of non-qualified campaign expenses

related to the general election campaign. The Primary Committee

__~~__._._...~~ id~.f<)or __c_~_r t~J!!. __exE~_rrd !_~~~.~~ ...~}t~·~.~.~PP_~ a·t.'e~_ ~.Q.J~~I}.~ f ~_~]1e_~_.. .....~. _._:. ~~.~._

Candidate's general election campaign, including polling, focus

group surveys, direct mail, list rentals, shipping and

materials, print media services, leased office space, and

e~~ipmen~. These expend~tures were incurred prior to the

.-,. Candidate's date of ineligibility, but after the state pri~~=y

e:ec:ions a~d ca~c~ses.i; The ?::cary Commlttee and the GEe

~. allocated expenditu:es be~ween the primary and general elec~i~ns

based on whether they were incurred and used before or after

August 20, 1992, the Candidate's date of ineligibility.

Specifically, the expenditures include polls and focus

group surveys that asked ~~es~ions about P:es:dent Bush, the

S/ State prlmary elections or caucuses were held through

June 9, 1992. The Candida~e's da~e of inel:g:bility was

August 20, 1992.
.. ...

'-"--.-;: .: :.;~~

-8-

~e~ccrat:c nominee Bill Clinton, and lndepe~dent candidate Ross

?erot. The invoices for these p~lls were dated between June 26,

1~92 and August 31, 1992. For example, one California statewide

poll asked voters to rate the probability that they would vote

for Bush, Clinton or Perot in the general election. Attachment

1:. Slmllarly, a New Jersey poll conducted in late July and

~~:-August asked individuals about the Candldate's job

performance, whether ~thin9s in the country are generally 90in9

i~ the right direction,ft whom they would vo~e for in the general

e:e::io~, and ~~ether E~s~ or Cl:~~c~ would do a bette: job

~andling certain issues. Id.

In addition, the Primary Commi~tee paid for direct mail

;~e~es tha~ featured pictures ~f President Bush and Bill Clinton ... . ... .. ... ",. .... .. . . . -:. - ~~--- ----and-- coiipa'r'rsori-s-'o'f---the-i[-'-positlon-s'--a-nd' --rec-o-r-cr-on'-vail-cus -is5ue s ~--'--.::;;----

'-

For instance, a letter from Marilyn Ouayle dated August 4, 1992

discussed kicking off the re-election campaign and included

=~~?a:gn materials, a c~cchure c:=?ar:ng the t~o candidates and

a Volunteer Hotline number active through Labor Oay. Attachment

:~~ Primary CCwm:t:ee also ~a:d fc: ad~ert~semen~s :elated

tc the general election campaign. Most notably, the Primary

Committee paid for a full page advertisemen~ in five ne~spapers,

including USA Today, appealing for the votes of Perot supporters

a::e: Ross Perot withdrew from the race. Attachment 14.

The Primary Committee re-opened 33 state offices l~ 32

s~ates after the date of the state primary or caucus, in July

a~~ Augus~, 1992. The Primary Committee paid the rent fer these

offices through August 20, 1992. For example, the Conr.ecticut
-9-

prl~ary ~as on March 24, 1992, and the state ~ffice was closed

on March 28, 1992, bu~ re-opened from July 20, 1992 until

November 19, 1992. Moreover, the Primary Committee purchased

and leased computer equipment and software; again, the Primary

Committee paid for equipment and software purchased before

August 20, 1992, and payments for leases were divided between

~he Prima:y Com~ittee and the GEe based on that date. In

addition, the Primary Committee purchased and shipped campaign

materials such as flags, bumper stickers, hats, pins, signs,

br=~h~:es ar.d Sh::~5 ~= s~a:e offices. The ?:lmary Committee

.--.,

'"--'

pa:d the costs incurred for purchasing and shipping these

materials up to and including August 20, 1992.

. • In t~e F.in~l Audi t Reports on' th~ ..p.r~mary C.o~i tt:ee. and .the

-- .~.='---'---' -'GEC---an-d -'colapffanc'e -Fund ··-the- 'conIs-s-fon --affocated -the' .ap'pa re"il"t---.----- --

general election expenses approximately 50/50\ between the

Primary Committee and the GEC. Consequently, the 50% allocated

to the primary Committee are qualified pri~a:y campaign expe~ses

not subject to repayment. The Commission conc:uded that the

?~:ma~y Commi::ee shou:d see~ rei~~~rsemer.t ::om the GE: the

remaining $146,602 in expenditures related to the general

election. Until the GEe reimburses these expenditures, they are

non-qualified campaign expenses subject to repayment. Thus, the

Coemission mace an initial repayment deter~ination that the

Primary Committee must repay 5195,224, based on a pro rata

portion of the non-qualified campaign expenses.

Moreover, in the final Audit Report on the GEC and

Compliance Fund, the Commission applied the amounts of general
-10-

elec~ion expenditures paid by the primary Comm:ttee ~o the ~EC's

overall expenditure limitation. The Commission concluded that

the GEC exceeded its overall expenditure limitation by 5553,258.

Since the Compliance Fund may reimburse the GEe for the

excessive expenditures, the Commission did not make an initial

repayment determination for this amount. Nevertheless, any

change in the amount of non-qualified campaign expenses related

to the general election paid by the Primary Committee will

result in an equivalent change to the GEC's expenditures subject

t~ th~ o~e:all limita~~o~. Further, any change to the a~ount of

general election expendi~ures subject to the GEC's overall

expenditure limitation would change. the amount of the necessary

Complia~ce Fund rei~bursement.

. ... ...- . -- 0 --S-:-o------ SfniJiOOly··· OP-COMITnB'-USPOllSES 0_

-.:-:-

,- . '-

'.:J

In their written responses to the Final Audit Reports and

oral presentation, the Committees argue that the expenditures at

:ssue ~ere legitimate qualifiec campaign expenses of ~~e primary

campaign.10/ Attachments 7, 8, 10 and 11. The Committees contend

that the Commission shou:d use a ~bright line" approach based cn

the Candidate's date of ineligibility, and deem all expenditures

incurred and used before the date of nomination to be qualified

campaign expenses of the Primary Committee. Moreover, they

offer legal and practical reasons why the Commission's division

of the expenditures between prlmary and general election

~O.l ::-:: i~s w=-itten respo~se, '::-.e GEe in~:·rp~rates t::e

Fr:mary Committee's a:guments cy reference. Thus, citatior.s

to the Primary Committee's wrl::en response, represe~t the argu~e~ts cf both the P::~a:y ::c~ittee ar.d t~e GEC.
-11-

~ampaigns at the Final Au=~t Report stage is ina?p~opria~e.

Flnally, the Committees contend that even 1f the Commiss~:~ does

not adopt a "bright line ft standard, the expenditures were

qualified campaign expenses of the Primary Committee because

they were made in connection with the Candidate's campaig~ for

the Republican nomination.

Citlng the la~guage of the Matching Payment Act and the

commission's regulations, the Committees argue that the

expenditures at issue meet the legal requirements of the term

.. qua 1i fie C c a :Xl pa i 9n e xpen s e S'I a s ::i e : :. n eat e d a t 6 U.S. C.

.. . .;" . ~:. ~~~

",:i.

"had a direct aqd sub~~antial connectioQ to. th~ campaign for tne . . .. . -----~......__ .~ ._----~--- _..

,..... J S 9032(9) and 11 C.F.R. S 9032.9 because the expenditures were

made within the time period of the candidate's eligibility and

.. .:::" nomination.· AttachJaent 7 at 3, Attachaent 10 at 8-11. During

~, the oral presentation, Counsel to the Committees defined this

dbright-line test" as: "expenses incurred prior to the

--

"-"

' ...

."• J .'

c~nvention a~e in connec~:on witt the p~imary, unless they a:e

for goods and services to be used during the general election

:~:iod." ~:=a:h~ent:O a: 60. :~ de=erm:ning ~hether a~

expenditure is "in connection wit~." the primary, th~ Committees

contend that "the standard is use, not benefit." !£. at 9-10.

The Committees base this "much less stringent test" on their

i~terpretation of the language of the PreSldential Election

Campaign Fund Act and Commission regulations governing general
.1

-12-

e:ection expenditures.lll Id. Moreover, the Committees argue

:~3t the expenditures are not qualified campaign expenses of the

general election because they were not incurred within the

general election expenditure report period and were not for

services, property or facilities to be used during the

ex?enditure report perlod. See 11 C.F.R. SS 9002.11(a)(2);

5~03.~; Attachment 10 a~ 9-10.

AS support for their position, the Committees argue that

the Commission applied a "bright line" test in its decision in

Report on Reagan Bush '64 primary ~approved July 7, 1986). In

addition, the Committees cite several advisory opinions,

Advisory Opinion ("AO") 1975-9 and AO 1978-99, to support their .. .. \ ., .. .. . . -,- - ----- ---"- c-ont-e-il-t-fon'--that--arf -e-x'peiia'i ture--'tfeed- if6t--e'ifc1tfsi ve'ly-bene-fl-t- tne-'-- ------..-_....- '-,

campaign for nomination to be a qualified campaign expense.

Further, the Committees argue that the Commission applied a

,..... ""

.... - ~0 'SO, split t~a~ had ne~er been a;~:~ed be~o=e. The Co:=~::ees

''', believe that any new standard should only be applied

~=~spec:ively, a~d noted :hat the C~~~iSSlon was revie~:~g :~lS

.....r-; issue in a rulemaking. See Notice of Proposed Rulemaking

: "~?RM") 59 Fed. 51006 (October 4, 1994). During the oral

111 Specifically, the Committees note that 26 U.S.C.

S-9002(11) defines a general election qualified campaign

expense as an expense "incurred within the expenditure report

t:eriod" or "incurred before the beginning of such perlod tc

the extent such expense is for property, services or

!a:ilities used during such per::~." See 11 :.F.R.

S 9002.11(a)("to be used during"); 11 C.F.R. S 9003.4 ("to be

used in connection with his or her general e:e=tion

:3::,.?algn ll'.
:-..: ..~-, ..'

-13-

presentatior., :=~nse: ~o :~e Coomittees referred to proposals tc

include certain "bright line" standards in the rulemaking which

was ongoing at that time. See e.g., Attachment 10 at 17-19.

In support of their argument that the expenditures were

qualified campaign expenses of the primary campaign, the

Commlttees submitted additional materials to demonstrate that

the expenditures were part of an overall effort to shore up

support for the Candidate's nomination at the Republican

National Convention ("the Convention"). The Committees provided

=e::ara~io~s ::~= Mary ~ata:in and Davlc Carney, politlcal

,·;~7,· :,.; :~

direc~o(s of the primary campaign, describing campaign

developments and strategy prior to uhe Convention during the

summer pf 1992.gl Attachments 3.at 60-6? anq 7. at. 20-23 •.,.; ,"~,.

-~ =-~_._--~.~.-_._.__ .. _._-~ ..__._.- ---_. --- -----~_..__._---- .-.. .. .. -- -_...-_. _... -...._-_._---------._._- Accord~9 to these individuals, certain expenditures were part

of a pre-Convention strategy intended to combat dissension

within the party, improve the Candidate's standing in the polls

to convince Co~vention delegates of t~e viabil::y 0: P~esice~:

Bush's candidacy, and build excitement for the Convention.

The Xa~a:~~ decla~ation notes that prlcr ~o the Co~ven~lO~,

President Bush was substantially behind the Democratic nom:nee

in the polls and faced opposition from within his own party,

including calls for him to change his Vice Presidential running

mate, or to step down himself, and disputes over platform issues

such as abortion. Attachment 3 at 60-65. The Matalin

12.. The Ccm:r::'":.t:ees re:e~ t= tr.e decla:-ation C1 Ms. Xa~a lr.

attached to the response to the Interim Audit Report, wh ch

is incorporated by reference i~ the response to :r.e Fina

Audit Report. See A~~a:hment 3 at 60-65.
..... ~-

-14-

ceclara~io~ also descr:bes how p~~~s a~d othe= ma~eria:s were

used to sO:ldify Convention delegate support :or the Candidate

by demonstrating his appeal to the overall electorate. Id.

Similarly, David Carney states that campaign activity during the

period between the primaries and the Convention was intended to

build suppo:t for the Candidate at the Conventlon, and avoid

conflicts o~e: the party platfor~. Attachment 7 at 20-23. The

attachment& to the Committees' re&ponses also include a number

of news articles which describe the political climate of this

. _ ..... :. ..~~

. ..: perle .... , an= a copy of :he ~epub:icao ?a:ty Pla:form. :he

Committees contend that because delegates were not legally bound

to cast their votes for him, President Bush ultimately had to

convi'nce Cor.".rention dele9at~s t.hat if nominated., h~ woul.d be . .. ... .... . . . .. ... . .. .. .. . --- ,_:.-----succe·ssf-uf-fii--the -ge~erar--'e'lec-tic)n - --Afta~'hment- 'f ·at-6-0-~6-S·1----··.-.--...--...------ --

Attachment 7 at 13, 20-23.

The Co~ittees assert that particular expenditures at issue

,_.... •.... ere ":' :: e g : a par t s : the campa i ;':1 's e f : 0 r s to for; e an

,~ acceptable resolution of the plat~~rm issues and to bolster

support =~ :~e Bush-Q~ayle :lcke: a~ t~e Co~~e~tio~.~

~~ Attachment: at 13-14~ Attachment :0 at 20-23, 47-50. For

.....

