Federal 

Election 

Commission 

Annua1Report1994 

Federal Election Commission 

Washington, DC 20463 
Commissioners 

Danny L. McDonald, Chairman 

Lee Ann Elliott, Vice Chairman 

Joan D. Aikens, Commissioner 

John Warren McGarry, Commissioner 

Trevor Potter, Commissioner 

Scott E. Thomas, Commissioner 

Statutory Officers 

John C. Surina, Staff Director 

Lawrence M. Noble, General Counsel 

Lynne A. McFarland, Inspector General 

The Annual Report is prepared by the 

Information Division. 

Louise D. Wides, Director 

Stephanie Fitzgerald, Editor 

Carrie Chapman, Writer 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF THE CHAIRMAN June 1, 1995 

The President of the United States 

The United states Senate 

The United States House of Representatives 

Dear Mr. President, Senators and Representatives: 

We are pleased to submit for your information the 

20th Annual Report of the Federal Election Commission, pursuant 

to 2 u.s.c. S 438(a)(9). The Annual Retort 1994 describes the 

activities performed by the Commission n the-list calendar 

year. The report also includes the legislative recommendations 

the Commission has adopted and transmitted to the President and 

the Congress for consideration. Most of these have been 

recommended by the Commission in previous years. It is our 

belief that these recommendations, if enacted, would assist the 

Commission in carrying out its responsibilities in a more 

efficient manner. 

This report documents the rapidly increasing demands 

on Commission resources brought about by record numbers of 

federal candidates and campaign expenditures. Despite new 

Commission initiatives to handle filings, audits, and 

enforcement matters more efficiently, the Commission remains 

overwhelmed by a growing enforcement case load and by massive 

amounts of data flowing from record election activity. 

The current system of reporting requirements and 

contribution prohibitions and limitations, and the resulting 

audit and enforcement mechanisms required to administer these 

provisions, are complex. The Commission remains in urgent need 

of additional resources to meet those responsibilities. 

Qspectfj~~ ~r;J ~ 

Dan~. McDonald 

Chairman 
Table Of Contents 

Introduction 1 

Chapter One 

Administration of the Law 3 

Enforcement and Litigation 3 

Audits 6 

Public Disclosure 7 

Press Office 8 

Review of Reports 8 

Regulations 8 

Advisory Opinions 9 

Assistance and Outreach 9 

National Clearinghouse on 

Election Administration 10 

Chapter Two 

Presidential Public Funding 13 

Audits of 1992 Committees 13 

Final Audit Reports and Determinations 15 

Legal Issues Related to Primary 

Committee Audits 17 

Other Audit-Related Legal Issues 19 

Looking Ahead to 1996: New Regulations 20 

Chapter Three 

Legal Issues 21 

Corporate/Labor Communications to Public 21 

Definition of Member 22 

Corporate Solicitations to Employees 23 

Prohibited Corporate Activities 24 

Bank Loans 25 

Definition of Political Committee: 

Major Purpose 25 

Disaffiliation 26 

Best Efforts Rules Upheld 26 

New Rule on Use of Candidate's Name 

in Opposition Project 27 

Rulemaking on Personal Use 27 

Compliance 28 

Coordinated Party Expenditures 29 

Constitutional Issues 29 

Chapter Four 

The Commission 31 

Commissioners 31 

Equal Employment Opportunity Office 31 

Ethics 31 

Inspector General 31 

The FEC's Budget: Fiscal Year 1995 32 

The FEC's Budget: Fiscal Year 1996 33 

Chapter Five 

Legislative Recommendations 35 

Chapter Six 

Campaign Finance Statistics 65 

Appendices

1. Biographies of Commissioners 

and Officers 75

2. Chronology of Events 79

3. FEC Organization Chart 83

4. FEC Offices 85

5. Statistics on Commission Operations 89

6. 1994 Federal Register Notices 93

7. House and Senate Campaign 

Finance Reform 95 
Introduction 

During 1994, the Commission faced another year 

of unprecedented growth in campaign finance activity. 

The total amount spent in the 1994 cycle exceeded 

$1.7 billion. Spending by House and Senate candidates reached $724 million-up 6 percent from 1992, 

itself a recordbreaking election cycle. The high level 

of financial activity translated into more reports for 

Commission staff to review this cycle and a surge in 

the Commission's disclosure workload. 

The year was notable in other ways as well. The 

Federal Election Commission saw recent reforms 

reap rewards in timely completion of Presidential audits, vigorous pursuit of civil enforcement and increased efficiency in overall Commission procedures. 

In 1994, the Commission completed all audits related to the 1992 Presidential election cycle. Completing the audits within two years of the election was a 

feat last accomplished in 1981. Streamlined procedures, simplified regulations and an increase in FEC 

staff made this achievement possible. 

The FEC's enforcement program, however, experienced a setback when the Supreme Court, in December 1994, issued its decision in FEC v. NRA Political 

Victory Fund. The Court ruled that the Commission 

did not have authority to petition the Court to review 

cases involving the Federal Election Campaign Act. 

Because the Court did not rule on the constitutionality 

of the FEC's composition, the decision left intact the 

U.S. Court of Appeals ruling that the composition of 

the Commission violated the Constitution's separation 

of powers doctrine. 

Despite this ruling, 1994 was a significant year for 

enforcement-largely due to the new enforcement 

prioritization system. The system proved to be a 

successful tool for using Commission resources more 

efficiently and strengthening civil enforcement. During 

1994, the Commission concluded a significant 

number of conciliation agreements that resulted in a 

record total of $1 ,692,854 in civil penalties. This figure 

included $177,000 in civil penalties for violations of 

the foreign national prohibition and the highest civil 

penalty in agency history, $550,000, for illegal 

corporate fundraising activity. 

The chapters that follow document the Commission's work during 1994. 
3 Chapter One 

Administration of the Law 

Enforcement and Litigation 

FEC v. NRA Political Victory Fund 

Late in the year, on December 5, 1994, the U.S. 

Supreme Court issued its opinion in FEC v. Nation~/ 

Rifle Association Political Victory Fund (NRA), a ruling 

that curtailed the FEC's ability to bring cases before 

the Supreme Court and left standing a 1993 appellate 

court ruling that the composition of the agency was 

unconstitutional. 

In October 1993, the U.S. Court of Appeals for the 

District of Columbia Circuit ruled that the presence of 

the Clerk of the House and the Secretary of the Senate as ex officio, nonvoting members of the FEC, an 

independent agency with executive powers, violated 

the Constitution's separation of powers doctrine. The 

court said that, because of its unconstitutional composition, the FEC could not litigate a lawsuit against the 

NRA Political Victory Fund for accepting prohibited 

corporate contributions. 1 

The FEC sought Supreme Court review of that 

decision. At the same time, it reconstituted itself as a 

six-member body without the Congressionally appointed ex officio members and revoted or ratified 

many past actions, including enforcement matters. 

(See next section.) 

The question of whether the Commission had authority to petition the Supreme Court for review was 

raised by the Justices themselves in NRA. They 

asked the U.S. Solicitor General for his opinion on the 

issue after the FEC had filed its NRA petition for certiorari. The Solicitor General argued that the FEC 

lacked authority to represent itself but proceeded to 

authorize the FEC's petition. However, the authorization was made long after the 90-day deadline for such 

petitions. 

In reaching its decision,2 the Court compared the 

Title 26 language, which specifically authorizes the 

FEC ''to petition the Supreme Court for certiorari," with 

the Title 2 language, which authorizes the agency to 

1 See the Annual Report 1993, pp. 3-4, for more details 

on the NRA appellate court decision. 

2The Court voted 7-1 in this decision, with Chief Justice 

William Rehnquist writing the opinion, Justice John Paul 

Stevens dissenting and Justice Ruth Bader Ginsburg not 

participating. 

"appeal any civil action." (See 2 U.S.C. §437d(a)(6) 

and 26 U.S.C. §§901 O(d) and 9040(d).) Although it 

stated that there were important policy reasons that 

would suggest giving the Commission authority independent of the Solicitor General to conduct Title 2 

litigation in the Supreme Court, the Court interpreted 

the difference in language as indicating Congressional intent to restrict the FEC's independent litigating authority at the Supreme Court level to Title 26 

(i.e., matters involving the Presidential public funding 

laws). Acknowledging that the FEC had previously 

represented itself in a number of Title 2 Supreme 

Court cases, the Court nevertheless pointed out that 

its authority to do so had not previously been challenged. 

Finding that the FEC could not petition the Court 

independently and that the Solicitor General's authorization was untimely, the Court dismissed the case for 

lack of jurisdiction without ruling on the constitutionality of the FEC's makeup and the related issue concerning the validity of the agency's past enforcement 

actions prior to the NRA decision. This issue was 

raised in several other suits, as discussed below. 

Impact of the NRA Decision on Enforcement 

As a result of the 1993 appellate court decision in 

NRA, the Commission undertook several steps to 

ensure uninterrupted enforcement of the law, including: reconstituting itself as a six-member body; ratifying regulations, forms and advisory opinions; and 

revoting or ratifying many of its prior actions in ongoing audits, enforcement cases (Matters Under Review 

or MURs) and litigation. This process demanded a 

significant dedication of legal resources and effectively halted progress on ongoing MURs. 

The enforcement staff had to review each MURin 

light of the NRA decision and in many instances had 

to return to the initial stages of a case to ensure compliance with NRA. 

In addition, parties in several pending MURs and 

court cases asked the courts to rule that they were 

also entitled to relief under the NRA decision, arguing 

that FEC enforcement actions pending at the time of 

the decision were subject to dismissal because they 

had been initiated by an unconstitutional FEC. 
4 Chapter One 

Over 1 0 cases of this kind were litigated in 1994. 

While most were pending at year's end, two cases 

heard by the U.S. District Court for the District of Columbia had conflicting outcomes. In February 1994, a 

district court judge ruled that the FEC's reconstitution 

and ratification of its enforcement findings cured the 

problem of the agency's unconstitutional status when 

the FEC enforcement action was initiated. (FEC v. 

National Republican Senatorial Committee, 93-1612.) 

By contrast, another district court judge, in dismissing 

an FEC enforcement suit on October 12, concluded 

that the NRA decision had to be given full, retroactive 

effect on pending cases and could not be overcome 

by later remedial actions. (FEC v. Legi-Tech, Inc., 91-

0213.) 

In spite of these setbacks, the Commission's new 

enforcement system allowed for a record breaking 

year of enforcement in 1994. 

Prioritization 

Throughout 1994, the Commission employed its 

prioritization system to deter illegal activity and enforce federal election law more effectively. The 

prioritization system, implemented in May 1993, is a 

comprehensive case management system designed 

to focus the Commission's limited resources on more 

significant cases, while at the same time resolving 

these cases more expeditiously. 

The Commission adopted the system to manage a 

burgeoning caseload involving thousands of respondents and complex financial transactions. The concept of prioritization was predicated on the Commission's acknowledgment that it would never have sufficient resources to pursue all enforcement matters. 

The agency adopted formal criteria to decide which 

cases to pursue and which cases, because of their 

age or relative lack of importance, to close without 

action. 

Additionally, the Commission decided to focus on 

specific areas of the law warranting special attention. 

In 1994, the FEC targeted three areas for enforcement: the foreign national prohibition, the $25,000 

annual limit and the 48-hour reporting requirement. 

The Commission was troubled by the lack of compliance in these areas and wanted to draw attention to 

the legal requirements. 

Civil Penalties 

During 1994, the Commission continued to move 

towards high civil penalties when serious violations of 

the law were found. This year, civil penalties soared 

to $1 ,692,854. This increase reflected the Commission's decision to send a message to the regulated 

community that it will not back down when negotiating 

penalties. 

Included in the almost $1.7 million total was a 

$550,000 penalty, the largest in the agency's history 

(seep. 24 for a summary of this case). Even excluding this figure, total civil penalties in 1994 exceeded 

1993 penalties by $546,755. (See graph.) 

The FEC's 1994 enforcement efforts resulted in 

substantial penalties for violations in the three targeted areas mentioned above. 