..... example, expenditures for polls helped the campaign with the

campaign platform and the question of ~hether to keep Vice

?residen~ Q~ayle on the ticket. rd. Moreove:, the Committees

argue that the polls at issue here, ~hich aske= voters whether

they would vote for President Bush, Bill Clinton, or Ross Perot

in the Novemoer eleCtlon, were simllar to pol:s cc~ducted
·~ ...,,;- .

'.--".

-15-

~h~~ughout :~~ :a~paig~, ~ncl~ding pc:ls as ea:ly as December,

19 9 . 13:'

The committees also assert that the polls and focus groups

did not provide a significant benefit to the general election

campaign because numerous independent organizations have

tracking poiis of presidential campaigns, and "the value of

polling inf~:oatlon decl:~es precipitously." Attachment 10 at

20. Since the rapid obsolescence of polls limited their

usefulness to 10-14 days, the Committees contend, the polls at

:55'';:, conc'';:':e: i~ JI'-C 3:-:'0 July, 1992, wOl::'d have had no

signlflcan~ value to the campaign after August 20, 1992.l!/

The Committees contend that expenditures for state offices

; ,

were intended to coordinate planning .fpc .the Con~ention, monitor . .. '--~~;-~--'----d-ete9ate6;' -ancf' ·'coun-te-i---rli'surqe'nc"fe·s on platform - i S&u~-s-. -15/---------------- -.-

Attachment 7 at 14; Attachment 10 at 24-26, 72-75. The

Committees submitted declarations from Chris Dudley, Executive

Director for the state c! Connecticut, ar.d Je::rey T. ta:son,

the Regional Political Advisor for the Weste:n Region in support

of their arg~=e~:s. ~=, :a:scn ~as respo~s:=:e for sta~e

..... 4 ..

:3/ The Com~i:tees supplled copies of polls taken in late ~91 and January, 1992 which they contend contain similar

questions to the polls at issue.

l~/ In addition, the Committees cite 11 C.F.R. S 106.4(9),

wnich reduces the value c: poll results by 5:~ IS days after

receipt, as evidence tha: the Commission acknowledges the

rapid obsolescence of pol:s. The Committees argue that a

50/50% split does not take into account the obsolescence of

the pol~s.

15/ The Com~ittees note :hat salaries of sta:: ~ho ~orked in

tne state o:fices a~e nc: at issue. Atta~h~~~: 11 at ~.
-16-

off~ces in ~he 12 s~ates in the ~estern :egion. At~achment 11

at 37, and 40-41. The Dudley declaration states that activity

in the Connecticut state office was related to the state

convention and preparations for the national Convention such as

monitoring delegates and platform issues. Attachment 11 at 31.

Similarly, the Larson declaration states that activity in state

cffices in the Western Region was "an in:egral part of the

preparation and build-up" for the Convention, and included

selecting individual delegates; resolving challenges; preparing

f:: a~~ ?articipa:ing i~ s:ate party ccnventic~s held in June

and July, 1992; organizing and monitoring the state delegation;

and logistical and administrative planning for the Convention.~/

Attachment 11 at 40-41.

~:~. '\.}-":'.

':. ..:~:! ._..',

there is no evidence that the equipment and campaign materials

were not used by the primary campaign prior to the Candidate's

'-.. da':.e .:: :':;el1s:'::i2.:':y.l-' A~tachment lC at E. The Committees

assert that ~o 1978-99 provides a basis to allocate all

~a~e:~a:s :ece:~e~ by a s~a~e of:ice p:i:: tc ~~e date of

ineligici:ity as primary expenditures. Finally, the Committees

16' The Committees did not submit declarations or other eviden~e concerning the :e~a~ning 22 0: :he 33 s:ate offices

at issue.

17/ Moreover, the Committees contend that the Commission

treated ce::ain equipment purchases by the C:in~on for

President 1992 Primary campaign as primary expenditures sold

:: :~e gene:al e~ectic~ :a~Faign at 60' :: t~e p~rchase

prlce, ~hich, the Commlt~ees argue, differs from the

Commisslon's treatment of :he primary Ccc~ittee's equipment

expe:-.d:. tures.
.;.....:: ... :.:-... -.. - '0

-17-

a:;~e tha~ :~~ direct ~ail and advertisements in disp~:e were

targeted a~ Republicans and intended to solidify suppc~t for the

Candidate at the Convention. Attachment 10 at 23.

c. ANALYSIS

Expend~~ures made in connection with a primary candidate's

campalgn fer ~omination prior to the candidate's date of

ineligibility are qualif:ed campaig~ expenses provide= ~~at the

expenditures do not constitute a violation of the law. 11

C.F.R. S 9032.9(a). Expenses incurr~d after a candidate's date

of :~eligi=::::t are nc~-qua:ifie= except to the exten:

permitted unde: 11 C.f.R. S 9034.4\c){3) for winding-down costs.

11 C.F.R. S 9034.4(b)(3). In addit~on, the Commission's

regulations permit general election c~mp~ign~ to incur expenses

accounting systems, and organizational planning to be used

during the expenditure report period prior to the beginning of

C. the expenc.:'":i;:-e report period. ~l C.F.R. S 9003.~(a~(lJ.~/

'- 1. -Bright Line- Test

Th~ C:::=:::ees' r~::ance 0:1 their proposed "b:-ig:-.:. line"

, r' " , test is mis~:aced. Contrary to the Committees' assertions,

prior to the Commission's recent revision of the public

financing regulations for the 1996 presidential election cycle,

18·' This p:ovision was "designed to permit a candidate to

set up a basi: campaign organiza~ion before the expendlture

report peried begins.~ Explanation and Justification, 4S

fee. !::.!.L ':~3-S ':Ju~e :: .. , :980,. ;';hile the =egula~lc:"'.

enumerates examples 0: permlsslble expenditures incurred

prior to the expendi:ure report period such as polling, these

examples are ~~t all-inclusive.
: •••',:.":# • .. •• ~". • ,

-18-

.. -::·:-1~r:~

"\-:

:~e :=~~~ssion did not apply a "bright line test" based solely

C~ the date of ineligibility to determine if an expenditure is a

primary qualified campaign expense.19/ Rather, the Commission

looked at both the timing and the purpose of expenditures to

determine whether they were qualified campaign expenditures.

Tr.e Committees' "bright line" standard fails to satisfy

c~th of the two key elements for assessing qualified campaign

expenses. See 26 u.s.c. S 9032(9); 11 C.f.R. S 9032.9(a). In

additio~ to being incurred prior to the candidate's date of

:~~:igi~ility, to be qual:fied, an expe~~:~~:e must a~so be made

~:..:: :o~ •. e.:t.ion w:..th" a primary candidate's campaign for the

nomination. 11 C.F.R. S 9032.9(a)., The Committees'

:~terpre~ation 0: the "in connection with" requirement relies on . .... • '0 ~'.. .. .. .. . ._:. ---:.-.- .__ .-vheth-er-an--expenditur&-is··-·u-sedW--prto·r ·-t"o--the-c"andi-dat"e 's-date------··.:..-· -_.'-- '... :-"

•.. ....

." 19/ The Commission recently adopted new "bright line" rules

::=:ted :c "cer~ain specific types of expenditures that may be~e:it both the primary and the general election. These

include expenditures for polling; state or national offices;

campaign materials; media production costs; campaign

communications; and campaign-related travel costs." Public ::~a~:i;.; of Presidential Primary and Genera: Election

Candidates: Final Rule, Explanation and Justification 60 Fed. ~ec. 31854 at 31867 (June 16, 1995). The new rules are norun!:orm:y based on the date an expenditure is incurred; while

polling 1S allocated based on the date results are received,

=edia production costs for media aired both before and after ~~e candldate's nomination would be split 50-50% between the ;e~e:al and primary committees. Id. These revisions are new

rules for the 1996 election cycle, not a codification of ~~i~= Cc~=:ss~c~ po!icy in t~is area. Indeed, the adop::c~

=f :~e ne~ rules necessitated the revision of 11 C.F.R.

S 9~C3.~:ai to reflect the new rules for polling expenses . • .,: at :~.
....~.~ .. -' .':,' -.'-- . ..'- - ' ,)~ -

'.' :.- ==.. . - \~~

-19-

::f lnelig~cli:ty.2C/ I~ is '..in~lear, ho·...·e·.·er, what would

constitute sufficient ~use" fa: an expense to be qualified ~nder

this standard. Contrary to the Committees' contention, the mere

receipt of equipment or publication of an advertisement is

insufficient to establish that an expenditure was used "in

connection wlth~ the primary campaign. Rather, an expenditure

must be intended to have actual substantive usefulness to the

primary campaign to be a qualified campaign expenditure made win

connection with" the primary campaign.

7~~ ~~=:ect standar= :== de:ermining ~hether an expend~t~:e

:s a prima:y qualified campaign expense relles on both the

timing of the expenditure and the nature of the expenditure.

See AO 1984-15. ~o be "in con~ection ~ith" the primary

--- ~~--- ------------- ---- ----_.-

--·--·------~···-c-ampaIgn,·- a-' ·quarffIed-·cailpalgn- exp'enct"itur'e '.~·st be prisarily "':""'-

_ related to the primary campaign. A portion of an expenditure .......

_.'

.........

If)

20,' The C~n~~ttees base ~h:s a:=~~ent on :~e defini:~cn o! a ~~a::::ec :a~~aign expense fo: tfe general election at 26

u.s.c. S 9002(11), which provides, in part, that the ~xpenditure may be lnc~:red ~efo:e the beginning of the

expenditure report period if it is "for property, services cr

facilities used during such period." See 11 C.F.R.

S 9002.11; S 9003.4. This definition aoes not apply to the

issue of whether the expenditures are qualified campaign

expenditures of the primary campaign. Nevertheless, the

language of the cited statute and regulations also requires

that a general election qualified campaign expense have so~e

substantive relationship to the candidate's general electicr.

campaign. The Presidential Election Campaign Fund Act, at 26

u.s.c. S 9002(11}, states that a qualified =ampaign expe~se

1S an expense incurred ~by the candidate of a political pa:~y

for the of:lce of President to further his election to such

office or to :~rther the election" of his Vice Presidential

:unnir.g ma:e, "or both." Se~ II C.F.R. S 9:02.:1. The

phrase "to further his eleCti"on" is eqUivalent to the "in

connection with" language In ~he ~a~ching Payment Act. 26

U.s.c. S 9032(9).
-20-

cc~:d be qua::fie= and a po~::~n r.~n-q~alified if the purpose of

an expenditure is mixed. In the i~stan~ case, most of the

expenditures apparently had a mixed purpose. Thus, in the Final

Audit Reports, the Commission divided the expenses 50/50\

between the primary and general campaigns to reflect that mixed

purpose.

The decision in the Reagan Bush '84 audit, which was based

on the particular facts in that case, also doe& not support the

co~~it~ees' position. See Final Audit Report on Reagan Bush '84

primary (approved July 7, 1986). :~ :~e Rea;a~ Sush a~dit, the

commiSSlon co~cluded that certain specific expenditures for

polling, consulting, and voter registration incurred prior to

the candidate's date of ineligibility t~at appeared to benefit . . ... . ...' . .. . _.--..~~~.~--- ~- !..!-~h~·--\lene-iar--el-ec-t"fo~-·ca.p~i9ri-·-COUla· oe--"ccirislde"ted quaifii"ed ._-._- -- . .........

campaign expenses of the Reagan Bush Primary Committee.

Contrary to the Committees' assertion, the Commission did not

....~~::~

....-... adop: a "bright l~~e" test in that case; rath~r, this p:ecedent

'- supports examining all of the particular facts surrounding an

ex~ene::~~e ~~ determine whe:~er :: ~as ·'In ::nnection ~i~hr. the

primary election.

Neither one of the advisory opinions cited by the

Committees, AO 1975-9 and AO 1978-99, supports the Committees'

p:opose: "bright line" standard. These opinions do not involve

publicly financed campaigns or the issue of qualified campaign

expenses. For example, in AO 1978-99, the Commission permitted

a committee to report a debt incurred prior to the date of the

primary election, for materla1s to be used in both the primary
:" ···;....·;-~·1

1.

-21-

and gene~a: electio~s, as a p=l~a~J ele:::cn debt. This opinion

~oes not add:ess whether such a debt wcu:d be a qualified

primary campaign expense in a publicly financed campaign, but

only whether an expenditure may be considered part of a

committee's primary debt for Title 2 reporting purposes.

Indeed, the Commission has more recently confirmed that

determining whether an expenditu:e ~s re:ated to the primary or

general election is based on both the timing and the purpose of

the expenditure. See AO 1984-15 (Commission considered whether

the purp~s~ :: expe~=:t~=es was to :~fluence the general

election campaign in order to determine If the expenditures were .... ' , '.

coordinated party expenditures.) AO 1984-15, which involves a

publicly financed presidential campaign and expenditur~

,-- . - _ ..-- -- ...- . - ...-.. _. - - - -- - --_ -"'--ffmIf'atlons, concluded that in situations involving coordinated

party expenditures, not only the timing, but also the purpose of

expenditures should be considered when determining to which

, "

~.- election an expenditu:e should be a-::ric·..::ed. ~hile "timing is

,~ relevant," coordinated party expenditures are not restricted to

.,"-

.J.

-:he time ~e:iod bet~ee~ the no~ina::on a~= the gen~=al election,

and it wou~~ be inconsistent with the purpose of the li~itatic~

C" on coordinated expenditures to "permit expenditures made prior

to nomination but with the purpose and effect of influencing the

cutcome of :~e presidentlal general election to escape this

limitation." See AO 1984-15.

Moreover, the "bright line" standard proposed by the

Commlttees :5 inconsistent with section 9J:3.4(a)(1) of the

regulations applicable to the 1992 election cycle, which permits
.::.......- ... . -.. : .' .. ~. _.. ...

-22-

ge~e~a: elect:~~ =a~~a:g~s to in=~: certain expenses prior to

the date of the nomination. This regulation would not be

necessary if all expenditures made prior to the date of

ineligibility were qualified campaign expenses of the primary

committee, even if the expenditures related to the general

elect:on.

2. Analysis of Particular Expenditures

The Committees' alternative argument is that even absent a

"bright line" rule, the expenditu=es at issue were made "in

ar9u=e~c ~ha: In:ernec;r.e party conf~lc~s seriously challenged

President Bush's nomination and that the expenditures at issue

_ were :ntend.ed .to dispel dissension, build exci tement for the _' ..__._ .__.• _e . .!.....-_ =-- ~. . . -..... '9 ...... •••• ••• .,. •• •

.:~. Convention and·'c'cinvi-lice---del-ega·tes---of--the-'viabili-ty--of·--t-he-------- .:__ . -- ..------

~, Candidate in order to secure his nomination, the Committees

provided declarations from four campaign officials. During the

Com~:ssion's considerat:c~ of the Fi~al A~=it Reports and

initial repayment determinations, the Commission acknowledged

elec~io~ component, and adopted a 50/50\ division of the

expe~ditures at issue to reflect the dual purpose of the
~""- ~., ........' '. 9'- -::

-23-

ex pen d : : '''; :- 5 • " I :' e a chi n9 l:s fin a: 1 e t e rmin a 0: :. :'n s, t e

Commiss:cn reviewed the entlre record fcr each category of

expenditures separately to determine whi:h, if any, expenditures

were qualified primary campaign expenses. Based upon its

review, the Commission has determined that certain expenditures

for polling and focus groups were quallfled campaign

expendit~res of the Primary Comm:ttee. ~~reover, s:nce the

Commission was unable to reach an agreement of four of its

members ,concerning the leased space, equipment and materials

relate~ :0 ~he state offices, o:hose expe~ditures ha~e bee~

re~oved from the to:al 0: non-qualifie~ campaign expenditures.

Accordingly, the Commission has revised the amount of

non-qualified campaign expendi~ures.

. .,- - -'-'----- ,.'--- -'a-~ .- --- 'po-friiig--'-- - ....

The Committees have provided evidence from campaign

operatives that president Bush trailed the Democratic nominee in

, ..... .. , 211 !~e Commission's regulations use s;milar so:~::ons for

other allocation issues where expenditures have a dual pu~pose. For example, the regulations Fermit primary

campaigns to treat 50\ of expenditures as exempt fundraising

expenditures not subject to the state expenditure limitations

in order to recognize the fundraising component in all

expenditures. 11 C.F.R. S 110.8{c){2); see also AO 1988-6

(Gore ?:esidential Committee could allocate ~of television

advertisement containing a solicitation as exempt fundraising expendi~ure). Moreover, the Commission'S recent revision of

the puc::c financing regulations discussed here:n a~plies a

50/50\ allocation for media production costs. public Financing of Presidential primary and General Elec~ion

Candidates: final Rule, Explanation and Justificatlon 60 fed.

Re.9. 3 : 8 5 4 (J un e 1 6, 1 995 ) . F 1 naIly, t ::e Comm issi on use d toe

same approach in the Clinton for President audit. See Final

Audit Report on Cl:n:cn :~r President ::~~:~tee ra;~ro~ed

December 27, 1994); Final Audit Report cn Clinton/Gore '92

Committee and Clinton/Gore '92 General Election Cc~pliance

Fund (approved Deceober 27, 1994).
••r. '. ..,.....

-24-

tr.e ~~lls p~ior ~~ t~e R~~~=lican ccnventio~, a~d used polling

to convince delegates of :he viability of his candidacy. See

Attachment 3 at 60-65; Attachment at 20-23. Poll results

could have been used, as the Committees argue, to get voter

input on crucial issues such as the party platform and the

question of whether to keep Vice President Quayle on the ticket.

:~ he~ declaration, Mary Mata~:n stated that the primary

Committee sought to persuade "Republican voters and delegates to

the :onvention that the Bush-Quayle ticket represented the

cor~~ct policies and values and that the B~s~-Quayle ticket was

l:~e:i to .in ~he e~ec~ic~ in November." Attachment 3 at 60.

·f~

Thus, "our basic purpose in conducting these polls was to enable

. the primary Committee to show Republican voters that George .Bush . ;7 .. .:..,. . . . ..-. ... .., ..:... . . • ..•. ... . '. . • -..--:-.,=.-.----- ---could-bea:t -a--·like·ly -Deaocr-ati·c· :nolll-1-oee- in -fioveabe [-. ~--.Id...-At.-6·1.":'-- .__

Ms. Matalin further stated:

.,....

" .

.......

'- -

Polls, surveys and focus groups were conducted to determine

why President Bush had fallen so far behind Bill Clinton in

the standings and ho~ the Primary Committee could bolster ~~s support in the polls. A~ ~hat point in time, our

principal concern was to convince the Convention deleaates

that President Bush and Vice President Quayle would be

stron; candioates :~ the Fa~: .

Id. at 63 (emphasis in original).

Similarly, David Carney's declaration s~a~es that "the

campaign faced one of the most difficult national conventions in

r e : e:".:. iti m0 : 1'. ,.. i r. :: ::. udin g an" 0 per. r e'" 0 1t" :: j. :: e :- a i n

Re?ublicans in July and August, 1992. Attach~ent 7 at 20. The

ca~paign tried to:

diffuse these intra-party dlsputes and to ensure the proper

atmosphere and results at the Conventio~.... the most

critical question for the delegates was whether the

candidates could win in Novettbe:-. Th\,;s, :,a:sing the
-25-

5us~-Quayle ti:~e~'s s~a~ding i~ the ~~ .•s before :he

Convention was a primary goal and one that was dlrectly

connected to the campaign for the no~:nation. The polls,

surveys, and focus groups also proviced guidance on

platform issues.... [but} provided little, if any

benefit to the general election campaign .... polling information more than about two weeks old would have

been essentially worthless to the campaign.

A~tachment 7 at 20-21.

~he polls at issue contain some simila~ questions to polls

the ?~imary Committee conducted early in t~e primary campaign,

such as questions asking voters to choose between potential

party nominees. While there are some significant differences

between the polls at issue and earlie: pc::s, s~~h as ~te focus

- ....

-.. of the polls and specific questions, the similarity of the

questions about voter preferences supports the Committees'

_..=-~_. ..._..__cO_l1.t e n t..~.QIt ~.t b~.~.. _t.h ..po1J._iJl.9 ..e ~p~ _so . ~~ .r!!_-p r .i m~. r Y. q~.~ l.JJ l_e_Q_:. . ._.._....

campaign expenses.

Moreover, the Committees contend that the polling

......

expenditures provided only limited, insig~~ficant benefits to

:he ;eneral electlon campaign because nume:ous independent

o~ga~izations maintain tracking polls cf ?:esidential ca~?aigns

a~d :~e ~a:ue o~ polling results "declines ~recipitou&ly" after

:ess :han :wo ~ee~s. See A:tachment 10 a: The

Comm~ttees correctly note that the Commission has explicitly

recognized the decrease in value of pollin; results after

fifteen days in the regulations at 11 C.F.R.·S 106.4(g). Since

usefulness after 10-15 days, the pol~s conducted in mid-summer

of :;92 would ha~e had lit:le value a:ter :r.e Candidate'S date
-26-

c: ineligibility C~ Augus~ 20, 19~:. Therefore, based on the

fo:egoing, the Commission has determined that the polling and

fo~us group expenditures totaling $614,108.33 were made in

connection with the primary campaign, and thus, were qualified

campaign expenses. As a result, these expenditures are not

subject to repayment.

b. State Offices

The Committees have also submitted evidence to support

their contentions that state offices were used to plan for the

Co~vention, d:ss~~:nate ir.=c=~a~:c~ t~ delegates, and monitor

de:egates and platform issues. See Attachment 3 at 60-65;

Attachment 7 at 14, 20-23; Attachment 10 at 24-26, 72-75;

_. Attachment 11 at 37, 40-41. Specifically, the Committees .'".. . . .: ... ... ' .. ... . . . ..:.. . ,. . .-.. _: _:-.-.~---·-'subai-tt·ed- de-c-farati·on's· -fr-o-Ie tvo--caiipaign -o'fficl-a-li-who' vorke-d-----'_·_-------

with 13 state offices, which address activities in 11 of the 33

offices at issue .

. The Dudley declaration describes ho~ ac:ivity in the .............

" Connecticut state office was related to the state convention and

p~e;ara~~ons ==: the ~a:~c~a: C~nve~::c~: ~~y firs:, and ~cs:

. .'"" important, task was to prepare for the state convention ...