Foreign Nationals 

Federal election law places broad prohibitions on 

the involvement of foreign nationals in U.S. elections. 

Foreign nationals are prohibited from making contributions or expenditures in connection with federal, state 

or local elections. In addition, foreign nationals are 

prohibited from participating, directly or indirectly, in 

decisions concerning the making of contributions or 

the administration of a political committee. The law 

also prohibits any person from soliciting or accepting 

contributions from a foreign national. 11 CFR 11 0.4. 

To focus attention on the prohibition, FEC Chairman Trevor Potter held an August 1994 press conference announcing the completion of a major investigation into contributions by foreign nationals. Chairman 

Potter said that the law-one of the few federal prohibitions that also apply at the state and local levelswas "not [as] widely known and understood as it 

should be ... especially in the foreign business community." 

In conjunction with this effort to educate the regulated community, the FEC published a new brochure 

explaining the foreign national prohibition. Over 

18,000 copies were sent to foreign diplomats, foreign 

manufacturers and lobbyists registered as foreign 

agents. 

The three foreign national prohibition MURs summarized below were closed in 1994. 
Administration of the Law 5 

Concllation Agreements by Calendar Year* 

--•Number of Agreements 

-Total Dollar Amount in Civil Penalties 

Thousands of Dollars Number 

$2,000 400 

300 

200 

100 

Civil Penalties by Calendar Year* 

--·Median Civil Penalty 

Thousands of Dollars 

$5,000 

$4,000 

$3,000 

$2,000 

$1,000 

$0~~~~~~~~~~~~~ 86 87 88 89 90 91 92 93 94 

* An enforcement case may include several respondents. Because some respondents enter into conciliation agreements 

more quickly than others, agreements calling for civil penalties in a single enforcement case may be concluded in different 

years. The figures in this chart represent the total penalties included in all conciliation agreements entered into during the 

calendar year specified, whether or not the case itself was concluded during that year. 

Note that conciliation agreements for a given case are not made public until the entire case closes. 

MUR 2892. This investigation uncovered more than 

$300,000 in foreign national contributions to over 140 

Hawaiian state and local campaigns during four election cycles. The illegal donors were primarily U.S. 

corporations owned by Japanese companies. The 

donations were illegal because they were financed by 

the parent/owner or because foreign nationals were 

involved in decisions concerning the contributions. All 

existing recipients of the illegal contributions received 

an admonishment letter from the Commission and 

were required to refund or otherwise rid their accounts 

of the illegal funds. The 26 contributors paid penalties 

totaling $162,225. 

MUR 3460. In this case, a U.S. subsidiary of a 

foreign corporation and its Japanese directors agreed 

to pay a $57,000 penalty for making illegal contributions. Five directors of Sports Shinko (Pukalani) Co., 

Ltd.-four of whom were Japanese citizens-authorized a "contribution committee" to make political and 

charitable contributions and appointed the U.S. citizen 

director as the sole member. Between 1990 and 1991 

the corporation issued checks totaling $12,500 to 

Hawaiian candidates. The Commission determined 

that the decision to form and fund a committee, and to 

appoint the sole member, constituted sufficient foreign 

involvement to violate the Act. 
6 Chapter One 

MUR 3541. During 1991, a Spanish foreign national, Jose Antonio Boveda, wired a $25,000 contribution 

from his company to Vincent Schoemehl's Missouri 

gubernatorial campaign. Mr. Boveda made the contribution at the request of his business partner, John 

Suarez, a U.S. citizen and a personal friend of the 

candidate. Although the Schoemehl committee refunded the contribution in May 1992, the violation 

nevertheless resulted in civil penalties totaling 

$24,000 for Mr. Boveda, Mr. Suarez, the Schoemehl 

committee and its treasurer and Mr. Schoemehl himself. This case highlighted Commission intent to pursue not only foreign contributors, but also campaigns 

receiving-and agents soliciting--contributions from 

foreign nationals. 

Violations of the $25,000 Annual 

Contribution Limit 

Under the law, individuals may not give more than 

$25,000 annually in total contributions to federal candidates, party committees and PACs. 11 CFR 

11 0.5(b). In pursuing violations of this provision in 

1994, the Commission entered into nine conciliation 

agreements that called for $163,179 in civil penalties. 

In an effort to educate donors on this issue, FEC 

Chairman Potter and Vice Chairman McDonald sent a 

letter to the chairs of the national committees of the 

two major parties, asking them to advise their individual contributors on compliance with the annual 

limit. The July 1994 letter pointed out several situations that have caused individuals to exceed the 

$25,000 limit inadvertently. The Commission also 

developed a brochure focusing exclusively on this 

issue. 

48-Hour Notices 

Because disclosure remains one of the essential 

tenants of federal election law, the Commission considers the timely release of campaign finance information to be a priority. 

In recent years, the agency has focused on violations of the 48-hour reporting requirement, a provision 

meant to provide speedy public disclosure of lastminute injections of money into the election process. 

Candidate committees must file 48-hour notices to 

disclose contributions of $1 ,000 or more received 

shortly before any election in which the candidate is 

running. Committees must file the notice within 48 

hours of receiving the contribution. 

In 1994, the Commission reached conciliation 

agreements in 23 MURs in which candidate committees failed to file 48-hour notices. Civil penalties in 

these cases totaled over $170,000 and ranged from 

$500 to $20,000. 

Litigation 

The Commission dedicated considerable resources 

to both offensive and defensive litigation in 1994. The 

Commission had 45 matters in litigation before federal 

district and appellate courts at year's end. 

In addition to the NRA-related cases summarized 

earlier, several 1994 cases are discussed in 

Chapter Three. 

Audits 

By the end of 1994, the Commission had completed all audits of the committees involved in the 

1992 Presidential public funding program. This was a 

major improvement over past election cycles, when 

the Presidential audits took significantly longer to 

complete. In the 1992 primary election, 12 candidates 

received a total of $43,430,558 in federal matching 

funds. In addition to auditing these campaigns, the 

Commission audited the two national convention committees and the two general election nominees. Federal funding for the conventions and nominees totaled 

$133 million. (For more information on Presidential 

audits, see Chapter Two.) 

Also part of the Title 26 program, audits of the two 

convention host committees and a joint fund raising 

committee authorized by a 1992 Presidential candidate were completed during 1994. 

While these audits absorbed most of its resources, 

the Audit Division was also able to complete four audits of House campaigns and to continue work on four 

Senate campaign audits. The Congressional audits 

were initiated "for cause," that is, because reports 

filed by the committees showed apparent substantial 

violations. 
Administration of the Law 7 

Public Disclosure 

Public disclosure of campaign finance information 

is a fundamental responsibility of the Commission. 

During 1994, the Commission focused on improving 

access to campaign finance information through enhanced computer technology. 

Processing Campaign Finance Data 

Central to the Commission's disclosure effort is the 

disclosure database, containing information on campaign committee receipts and disbursements from 

1977 through 1994. The database includes "detailed 

entries" of contributions and expenditures that are 

itemized on a committee's report. In addition, the database contains summary information taken from the 

first two pages of each report, providing an overall 

picture of how much money a committee raises and 

spends. 

During 1994, 950,000 detailed entries of contributions and expenditures were added to the database, 

along with summary financial information from 44,000 

reports filed by candidate committees, PACs and 

party organizations. (The table below lists detailed 

entries by election cycle; thus the 1994 figure includes 

both 1993 and 1994 entries.} Even though 1994 was 

not a Presidential election year, the number of detailed entries was 1 0 percent higher in 1994 than in 

1992. The increase reflected the high level of financial 

activity that resulted from the extraordinarily competitive 1994 Congressional races. 

Nonfederal receipts and disbursements also increased during the 1994 cycle over 1992. The 1992 

election cycle was the first in which the national committees were required to disclose the activity of their 

nonfederal or "soft money'' accounts, which contain 

money raised outside the limits and prohibitions of the 

federal campaign finance law. The Commission began requiring disclosure of these funds to monitor 

compliance with the new allocation rules that became 

effective in January 1991, the start of the 1992 election cycle. 

Statistics generated from the FEC database are 

published periodically in press releases, which update 

campaign finance information throughout an election 

cycle. 

The table below tracks the size of the detailed database for each election cycle available. 

Size of the Detailed Datab9se 

Election Cycle No. of Entries 

1978 478,000 

1980 648,000 

1982 403,000 

1984 509,000 

1986 526,000 

1988 698,000 

1990 767,000 

1992 1,400,000* 

1994 1,364,000 

*The 1992 cycle was the first in which disclosure of 

nonfederal account activity was required. 

Public Access to Campaign Finance Data 

The Commission continued a project, begun in 

1993, to improve access to campaign finance information through an electronic imaging system. The 

new system enables an individual sitting at a personal 

computer workstation to retrieve campaign finance 

reports and other FEC material and view the pages on 

a computer screen just as they appear in original form. 

During 1994, the digital imaging system went 

through an initial testing period at workstations set up 

in the Public Records Office and in the Reports Analysis Division (see Review of Reports, below}. Documents available through the system were limited to 

the campaign finance reports filed by PACs and party 

committees during the 1994 election cycle. 

The Commission's tried and proven Direct Access 

Program (DAP}, now in its ninth year, offers subscribers online computer access to the FEC disclosure 

database and other information. Paying a small fee, 

subscribers can retrieve and organize campaign finance data according to their individual needs. The 

Commission itself benefits because providing information through DAP is significantly more efficient than 

processing phone orders for the same information. 

Total DAP subscribers numbered 789 in 1994. 

The Commission continued to give state election 

offices free access to DAP and, by the end of 1994, 
8 Chapter One 

30 offices were online. In other projects coordinated 

with the states, the FEC used information provided by 

state election officials to compile a list of 1994 Congressional candidates on the ballot and the 1994 election results. State offices also helped the Commission 

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

required under federal law. These committees received letters from the FEC notifying them of their 

delinqu&nt filing status. 

In terms of assisting the public, the Commission 

responded to public demand by developing a new 

independent expenditure index with expanded information on this type of campaign spending. To help 

members of the public take advantage of the information available at the FEC, the agency introduced a 

new brochure, Researching Public Records, and revised another one, Using FEC Campaign Finance 

Information. 

In an effort to educate the national and local press 

on campaign finance information, the Commission 

participated in an hour-long National Press Club forum broadcast on C-SPAN from the FEC's Public 

Records Office. The program, called "Analyzing Campaign Finance Reports," demonstrated how to access 

and analyze the information disclosed by committees 

in their FEC reports. 

Press Office 

The Commission's Press Office had another busy 

year, answering 14,670 calls from media representatives and preparing over 150 press releases. Additionally, the office coordinated the August 3 press conference at which FEC Chairman Trevor Potter announced the completion of a major investigation into 

foreign national violations (seep. 4). 

Review of Reports 

To ensure full and accurate disclosure of campaign 

finance activity, the Commission reviews the reports 

filed by political committees. The agency also reviews 

reports for compliance with the Act and Commission 

regulations. If a report shows omissions or errors, or 

suggests that the committee may have violated the 

law, the Commission sends a letter, called a request 

for additional information (RFAI}. In response, the 

committee treasurer can correct mistakes in the report 

or provide missing information. Apparent violations 

may lead to FEC enforcement action. 

With the installation of 43 computer workstations in 

the Reports Analysis Division-a project completed in 

March 1994-half of the reports analysts were able to 

take advantage of the new document imaging system, 

which provided access to over 1 million digitized 

pages from reports filed at the FEC. Analysts could 

review on-screen images of reports at their workstations, which also provided access to the FEC disclosure database. Although the imaging system does not 

completely eliminate the need to review microfilm and 

paper copies of reports, the technology helped the 

division keep pace with escalating campaign finance 

activity in the 1994 election cycle. 

In July 1994, the agency approved streamlined 

procedures for processing debt settlement plans (Directive 3). These procedural refinements were one 

more example of the Commission's efforts to enhance 

efficiency. During the year, the Commission completed review of 49 debt settlement plans. In October 

1994, the Commission revised its procedures for administrative terminations (Directive 45) to parallel the 

new procedures for debt settlement plans and to accelerate the termination process. Under these procedures, the Commission encourages committees that 

could terminate but for their outstanding debts, to 

settle their debts and terminate. 