From the time of my arrival in Connecticut in mid-July and up to

and including the National Convention in Houston, our state

~~~~ce was ex:ensi~ely invc~ved In monitorlng the delegate

ratification process and maintaining contact with the state

delegation." Attachment 11 at 37. Moreover, the declaration

describes how state office staff "gathered lnformation on the

delegates and issues" related to the party platform, such as the
~:. ;.~~ ......; ..-~.~ .

-27-

a~orti~~ ~ss~e, and ~r=vided in:ormatlcr. to the national

~.eadquarters.~/ Id.

Similarly, the Larson declaration describes activity in 12

state offices in the Western Reqion, of which 10 are relevant to

t~e non-qualified expenditure repayment determination, and

concludes that "the campaign could not have prepared for the

NatlCnal ConYen~ion without the acti~e and extensive support

provided by the state campaign office personnel." Attachment 11

a~ 41. Mr. Larson stated: "the state offices were the point of

~~n:act ce':.~ee;. the na~ional campaign and the state delegations

a~d engaged in a wide range of activities." Id. State office

staff "helped to prepare for the state conventions and attended

the conven~ions as active participants" and were involved in . ... . ._.. ...- ... _---- -- ---- -_.._... _...- .-_.. - _._- ---_.. -_.._-----_.-- '.' ·~··-------se·lec·tin9·-deie·9a-t.s·-yho· would -support President Bush qenerally,

but who also would support his views on various platform

issues." Id. Thus, they "were involved in resolVing challenges

..... " tothe s tat.e del ega t i 0 r.s . " ll,' ! d . :- eov e r, the s t a -: e 0 f f ice s

'-.. "were exte~sively involved in the logistical and administrative

~:'a:lni;:g" :0: t~e Con·~·ent:ior:. n':.tachment I: at ':1. In addition

:n

.....

..' .

M:. Larscr. states that state office staff:

met wlth delegates and helped to organize the delegation, ... {and] were the eyes and ears of the national

22/ :Ocr exa::lple, "Co;::;,e:::icut ·~·as a it\ey state in the

strU9gle to avoid a floor fight" on the abortion issue, and

the state office monitored the state delegation and provided i~:ormation to national headquarters through the Convention.

1:'.

23 X:. :a:son discussed several instances where supporters of other p:esidential candidates challenged delegate selections, and attached documentation of these cha:lenges to

his declaration. Attachment 11 at ~:-~7.
., .... -:::-.-:.... ~"S

."tf'.Y.....,:

-28-

campaign. State ca~paign pe:s~~~el ~ould meet with the

state delegates and help to monitor their views on issues

of importance to the campaign. The campaign was

particularly concerned that dissension among the delegates

would lead to a disastrous floor fight at the Convention on

the Party Platform. Accordingly, the campaign spent large

amounts of time and effort soliciting the views of the

delegates and to persuade them to support the positions

espoused by the campaign.

Id.

In a memorandum dated July 28, 1995 accompanying a draft

Statement of Reasons, the Commission's Office of General

counsel recommended that the Commission determine that the

ex~enditures for leased c:fice space, equi?=e~: and materials

associated wl~h the 11 state offices discussed in the Larson and

Dudley declarations totaling $10,734.64 are qualified primary

campaign expenses which are not.subject to repay~ent. However, 'R~v,S(D --:-. . .... .... . .. . .~.... .... ... ..' .... ---- ~-.-.-- ---~ -the -O-f-fice--of-<:;ener-al-Coun-sel"'- did'-h'ot---r-eco_end -that--the--' - .-----. - ..---- "~

Commission change the 50/50% allocation of expenditures related

to the remaining 22 state offices. On August 3, 1995, the

\._.

',..

r-

'n

-,-

'- -

(:~mission considered the draft S~ate~ent 0: Reaso~s and the

Office of General Counsel's recommendations. A motion to

::~side: 10:~ of the expendi~ures :~:a~e~ :: a:: 33 scate

offices to be qualified campaign expenditures of the primary

campaign failed by a three to three vote. SUbsequently, a

motion to approve the Office of General Counsel's

:e:cmmmendations also failed by a three to three vote. An

affirmative vote of four members is required for the Commission

to take any action under the Presidential Primary Matching

Payment Account Act or the Presidential Election Campaign Fund

Act. 2 U.S.C. S 437clc). Therefore, the amounts of

ex?enditures for leased space, equipment and ma~erials related

~~ all of the state offices a~ lssue ~c:aling S10i,031 have been
:f' 0: ......- .~.._. '._ ... "..... <,-q

'''-.-.

-29-

re~~~~o fr~~ ~he total a~~~~: == ~~~-qua::=:ed campaign

ex~enses.:~/ J

.......

c-.

c. Other Expenses

The Commission has also determined that the Committees have

nee provided sufficient evidence to demonstrate that the

remaining expenditures were made in connection with the primary

ca~pdign. Indeed, the direct ~a:: and advertising expenditures

have no apparent connection to the nomination, but appear

instead to be related to the general election.~/ For example,

~~e ?r:mary Committee paid fa: a full page advertise~ent 10 five

ne_spapers on July 29, 1992 after independent candidate Ross

Perot announced he would not run for President. Attachment 14.

~he advertisement, written as a letter from President Bush to

_.. .- -_ ..__ .- -- -_._----- --- ---- Perot supporters, appealed for their votes in the general

election: "in these days following [Perot's] withdrawal, I'm

asking for your vote. Give me the chance to earn it. Over the

:-:~x: fe·....· =.~ntr.s, se:udy the t",-o :emaining candidates." !d .

Although this advertisement appeared before the Convention, the

2~1 This figure represents the total amount of expenditures for

:eased space, equipment and materials with respect to the state ~~~ ~:f:=es. :~ the Final Aud:t Re~o=~, 5C~ :: ~h:s a=.cunt ~as

cpnsldered to be qualified primary campaign expenses.

25/ while direct mail and advertising are not specifically r:s~ed as permissible expenditures by section 9003.4(a)\1),

that section should be interpreted to permit a committee to l~C~~ expe~ses clearly relate= t~ setti~~ up the genera:

election campaign, including direct mail and advertising

intended to influence potential supporters and volunteers for ~~e general election campaig~.
-30-

t:~:~; an~ nature of the ad~e~tise~ent indicates that it was

intended to s~ay Perot suppc::ers for the general election.

In their written responses and the oral presentation, the

Committees were unable to demonstrate how this advertisement,

targeted at supporters of an independent candidate, was

ccnr.ected to the Convention. At the oral presentation, Counsel

for the Committees stated:

the Perot advertisement was intended to shore up aepublican

support at the convention in light of Ross Perot's impact

on the race. When Mr. Perot withdrew, he had eroded the

Republican base, and the advertisement in USA Today and

ether papers was intended to add~ess principa~ly the

Republicar.s who had defected to Ross Perot.

Attachment 10 at 24. It is unclear from the record how this

advertisement could affect support for the Candidate at the

" Convention, ~in~e it is- un~i~ely" that:· aRy Peroti &uppotte-rs 'W1)uld" • ••• .....M • ... _- --._---_.- ---------_._-- - -~-- -- - - _. _._... . .. _ - - --. - - - _.. --_. _._-----_._--_._----

be Convention delegates. Moreover, the language of the

advertisement explicitly refers to the general election, not the

Convention.

S:~:~arly, the Committees' argument that the direct mail at

issue ~as targeted at Repub~icans dces not prov:de a sufficient

co~~~c~:=n to ~~e ?rimary ca~~aign O~ the Con~e~tion. The

direct oail featured pictures of Bush a~d Clinton and

discussions of their positions and records on issues. See

Attachments 13 and 15. Fer example, the "Marilyn Ouayle" ~ette~

sent on August 4, 1992 discussed kicking off the re-election

campaig~, and provided a vo:~~:eer hot~ine number active through

Labor Day. The letter states: "[a~ true grass:octs campalg~

orga~iza~ion tha~ includes yc~ ~ill make the difference In
':::·.·embe::- .

-31-

Wc~ki~g togethe:, we ~::: ~ave a victcry in

,;":,,,,-:-;--~

::"1

~ovember."26/ Attachment 13 at 2. The Committees contend that

:he direct mail pieces were "intraparty mailing(s}" to

Republicans rather than the general public, and that the Marilyn

Quayle letter "asked putative supporters of the President ...

:~r volunteer help with the convention and other activities.-

Attachmer.t 10 at 23.

Even if the mailings were only sent to Republicans, the

content of the mailings appears to be general election campaign

literatu:e ~~~parir.; the pos:~i:~s 0: ?resijent Bush and

G:~ernor C:inton, the general e:ection candidates. There is no

evidence that the direct mail was targeted at Convention

delegates. Moreover, the Marily~ Quayle letter appears to be _________• e e _ ... _. __• • __ ••• • ....-- _

- ·_--------iiitinded--to·-en1Ist-·v-ofun"teer help for the general election

"

campaign, not to prepare for the Convention. Most of the

suggested grassroots activities have no apparent connection to

-. :he Convention, and the voluntee: hotline =e~a:ned ~pen thro~;~

......, Labor Day, several weeks a fte r the Conven t i on. Al though the se

=:~~es may reave bee~ mailed pric: :~ the Ca~1idate's date of

2"- .

26/ The Marilyr. Quayle letter aSKs for volunteer help ~:luding: asking friends to volunteer; helping the state

Bush-Quayle campaign; writing letters to ne~spapers and

calling radio talk shows; using the enclosed campaign ~a~erials; convincing former Per:: supp~=:e:5 to support

?:esident Bush; and attending a Convention watch party. Id.

The Convention party is the only suggested a=tivity related t~ the Co~ve~tion. The mailing a:so included a poster, b~~per st:ckers, a paper comparing Pcesldent Bush's and

Governor Clinton's accomplishments and positions on issues,

aiod a vol~~:eer response care. :~e :es~ci.se card has a

ci.eck-off :~st of volunteer actlvlties such as "Work the

polls" and ~Distribute literature." none of ~hich were

ccnnected to the Convention.
···,· ...i~~

-32-

:~e::;:ci:ity, they appear to antici~ate responses by potential

~olunteers and supporters during the general election campaign

period.

'" In addition, as a result of the Commission's three to three

vote regarding the 33 state offices, the remaining expenditures

for equlpment and materlals for the state offices that were

i;"lcurred in July and August 1992 are not included in the amount i

J of non-qualified campaign expenses.27/ These expenditures include

the purchase of miscellaneous campaign materials such as flags,

hats, brochures ar.d signs ~hich were shipped ~o various s:ate

o:fi=es in July a~d August, 1992 and the purchase and lease of

computer equipment, software and related supplies. The Primary

Commi t tee pa id the costs for these items through. Augus t 20, 19~2.. . ... ... - . . ...." ." ." . -' :-~~.!------·--a-nd-~·tne-··ciEC-·-p·aid---fo-r-·-th-e.--fol~·ovl·ncr-that·-date .•.. _- --..- _.... - _. - -----------.------.--- '--- ....

C' Other than those expenditures related to the 33 state JN~w

offices, the Primary Committee bears the burden of demonstrating

C., that the expenditu:es had so~e connection to the primacy

........

,.....

\.

:.n

campaign. The Comnittees have provided no evidence to p=ove

:~a: :~e pcima:y =a~paign use~ the ::eos tha: ~ere not s-~-PQ~ ••• t=' • '- J

to the 33 state offices for the primary campaiqn. For example,

the Committees have not provided evidence that these materials

were distributed to Convention delegates or brought to the

:onve~::on, or tha: compu~er equipment was used to monitor

dele~ates or perform other Convention-related administra:ive

27; However, the Committee's expenditures for equipment and

materials that were sent ~o ~he natlonal headcuarters a:!

:ons:dered non-qua:::led campaign expenses. .
-33-

deter~ined that the remaining expenditures for advertisements,

direct mail, office space ren~a:, equipment and materials not

related to the state offices are related to the general election

campaign. The Commission thus determines that the Primary

Committee incurred non-qualified campaign expenses for these

items to~aling $446,536.29/ Therefore, the Commission has made a

final determination that the Primary Committee must repay

$106,979, a pro rata portion of the non-qualified campaign

expenses totaling S~G9,123.

With respect to the GEC, the Commission has reduced the

expenditures subject to the GEe's overall expenditure limitation

by $333,172, reflecting the changes associated with polling and ...._--_. _...---.. - ---- ------- _.----_.. __ ...

~- focus group expen6·e-6-·and-·i"eas·ed··-cifffc-e--space~-·-equIp.enf~-ancf ---------.-- ---

materials expenses related to the state offices which the

Commission has concluded were qualified campaign expenses of the

.......

28/ The Committees' contention that the Commission treated equipmen~ expenditures differe~~ly in this audit than in the

Clinton for President audit is incorrect; the Commission

adopted a consistent approach for both the Clinton and Bush

campaigns. See Final Audit Report on Clinton for President

Committee (approved December 27, 1994); Final Audit Report on

:lin:on/Gore '92 Committee and Clinton/Gore '92 General

Election Compliance Fund (approved December 27, 1994); Final

Repayment Determination on Clinton for President Committee :appr~ved February 13, 1995}. ~hile most o~ the expenditures

at issue were divided 50/50\, capital assets such as

equipment were consistently d:vided in both audits using the

60/40\ depreciation.