Regulations 

1994 New Regulations 

In 1994, the Commission adopted new and revised 

regulations in three areas: 

•Implementation of the National Voter Registration 

Act of 1993, including development of a national 

voter registration form (see p. 1 0); 

• Federal financing of Presidential nominating conventions (seep. 20); 

• Use of a candidate's name in an opposition project 

(seep. 27). 
Administration of the Law 9 

1994 Rulemakings In Progress 

In addition to completing these projects, the Commission also: 

• Published proposed revisions to the public funding 

regulations for Presidential candidates; 

• Drafted changes to regulations affected by the Supreme Court's decision in FEC v. Massachusetts 

Citizens for Life, Inc., including a draft definition of 

express advocacy (see p. 21 ); 

• Published proposed changes to the regulations governing the use of disclaimers on campaign communications; 3 

• Held a public hearing and published revised proposed rules on the personal use of campaign funds 

(seep. 27).4 

Advisory Opinions 

Advisory opinions clarify the election law for the 

person requesting the opinion and for others with a 

materially similar situation. The Commission discusses and votes on advisory opinions in public meetings. The Commission issued 30 advisory opinions in 

1994. 

Selected advisory opinions issued during 1994 are 

included in the discussion of legal issues, Chapter 3. 

Assistance and Outreach 

The Commission encourages voluntary compliance 

with federal election law by offering information and 

clarification to those seeking help. Outreach activities 

undertaken in 1994 are discussed below. 

Flashfax 

This year the Commission introduced Flashfax, a 

service permitting callers with touch-tone phones to 

have FEC documents immediately faxed to them. The 

Flashfax number, 202-501-3413, is operational 24 

hours a day, 7 days a week. Members of the public 

can order over 130 documents, including brochures, 

reporting forms, recent advisory opinions and regulations. 

In 1994, over 1,700 callers used Flashfax to receive 2,550 documents. This automated ordering 

system not only conserved staff resources but also 

provided cheaper and faster customer service than 

traditional phone and mail orders. 

Telephone Assistance 

During 1994, the Commission also automated its 

toll-free information line, enabling callers to reach the 

office they need simply by pressing a button on their 

touch-tone phones. The toll-free line is a mainstay of 

the agency's outreach program. During 1994, public 

affairs specialists continued to research and answer 

questions about the law. The Information Division 

handled 91,192 calls in 1994, 26,217 of which were 

directed to public affairs specialists. 

Reporting Assistance 

Any committee with reporting questions may call 

the Commission and speak directly with the reports 

analyst assigned to review its reports. Reports analysts are trained to answer complex questions on 

reporting and related compliance matters. 

The Commission sends each committee treasurer 

a prior notice-that is, a reminder of upcoming reporting deadlines-three weeks before the report is due. 

In addition, the Record, the FEC's monthly newsletter, 

publishes reporting schedules and requirements. 

In 1994, the Commission published a new form, 

FEC Form 6, used by candidate committees to report 

the receipt of last-minute contributions. The new form, 

with detailed instructions, made it easier for these 

committees to comply with the 48-hour notice requirement, one of the areas the Commission targeted in 

the agency's 1994 enforcement program (see p. 6). 

Form 6 was added to the Form 3 reporting packet, 

which was updated with a new cover page briefly 

describing the schedules within. The Form 3X packet, 

used by party committees and PACs, was similarly 

updated with a new cover page and the addition of 

Schedule C-1 , used for bank loans and lines of credit. 

The forms and schedules themselves were not 

changed. 

3 On March 8, 1995, the Commission held a public hearing on the proposed disclaimer rules. 4 The final rules became effective on April 5, 1995. 
10 Chapter One 

Publications 

In addition to the new publications mentioned under Public Disclosure, the Commission published a 

new edition of the Campaign Guide for Corporations 

and Labor Organizations and issued supplements to 

update the Campaign Guides for nonconnected, party 

and candidate committees. A new brochure, Foreign 

Nationals, covered essential information on the foreign national prohibition, one of the areas the agency 

focused on under its enforcement priority system (see 

p. 4). 

Finally, the FEC's newsletter, the Record, received 

the 1994 gold award for "overall excellence" in the 

National Newsletter Clearinghouse competition. All 

committee treasurers automatically receive the 

Record, but anyone may order a free subscription. 

The 1994 mailing list included 12,127 subscribers 

(committees and others). 

Survey of Outreach Services 

During 1993 and 1994, the Commission assessed 

its telephone services, publications and reporting 

forms through a survey sent to 400 registered committees of all types (party, candidate, nonconnected and 

separate segregated funds). The 212 committees who 

responded were very satisfied with FEC services. 

In response to questions examining the penetration 

and usefulness of the FEC Record, 65 percent of 

respondents reported reading it regularly, while only 4 

percent said they never read it. Seventy-four percent 

of respondents reported using the Campaign Guides. 

With respect to FEC reporting forms, committees 

generally found the forms clear and easy to fill out. 

Some party and nonconnected committees, however, 

said that the H Schedules for reporting allocation of 

federal and nonfederal activity were difficult. 

A large number of the responding committees reported calling the FEC to ask questions about the law 

or for reporting help (the Reports Analysis Division 

was the most frequently contacted Division). A large 

majority of committees found FEC staff very helpful, 

and virtually all committees said that their orders for 

publications, forms or campaign finance information 

were filled correctly and received quickly. Survey results indicated, however, that the FEC's telephone 

system was operating near or at capacity. 

The survey also revealed that nonconnected committees were less likely to use FEC services and publications than other types of committees. In addition, 

results suggested that the terms "separate segregated fund" and "nonconnected committee" were not 

fully understood by the regulated community, since 

many nonconnected committees and some separate 

segregated funds had difficulty identifying themselves 

on the survey form. 

Conferences and Visits 

The Commission conducted several conferences to 

help candidates and committees prepare for the 1994 

elections. The first conference of the year, a conference for House and Senate candidates, was held in 

Washington, DC, on February 11, but a snow storm 

prevented full attendance. The entire conference was 

repeated on April 15. In addition to offering workshops 

conducted by Commissioners and FEC staff, the conference featured guest speakers from the Internal 

Revenue Service, the Office of Special Counsel and 

the House and Senate ethics committees. 

The Commission also conducted two regional conferences in 1994. The first was held in New Orleans 

on March 14 and 15, and the second in Pittsburgh on 

April 28. The conferences included workshops for 

candidate committees, party committees and corporate and labor PACs and their sponsoring organizations. Attendance at the 1994 conferences totaled 

310. 

National Clearinghouse on Election 

Administration 

National Voter Registration Act 

Clearinghouse efforts during 1994 again focused 

on carrying out the Commission's responsibilities 

under the National Voter Registration Act of 1993 

(NVRA, also called the "motor voter'' law). The NVRA 

became effective in most states at the start of 1995. 

The law requires states to provide voter registration 

for federal elections at motor vehicle offices (for 

people applying for or renewing drivers licences), 

state welfare and disability offices, armed forces recruiting offices and other state-designated offices. 
Administration of the Law 11 

The NVRA also provides for a national mail voter 

registration form. 

In 1993, the Commission opened a rulemaking to 

determine the content and format of the national voter 

registration form and the information to be included in 

biennial reports to Congress that are mandated under 

the law. These reports, to be compiled by the Commission beginning June 1995, will assess the impact 

of the NVRA on the administration of federal elections 

based on statistics provided by the states. 

NVRA final rules at 11 CFR Part 8 became effective July 1994. In November 1994, the agency also 

approved the national voter registration form, which 

was made available to the public in January 1995. 

Citizens in most states 5 can mail the form from 

anywhere in the country. They may use it to register 

to vote in their home state or to update voter registration information, such as a change of address. The 

national form does not supplant state registration 

forms but is meant to offer greater flexibility in the 

voter registration process. 

During 1994, the Clearinghouse continued its efforts to assist states in implementing the NVRA. 

Clearinghouse staff visited over a dozen states to 

speak with election officials, state welfare and disability officials, advocacy groups and other interested 

parties.6 

U.S. Voting Sites for South African Elections 

Expecting a large voter turnout for the first all-race 

elections in its history, the South African Government 

allowed its citizens living in the United States to vote 

at polling stations in 15 U.S. cities on April 26. In response to a request from the Embassy of South Africa, the Clearinghouse acted as a liaison between 

the embassy and the local election officials, who located facilities for 25 polling stations. 

Integrated Voter Registration Databases 

The Clearinghouse awarded a contract in 1994 for 

the development of a guide on integrated voter registration databases. Scheduled for completion in late 

1995, this project was designed to provide a practical 

guide for integrating voter registration databases with 

those kept by other offices, such as motor vehicles, 

public assistance and vital statistics offices and the 

state and federal courts. 

Publications 

The Clearinghouse published Election Directory 94, 

which lists the names and addresses of state election 

officials, and the biennial Campaign Finance Law 94, 

which summarizes the campaign finance laws of each 

state. The year also saw the publication of three new 

volumes in a continuing series of monographs describing technical and administrative innovations in 

election administration, (Innovations in Election Administration). Volume 7 describes mail voter registration systems; Volume 8 examines election-document 

retention; and Volume 9 studies the administration of 

early voting programs. 

5 ln Arkansas and Virginia, state laws prohibit use of the 

form until 1996. New Hampshire accepts the form strictly as 

an application for the state absentee mail-in registration 

form, and Wyoming, which is exempt from the NVRA, does 

not accept the form at all. North Dakota does not have voter 

registration. 

6 In December 1994, California filed a lawsuit in district 

court challenging the constitutionality of the NVRA. In a 

March 1995 decision, the court found that the NVRA is 

constitutional and binding on the State of California. 

In January 1995, the Justice Department sued California, 

Illinois and Pennsylvania for refusing to comply with the 

statute. Although South Carolina also filed a preemptive 

lawsuit to prevent the government from forcing it to comply 

with the law, the Justice Department sued South Carolina in 

February 1995. 
13 

Chapter Two 

Presidential Public Funding 

Public funding has been an essential part of our 

Presidential elections since 1976. Using the funds 

from the $3 tax checkoff, the federal government provides matching funds to qualified candidates for their 

primary campaigns, funding for major party nominating conventions, and grants to Presidential nominees 

for their general election campaigns. The Federal 

Election Commission administers the public funding 

program and certifies payments to qualified candidates and committees. The U.S. Treasury makes the 

payments. 

Audits of 1992 Committees 

By December 1994, the Commission completed all 

mandatory audits of the 1992 publicly funded Presidential primary and general election campaigns and 

nominating conventions. This represented a significant reduction in time compared with the 1988 cycle 

audits. 

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

records. Recognizing the importance of concluding 

the audits speedily, the Commission undertook 

sweeping measures designed to expedite the process 

in preparation for the 1992 race. 

Changes to Expedite the Audit Process 

The timely completion of the 1992 cycle audits was 

made possible by streamlined procedures, simplified 

regulations and a six-person staff increase. 

To overcome problems that delayed audits in past 

election cycles, the Commission implemented the 

procedures described below. 

• Getting a head start on the audit process, before 

audit fieldwork commenced, FEC auditors used 

committees' computerized records to begin reconciling bank records and identifying possible illegal contributions. 

• Also before fieldwork, FEC auditors conducted an 

inventory of committees' campaign records to expedite the fieldwork process. Deficiencies in records 

had to be corrected within 30 days or the Commission could compel production of documents through 

subpoenas. 

• Even with more complete records at the onset of 

fieldwork, the need for specific records was likely to 

arise during the audit. The Commission set specific 

dates for committees to produce missing records in 

order to prevent the delays that occurred in past 

audits. Again, the Commission could use its subpoena powers to compel compliance. 

• The agency also tightened its policy on granting 

committees extensions of time to respond to audit 

findings in an effort to prevent multiple extensions of 

time that had delayed previous audits by several 

months. 

• The agency used a sampling technique to quantify 

the dollar amount of excessive and prohibited contributions instead of manually compiling lists of potentially illegal contributions. (Excessive and prohibited 

amounts not resolved in a timely manner were to be 

paid to the Treasury; seep. 14.) 