29/ The amount of non-qualified campaign expenses subject to ~pay~e~t, $409,123, resul:s from adjust~e~ts to this amount

for expenditures reimbursed by the GEC totaling $37,301 and expendi~ures paid after March 2, 1993, the last day that the

Primary Ccmmittee had public :unds in its accounts.
.... ,_ _ .

-34-

F:imary Committee. ~his reduces the amount in excess of the

GEe's overall expenditure limitation to 5220,086. The

Compliance Fund may reimb~rse the GEC for this amount. The

Commission recommends that the Compliance Fund reimburse the GEC

and provide documentation of the reimbursement to the Commission

....·ithin 30 days.

III. PRlKARY COMMITTEE RECEIPT OF FUNDS IN EXCESS OF

ENTITLEKENT

During the candidate's period of eligibility, the candidate

is entitled to receive public funds to the extent that the

candidate received matchable contributions. 11 C.F.R. §

.~~ 9034.1(a). After the candidate's date of ineligibility, the

, candidate is entitled to receive additional matching payments

--

.---.. ._.for.•mat¢hable .... ----_•• --. -.c.ontributiq~5; ---_._._ ••• _. _ •••• -_.- -received •• - •• •• - -anda • _.deposited - - - - - - _.:On··or -before ... - - __:...... : - ••. ._.•._

.~'~ December 31 of the presidential election year provided that on

the date of payment there are remaining debts reflected in the

...... '"

Statement of Net Outstanding Campaign Obligations ("NOCO

Statement"). 11 C.F.R. S 9034.1(b). Any por~ion of the

payments made to a candidate from the matching payment account

ir. excess of the aggrega~e amount of payments to which the

candidate was entitled under sectio~ 9034 shall be repaid to the

Secretary of the Treasury. 26 U.S.C. S 9038(b)(l). The

Commission may seek a repayment of public funds received in

excess of the candidate's entitlement to the extent that

payments made a~te= the candidate's date cf inellg:bility are

greater than the debts reflected in the NOCO Statement. :1

C.F.R. S 9038.2~b)(1)(i~.
, .....

,~

.,.. '. ":~::r~

;.:.....

-35-

:~ the rlna: ~~ci~ Re~::~ on the Pri~ary Committee, the

Commission determloed that the Primary Committee received funds

in excess of its entitlement totaling $485,631. This amount has

been revised. Based on the Commission's analysis of the Primary

Committee's NOCO statement, the Primary Committee had net

outstanding campalgn obligations on August 20, 1992 of

Sl,816,043. The Primary Comnittee deposited private

contributions totaling $876,527 between August 20, 1992 and

March 2, 1993. The primary Committee received matching fund

payments of $714,529 between August 20, :992 and January 5,

1993. The Primary Committee's remaining entitlement prior to

receiving the March 2, 1992 matching payment was $224,587. The

primary Committee received matching payments of $340,662 on -.- -_.- .. __..- ----_._..__._---------_ _ -_.- .._.. _- . ._-- ..._. --_ ..- --- - -... _. -- -----_..._._-_._-- -_.. __ .-.----

March 2, 1993, which exceeded its entitleaent by $116,075. The

primary Committee received an additional matching fund payment

of $100,778 on April 2, 1993. As a result, the Primary

Committee receive= $216,853

of its entitlement .

matching fu~ds pay~e~:s in ex:ess

.-- \.

:n

,.:;- ..

!he:efore, ~~e CommiSSl~n has made a final de:erminatic~

that the Primary Committee received $216,853 in matching fUr.~5

in excess of its entitlement and must repay $216,853 to the

United States Treasury pursuant to 26 U.S.C. 5 9038(b)(1).

III. STALE-DATED CHECKS - PRIMARY COMMITTEE

Section 9038.6 of the Commission's regulations provides

that if a committee has outstanding checks that have not been

cashed, the commit:ee should submit a che=k for the total amount

of the outstanding checks to the united States Treasury.
- :."_•. ---. '.::.-

~" .".

-36-

In the Final Audit Report on the Primary Comrnl::ee, the

Com~ission made an initial determination that the primary

Committee must pay $19,194 for stale-dated checks to the United

States Treasury. See 11 C.F.R. S 9038.6. The primary Committee

paid this amount to the Treasury on October 21, 1993 and July

25, 1994. Therefore, the Commission has made a final

determination that $19,194 is payable to the United States

Treasury pursuant to 11 C.l.R. S 9038.6. Since the Primary

Co~~ittee has made this payment, no additional payment is

IV. GEe AND COMPLIANCE FUND PAYMENTS

The Commission's regulations pr~vide that if a committee

has checks outstanding. that haye not been cashed, the Committee - ... '.. .,. .-.. . . .. . . . . .."

_! ~~;----_!...·-··~half-subliif--i -cnec"K··-fo-r:· ·the--t-otal--uount-··of- -the--outst~~dtnq--··--------:-.---

checks to the United states Treasury. 11 C.F.R. S 9007.6. In

addition, if a candidate receives income as a result of

_~ i~~estrnent c: other use of ?ublic funds, he shall ?ay the a~ount

, of the income to the United States Treasury. 11 C.F.R.

I~J

'...... . -

The Commission made an initial determination that the GEC

must pay $19,023 to the United States Treasury for stale-dated

cheCKS. The GEC made this payment on October 21, 1993, and does

no: contest the payment. !~e Co~mission also made an initia:

determination that the GEe pay 52,086 to the United States

Treasury for income gained from an insurance settlement. The

GEe notes in its response that 1 t "di sagrees ... that the

insurance settlement at issue created income" but p~ovides no
!.:,,~._....... W.· 4.·' .• J' :, ••

-37-

lega: c: :a~:ual ar;umen~s to suppc:c thiS statement.

Attachment 8 at 3-4. The GEe made the $2,086 payment on July 6,

1994. Finally, the Compliance Fund made a payment to the United

states Treasury for stale-dated checks totaling $8,666 on

October 21, 1993.

Therefore, the Commission has made a final determination

that the GEe must pay $21,109 to the United States Treasury,

representing a gain on an insurance settlement of $2,086 and

stale-dated checks totaling $19,023. 11 C.F.R. SS 9007.2(b)(4);

9007.6. The Commission further has made a final determination

that the COQpliance Fund must pay $8,666 for stale-dated checks.

Since the GEe and Compliance Fund have paid these amounts they

do not owe any amount to the United States Treasury.

. ... ... .:..-:-;...... ~.~~:

~<~

'. v. CONCLUSION

For the foregoing reasons, the Commission has made a final

.-

I -. . I ,

...... '- ..

determination that the primary Committee must repay a pro rata

portion of non-qualified ca~~aign expenses tota::~g $~OS,123 in

the amount of S106,979 ($409,123 x .261483) to the United States

treasury. :~:ther, the Commission nas made the final

determina~ion that the Primary Committee must repay $215,853 to

the United States Treasury for matching funds received in excess

of its enti tlement.' The Commission has also made a final

determlnation that the Primary Committee must pay $19,164 to the

united States Treasury for s:ale-dated checks. Because the
-38-

?:i~ary Committee has ~a:e a pay~er.t for the stale-date: checks,

the total amount due to the United States Treasury is $323,832.

Moreover, the Commission has made a final determination

that the GEe must pay $21,109 and the Compliance Fund must pay

$8,666 to the United States Treasury. 11 C.F.R.

SS 900~.2(b)(~~i 9007.6. As noted, the GEe and Compliance Fund

have made these payments and no additio~al payment is due f:om

the GEC or Compliance Fund. Finally, the Commission recommends

that the Compliance Fund reimburse $220,086 t~ the GEe to

e~im:nate the GEe's expendi~ures in ex:ess of its cvera::

expendit~=e limitation. 2 ~.s.c. S 441a\bl.

Attachments

-I.

4 .

8 .

9 .

5 .

6 .

13.

14 .

15.

. (:.

--". . 1. :., I.nt~rim.·Aucli t Repor.\:.- Pr j,mary Coaai.ttee- . . .• .: ---- -_.- - -2-~ - - ---I-n-te-r-i.--Audit"'Report--'--GEC-and-- Co.pli-anee-'- Fund"-- - ...- -----. --------- ------

....:- 3. Primary Committee Response to Interim Audit Report dated

IJuly 6, 1994 (portions of attachments deleted)

GEe and Compliance Fund Response to Interim Audit Report dated July 6, 1994 (portions of attachments deleted)

Primary Committee Final Audit Report

GEC and Compliance Fund Final Audit Repo:t

Primary Committee Response to Final Audit Report

GEe and Compliance Fund Response to Final Audit Report Audit Analysis of Responses to Final Audit Reports

Oral P:esen~a~:on 7:a~s:=:=:

1:. Submlssion of additional materials :~110~:ng oral

presentation ~Z. Audit analysis of oral presentaticn and additional

submission

Marilyn Ouayle letter

Perot Advertisement

Direct mail brochures Califor~ia and ~e~ Jersey po._ sc::p~s

17. Certification of Commission's vote on August 3, 1995
"-'-~~ ,~~

:'~ §. - -- -.~:~ ".-.~

!~fA?'l/tk

FEDERA L ELEe T10" CO,\., \ \I SS10"

DATE & TIME TRANSMITTED: FRIDAY, SEPTEMBER 15, 1995

BALLOT DEADLINE: WEDNESDAY, SEPTEMBER 20, 1995

12:00

4:00

COMMISSIONER: AIKENS, ELLIOTT, McDONALD, McGARRY, POTTER, THOMAS

SUBJECT: PETITION OF THE BUSB-QUAYLE '92 PRIMARY COMMITTEE,

INC., THE BUSB-QUAYLE '92 GENERAL COMMITTEE, INC.

AND THE BUSB-QUAYLE 192 COMPLAINCE COMMITTEE, INC.

TO STAY REPAYMENT PENDING APPEAL (LRA 1425).

MEMORANDUM TO THE COMMISSION DATED SEPTE"BER 14, 1995.

. ---------_. ------ --- -----I'--approve --the --ie-c'-.imendat fonTs)

I object to the recommendation(sl

COMMENTS:

: ,-.

• J l

" ' ..

DATE:------ SIGNATURE:-------------------

A definite vote is required. All ballots must be signed and dated.

Please return ONLY THE BALLOT to the Commission Secretary.

Please return ballot 00 lat~r than date and time shown above.

FROM THE OFfICE C~ THE SECRETARY OF THE COMMISSION
:.""" .' ,.'\.'.. ::-

" ."" .. ,:: .., .... ,.'~

'\..-'0.

~,,:

FED ERAL ELf ( 1I()'- CO.\t\\ IS5:0 '\

September l~. lq95

MEMORANDUM

TO: The Commission

.--

\..

.- ... '-' '

THROUGH: John C. Surina

Staff Director

FROM: Lawrence M. Noble ' General Counsel

Kim Bright-Coleman [tf~ Associate General Cbunsel

Kenneth E. Kellner~~ Assistant General to~n~l

.-=---_.'- ._-~.-=- ._'-'----~~-~~~~:~Dew ~-~t-p~i:nt:~ r -~i-(J-~ -- ----------- ----~~---:-~-- --_...-

SUBJECT: Petition of the Bush-Quayle '92 Primary Committee,

Inc., the Bush-Ouayle '92 General Committee, Inc.

and the Bush-Ouayle '92 Compliance Committee,

Inc. to Stay Repayment pending Appeal

(LRA 1425)

I. I Wl'RODUCTION

On August 22, 1995, the Bush-Quayle '92 Primary Committee,

Inc. ("the primary Committee"), the Bush-Quayle '92 General

Committpe, Inc. ("the GEC") and the Bush-Quayle '92 Compliance

Committee, Inc. (the "Compliance Fund") filed petitions for

review of the Commission's final repayment determinations and a

joint motion to consolidate with the United States Court of

Appeals for the District of Columbia Circuit. On the same date,

the Committees sent a letter petitioning the Commission to "stay pending appeal the Committees' repayment of the amounts set

forth in the final repayment determinations sent to the

Committees on August 17, 1995" pursuant to 11 C.F.R. S 9007.4(c)

and § 9038.5(c). Attachment 1. It should be noted that the

letter does not petition on behalf of President George Bush, the

candidate. For the reasons set forth in this memorandum, this

Office recommends that the Commission deny the petition.
.'.' . '. ..". . '. .. .~., ....':" ', ..-,- :;..... ..,. ~, .

Memorandum to The Commission

Request to Stay Repayment Pending Appeal

Bush-Ouayle '92 Committees

(LAA .425)

Page 2

II. BACKGROUND

'.' : ., -'~

On August 17, 1995 the Commission approved the Statement of

Reasons supporting final repayment and payment determinations

for the primary Committee, GEC, and Compliance Fund.!1

Specifically, the Commission made a final determinatIon that the

Primary Committee must repay $323,832 to the United States

Treasury, including a pro rata repayment of non-qualified campaign expenses related to the general election in the amount

of $106,979 and a repayment of $216,853 for matching funds that

the Primary Committee received in ex~ess of its entitlement.

The Statement of Reasons also included a final determination

that the primary Committee make a payment of $19,194 for

stale-dated checks, which the primary Committee has already paid

to the united States Treasury.

Moreover, the Statement of Reasons included final

determinations that the GEC must pay 521,109 for stale-dated

checks and a gain on an insurance settlement and that the

Compliance Fund must pay 58,666 for stale-dated checks to the

United States Treasury. The GEC and Compliance Fund have paid these amounts. Finally, the Statement of Reasons recommended

that the Compliance Fund reimburse the GEe $182,785 in order to

eliminate the GEC's expenditures in excess of its overall

expenditure limitation. 2 V.S.C. S441a(b). . -- :,:::---"-'--'--'-It'I-~---AN1iLYSIS"

. . :

,,--

'- .

'n

The Primary Committee, GEC and Compliance Fund requested a

stay of the final repayment determination pursuant to 11 C.F.R.

S 9038.S(c}(iii).2/ Under this provision, a stay may be granted

while judicial review is pending if a candidate meets all of the

following criteria: 1) the candidate demonstrates that he or she

will suffer irreparable harm in the absence of a stay; 2) the

candidate has made a strong showing of the likelihood of success

on the merits of the judicial action; 3) such relief is

consistent with the public interest; a~d ~) no other party

interested in the proceedings would be substantially harmed by

1/ The Statement of Reasons was hand delivered to counsel

tor the Primary Committee, GEC, and Compliance Fund on the

same date.

2/ This provision applies to primary campaigns. The

Committees also cite a similar provls:on for general election

campaigns, at 11 C.F.R. § 90Q7.5(c'. However, that provision