Under another new policy applied to the 1992 audits, the Commission provided public disclosure of all 

audit findings in final audit reports. Previously, a report was issued only after the Commission had determined whether to refer potential violations uncovered 

in the audit to the Office of General Counsel for possible enforcement action. All mention of these potential violations was removed from the final audit report. 

The new policy provided more complete disclosure 

and speeded up public release of final audit reports. 

Regulatory changes also expedited audits. The 

Commission simplified the regulations on allocating 

expenses to the state spending limits-a requirement 

for primary candidates receiving matching funds. Before this simplification, campaigns had devised complex schemes to reduce the amounts allocated to 

early primaries held in small states with low spending 

limits. The Commission was forced to devote considerable time and resources to determine whether campaigns had actually exceeded the limits and to enforce violations. Under the revised regulations first 

applied to the 1992 election cycle, expenses were 

allocable to a particular state only if they fell within 

one of five specified categories. As a result of this 

change and other factors (such as the late start in 

fundraising by the 1992 campaigns), none of the 
14 Chapter Two 

Presidential candidates exceeded the state spending 

limits for the 1992 primaries. By contrast, about half 

the 1988 primary candidates exceeded the Iowa and 

New Hampshire spending limits. 

The changes in regulations, technology and staffing are outlined at length in the Annual Report 1991, 

p. 1 0, Annual Report 1992, pp. 8-11 , and Annual Report 1993, pp. 19-20. 

Repayment Process 

The final audit report, approved by the Commission 

and released to the public, may include an initial determination that the committee repay public funds to 

the U.S. Treasury. A repayment is required when the 

Commission determines that a primary or general 

election committee: 

• Received public funds in excess of the amount to 

which it was entitled; 

• Had surplus (unspent) funds remaining after debts 

and obligations were paid; 

• Incurred nonqualified campaign expenses by spending in excess of the limits, by using public funds for 

expenses not related to the campaign or by insufficiently documenting the expenditure of public funds; 

• Had stale-dated checks that remained uncashed by 

the recipient; or 

• Earned interest on the investment of public funds. 

Primary campaigns, which receive private contributions as well as public funds, must repay only the 

portion of nonqualified campaign expenses defrayed 

with matching funds. A ratio formula is used to determine this amount. 

Unless a committee disputes the Commission's 

initial repayment determination (contained in the final 

audit report), the determination becomes final and the 

committee must make the repayment to the U.S. 

Treasury within 30 days. The repayment date is suspended if the committee disputes the initial determination and submits written arguments to support its 

view. The committee may also request the opportunity 

to make an oral presentation as part of its response to 

the final audit report (see table on pp. 15-16). 

When making its final repayment determination, the 

Commission may reduce the amount owed to the 

Treasury based on the committee's response. The 

basis for the Commission's final determination is set 

forth in a statement of reasons. 

Under a new policy implemented during the 1992 

cycle, the Commission required campaigns to pay to 

the U.S. Treasury the amount of excessive and prohibited contributions they received and failed to resolve in a timely manner. 1 Previously, campaigns 

were merely required to return excessive contributions 

to the donors. The Commission used a sampling technique to calculate the projected amount of excessive 

and prohibited contributions. Campaigns were given 

an opportunity to demonstrate that the contributions in 

the sample-as well as any other questionable contributions discovered during the audit-should not be 

considered impermissible or unresolved. Contributions that remained unresolved had to be paid to the 

U.S. Treasury. (Some campaigns objected to the new 

policy; seep. 18.) 

In addition to the payment and repayment requirements imposed during the audit process, a committee 

may have to pay a civil penalty resulting from an enforcement proceeding (MUR) based on matters uncovered in the audit. 

1 A committee can resolve a prohibited contribution by 

refunding it to the donor within 30 days of receipt. A committee has 60 days to resolve an excessive contribution either 

by refunding the excessive amount or by receiving a donorsigned reattribution or redesignation of the excessive 

amount. 11 CFR 103.3(b)(1) and (3). 
Presidential Public Funding 15 

Final Audit Reports and 

Determinations 

The following pages highlight findings made in the 

final audit reports of the 1992 public funding recipients. The "Amount Due U.S. Treasury'' figure represents both initial repayment determinations and other 

required payments to the U.S. Treasury. Because the 

Commission may re-calculate these figures based on 

a committee's response to the final audit report and 

adjustments that occur during the winding down 

period, the "Amount Due U.S. Treasury'' is subject to 

change until a final determination is reached. Where 

relevant, the chart includes final determination 

amounts and the amounts paid. All figures are current 

through March 22, 1995. 

Primary Committees 

Agran for President '92 

Date Audit Report Approved: June 8, 1993 

Total Matching Funds Received: $269,691 

(No payment to U.S. Treasury required) 

Brown for President 

Date Audit Report Approved: May 24, 1994 

Total Matching Funds Received: $4,239,405 

Amount Due U.S. Treasury: $191 ,806 * 

(Final Determination) 

• $171,136-matching funds in excess of entitlement 

• $11 ,423--excessive travel reimbursements from the 

press ($51 ,233 refund to press also required; 

seep. 18) 

• $7,913-unspent funds 

• $1 ,334--committee checks never cashed 

Amount Paid to Date: $179,049 

Buchanan for President t 

Date Audit Report Approved: October 11, 1994 

Total Matching Funds Received: $5,199,987 

Amount Due U.S. Treasury: $490,393 * 

• $399,521-matching funds in excess of entitlement 

• $61 ,925--excessive and prohibited contributions 

• $28,336-nonqualified campaign expenses 

• $611-committee checks never cashed 

Amount Paid to Date: $0 

Bush-Quayle '92 Primary Committee* 

Date Audit Report Approved: December 27, 1994

Total Matching Funds Received: $10,658,521 

Amount Due U.S. Treasury: $841 ,850 ** 

• $485,631-matching funds in excess of entitlement 

• $195,224-nonqualified campaign expenses 

(including general election expenditures; see p. 18) 

• $141 ,801-unresolved excessive contributions 

• $19, 194-committee checks never cashed 

Amount Paid to Date: $160,995 

Clinton for President Committee 

Date Audit Report Approved: December 27, 1994

Total Matching Funds Received: $12,536,135 

Amount Due U.S. Treasury: $1,383,587 

(Final Determination) 

• $1 ,072,344-matching funds in excess of entitlement 

(seep. 17) 

• $270,384-nonqualified campaign expenses

(including general election expenditures; see p. 18)

• $40,859-committee checks never cashed 

Amount Paid to Date: $1 ,383,587

Lenora B. Fulani for President 

Date Audit Report Approved: April 21, 1994 

Total Matching Funds Received: $2,013,323 

Amount Due U.S. Treasury: $1 ,394

• $1 ,394-nonqualified campaign expenses 

Amount Paid to Date: $1 ,394

Dr. John Hagelin for President Committee 

Date Audit Report Approved: September 14, 1994 

Total Matching Funds Received: $353,160 

Amount Due U.S. Treasury: $2,907 

(Final Determination) 

• $2,907-nonqualified campaign expenses 

Amount Paid to Date: $2,907 

*These figures differ from those published in the final 

audit report due to re-calculations based on information 

provided by the committee. 

t At a March 2, 1995, Commission hearing, the Buchanan 

for President committee made a presentation as part of its 

response to the final audit report. No final determination had 

been made by March 22, 1995. 

*A hearing on the final audit report for the Bush-Quayle 

primary committee was scheduled for May 17, 1995. The

Commission was to make its final determination after the 

hearing.

** In connection with a joint fundraiser conducted by the 

Republican Leadership Fund, the Bush-Quayle '92 Primary 

Committee also refunded $2,326 to the Treasury and $4,719 

to the Fund for excessive joint fundraising contributions it had 

received. As recommended in the final audit report on the 

fundraiser, the Leadership Fund, in September 1994, paid 

$26,575 to the U.S. Treasury for unresolved excessive contributions accepted on behalf of the other two participants, the 

Ohio Republican Party Federal and State Accounts. 
16 Chapter Two 

Americans for Harkin, Inc. 

Date Audit Report Approved: March 15, 1994 

Total Matching Funds Received: $2,103,362 

Amount Due U.S. Treasury: $35,316 * 

(Final Determination) 

• $33,033-prohibited and excessive contributions 

• $2,283-committee checks never cashed 

Amount Paid to Date: $35,316 

Kerrey for President 

Date Audit Report Approved: March 3, 1994 

Total Matching Funds Received: $2,195,530 

Amount Due U.S. Treasury: $7,937 

(Final Determination) 

• $6,762-excessive travel reimbursements from the 

press (see p. 18) 

• $1,175-committee checks never cashed 

Amount Paid to Date: $7,937 

Democrats for Economic Recovery-LaRouche in '92 

Date Audit Report Approved: November 30, 1994 

Total Matching Funds Received: $568,435 

Amount Due U.S. Treasury: $130,227 

(Final Determination) 

• $130,227-income earned on federal funds 

Amount Paid to Date: $132,300 t 

The Tsongas Committee, Inc. 

Date Audit Report Approved: December 16, 1994 

Total Matching Funds Received: $3,003,981 

Amount Due U.S. Treasury: $74,730 (seep. 17) 

• $64, 163-excessive contributions 

• $1 0,567-nonqualified campaign expenses 

($19,733 refund to the press and Secret Service also 

required; see p. 18) 

Amount Paid to Date: $0 

Wilder for President* 

Date Audit Report Approved: April 21, 1994 

Total Matching Funds Received: $289,027 

Amount Due U.S. Treasury: $40,242 

• $19,032-matching funds in excess of entitlement 

• $12,026-nonqualified campaign expenses 

• $9, 184-prohibited and excessive contributions 

Amount Paid to Date: $0 

Convention Committees** 

1992 Democratic National Convention 

Committee, Inc.

Date Audit Report Approved: March 1 0, 1994

Total Public Funds Received: $11,048,000 

Amount Due U.S. Treasury: $37,338 * 

(Final Determination) 

• $33,481-nonqualified convention expenses 

• $3,847-unspent funds 

• $1 o---committee checks never cashed 

Amount Paid To Date: $37,338 

Committee on Arrangements for the 1992 Republican 

National Convention 

Date Audit Report Approved: June 23, 1994 

Total Public Funds Received: $11 ,048,000 

Amount Due U.S. Treasury: $31 ,683 * 

(Final Determination) 

• $30,647-unspent funds

• $1 ,036-committee checks never cashed

Amount Paid to Date: $31,683 

General Election Committees 

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

Date Audit Report Approved: December 27, 1994

Total Public Funds Received: $55,240,000 

Amount Due U.S. Treasury: $29,775 

• $27,689-committee checks never cashed 

• $2,086-income earned on federal funds 

Amount Paid to Date: $29,775 

Clinton/Gore '92 Committee and Clinton/Gore '92 

General Election Compliance Fund 

Date Audit Report Approved: December 27, 1994 

Total Public Funds Received: $55,240,000 

Amount Due U.S. Treasury: $254,546 

• $112,1 OG-prohibited contributions 

• $78,625-nonqualified campaign expenses 

• $57, 175-committee checks never cashed 

• $6,646-income earned on federal funds 

Amount Paid to Date: $109,061 

*These figures differ from those published in the final audit 

report due to re-calculations based on information provided by 

the committee. 

t Repayment was received in response to the interim audit 

report. In the final audit report the repayment amount was 

revised downward to $130,227. On January 10, 1995, the 

Commission certified a $2,073 refund to the committee. 

*At an October 5, 1994, Commission hearing, the Wilder 

for President committee made a presentation as part of its 

response to the final audit report. 

**The Commission also conducted audits of the Houston 

and New York Host Committees. Host committees do not 

receive public funding but undergo an FEC audit. See the 

Record, February 1994, p. 2, and April 1994, p. 3. 
Presidential Public Funding 17 

Legal Issues Related to Primary 

Committee Audits 

Included here are selected legal issues that 

emerged from the final audit reports on the 1992 

Presidential primary campaigns. In some cases, the 

issue was unique, such as the embezzlement of campaign funds. In other cases, the issue concerned an 

area of the law that proved troublesome for many 

campaigns, such as contributions resulting from staff 

advances. 