does not apply here because the only outstanding repayment amou~t is due from the Primary Commit~ee.
.-:.-. :',,~'.. ~~ -...... ...... ,. - . ...

'Memorandum to The Commission

Request to Stay Repayment pending Appeal

Bush-Quayle '92 Committees

(LRA 4425)

Page 3

the stay.3/ 11 C.F.R. § 9038.5(c)(2}(iii). For the purposes of

11 C.F.R.-S 9038.S(c)(2)(iii), in determining whether the

candidate has made a strong showing of the likelihood of success

on the merits, the Commission may consider whether the issue on

appeal presents a novel or admittedly difficult legal question

and whether the equities of the case sU9gest that the status quo should be maintained.1/ 11 C.F.R. S 9038.5(c)(3).

We note at the outset that there is no repayment amount

outstanding from either the GEe or the Compliance Fund, and

therefore, it is unnecessary for those committees to seek a

stay. Indeed, the GEC and Compliance Fund have no standing in

this matte~; the outstanding repayment at issue is due from the

primary committee and the candidate. Accordingly, we recommend

that the Commission deny the petitions for a stay made by the

GEe and the Compliance Fund.

In addition, the Primary Committee has not satisfied the

four elements required by 11 C.F.R. § 9038.5(c)(2l(iii) for the

Commission to grant the requested stay. Its first argument is

that the repayment would cause irreparab:e harm because the

primary Committee does not have sufficient funds to make the

repayment, and the Compliance Fund would require "difficult and

substantial fundraising activities· to raise the amount.

Attachment 1 at 4-5. The Primary Committee contends that if it -_~_,_~ -=._ ultimately: p~evai.ls,.oA appeal,. t;he Primar.y Ct?m.m1.ttee and , .. ...~. - Cc)mpTi"a'nce--Yund ·would--·l ose -- the---fund r-a-i-si 09-- e-xpendi tu-res-- needed _. _

to raise the repayment amount and will incur additional costs to

:~ ref~nd t~e contriibutionS.

b ~n sUdPportfof~dthiS 8

f

r gument, the

pet1tionLng Comm ttees su mltte an a 1 avit rom Assistant

Treasurer Keith Davis stating that the Committees do not have

sufficient funds to make the repayment and it would cost at

."........'

.,., 3/ The other alternatives available to candidates and their

authorized committees are: 1) to place the entire amount at

issue in a separa~e interest-bearing account pending the

outcome of the appeal, with withdrawals from the account only

by joint signatures of representatives of the candidate and

the Commission (11 C.F.R. S 9038.5(c)(2)(i»i or 2) to post a

surety bond guaranteeing payment of the entire amount at

issue plus interest (11 C.F.R. § 9038.5(c'(2)(ii)'.

4/ The Commission's regulations are consistent with the

test for determining whether a stay is warranted developed in

case law in the D.C. Circuit. See Vir~inia Petroleum Job

Ass'n v. Fed. Power Com'n, 259 ~d. 9 1, 925 (b.c. Clr. 19~8); wasfiin ton Metro olitan Area Transit Commission v.

Holiday 'I'ou:s, Inc., F.., D •• Clr. 77};

see also Explanation and Justification of 11 C.F.R. S 9038.5, '5"LFea:-~. 20673 at 20673-4 (June 3, 1987).
-"-Memorandum to The Commission

Request to Stay Repayment Pending Appeal

Bush-Quayle '92 committees

(LRA #425)

Page 4

least $100,000 to raise su:ficient fUr.~5 t~ make the repayment.~/

Attachment 1 at 8-10.

The foregoing does not demonstrate the requisite

irreparable harm under 11 C.F.R. S 9038.5(c)(2){iii). Since the

candidate is personally liable for the full amount of the

repayment, the Primary Committee may avoid incurring fundraising

expenses if the candidate makes the repayment.~/ In any event,

to establish irreparable harm, "(m]ere injuries, however

substantial, in terms of ~cney, time and energy necessarily expended in the absence of a stay, are not enough." Virginia petroleum, 259 F.2d at 925. Moreover, -the possibility that

adequate compensatory or other corrective relief will be

available at a later date, in the ordinary course of litigation,

weighs heavily against a claim of irreparable harm." Id. Since

the harm postulated by the Primary Committee is not inevitable

absent the requested stay, and the Primary Committee may recover

the repayment amount from the Commissio~ if it prevails on the

merits of its appeal. the P~i~ary Com~:~~ee has not established

"irreparable harm."]/

..'-.~~. --..~~~

The Primary Committee also asserts that the repayment

determinations "involve difficult and close legal issues" and

that it has "a reasonable probability of success on the merits."

Attachment 1 at 5-6; 11 C.F.~. S9038.5(c)(2)(iii). To -_..;. e$tap.lish the requisi·te "substantial indication of probable~.__.. ,__.. _, -- ~;-:--- -- - --s·u-c·c-e-s-s-""·on--tne"'me-r-its'--of-i ti-ap-p'ear;'-'V'i-rg-i-rila-"Pe-t-roleum-; 259

.":'

,...

,

5/ Mr. Davis states that as of AUgust 22, 1995, the ~ommittees had the following net balances: the Primary

Committee, $5,550.63; the GEe, $8,734.33, and the Compliance

Fund, $76,930.63.

6/ President George Bush, the candidate, has not petitioned

Ior a stay. To become eligible for public funds, the

candidate agreed in writi~g, inter al:a. to pay any amounts

required to be repaid unde: 26 U.S.C. § 9038. 26 U.S.C.

S 9033(a), 11 C.F.R. 559033.1, 9033.2. Moreover, 26 U.S.C.

S 9038 provides that "the candidate shall pay" repayments to

the United states Treasury for amounts received in excess of

entitlement and non-qualified campaign expenses. 26 U.S.C.

S 9038(b)(1) and (b)(2). Therefore, the candidate is

personally responsible to make the repai~ent, and the

Commission may seek payme~t from him.

7/ Moreover, the Primary Committee COuld mitigate the

potential harm by requesting an extensic~ of time or

installment plan to make the repayment. In addition, the

Primary Committee could have sought a stay on the basis of a

surety bond, which would likely cost less than the full

repayment amount. No evide~ce has been 9rovided that the

Primary Committee or the candidate would be unable to obtain

or pay for a surety bond.
.: --.... -:~"":'-"::--;Meino'ra-ndum to The Commi'ssion

Request to Stay Repayment Pending Appeal

Bush-Quayle '92 Committees

(LRA t42S)

Page 5

F.2d at 925, the Primary Committee need not demonstrate a

mathematical probability of success, but must raise serious,

substantial and difficult legal questions and demonstrate that

the equities are in favor of maintaining the status quo. Washington Metropolitan, 5?9,F.2d 841, 843-844; ,11 C.F.R.,

i g038.5(c)(3). "(M)alnta1nlng the status quo 1S approprlate

when a serious legal question is presented, when little if any harm will befall other interested persons or the public and when

denial of the order would inflict irreparable injury." Id.

---_._-~--

-' ":ow -, ~~~

.•.

The Primary Committee has failed to demonstrate a strong probability that it will prevail on the merits of its appeal. The Commission has rejected the "bright line test ll proposed by the Bush-Ouayle '92 Committees. As analyzed in the Commission's

Statement of Reasons, the Bush-Ouayle '92 Committees have

misinterpreted the Commission's re9~lations and precedent.

contrary to the arguments presented, the statute, applicable

Commission regulations, and Commission precedents do not support application of a "bright line test" based on the candidate's

date of ineligibility to determine if an expenditure is a

primary qualified campaign expense. Rather, the Commission has

looked at both the timing and the purpose of expenditures to

determine whether they were qualified campaign expenditures made

"in connection with" the primary campaign. See 26 U.S.C.

§ 9032(9); 11 c.r.R. S 9032.9(a). Moreover,~e Commission did

:--'. .' ~ot.·apply.a .. "bright line .\est" to. other a.udits £~Olll the:1992 '. . .. ' -----.-.---·--pre-s-rdeiYtial-ele-ct-ion-··eyc·le-.---See--Final--'Audit-'Rep-ort- o-n-- Cltnt-on------ -- --------:-

:.- for President Commi ttee (approved December 27, 1994). While

certain factual aspects of this matter, such as polling expenditures and ot~te offices, presented close factual issues,

the Commission resolved each of those close factual questions in

favor of the Bush-O~ayle '92 Committees. The remaining

non-qualified expenditures that form the basis of the

Commission's final repayment determination are clearly related

to the general election campaign. Therefore, the final

repayment determination does not present a Mnovel or admittedly difficult legal question." 11 C.F.R. § 9038,5(c}(3~.

The primary Committee also argues that a stay would not

harm the government interest because the money "is not needed

immediately by the United States Treasury." Attachment 1 at 6;

11 C.F.R. S 9038.5(c)(2)(iii). To the contrary, the first

matching payments are due to candidates and committees eligible for public funds in the 1996 presidential elections in a mere

five months. The amounts of repayments made pursuant to 26

u.s.c. S 9038 are deposited into the Matching Payment Account,

the source of public funding for the 1996 presidential primary and general election campaigns and the major party nominating conventions. 26 U.S.C. § 9038(d). It is unlikely that an

appellate case will be resolved before 1996. Thus, the stay

could harm the interests of interested third parties, the 1996

presidential campaigns and conventions,
"":""'~~morandum 'to: The Commission

Request to Stay Repayment pending Appeal

Bush-Quayle '92 Committees

(LRA #425)

Page 6

Finally, the Primary Committee argues that the equities of

the situation favor maintaining the status quo. Attachment 1 at

6; 11 C.F.R. S 9038.5(c)(2)(iii). To the contrary, public

policy considerations favor protecting the public fisc. The

requirements of the regulations are intended to protect the

public treasury if the Commission's repayment determination is

upheld on appeal. See Explanation and Justification of 11

C.F.R. S 9038.5, 52-rid. Re~. 20673 (June 3, 1987). A stay unsupported by a surety bon or escrow account raises the risk

that in the event the Commission prevails on the merits, the

repayment will be delayed. Moreover, it creates a precedent

that could encourage other campaigns to indulge in frivolous

challenges to repayment determinations to delay repayment.

Therefore, since the Primary Committee has failed to

establish any of the four required factors for the Commission to

grant a stay under 11 C.F.R. S 9038.5{c)(2)(iii), the Office of

General Counsel recommends that the Commission deny the

requested stay. We recommend, however, tha~ the Commission

permit the Primary Committee and the candidate to obtain a

surety bond or establish an escrow account and submit a revised ~, request for a stay based on 11 C.F.R. S 9038.5(c)(2)(i) or (ii)

within ten days. This Office's letter to the Primary Committee

will suggest these alternative methods of obtaining a stay.

-'-~;:;-~'~"\l

: '.:~

'.

'(.--- ....

.ro.. .... '

r'-

'---

....... '- '

- . --- - -_._--.-------.-..._.. ------

The Office of General Counsel recommends that the

Commission:

1. Deny the requests of the Bush-Ouayle '92 Primary'

committee, Inc., the Bush-Quayle '92 General Committee, Inc.,

and the Bush-Quayle '92 Compliance Committee, Inc. to stay the

Commission's final determination that the Bush-Quayle '92

primary Committee, Inc. must repay $323,832 pending the appeal

filed in the United States Court of Appeals for the District of

Columbia Circuit; and

2. Approve the appropriate letter .

Attachment

1. Letter dated August 22, 1995 from Bobby R. Burchfield

with attached Petitions for Review dated August 22, 1995
, ..:: -~.-

THOMAS O. BARNETT

VIA HAND DELIVERY

COVINGTON & BURLING

1201 PtNNSY~V"NIA AVCNUE. N W

POBOX 1566

W-.SHINGTON 0 C 20044·7566

1202; 662·6000

• CLC'&ll I~O~1 ••Z· .Z.,

TCLCIl .O·"llO~ IC;O"\.... _ • ..,

C: ••\.C C:OVL".O

August 22, 1995

~tc:ooor~-o..toe

C'-"IOOo I-a·

\.C»tOON ..... -.•

~A-e)

~_."' !l5

TUV''-l ...",

~ICL' CO-(~O"'e:t

- avorJt OCt .....T. WIUSaQ.. '0.0 IC.GOUOO

'l"n.0"'ClIC »., Sr,...-<l

~A'»'~~

Ms. Kim Bright-Coleman

Associate General Counsel

Of:ice of the General Counsel

Federal Electio~ Commission

~:::: Floor

999 E Street, N.W.

Washington, D.C. 20463

_.:~_~._n . :.~~..:_ ".. ·Bush-ouarle· ~.$? .Audit Reports .. . - -- ... . _...._.- ----- _... -_._._-- - .... - ..-

Dear Ms. Bright-Coleman:

••f""'.

,-,

'. '

You will find enclosed a copy of three pecitions for

review and a joint motion to consolidate filed today on behalf of

Bush-Quayle '92 Primary Committee, Inc. (the nprimary ~~~mitteen), Bush-Quayle '92 General Comm'~tee, Inc. (the

"3eneral Committee"), and Bush-Quayle '92 Compliance Committee, --- t:he "Compliance Commit~ee") (c~llectively, the

·'-=~~.-;".:.:~eesll) w~th the United States Court of Appeals for the

District of Columbia Circuit.

Pursuanc to 11 C.F.R. §§ 9007.4(c) and 9038.5(c), the

Committees hereby petition the Commission to stay pending appeal

the Committees' repayment of the amounts set forth in the final

repayment determinations sent to the Committees on August 17,

:395. The Commission found as part of its final repayment

determination that the Primary Committee·must repay to the United

States Treasury a pro rata portion of non-qualified campaign

expenses in the amount of $106,979 a~d matching funds received i~

excess of entitlement in the amount of $216,853. Related to ~hese repayment de~erminations is a Commission recommendation t~at the Compliance Committ~e reimbu~se the General Committee in ~he amount of S~82,78S. As noted in the materials accompanying ~~e Final Repayment Determination, the Committees have already ~epa~d the c~he~ amoun~s"

··l.-:'''·~ ,