Disposition of Post-Nomination Contributions 

The Clinton for President Committee received 

matching funds in excess of the candidate's entitlement and, by law, was required to repay the excess 

matching funds to the U.S. Treasury. The six members of the Commission, however, were divided on 

the amount of matching funds that exceeded the entitlement. At issue was the Committee's use of contributions that were received after President Clinton's 

nomination on July 15 and later transferred to the 

Clinton general election legal and accounting compliance fund (GELAC).2 

July 15 was the candidate's date of ineligibility; 

after that date he was entitled to receive matching 

funds only to the extent that he had net outstanding 

campaign obligations. 

Three Commissioners viewed the post-nomination 

contributions as being designated for the primary 

campaign because they were solicited for and received by the primary committee. The Commissioners 

maintained that the transfers were impermissible because the Committee carried a debt at the time of the 

transfers and the transferred contributions should 

have been used for debt reduction. 11 CFR 

9003.3(a)(1 )(iii). This would have decreased the 

amount of matching funds to which the candidate was 

entitled, thus necessitating a repayment of over $3.4 

million. 

2 Presidential general election campaigns receiving federal funding are permitted to establish compliance funds, 

which are special accounts used to pay for specified expenses, including legal and accounting expenses incurred 

solely to comply with the campaign finance law. Compliance 

funds are funded with private contributions. 

The other three members of the Commission, however, believed that the contributions in question were 

not specifically designated for the primary, according 

to Commission regulations at 11 CFR 11 0.1 (b)( 4), 

and thus were not required to be used for primary 

debt retirement. These Commissioners viewed the 

transfers to the GELAC as permissible. The transferred contributions, because not applied to the primary debt, would increase the candidate's entitlement 

to matching funds and thus would reduce by almost 

$2 million the repayment amount for matching funds 

received in excess of the entitlement. 

The Commission adopted this lesser repayment 

amount ($1 ,072,344) because, by a split 3--3 vote, 

they failed to approve the higher amount ($3.4 

million).3 

Embezzled Contributions 

The Tsongas Committee's principal fundraiser, 

Nicholas Rizzo, solicited and accepted $794,000 in 

campaign loans, almost all of which were diverted to 

his personal use. The loans, made by 8 individuals, 

exceeded the donors' limits by a total of $790,750. 

Mr. Rizzo deposited the loans into an account opened 

in the Committee's name without its knowledge and 

into his personal and business accounts. Mr. Rizzo 

also deposited nearly $200,000 in other campaign 

contributions into his personal accounts. (Mr. Rizzo 

received a 52-month sentence in a federal penitentiary for his embezzlement of campaign funds.) 

The Committee contended that the funds were not 

campaign contributions, subject to the limits, because 

Mr. Rizzo was not acting as a campaign agent when 

he collected them. The audit report disagreed, stating 

that Mr. Rizzo-in his role as fundraiser-was an 

agent of the campaign and, consequently, the funds 

had to be considered contributions. 

Because of the special circumstances, however, 

the Commission did not require the Committee to 

make any payments to the Treasury with respect to 

the excessive loans. The issue could be addressed in 

an enforcement action. 

3 For information on another case concerning the effect 

of post-date-of-ineligibility contributions on a candidate's 

entitlement, see "Challenge to 1988 Repayment," p. 19. 
18 Chapter Two 

Contributions Reviewed Through Sampling 

Several campaigns were critical of the FEC's decision to use a sampling technique to review the legality 

of contributions, one of the new audit procedures 

previously discussed. Campaigns also had technical 

objections to the specific sampling method used, 

claiming that it inflated projections of excessive and 

prohibited contributions accepted by the campaigns. 

The final audit reports pointed out, however, that the 

technique-the same one used to evaluate matching 

fund submissions-is widely accepted in the accounting profession. 

Campaigns also objected to having to pay the projected amounts to the U.S. Treasury, arguing that the 

requirement was an invalid regulation implemented 

without satisfying the public notice and comment provisions under the Administrative Procedures Act 

(APA). The Commission, however, said that a 1992 

notification letter sent to Presidential campaigns to 

explain the payment requirement was exempt from 

the APA because it served to interpret, rather than 

create, a regulation. 

Staff Advances as Contributions 

Several campaigns were found to have accepted 

excessive contributions in the form of advances from 

campaign staff. For example, one campaign received 

over $53,000 in excessive contributions in the form of 

staff advances from three individuals. In some cases, 

these contributions were for the individual's own campaign travel and subsistence and could have been 

avoided if the committee had reimbursed the advances within the prescribed time period (30 days or, 

in the case of credit card charges, 60 days). However, 

in other cases the expenses were not travel related or 

were the travel costs of persons other than those who 

paid the expenses. The regulations provide no grace 

period for reimbursing such expenses before they are 

considered contributions. 11 CFR 116.5(b}. 

Disclosure of Donor's Occupation and Employer 

Committees are required to disclose the name, 

mailing address, occupation and employer of any 

individual whose contributions aggregate more than 

$200 within a calendar year. Several 1992 Presidential committees failed to disclose complete contributor 

information, generally omitting the donor's occupation 

and employer. For example, a sample review of one 

committee's reports revealed that it failed to report the 

occupation and name of employer for 56 percent of 

the items tested. 

Committees that inadequately disclosed contributor 

information and could not demonstrate that they had 

made "best efforts" to obtain the information, could be 

subject to FEC enforcement action. (For more information on best effort rules, seep. 26.) 

Overbilling the Media for Travel 

Three 1992 campaigns had to make repayments to 

the Treasury or refunds to press organizations for 

travel overcharges. (See the media-travel repayments 

and refunds listed under the Brown, Kerrey and 

Tsongas campaigns, pp. 15-16.) Presidential committees traditionally allow members of the press to accompany the campaign on airplane flights in order to 

encourage media coverage. However, when seeking 

a reimbursement from the press for this expense, 

campaigns must base travel charges on the cost per 

passenger. Any overcharges-amounts greater than 

the actual cost plus 1 0 percent-must be refunded to 

the travelers. Any profits-amounts greater than the 

actual cost plus 3-to-1 0 percent in administrative 

costs-must be paid to the U.S. Treasury. 4 

Allocation of Mixed Primary/General Expenditures 

Primary matching funds used to fund general election activity are considered nonqualified campaign 

expenses. Both the Bush and Clinton primary committees made such expenditures, the Bush committee 

spending $1,577,196, and the Clinton campaign, 

$598,864. The Commission reduced the nonqualified 

amounts after determining that most of the expenditures should be allocated on a 50-50 basis between 

the primary and general elections. 

The campaigns could take alternative actions to 

resolve the nonqualified campaign expenses. The 

primary committees could make pro rata repayments 

4 The administrative cost allowance may range from 3 

percent (if no documentation exists) to 10 percent (if the 

Committee can document costs greater than 3 percent). 
Presidential Public Funding 19 

to the Treasury in the amounts determined to be general election spending (the repayments representing 

the amount of federal matching funds used to finance 

the expenditures). Or the general election committees 

could reimburse their share of the expenses to the 

primary committees (in which case no pro rata repayment would be necessary). 

Other Audit-Related Legal Issues 

In addition to issues stemming from the 1992 audits, the Commission dealt with other Presidential 

issues, including cases filed by the 1992 and 1988 

campaigns of Lyndon LaRouche and enforcement 

matters from the 1988 cycle. 

Court-Ordered Public Funding 

On February 17, 1994, the Commission complied 

with a court mandate to certify Lyndon LaRouche as 

eligible to receive federal matching funds for his 1992 

campaign. The agency certified a $1 00,000 threshold 

payment on February 22. 

The FEC had originally denied Mr. LaRouche's 

request for matching funds based on his past violation 

of the public funding law and his criminal convictions 

for mail fraud, including fraudulent fundraising. 

Ruling that the FEC did not have statutory authority 

to deny federal funds on that basis, the U.S. Court of 

Appeals for the District of Columbia Circuit, on July 2, 

1993, instructed the agency to certify the candidate as 

eligible to receive public funds. (See the Annual Report 1993, p. 23, for a summary of the decision.) 

Given the appellate court's decision and the Supreme 

Court's refusal to review that decision, the Commission certified the $100,000 payment. Mr. LaRouche 

ultimately received $568,435 in matching funds for his 

1992 campaign. 

Challenge to 1988 Repayment 

Mr. LaRouche received $833,577 in 1988 primary 

matching funds. The Commission determined that he 

had to repay $151,269 to the Treasury. The campaign 

repaid part of that amount in 1992, leaving $146,464 

outstanding. In October 1992, Mr. LaRouche and his 

campaign filed a petition in the Court of Appeals 

against the FEC seeking review of $109,149 of the 

repayment. In May 1994, pending a ruling in this suit, 

the FEC filed suit in district court to obtain repayment 

of the full outstanding amount ($146,464). 

On July 8, 1994, the U.S. Court of Appeals for the 

District of Columbia Circuit upheld the repayment 

determination. At issue was the entitlement of a candidate to matching funds after his date of ineligibility 

(DOl). On May 26, 1988, after receiving less than 10 

percent of the vote in two consecutive primaries, 

Lyndon LaRouche became ineligible to receive 

matching funds to continue his campaign but was still 

entitled to matching funds to help defray preexisting 

net campaign debts of about $300,000. On that basis, 

the campaign continued to receive matching fund 

payments through October 1988. However, an FEC 

audit later found that, by July 22, the campaign had 

received sufficient post-DOl matching funds and private contributions to satisfy the debt. 

The LaRouche campaign argued that the campaign 

was entitled to collect matching funds for contributions 

received after the DOl without having to credit the 

contributions against the net debt figure. Otherwise, 

the campaign said, the candidate would be limited in 

his ability to continue the campaign. 

The court, however, disagreed, stating that the 

statute "make[s] clear that Congress wished to restrict 

the availability of matching payments to candidates it 

considered viable." 

The district court in which the FEC had filed suit to 

collect payment issued an order in September 1994 

holding the 1988 LaRouche campaign liable for repayment of $146,464 in matching funds {the full outstanding amount) plus accrued interest. 

The 1992 LaRouche campaign gave the court a 

$158,304 check as security for the 1988 campaign's 

repayment obligation plus interest. The court agreed 

to release the check to the FEC if the 1992 campaign 

had sufficient excess funds to cover the check after 

making its own repayment to the Treasury (the 1992 

repayment determination was then pending).5 

5 Under the Commission's final repayment determination, 

the 1992 LaRouche committee did have sufficient excess 

campaign funds to cover the check. The FEC received the 

check, including interest, on February 1, 1995. 
20 

Enforcement Matters from 1988 

In 1994, the Commission closed two enforcement 

matters from the 1988 Presidential election. These 

cases focused on several violations, including excessive contributions, prohibited corporate contributions 

and excessive expenditures in primary elections. 

MUR 3467. The 1988 campaign committee of 

George Bush paid a $40,000 civil penalty for violating 

contribution and expenditure limits. The committee 

had accepted $188,195 in excessive contributions 

from individuals. Of this amount, a total of $163,725 

was refunded too late to cure the excessive nature of 

the contributions. On average, it took the committee 

112 days to refund excessive contributions; FEC 

regulations require that refunds be made within 60 

days. 

The remaining $24,470 in excessive contributions 

were primary contributions redesignated by contributors to the general election compliance fund. However, because the committee failed to retain any 

records of when it received the redesignations, they 

were ineffective, and the contributions remained excessive. Additionally the Bush campaign made untimely refunds of $11 ,000 in excessive contributions 

from political committees. 

The Bush campaign also exceeded the Iowa and 

New Hampshire spending limits by a total of 

$260,460. 