ATTA :::;..:...\ 1 --2-'-

Pag e \ of -..~...--
"--...

;~-~ . . : - .

COVI NGTON & BURL I NG

Ms. Kim Bright-Coleman AUgus~ 22, 1995

Page 2

I. PACTUAL AND PROCEDURAL MCJGRQUND

Prior to the 1992 primary campaign season, Primary

Committee personnel reviewed the law, regulations, and existing

precedent con=erning the proper treatment of expenditures made up

to the date of ineligib~l~ty. The law and regulations state, in

pertinent part, that such expendit~res may be treated as primary

campaign expenses if t.hey are made "in connection with" the

campaign for nomination. 26 U.S.C. § 9032(9); 11 C.F.R.

§ 9032(9). Neither the regulations nor Commission precedent

indicated that the purpose of the expenditure must be exclusively

or even primarily related to the campaign for nomination. To the con~rary, Commission staff had questioned the relative bene:it of

certain expendi~ures by the Reagan-Bush campaign during the 1984

elec~ion cycle. As an examp~e, ~he scaff sought to treat

expenditures for voter registration efforts made in states after

the primaries had taken place as general election expenses. The

Reagan-Bush campaign had responded chat, although some of these

expenditures may have benefitted the general e~ection campaign,

,_=.. -.:.._.. ~.h_~y._~~.!.~_ ~nt::.~eles.s pa-z;t Of' a "general.: bllild-up ~d the ... . ,,: '~- Republican Nati vnal-Convention~-- --'The -CommiffsTon--'acc'epte-d' 'this" .. -- --"'''-'-''- - ..._-

explanation and deemed the expenditures to be qualified primary

campaign expenses. Other Commission precedents were in accord.

See Adv. Op. 1975-9, Fed. Election Camp. Fin. Guide (CCH) 1 5110

at lO,035 (~975) (holding expenditures during primary by

unopposed candidate "a~locable to that primary election rather

than to a subse~~ent general election"): Adv. Op. 1978-99, Fed.

Election Camp. Fin. Guide (CCH) 1 5387, at 10,396 (1979)

(campaign materials ordered and received only one day before the p=:~a~ electior., whic~ we~e used both :n the primary electio~

and ~he general election, may be treated as primary campaign

expense) .

On the basis of this review, the Committees adopted a "br~ght-line" approach based on the date of ineligibility

("DOI"), which was August 20, 1992. The Committees treated

expenditures for advertising, equipment, offices, salaries, mater~als, and the like as primary campaign expenses so long as

they were made prior to the DO! and were connected to the

campaign for nomination.

During the audit, the Commission staff adopted the same

position that hao been rejected by the Commission in the ReaganBush '84 audit. The staff selected a series of expenditures,

including polling, advertising, equipment and materials, and

office space that the staff contended had a larger benefit t~ the

general elec~~c~ campa~gn ar.d should therefore have been treated

as a general election expense. ~he Commission ~nitially agreed ~n ~~s rnte~im Aud~: Reports ~ss~ed on March 24, 1994.

A'i''rACi-JlD:T ~, .

~a.-e~O" ::;
......- .",:-..'

COVINGTON & BURl.ING

Ms. Kim Bright-Coleman

-August 22, 1995

Page 3

The Committees submitted responses to the Commission in

which they explained the following: (i) the law and precedent

indicated that the Committees' "bright-line" approach was proper,

(ii) the primary benefit test applied by the Commission was

inconsistent with the law and regulations, (iii) the Committees

had, in any event, not received adequate prior notice of the

Commission's standard, and (iv) the expenditures were nonetheless

sufficiently connected ~o the campaign for nomination as to meet

the prima~ benefit standard reflected in the Interim Audit

Reports.

-:.~

:........

During the open meeting on December 8, 1994, the

Commission expressly aba~coned the primary benefit test in the

Interim Aud~c Reports a~~ agreed that the Committees had shown a

connection between a~: ~: :~e challenged expenditures and the

".' campaign for nomination. The Commission adopted a new approach,

however, in which it split the challenged expenditures evenly

between the Primary and General Commit~ees. This approach does

not appear in the regulations, had never been adopted in a prior

.• auditl \ nad not been suggested by the audit staff, and apparently . ----.- _.. a-(.ose '-for--the- -flr-st-t,-ime--dlfr"ing--- t"Ife -meet-ing-;---·- --.-----------.--------.. ',' . After rece1v~ng the initial final determination, the

Committees submitted additional materials and made an oral

presentation to the Commission further explaining the arguments

mentioned above and pointing out that, regardless of whether the

Commission's interpreta~icn was permissible under the law, the

Commission had not given the campaign adequate prior notice that

this novel approach would be applied.

'1'"'\

.....

"\-- --,

A: its mee:ings on August 3 and 17, 1995, ~he

Commission found that additional expenditures, such as polling

and state office expendit~~es, could be treated entirely as q~alified primary campaign expenditures, but declined to modify

its repayment determinations with respect to the remaining

challenged expenditures. The Committees are now seeking judicial

review of this issue_

Unless the repayment requirement is stayed or extended,

the Committees will have only uncil September 16, 1995, to raise

the money to make the repayment, a process that would be

difficult if not impossible to complete in that time. Further,

in view of the Petitions for Review of the Commission's

determinations filed by the Committees with the D.C. Circuit, the

Committees would suffer ir~eparable harm if forced to comply with

the determination prior to resolution of their appeal.
-'~.: -.~. - . ...,.:..-...•. ..:~

·1-;' ---:'

COVINGTON & BURl.ING

Ms. Kim Bright-Coleman

August 22, 1995

Page 4

II.. ARGUMENT

A. Requirements for Entry of a Stay

The Commission has the authority and discretion to

issue a stay of its repaymen~ determinat~ons. 11 C.F.R.

§§ 9007.5(c) and 9038.S(c). More generally, the test for a p~eliminary injunction, the equivalent c: a stay pending appeal,

is set forth in Virginia Petroleum Jobbers Ass'n v. ~, 259 F.2d

921 (D.C. Cir. 1958).

The principle issue on appeal will be whether the P~imary Committee acted reasonably in treating as primary

campaign expenditures the cos~ of advertising, equipment, and ~aterials that were used during the primary campaign period for

purposes that had a connection to the campaign for Domination.

For the reasons set forth below, the Committee respectfully

submits that {i} requiring repayment prior to the resolution of

the appeal would cause irreparable harm, (ii). the COfT!TOittee has a

_..::=-.!.. __.:....~------ sUb.g.t.an~l~~·;PJ~~~~!i.~'y ..._.~!__.:"uc~~_~~ ~~ .~h~_ ~.E~!:~ .. ~~__ ~~~!~5!~e~ _~y_. _ '\:- the Comm.lssJ.on' s own struggle to resolve the dJ..ff J:cult underlying . . legal and factual issues, (iii) there is no compelling government .~ interest in requiring repayment at this point, and (iv) the

equities favor maintaining the status quo. Accordingly, the

Commission should stay the repayment pending resolution of the

appeal.

B. A Stay Pending Appeal II Warranted Here

Because of the s·Jbstantial legal issues presented by

~he ~ommittees' appeals, and che irreparable injury that would be

incurred in complying with the repayment order, a stay is

appropriate here.

First, requiring immediate repayment would cause

irreparable harm to the Primary Committee and others. The

Primary Committee does not have funds sufficient to pay the

amount required in che repayment determination. The Compliance

Committee would need to raise the balance through difficult and

substantial fundraising activities, largely if not exclusively

:hrough direcc mail appeals. While raising money is never easy,

it is particularly difficult several years after the election

during the heat of the next presidential election campaign that

is already well underway with 10 active Republican candidates.

As Keith A. Davis, Assistant Treasurer to the Committees,

exolains in the attached declaration, the fundraising would have ~o·be l~miced to the Pri~a~' and Compliance Co~~ittees, and only

:nd:v:duals ~ho have not already con:ributed the Sl,OOO maxi~um

:0 those Co~~ictees would be allowed to contribute. Mailing

A7:ACrpt1i'NT _1_-

rage:2C of 21
: ...:_ 0 •• _ ....;-""" -. "~''''-0'~

COVINGTON & BURl..ING

Ms. Kim Bright-Coleman

August 22, 1995

Page 5

lists would have to be culled and contributions would have to be

screened to ensure that each was proper and allowable.

As a result of these difficulties, the cost of raising

the funds would likely consume more than one third of the amount

raised and could easily reach one half of that amount. If the

Committees prevail on appeal, the time, effort, and expense of

the fundraising will have been entirely wasted. The government

would presumably pay back the money paid to u.s. Treasury, but it

would not reimburse the Committee, the fundraising volunteers, or

the contributors for their time or for the expense of the

fundraising. This loss would thus be irreparable.

A second i~reparable loss wouid occur after the

Committee received the refund from the Treasury, again assuming a

favorable outcome on appeal. The Committee would refund the

remaining money -- thus incurring substantial additional

adminiscrative and postage expense ---leaving the contributors

substantially less than their original contributions. On the . ___==-_ ._. ._._o_tber__h~f1~:L_~~_~ec;;.l.~io~ __1].9~_.~_~_C?_ ;-_efurid' the money would also leaV'e . . "'-~ the contrib\,~ors irreparably harmed-: -.. , -- _.. ".-- ... _- -.--....- -..----------.-.-------- --

" .. :

,.... '- .

Second, as the Commission itself recognized during its

deliberations, the repayment determinations involve difficult and

close legal issues that indicate that the Committees have a

reasonable probability of success on che merits. For example,

there is a substan~ial question as to whether che Commission has

applied ~he proper legal standard in making its determination.

The applicable statute and regulations require, in pertinent

pa=t, o~ly that expe~ditures be made "~~ connection with" t~e

campaign for nomination, 26 U.S.C. § 9C32(9); 11 C.F.R.

§ 9032(9). The Commission, however, applied a much higher

standard; it required that the expenditures "must be primarily rela~ed to the primary campaign." Statement of Reasons at 19

(emphas~s added). Moreover, the Commission has recently adopted

the qbright linen test advocated by the Committees for the 1996

election cycle. If the "SO/SO split ft prevails on appeal, only

the 1992 cycle will have been subjected to this standard.

Even if the "primarily-related- standard were to be

found to be within the Commission's discretion, another

substantial legal issue is whether the commission provided the

Commictees with adequate notice of ics incerpretation prior to

the 1992 campaign. The statute and regulations do not on their

face suggest that expenditures for goods and services received

and used p~ior to the date o~ ineligibility ("DOl") must either

be pr~ma=~~y related to the primary ca~paign or otherwise

allocated 50/50 between the primary Co~~~~tee and the Gene=a: Com~~:tee. Nor has the Comm~ss~on been able to point to a slngle

~TTAC~liT_J:"-'- ra.se -2..- o~ ....6l.-
· ." ..-.--": -

COVINGTON & BURLING

Ms. Kim Bright-Coleman

August 22, 1995

Page 6

instance before 1992 in which a presidential campaign was

required to allocate such expenditures on a SO/SO basis.

Thi.g, the government would not be harmed by a stay.

While the repayment demand is substantially in excess of the Com~it~ees' current ability to pay, it is not needed immediately

by ~~e United States Treasury. If t~e Commission's determination

is upheld on appeal, the Committees will be as able to raise the

funds for the repayment at the end of the appeal process as they

are now. Moreover, the Commission's rules provide that ·stays

shall ~equire the payment of interes~ on the amount at issue."

11 C.r.R. § 9038.5(4).

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

: ':

."

Finally, the equities of the situation favor ma~~~aining the status quo. The Committees undertook a review of

the existing law, regulations, and precedents concerning the

allocation of expenditures between the Primary and General

Committees, and, based on that review,- adopted a coherent _- approach that was ~onsisten~ly applied. The Cd~ittees promptly - -.. ·-~-~··---··-coriec-tecr··-t;-he:':.tel~ati-velY·-few-:ihadvertent.._:de"rations_~from_that __ ~. __. ~~~~

~~. approach that the Commission staff revealed during the posteleccion audit. Several Commissioners made clear in their

comments during their deliberations that they do not question

that the Committees sought in good faith to comply with the

Commission'S requirements and that the issues presented were di:=icul~. Moreover, the Commissioners have made clear, both in

the regulations recently published and their comments during the

open meetings, that the -bright-line" approach under which the Com~ittee believed it was operating is the better policy .

For the reasons set forth above, the Committee requests

that the Commission stay the repayments not already made by the ~. Commit~ees pending the resolution of the appeal.

Respectfully submitted,

Thomas

B~~r~~ O. Barnett

Counsel to the Committees
COVINGTON & BURLING

DBCLARATION

I declare under penalty of perjury that the foregoing

is true and correct to the best of my knowledge, information, and

belief. Executed in Washington, D.C. on this 22nd day of August

1995.

"'~

~~R:. Bobb~hfield _._._--_.__.-...:.... _----~---_.- ... .. . .. ; .- . -----._-_.-._---. _.----------- ---- - -._--- ---------- .------------. ----------- - ....

c.. ·

........

...... .

ATTAC~ENT (

Pa~e -.1.- 0 f :=:l.l
BBFORE TUB FEDERAL ELBCTION CO~SSION

,:.--." :;":.~

)

Bush-Ouayle '92 primary )

Committee, Inc., }

)

Petitioner )

)

v. )

)

Federal Election Commission, \

Respondent.

Petition for Stay

.- .._-----._---------. --_... --------- ----:

DECLARAUON OF glIB A. DAVIS

~~ accordance with 28 U.S.C. § 1746, I, Keith A.

Davis, hereby declare as follows:

1. During the 1992 Presidential campaign, I served

__• " ••••" __.~ ••0_0__··."_••:...a~_.._~~_i_st~t Treasure];' tQ. ·Busa-~ayle ' 92 Prima~. Cotm\it~ee, .. • - --- .....-.-----.--•••• 0 __- ••

Inc. (nprimary Committee"), Bush-Quayle '92 General Commi~tee,

Inc. ("General Committee"), and Bush-Quayle '92 Compliance

,""

~,

" '

Committee, Inc. ("Compliance Committee") (collectively, the

"Committees"). As part of my responsibilities, I was involved

w:th virtually every aspect of the finances of the Committees,

including the fundraising efforts made by the Primary and

Compliance Committees. I have been involved with campaign

finance activities since 1979. This declaration is based upon

my personal knowledge, experience, and expertise.

2. The Commission's final repayment determination

requires, in part, that the Primary Committee repay to the

United States Treasury $106,979 for non-qualified campaign

expenses and $210,853 fer match:~g funds received in excess of

A':'rAe:-:1n;:NT I

:;. a.g 2 g o-f~6.-\-
........-...

- 2 -

entitlement. The Commission also recommends that the

Compliance Committee reimburse the General Committee for

$182,785 to eliminate expenditures in excess of the General

Committee's overall expenditure limitation.

3. The Com~ittees currently lack the funds to make

such payments. As of August 22, 1995, the three funds had the

following net balances:

Primary Committee

General Committee

Compliance Committee

$ 5,550.63

- . $ 8,734.33

$76,930.63

4. If the Primary and General Committees are

........

..... '

~eaui~e~ to make the payments set fo~th in t~e Ccmmission's

final determinations, they will have to undertake expensive

and dif:icult fundraising efforts. The only realistic method

for raising·the amounts necessary to comply with the repayment

determination ~s a d~rect mail appeal to the Primary and

Compliance Committee contributor lists. Since many of those

contributors have already contributed the maximum amount to

those Committees, the Committees' most reliable contributors

wo~ld need to be deleted f~om the mailing.

ATTAC~JlENl' I --- Page of .<. ,
-_.... -~---~~--~~~._----_.

....... ,.~~

·:·~·f

- 3 -

S. The cost of raising funds during an election

campaign typically amounts to about one third of the funds

raised. To raise funds several years after an election,

however, the cost would be substantially greater.

6. The difficulty i~ raising funds for a past

Presidential election campaign is increased further by the

ex~ensive fundraising ef=or~s currently being made by the 10

Re~'ib:icans seeking ~~e ~o~inatior. for tte :996 electio~. It

could well be easie= to raise f~~ds after the 1996 election

than it would be to do so now.

_a. . ..

i. As a result of these factors, I estimate that

..........

......

...... .

the cost of ~aising the funds necessary to make the repayments

re~Jired by the Commission would be at least $100,000 and

cculd exceed 5150,000. These cos~s do not include the time

a~c e:=o=~ by volunteers helpi~g .~ch the :~~draising ef:c=:s.

I declare under penalty of perjury that the

foregoing is true and correct. Executed in Washington, D.C.,

O~ August 22, 1995.

K~th A. Davis

. I r. - _ ---

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TMO"'AS O. BARNET":"

Oo-Cl:· Ot"~ """·.C· ~c~ &e~ ~.C:)'l'

COVINGTON & BURLING

lao, PENNSYLVANIA AVENUE. N W

POBOX 7566

WASHtNGTOI\,j 0 C 2004"'.7566

12021 662 ·6000

Tt~t""ll IZO~1 eoa· ••••

Tt~C. 80·583 'COV~IIlfO WSfoO

: ••~t CO,,~,NG

August 22, 1995

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--.

Mark Langer

Clerk of the Court

Cnited States Court of Appeals

for the District of Columbia Circuit

Room 5423

333 Constitution Avenue, N.W.

Washington. D.C. 20001-2866

--------.__.._-------------_._----._-_. - -'- -- --_._--------------_._._. --- .._-----

Re: Petitions for Review Submitted by Busb-Qaayle '92

Primary Collllllittee, IDe., Bush-Qaarlc '92 Galen!

Committee, IDe. and Busb-Quayle '92 CompliaDce

Committee. IDe.

Dear ~1r. Langer:

You \\;11 find enclosed an original and four copies of the follo~ing:

.,....

'oJ I

1. A petition by Bush-Quayle '92 Primary Committee, Inc. for review

of fmal audit detenninations of the Federal Election Commission;

2. A petition by Bush-Quayle '92 General Committee, Inc. for review

of final audit determinations of the Federal Election Commission;

3. A petition by Bush.Quayle '92 Compliance Committee, Inc. for

revie~· of final audit determinations of the Federal Election

Commission; and

4. A joint motion by the three committees to consolidate consideration

of the three petitions.

ATTAC~T_I~

rage It of-2l-
:.::::.:... _:..~ •.• _ ...." w.: .... -;-.: .~ ...r'-.. - '., i.; .:~ - :. " .,.~ .. ,.:....:. ~~

CO"~NGTON " 8UAl.ING

Mark Langer

August 22, 1995

Page 2

You will also fmd enclosed three checks in the amount of S100.OO each

payable to the United States Court of Appeals for the District of Columbia Circuit for the

filing fees for each petition.

Please date-stamp and return a copy of each paper \\ith our messenger.

Your cooperation in this maner is appreciated.

Sincerely,

~Dfl.-B~ Thomas O. Barnett

TOB:nnh

Enclosures

--=--~-'-::.':. _.~..:........ _·-:-·:-cC~- -=-Service.LiSL--.- --

...........

.,...

. .'

.._---- '. .' '. . ,-"
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.' ...

UNITED STATES COURT OP APPEALS

POR THE DISTRICT OF COL~~ CIRCUIT

)

Bush-Quayle '92 Primary )

Commi t tee, Inc., )

}

Petitioner }

)

v. }

)

Federal Election Commission, )

)

Respondent~ )

----------------)

Petition for Review

'.'

',",

.. '.

Bush-Quayle '92 Primary Co~~~ttee, Inc. (the

"Primary Committee A ) hereby petitions the Court for review of

the final determinations sent to the Primary Committee by the

- --=-- f..~.9~r_~J._ ..~~_~~~~9n Commission on AUgus~ 17, 1995. In addition, . ~:''''~ - . ---- --- ----- --- -_._------------ --_.--- -------- - -- -_._- _._- -

because the issues raised in this appeal are closely

interrelated to those raised in the petitions filed today by

Bush-Quayle '92 General Committee, I~c. and Bush-Quayle '92

Compliance Committee, Inc., thp Primary Committee requests

~hat ~he Cour~ consolidate the three petitions.

:,1

-....

.... '

Respectfully submitted,

Bobby~~R. Burchfield

Thomas O. Barnett

COVINGTON & BURLING

P.O. Box 7566

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20044 (202~ 662-5000

Attorneys for Petitioner

August 22, 1995

A:TAC~T I --- ::-;:e \~of.~1
•-~.> .. - ... '- --:... -':'" .'.

CERTIFICATE OF SERVICE

'I. Thomas O. Barnett, certify that a copy of the foregoing document was

served by hand on this 22nd day of August, 1995. on the following:

Lawrence ~L Noble. Esq.

Kim Bright-Colem~ Esq.

Delanie Painter, Esq.

Federal Election Commission

999 E Street, N.W.

\Vashington. D.C. 20463

'"

~- - --. _._--~.:_---~_. .~-~~-_.._--~ -

c:

~d;~ •. ~. . -. --Thomas-D.-Barnett ----------- -------------- --.-.------
.. .~. :.... .. ----;:- .. ~. ," ... .. ,;. .

lJNrrBD STATES COURT 01' APPEALS

POR THE DISTRICT OF COLOMBXA CIR~T

Bush-Quayle '92 General

Committee, Inc.

Petitioner

v.

Federal Election Commissior.,

Respondent.

)

)

)

}

)

)

Petition for Review

Bush-Quayle ' 92 General Committee, Inc. ("General

Committee") hereby petitions the Court for· review of the final

determinations sent to the General-Committee by the Federal

_.~~_______ Election Commission on August 17, 1995 w In addition, because

-:- --------:he--~-~~e~-~~i-S~d---~n - t ~~:~;~~;-;r~-- C~~~~l; in~~;~ela t~d--to- --------

those raised in the petitions filed today by Bush-Quayle '92

P~imary Committee, Inc. and Bush-Quayle '92 Compliance

Committee, Inc., the General Committee requests that the Court

consolidate the three petitions.

......

'- .

A~gus': 22, 1995

Respectfully submitted,

B~B£:~ Thomas O. Barnetc

COVINGTON & BURLING

P.O. Box 7566

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20044

(202) 662-5000

Attorneys for Petitioner

ATTACH'aNT I

Eage IS of:iLL
~-. : ..

CERTIFICATE OF SERVICE

1. Thomas O. Barnett, certify that a copy of the foregoing document was

served by hand on this 22nd day of A~ 1995. on the following:

LaVwTence M. ~oble. Esq.

Kim Bright-Coleman., Esq.

Delanie Painter, Esq.

Federa1 Election Commission

999 E Street, N.W.

Washington. D.C. ~0463

----- ....... :"'f~

-.

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- .:~~•• ~_._-...-_:-_.:. -~~...!_~ • - --~_.- ••- •

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UNITED STATES COURT 01' APPEALS

FOR THE DISTRICT OP COLOMB~ CIR~T

Bush-Quayle '92 Compliance }

Committee, Inc., )

}

Petitioner )

)

v. )

}

Federal Election Commission, )

)

~espondent. )

----------------)

Petition for Review

Eush-Quayle '92 Compliance Commi~tee, ~nc.

(ltCompliance Committee~) hereby petitions the Court for review

of the final determinations sent to the General Committee by

----=-~~ --------.-- -----t1~e-Fede-ral---Elec-tion---Commiss10-fi-- on--Alrgust--17-;--1.99S-;-·--In---- --._-- - ---_..._-

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addition, because the issues raised in this appeal are closely

interrelated to those raised in the petitions filed today by

Bush-Quayle '92 Primary Committee, Inc. and Bush-Quayle '92

General Committee, Inc., the Compliance Committee requests

that the Court consolidate the three petitions.

Respectfully submitted,

BO~BU~§:~ . Thomas O. Barnett

COVINGTON & BURLING

P.O. Box 7566

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20044

(202) 662-5000

Attorneys for Petitioner

Augus~ 22, :'995

ATTACHMENT (___

Page '\ of 2. {
..;:: .,':." .. _ :. :.._..;' .t:;" ':~ :~'..I.. • ..... ,.:ol. I,' • .::....' :

CERTIFICATE OF SERVICE

I. Thomas O. Barnett. certify that a copy of the foregoing docwnent was

served by hand on this ~2nd day of August, 1995. on the following:

La\l;Tence M. Noble, Esq.

Kim Bright·Cole~ Esq.

Delanie Painter, Esq.

Federal Election Commission

999 E Street, N.W.

\Vashington. D.C. 20463

... . - --- -_._-_. ---- -------_.__ . -- -----_. --- .. _. __ .

.--'-..

-.

-.

..

. ... ~o A,,·iB~· ';' . -- --- Thomas--O:-Bamett------ --------- ------ ... _----.- -----

I l.. 'I'TACI--~NT _

Fage ,~ of J J
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':'';''.

UNITED STATES COtJRT or APPEALS

POR THE DISTRICT OP COLUMBXA CIR~T

:")

)

Bush-Ouayle '92 Primary )

Committee, Inc., )

Bush-Quayle '92 General )

Committee, Inc., and } B~sh-Quayle '92 Compliance )

Committee, Inc., )

)

Petitioners }

)

v. )

}

Federal Election Commission, )

)

Respondent. )

----------------}

Petition for Review

.... ...

..... ~.

"'0 \

:0

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JOINT MOTION lOR CQHSOL;mAnOB- or PETITIONS roR Rl5VXI!!

"Primary Con~ttee"), Bush-Quayle '92 General Commdttee, Inc.

(the "General Committee"), and Bush-Quayle '92 Compliance

Committee, Inc. (the "Co~?liance Committee") (collectively,

the "Committees") have petitioned the Court for review of the

:~nal determina~ions sen: to the Committees by the Federal

E:ection Commission on August 17, 1995. For the reasons set

forth below, the Committees jointly move the Court to

consolidate consideration of the three petitions for review.

The primary issues raised by all three petitions

c~ncern the Commission's determina:ion that certain

expenditures should have been paid by the General Committee

~ather than by the Primary Commitcee. Because the resolution

~: :hese issues a:fects ~he final Commission determinations

w~:h respec~ to all of :~e Co~mit:ees, the Commission
.:-:~.'~' :~;._.~~'.- ••' P ••• ,:.. ';"'~.' __ :-: -... - ,. : .: _ ••••

-- -.. ' ..'; ; ..; :-;,,: .'

- 2 -

~-_.::..::.~-~

.. ........

addressed the issues on a cc~solidated basis, and the

Committees respectfully submit that it would be more efficient

for the Court to do the same.

Counsel for the Committees has consulted with the

General Counsel for the respondent Federal Election Commission

G~ th~s motion, which has ~~: yet reached a determination on

the issue.

Respectfully submitted,

\" '.

__ ..__._._.._~::.......:..~:... __._._':-,:",_ •• . •... . ; COVINGroN··&· B'O}U);INE;. :.. : . .~. ------ ----------.-.- -- ... _- ·--p~o:-Box--,s6-6··-·---·- ------:.--.....---- ---------.-- -

1201 Pennsylvania Av~nue, N.W.

Washington, D.C. 20044

(202) 662-5000

Attorneys for Petitioner

August: 22, 1995

.-' '.

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..............

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'-..

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C"

.. ~: . ..;..... .. ::-:~

,-_.~

CERTlFICAIT OF SERVICE

I, Thomas O. Bame~ certify that a copy of the foregoing docwnent was

served by hand on this 22nd day of August.. 1995, on the following:

La~Tence ~l ~oble. Esq.

Kim Bright-Coleman, Esq.

Delanie Painter, Esq.

Federal Election Commission

999 E Street, N.W.

\Vashington. D.C. 20463

~"A-,6),-~ - .- - -..-Thomas O_Bame.tt. ._. .._ -.---------.-