MUR 3306. The 1988 Jack Kemp for President 

Committee and two Kemp fundraising committeesVictory 88 and the Kemp/Dannemeyer Committeeagreed to pay a total of $120,000 in penalties and 

refund $11 0,000 in excessive and prohibited contributions. The committees were cited for numerous violations of the federal campaign finance law, including: 

• Accepting more than $750,000 in excessive contributions and over $13,000 in direct corporate contributions; 

• Accepting corporate in-kind contributions by failing to 

pay in advance for campaign use of corporate aircraft; 

• Exceeding the Iowa spending limit by almost 

$104,000 and the New Hampshire limit by over 

$66,000; 

• Failing to follow the prescribed methods for calculating and billing the costs of media travel services; 

• Failing to comply with the joint fundraising rules; and 

• Failing to retain and furnish documents requested by 

the FEC. 

Looking Ahead to 1996: New 

Regulations 

In preparation for the 1996 Presidential elections, 

the Commission completed revisions on regulations 

governing public funding of Presidential nominating 

conventions and began revising public funding regulations for Presidential candidates and committees. The 

revisions were designed to address several issues 

that arose during the past election cycle and to anticipate issues that might arise in 1996. 

Because the convention funding rules had not been 

substantively changed in 15 years, the Commission 

updated them to make them consistent with parallel 

provisions in the public funding rules for Presidential 

committees. The convention rules were also simplified 

and reorganized into a more logical sequence. The 

rules at 11 CFR Part 9008 became final in August 

1994. 

Among other changes, the revised rules require 

convention cities to file post-convention financial 

statements and allow them to establish municipal 

convention funds to pay for certain convention expenses. Under another new provision, convention 

committees may raise contributions to defray exempt 

legal and accounting compliance costs, as general 

election Presidential campaigns are permitted to do. 

The regulations also simplify terminology by substituting "commercial vendor" for several terms previously 

used to describe businesses that offer reductions, 

discounts or free items to a convention. 

The Commission also began revising the regulations governing the public funding of Presidential primary and general election candidates. On October 6, 

the Commission published a notice of proposed 

rulemaking seeking public comment on possible 

changes.6 

6 The Commission held a public hearing on the proposed 

changes on February 15, 1995. 
21 

Chapter Three 

Legal Issues 

In December 1994, the Supreme Court ruled that, 

under the Federal Election Campaign Act, the 

Commission did not have independent authority to 

appeal cases to the Supreme Court. This decision in 

FEC v. NRA Political Victory Fund and its implications 

for the agency are discussed under Enforcement, 

Chapter One. 

This chapter examines other legal issues that 

confronted the Commission in 1994 advisory 

opinions, enforcement cases and litigation. 

Corporate/Labor Communications 

to Public 

The Federal Election Campaign Act (the Act) 

restricts political communications and other electionrelated activities by corporations and labor 

organizations. Specifically, 2 U.S.C. §441b prohibits 

corporations and labor organizations from making 

contributions or expenditures in connection with 

federal elections. The courts have found that this 

restriction on constitutionally protected speech is 

justified in light of the potentially corrupting effect that 

the concentrated power and wealth of corporations 

and labor unions could have on the democratic 

electoral process. 

MCFL Rulemaking 

In its regulations, the Commission interpreted 

§441 b as broadly banning all election-influencing or 

"partisan" communications by corporations and labor 

organizations to the public. Several years ago, 

however, the agency found it had to reexamine its 

regulations in light of the Supreme Court's interpretation of the §441 b prohibition in FEC v. Massachusetts 

Citizens for Life, Inc. (MCFL) and subsequent cases. 

The Supreme Court, in its 1986 MCFL decision, 

ruled that "an expenditure must constitute 'express 

advocacy' in order to be subject to the prohibition of 

§441 b." This ruling narrowed the scope of the 

prohibition on expenditures to include only independent expenditure communications, which, by 

definition, contain express advocacy.1 (The §441b 

prohibition against contributions by corporations and 

labor organizations remains the same and applies to 

expenditures that are coordinated in any way with a 

candidate.) 

In MCFL, the Court also found that a narrowly defined category of corporations (MCFL-type corporations) is exempted by the Constitution from the prohibition on independent expenditures. The Court said 

that the prohibition was unconstitutional as applied to 

nonprofit corporations that were ''formed to promote 

political ideas," and satisfied three other criteria specified by the Court. 

In 1994, the Commission continued work on revising its regulations on corporate/labor communications 

(11 CFR 114.3 and 114.4) to conform withMCFL and 

on crafting new regulations on the exemption for 

MCFL-type corporations (proposed 11 CFR 114.1 0). 

In past years, the agency published four rulemaking 

notices for public comment and heard testimony at 

two public hearings. This year, the Commission deliberated over draft final rules. Because express advocacy was critical to the rulemaking, the Commission 

focused on defining the concept and, in August, approved a new definition. This represented a significant 

accomplishment given the lack of consensus in court 

rulings on this issue and the conflicting public comments on alternative draft definitions. The definition of 

express advocacy approved in 1994 will be subject to 

a vote to publish it in the Federal Register and send it 

to Congress. 

Definition of Express Advocacy 

In a related court case addressing express advocacy, the U.S. District Court for the Southam District 

of New York ruled on letters sent to the general public 

by the Survival Education Fund, Inc. The court found 

that although the letters were undeniably hostile to 

1 An independent expenditure is a communication that 

expressly advocates the election or defeat of a clearly 

identified candidate and that is made independently-that 

is, without any cooperation or consultation with the candidate or his or her authorized committee or agents and 

without the prior consent, suggestion or request of the 

candidate, authorized committee or agents. 
22 Chapter Three 

President Reagan, who was facing reelection at the 

time of the mailing, they did not constitute prohibited 

corporate expenditures because they did not expressly advocate his defeat. In its ruling, the court 

relied on Supreme Court cases, including Buckley v. 

Valeo and MCFL, that interpreted the §441 b ban on 

corporate expenditures as applying only to communications that expressly advocate the election or defeat 

of a candidate using, for example, words such as 

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

Commercial Ventures and Express Advocacy 

In AO 1994-30, the Commission said that a corporation's sale of t-shirts expressly advocating the election of conservative candidates was not prohibited 

under §441 b as long as the activity was purely commercial in purpose-that is, undertaken to turn a profit 

rather than to influence federal elections. The corporation, Conservative Concepts, Inc. (CCI), could advertise the t-shirts on a radio talk show and sell them at 

campaign events, as long as the activities did not 

have an election-influencing purpose and were not 

coordinated with the campaign. 

Definition of Member 

Under the Act, only "members" of an incorporated 

membership organization may be solicited for contributions to the organization's separate segregated 

fund (SSF, commonly called a political action committee or PAC). Additionally, only members are allowed 

to receive communications from the organization that 

advocate the election or defeat of candidates. In November 1993, the Commission prescribed new regulations specifying the criteria for qualifying as a member(11 CFR 114.1(e)). 

In 1994, the agency received four advisory opinion 

requests seeking guidance on the new rules. The 

Commission issued two advisory opinions in response 

to these requests, but could not agree upon an opinion in the case of the other two requests. The definition of member was also the subject of two court 

cases. 

Advisory Opinions 

In AO 1993-24 (issued in February 1994), the 

National Rifle Association (NRA), an incorporated 

membership group, asked the Commission to determine which of its classes of membership would be 

considered qualified "members." Under the new regulations, members must affirmatively respond to the 

invitation to join (all NRA members appeared to meet 

this requirement) and must satisfy one of the following 

three requirements: 

1. Members must have some significant financial 

attachment to the association beyond the payment of dues; or 

2. They must pay regular dues and have the right to 

vote for at least one member of the highest governing body of the association or for those who 

select at least one member of that body; or 

3. They must have the right to vote for all of those 

on the highest governing body. 11 CFR 

114.1(e)(2). 

"Annual" members of the NRA (two-thirds of NRA's 

total membership) paid dues of $2Q-$25 a year, but 

they lacked voting rights and therefore failed to satisfy 

requirements 2 or 3. Nor did they satisfy requirement 

1 merely by paying dues. Consequently, they were 

not considered "members" for the purposes of receiving NRA solicitations and partisan communications. 

Other NRA membership classes, because of their 

dues obligation and ability to vote for NRA's highest 

governing body, met the definition of "member'' under 

either 2 or 3. 

In AO 1994-12, the American Medical Association 

asked the Commission whether their 290,000 members qualified as members under the new rules. AMA 

dues-paying members fell into two categories. "Constituent members" belonged to AMA state medical 

associations and were entitled to vote for delegates to 

their state associations' house of delegates. These 

state bodies, in turn, elected delegates to the AMA 

House of Delegates, the AMA's highest governing 

body. Constituent members, therefore, had sufficient 

voting rights to meet the definition of "member'' under 

FEC rules. 

AMA's 45,000 "direct members," a second class of 

dues-paying members, were generally not entitled to 
Legal Issues 23 

participate in elections. The Commission, in a 3-3 

vote, could not reach agreement on their membership 

status. 

The impasse focused on whether direct members 

could qualify under 11 CFR 114.1 (e)(3). Under that 

provision, the Commission may determine, on a caseby-case basis, that individuals who do not "precisely 

meet the requirements of the general rule" nevertheless qualify as members based on "a significant organizational and financial attachment to the association." While three Commissioners believed AMA's 

direct members qualified under section 114.1 (e)(3), 

the other three Commissioners believed the members 

lacked sufficient voting rights. 

For the same reason-conflicting interpretations of 

114.1 (e)(3)-the Commission was unable to approve 

advisory opinions on whether individuals belonging to 

the U.S. Chamber of Commerce (220,000 members) 

and the International Council of Shopping Centers 

(22,343 members) qualified as "members." (Advisory 

Opinion Requests 1994-4 and 1994-18.) 

Legal Challenges 

The Chamber of Commerce and the AMA filed suit 

against the Commission, claiming that the rules on 

the definition of member violated their constitutional 

rights of free speech and association by preventing 

them from sending partisan communications (candidate endorsements) to large segments of their memberships. 

In- dismissing the case on October 28, 1994, the 

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

that the associations lacked standing to bring suit. 

Because the Commission deadlocked on whether the 

organizations' supporters were members, the court 

ruled that the regulations did not pose any threat of 

enforcement against the groups. For similar reasons, 

the court said that the matter was not ripe for review. 

The court also concluded that the regulations were, 

on their face, within the Commission's authority to 

construe the statute. 

In another case, Jordan v. FEC, the district court 

upheld a definition of member that predated the one 

codified in the 1993 regulations. The previous regulations had defined "member'' simply as a person who 

satisfied the organization's own requirements for 

membership, although FEC advisory opinions had 

refined the term to mean persons who had an obligation to pay regular dues and the right to participate in 

the organization's governance. 

In his suit, Absalom F. Jordan, Jr., challenged the 

FEC's dismissal of his administrative complaint alleging that Handgun Control, Inc. (HCI) had violated the 

law by soliciting contributions from individuals who did 

not qualify as members because they lacked sufficient 

governance rights. 

In dismissing his complaint, the FEC said that his 

claims were substantially similar to claims already 

conclusively resolved through a previous complaint 

filed against HCI by the National Rifle Association 

(NRA). That complaint resulted in a conciliation agreement requiring HCI to pay a civil penalty and to 

amend its bylaws to establish voting rights for members. The Commission dismissed subsequent NRA 

complaints against HCI because they did not raise 

any new claims. 

Finding the FEC's definition of member to be reasonable, the court also upheld the agency's dismissal 

of the Jordan complaint, and, on May 27, 1994, 

granted summary judgment to the FEC. 

Corporate Solicitations to 

Employees 

Employee Stockholders 

When raising funds for its separate segregated 

fund (SSF), a corporation may solicit contributions 

from its restricted class, that is, its executive and administrative personnel, stockholders and the families 

of both groups. In AO 1994-27, the Commission considered whether employees who were not executive 

or administrative personnel could nevertheless be 

solicited because they qualified as stockholders 

through their participation in a company stock ownership plan. 

The opinion focused on whether employee-investors satisfied the three criteria for stockholder status: 

(1) a vested beneficial interest in the stock; (2) the 

power to direct how the stock is voted; and (3) the 

right to receive dividends. 11 CFR 114.1 (f). 
24 Chapter Three 

Consumer Power Company offered a stock ownership plan under which employees could invest in common stock through contributions from their salaries 

and a matching payment by the company. 

The first requirement for stockholder status was 

met by employees who owned one share of stock. All 

employees met the second requirement because they 

had the right to vote through a trustee. The third requirement, however, was met only by employees who 

had actually withdrawn stock or who were able to 

make withdrawals without significant restrictions. Employees who had unrestricted withdrawal rights and 

employees who could make partial withdrawals once 

a year, without penalty, satisfied the third requirement. 

Twice-Yearly Solicitations and Charitable 

Matching Plans 

While corporations may solicit contributions from 

their stockholders and executive and administrative 

personnel at any time, other employees (i.e., the expanded class) may be solicited only twice a year, and 

then only under the specific procedures spelled out at 

11 CFR 114.6. In three advisory opinions issued in 

1994 (AOs 1994-3, 1994-6, 1994-7), the Commission 

said that corporations could make charitable donations to match SSF contributions collected from expanded class employees in twice-yearly solicitations. 

In earlier advisory opinions, the Commission had 

approved charitable matching plans for contributions 

from the restricted class. In these opinions, the Com­

~ission reasoned that the costs (the matching donations) were exempt solicitation expenses rather than 

prohibited exchanges of corporate funds for PAC 

contributions.2 2 U.S.C. §441 b(b)(2)(C); 11 CFR 

114.5(b). For the same reason, the Commission conclu?~d ~hat charitable ~atching plans for twice-yearly 

sohc1tat1ons were permissible as along as the corporation complied with the requirements for such solicitations. 

2 T~e IRS has concluded that charitable matching plan 

donations do not result in compensation to the employees 

and are not tax deductible by the corporation. Judith E. 

Kin.dell and John F. Reilly, Election Year Issues, IRS publication, 441-444 (1992); see also Rev. Rul. 67-137, 1967-1 

C.B.63. 

Prohibited Corporate Activities 

Corporate Fundraislng on Behalf of Federal 

Candidates 

In MUR 3540, Prudential Securities, Inc. (PSI) 

agreed to pay a $550,000 civil penalty for having violated the Act by conducting illegal corporate fundraising on behalf of federal candidates. This civil penalty 

was the largest in the FEC's 19-year history. 

From 1986 through 1993, various PSI officers and 

employees engaged in fundraising activities that 

raised nearly $250,000 on behalf of candidates. The 

Commission found that PSI's fundraising activities 

often involved the use of corporate facilities to solicit 

contributions from officers and employees of PSI and 

other securities firms. Some fundraisers were held in 

PSI board rooms, and PSI clerical staff were asked to 

prepare materials for fund raising events during their 

regular work hours. In various instances, PSI collected contributions and forwarded them to the candidates' campaigns. The Commission found several 

violations of the law in these activities. 

The Act prohibits corporations from making contributions-defined as "anything of value"-to candidates for federal office. 2 U.S.C. §§441 b(a) and 

100.7(a)(i). Because PSI collected and forwarded 

contributions, thus facilitating the making of contributions to federal candidates, the Commission concluded that PSI had provided something of value to 

those candidates, which resulted in a prohibited inkind contribution. 

The 441 b prohibition also applies to fund raising 

activities in which a corporation's employees solicit 

and gather contributions using corporate facilities. 

PSI's use of employees to conduct an organized fundraising effort resulted in prohibited in-kind contributions. Although employees may make occasional, 

isolated or incidental use of a corporation's facilities 

for individual volunteer activity, this exemption does 

not extend to the collective enterprise undertaken at 

PSI during which executives directed their subordinates in fundraising projects using corporate resources. 

The Commission found that PSI's violations were 

"knowing and willful" because PSI was involved in a 
Legal Issues 25 

similar enforcement matter in 1987 that led to a 

$7,000 civil penalty. Some PSI personnel involved in 

that matter were also involved in the 1994 case. 

Corporate Contributions In the Name of Another 

MUR 3781 also involved illegal contributions. During a period of almost 1 0 years, the University of Osteopathic Medicine and Health Sciences of Des 

Moines, Iowa, a nonprofit corporation, reimbursed the 

University's president for his contributions to federal 

candidates. The contributions, which totaled approximately $19,000, violated the prohibition on corporate 

contributions and the ban on contributions made in 

the name of another. 2 U.S.C. §§441 b and 4411. The 

University and its former president paid $19,000 and 

$16,000 respectively in civil penalties. 

Bank Loans 

In AO 1994-10, Franklin National Bank was permitted to waive deposit fees and similar service charges 

when making loans to candidates and political committees as long as the waivers were consistent with 

normal industry practice and the Bank's ordinary 

course of business with commercial customers. Otherwise, a prohibited corporate contribution would 

result. 

In AO 1994-26 the Commission ruled that Scott 

Douglas Cunningham, a 1994 House candidate, could 

draw funds for his campaign on lines of credit opened 

with two banks. A bank loan-including a line of 

credit-does not result in a contribution if, among 

other conditions, it is made in the "ordinary course of 

business." One criterion of the "ordinary course of 

business" standard is that the loan be made on a 

basis which assures repayment. 11 CFR 100.7(b)(11). 

Although the security for the credit (the candidate's 

personal income) did not specifically meet FEC criteria for assuring repayment, the Commission determined that the draws would not result in prohibited 

contributions from the banks because: the lines of 

credit were opened years before Mr. Cunningham's 

candidacy, indicating his long-standing relationship 

with the banks; the terms were not unduly favorable; 

and the credit appeared to be standard. 

In MUR 2619, the Commission obtained a $37,000 

civil penalty from a Senate candidate who accepted a 

loan from an institution that did not qualify as a bank, 

a savings and loan association or a credit union under 

11 CFR 100.7(b)(11). A $100,000 loan from 

Remington Investments, Inc., was deposited into the 

personal account of the candidate, Michael 

Antonovich. Mr. Antonovich then issued a personal 

check for the full amount to his Senate committee, 

which used the monies for campaign expenses. Because Remington Investments, Inc., was not a bank, 

a savings and loan association or a credit union, the 

$100,000 loan constituted an illegal corporate 

contribution. 

Definition of Political Committee: 

Major Purpose 

Under the Act, a group becomes a political committee, and thus triggers registration and reporting requirements, when its aggregate contributions or expenditures exceed $1 ,000 in a calendar year. 

2 U.S.C. §431 (4). In interpreting the statutory definition of political committee, the Commission has considered whether the group's major purpose is to elect 

federal candidates. 

In 1994 litigation, the Commission successfully 

defended its use of the "major purpose tesf' in determining whether a lobbying group was a "political committee." The Commission also applied the major purpose test in an advisory opinion concerning the proposed activities of a corporation organized to stage a 

Presidential nominating convention. 

Lobbying Group 

The case Akins v. FEC stemmed from an administrative complaint (MUR 2804) filed by James E. Akins 

and five other individuals against the American Israel 

Public Affairs Committee (AIPAC), an incorporated 

lobbying group. The complainants alleged that 

AIPAC, in addition to making prohibited corporate 

expenditures, failed to register and report as a political committee when those expenditures exceeded 

$1 ,000 in a calendar year. The Commission found no 

probable cause to believe that AIPAC was a political 
26 Chapter Three 

committee because its campaign activity (although 

probably in excess of $1 ,000 per year) was small in 

comparison with its major purpose, which was 

lobbying. 

When the FEC dismissed the complaint, Mr. Akins · 

and the others filed a lawsuit against the Commission, 

arguing that the agency should have relied solely on 

the plain wording of the statute. 

The court ruled that the FEC was correct in applying the major purpose test, citing Buckley v. Valeo 

and MCFL, in which the Supreme Court used the test 

to define "political committee." The district court 

observed that the Supreme Court narrowed the 

statutory definition in order to protect the constitutional rights of groups formed for issue discussion. 

Corporation Running Convention 

In AO 1994-25, the Commission concluded that 

FEE Enterprises (FEE), a corporation organized 

solely to conduct the Libertarian Party's 1996 Presidential convention, qualified as a political committee 

under the Act. The Commission based its determination on the arrangement proposed by the Libertarian 

National Committee (LNG) under which FEE, a forprofit corporation founded by four individuals each 

contributing $3,333 in start-up capital, would organize, 

promote and stage the convention and perform other 

convention-related services. 

FEE would meet the definition of political committee through its receipt of contributions in excess of 

$1 ,000 in one year (the start-up costs). Furthermore, 

its major purpose was election related, i.e., making 

arrangements for the Libertarian Party's convention to 

nominate a Presidential ticket. Such organizations are 

required to register and report under 11 CFR 

9008.1(b). 

The Commission pointed out that, based on the 

affiliation factors in FEC rules, FEE would be affiliated 

with the Libertarian National Committee and therefore 

would share contribution limits with the LNG and its 

other affiliates. 

Disaffiliation 

Separate segregated funds (SSFs) established by 

a parent and its subsidiary are automatically affiliated 

and thus share the same contribution limits. 11 CFR 

11 0.3(a)(2)(i). 

In AO 1993-23 (issued in 1994), the Commission, 

for the first time, determined that a parent corporation 

and its subsidiary-and their respective SSFs-would 

no longer be affiliated when the subsidiary, PacTel, 

separated from the parent, Pacific Telesis Group 

(PTG), through a "spin-off"-that is, the distribution of 

PTG's shares in PacTel to the PTG shareholders. 

The Commission applied the criteria used to determine whether affiliation exists in the absence of a 

parent-subsidiary relationship (11 CFR 11 0.3(a)(3)(ii)) 

and concluded that the spin-off would effectively 

disaffiliate the two companies and their respective 

SSFs because: PTG would no longer hold a controlling interest in PacTel stock; the governance and 

management of the two corporations would become 

separate; and they would no longer share any directors, officers or employees. (By contrast, see two 

previous opinions on spin-offs, AOs 1987-21 and 

1986-42.) 

Best Efforts Rules Upheld 

On July 22, 1994, in RNC v. FEC, the U.S. District 

Court for the District of Columbia granted summary 

judgment to the FEC, rejecting a challenge to the 

agency's revised "best efforts" regulations. The revised rules, which became effective March 3, 1994, 

explain what steps a committee treasurer must take in 

order to demonstrate that he or she has used best 

efforts to obtain and report required information on 

individual contributors whose aggregate contributions 

to a committee exceed $200 in a calendar year. 

11 CFR 104.7(b). 

When reported information on contributors is incomplete, a committee will be in compliance with the 

law if it can demonstrate that "best efforts" were used 

to obtain the information. 2 U.S.C. §432(i). To satisfy 

the best efforts standard, a committee must include a 

clear request for the information in written solicitations, which must also display the following statement: 
Legal Issues 27 

"Federal law requires political committees to report 

the name, mailing address, occupation and name of 

employer for each individual whose contributions aggregate over $200 in a calendar year." Furthermore, 

committees must make a follow-up request to the 

contributor for any missing information; this request 

may not include an additional solicitation or material 

on any other subject. 

The plaintiffs-the Republican National Committee, 

the National Republican Senatorial Committee and 

the National Republican Congressional Committeeargued that these requirements violated their free 

speech rights by impermissibly limiting the language 

and subject matter of solicitations. The court, however, pointed out that the best efforts regulations are 

not compulsory but "merely [provide] a 'safe harbor' 

for any committee that is unable to obtain all of the 

required information." 

In a related argument, the committees contended 

that the requirement for a follow-up request would 

curtail free speech by imposing additional costs on 

committees, leaving less money for political speech. 

The court said that the added cost to the committees 

was a "minimal burden" given the strong governmental interest in disclosure of contributor information. 

The committees filed an appeal that was still pending at year's end. 

New Rule on Use of Candidate's 

Name in Opposition Project 

In 1994, the Commission created a limited exception to the general ban on the use of a candidate's 

name in the title of a "special projecf' created by an 

unauthorized committee (i.e., a party committee, PAC 

or other committee not authorized by any candidate). 

The exception allows an unauthorized committee to 

use a candidate's name in project titles that clearly 

oppose the candidate. 

The ban was adopted in 1992 to put a stop to the 

increasing practice-generally by PACs--of including 

a candidate's name in the title of a special project 

fundraiser. There was evidence that this practice had 

misled contributors into believing they were making 

contributions to the named candidate, thus diverting 

substantial funds from the candidate's campaign. 

However, a group called Citizens Against David Duke 

petitioned the Commission to repeal the rule, claiming 

that it infringed upon free speech rights. The FEC said 

that the ban itself was justified as it protects the integrity of the electoral process. At the same time, the 

agency recognized that fraud and abuse were less 

likely to occur where a project title opposed a candidate. The new regulation at 11 CFR 102.14(b)(3) 

became effective June 30, 1994. 

Rulemaking on Personal Use 

On December 1 , the Commission approved final 

rules on the personal use of campaign funds. The 

Commission planned to vote on the explanation and 

justification for the rules in 1995.3 

Under the law, candidates have long been prohibited from using campaign funds for personal expenses. However, until the beginning of the 1 03d 

Congress in January 1993, many Members of Congress were exempted from this ban. When Congress 

extended the ban to all candidates, the Commission 

anticipated that a greater number of questions would 

arise in this area and initiated a rulemaking to clarify 

the regulations at 11 CFR 113.1 and 113.2. The Commission sought comments on proposed rules published in August 1993 and in August 1994, and heard 

testimony at a January 1994 public hearing. 

The final rules ban any use of campaign funds for 

expenses that would exist irrespective of the campaign or the duties of a federal officeholder. The rules 

apply the personal use prohibition to several situations. For example, the rules prohibit the use of campaign funds to pay the candidate's living expenses 

(e.g. mortgage, rent, clothing or tuition). 

Salary 

In a 3-3 split vote, the Commission was unable to 

decide whether campaign funds could be used to pay 

the candidate a salary. Three Commissioners believed that campaign salary payments were justified 

because they would offset the public salary received 

by incumbents throughout the campaign and mitigate 

3 The final rules became effective on April 5, 1995. 
28 Chapter Three 

the effects of the prohibition on receipt of a private 

salary while campaigning.4 Three Commissioners, 

however, took the position that: (1) the FEC did not 

have the authority to exempt salary payments from 

the personal use ban; and (2) a salary could be used 

as a loophole for converting campaign funds to personal use. 

Campaign Use of Candidate's Property 

Under the personal use rules, a campaign is permitted to rent property owned by the candidate or a 

member of the candidate's family as long as the rental 

payments do not exceed fair market value and the 

property is not used as the personal residence of the 

candidate or family member. Two 1994 advisory opinions (AOs 1994-8 and 1994-22) provided similar guidance, but they also cautioned that paying less than 

the usual charge would result in a campaign 

contribution. 

The opinions concerned campaign rental of office 

space and a vehicle from candidate-owned businesses. In both cases, the Commission said that if the 

committee were to pay more than the usual charge, 

the excess amount accruing to the candidate's business would constitute personal use of campaign 

funds. On the other hand, if the committee were to 

pay less than the usual charge, the candidate-owned 

business would be making a contribution to the 

committee-a prohibited contribution, in the case of a 

corporation. 

Compliance 

During 1994, the initial and final stages of the compliance process were the focus of an advisory opinion 

and litigation. The advisory opinion articulated the 

Commission's position on the confidentiality of a complaint, and the court cases served to enforce payment 

of civil penalties. 

The Confidentiality Provision 

In AO 1994-32, the Commission determined that 

Kellie Gasnik could freely share with the public the 

fact that she had filed an administrative complaint with 

the Commission, the allegations contained in the 

complaint, and any other information contained in or 

related to the subject matter of the complaint. 5 Divulging this information did not violate the provisions safeguarding the confidentiality of a Matter Under Review 

(MUR). 2 U.S.C. §437g(a)(12)(A) and 11 CFR 111.21. 

Those provisions protect the confidentiality of information connected with any Commission investigation of 

a MUR-for example, a notification of findings or an 

action taken by the FEC in connection with the casebut they do not apply to the substance of the complaint. In the absence of prior advisory opinions dealing with the issue of MUR confidentiality, the Commission relied on precedents set in several MURs.6 

Payment of Penalties 

In March 1994, a U.S. district court held Cesar 

Rodriguez in contempt of court for failing to pay a 

$5,000 penalty that had been outstanding since October 1988, when the court ruled that he had knowingly 

assisted in making contributions in the names of others, a violation of 2 U.S.C. §441f. Under the terms of 

the 1994 judgment, Mr. Rodriguez was to pay $100 a 

day until the penalty was paid and to reimburse the 

FEC its costs in the proceeding. 

4 If a candidate receives compensation from his or her 

employer for time spent campaigning, the payments are 

considered a contribution. Such payments are likely to result in prohibited or excessive contributions. However, no 

contribution results if the compensation payments were 

made before the individual became a candidate and continue during the campaign and if these additional three 

conditions are met: the compensation results from bona fide 

employment that is genuinely independent of the 

candidate's campaign; the compensation is exclusively in 

consideration of services provided by the candidate as part 

of that employment; and the compensation is not in excess 

of the rate at which others would be paid for the same work. 

5 The respondent in this complaint, Lenora B. Fulani, a 

1992 Presidential candidate, filed suit in June 1994 asking 

the court to enjoin the Commission from investigating the 

complaint on the grounds that it was improperly filed. This 

case was pending at year's end. See the August 1994 

Record for more information. 

6 See MURs 3573, 3170, 3169, 3168, 1244 and 298. 
Legal Issues 29 

America's PAC and its acting treasurer were also 

held in civil contempt for failing to pay a penalty. In 

January 1992, a U.S. district court imposed a $25,000 

penalty against the defendants for several violations 

of the election law. In a May 1994 contempt order, the 

court reduced the penalty to $5,000 but ordered 

defendants to pay the penalty in full within 30 days. 

In September 1994, the defendants in another suit 

agreed to a schedule for paying $5,500 in outstanding 

penalties. The defendants-the Committee of 1 00 

Democrats, the Committee to Elect Fusco to Congress and Dominick A. Fusco--had been ordered to 

comply with the terms of two conciliation agreements 

that included $3,500 in penalties. A U.S. district court 

ordered Mr. Fusco and the Committee to Elect Fusco 

each to pay an additional $1 ,000 penalty for violating 

the terms of both agreements. 

Coordinated Party Expenditures 

Under the Act, national party committees are 

permitted to make limited "coordinated party expenditures" on behalf of their House and Senate nominees 

in the general election. 2 U.S.C. §441a(d). In 1994, 

the Commission and the courts considered the 

application of these expenditure limits to the 1992 

Senate election in Georgia. In 1992, the Democratic 

Senatorial Campaign Committee (DSCC) and the 

National Republican Senatorial Committee (NRSC) 

were each permitted to spend up to $535,608 on 

behalf of their party's nominee for the U.S. Senate in 

Georgia. 

Under Georgia law, when an election for U.S. 

Senate fails to produce a majority winner, a second 

election must be held between the top two vote 

getters. None of the Senate candidates in Georgia's 

November 3, 1992, general election won a majority, 

and the Democratic and Republican nominees went 

on to compete in a second election held November 

24. The Republican candidate prevailed. 

The NRSC had exhausted its coordinated party 

spending authority by the November 3 election, while 

the DSCC had not. The NRSC requested an advisory 

opinion from the FEC as to whether the November 24 

election was a second general election or a runoff. 

Both national party committees would be legally entitled to a new $535,608 spending authority if the election were deemed a general election, but not if it were 

deemed a runoff. The Commission, however, split 3-3 

on this question, and no advisory opinion was issued. 

The NRSC proceeded on the basis that the November 24 election was a second general election, 

spending nearly $535,608 in support of its candidate. 

The DSCC spent only the balance remaining from the 

allowance for the November 3 election. The DSCC 

filed a complaint with the FEC on November 19, 1992, 

alleging that the NRSC had violated federal election 

law by exceeding its spending limit in the November 

24 race. In voting on whether to pursue the complaint, 

the Commission again split 3-3 and, as a result, dismissed the complaint. The DSCC then filed suit 

against the FEC in the U.S. District Court for the District of Columbia. 

On November 14, 1994, the court held that the 

Commission's dismissal of the DSCC's November 

1992 administrative complaint was contrary to law. 

The court concluded that the November 24 election 

was not a general election because it did not satisfy 

the definition at 11 CFR §1 00.2(b): the election was 

not held on a Tuesday following the first Monday in 

November in an even numbered year, nor was it held 

to fill a vacancy. 

The court further reasoned that the November 24 

election fit the regulatory definition of a runoff election 

because it was held after a general election and was 

prescribed by applicable state law as the means for 

deciding which candidate was the winner. 11 CFR 

§100.2(d). 

The court ordered the FEC to initiate appropriate 

enforcement proceedings against the NRSC. The 

Commission asked the court for clarification of procedural aspects of its order.7 

Constitutional Issues 

In addition to the issues addressed in NRA v. FEC 

(discussed in Chapter One), the Commission, in 

1994, was faced with other constitutional challenges 

to the Federal Election Campaign Act. 

7 On March 9, 1995, the court denied the FEC's request. 

See the April1995 Recordfor more information. 
30 

Nonresident Contributions 

Plaintiffs in three separate court cases claimed that 

the Act was unconstitutional to the extent it permitted 

contributions by donors living outside a candidate's 

state or district. They contended that nonresident 

contributors exercised undue influence over electoral 

outcomes, thus infringing on the constitutional right of 

resident voters to elect their U.S. Representatives and 

Senators. Plaintiffs further argued that nonresident 

contributions created the appearance that an officeholder was answerable to nonresident contributors 

rather than to constituents. 

Two of these cases, Froelich v. FEC and Whitmore 

and Quinlan v. FEC, were dismissed by district courts. 

The courts ruled that the plaintiffs did not have standing to bring suit. Both courts observed that the general grievances presented in the cases were more 

properly addressed by the legislative branch. Plaintiffs 

in both cases filed appeals that were still pending at 

the end of 1994. 

The other case on nonresident contributions, 

Lytle v. FEC, was also dismissed. 

Challenger Disadvantage 

In another suit unresolved at the end of the 1994, 

Albanese v. FEC, plaintiffs asked the court to rule that 

the Act is unconstitutional to the extent it permits private campaign contributions and expenditures. The 

plaintiffs argued that all federal election campaign 

expenditures made with private money are unconstitutional because such a system, which they labelled a 

''wealth primary," discriminates in favor of incumbents 

against poor people and the candidates they support. 

Plaintiffs sought a court mandated public funding system for Congressional elections. 
31 Chapter Four 

The Commission 

Commissioners 

During 1994, Trevor Potter served as Chairman of 

the Commission and Danny L. McDonald served as 

Vice Chairman. On December 15, 1994, the Commission elected Mr. McDonald to be its 1995 Chairman 

and Lee Ann Elliott to be its 1995 Vice Chairman. 

Both Commissioners had been reappointed by President Clinton on July 1 , 1994. 

For biographies of the Commissioners, the Staff 

Director, General Counsel and Inspector General, see 

Appendix 1. 

Equal Employment Opportunity 

Office 

During 1994, the Commission created a separate 

Equal Employment Opportunity (EEO) Office with a 

full-time director and administrative staff. Previously, 

an FEC staff member performed EEO duties on a 

part-time basis. The EEO office also increased its 

collateral duty staff-FEC staff with part-time appointments to the EEO office-with the addition of a complaints investigator and a third EEO counselor. 

In its first year of operation, the EEO Office developed a new dispute resolution technique program, the 

Early Intervention Program, as an alternative to the 

formal EEO complaint process. Under the Early Intervention Program, Commission employees with an 

EEO-related problem meet informally with the EEO 

director and the responsible supervisor. Together they 

discuss the situation, suggest solutions, create a written agreement to help resolve the problems and 

schedule follow-up meetings to evaluate progress. 

The Commission used this informal program to resolve eight cases during 1994. The program not only 

provided an immediate response to employee concerns but also offered a cost-effective mechanism for 

addressing those concerns. The cost of a formal complaint, processed to completion, is an estimated 

$80,000, according to the EEO Commission. 

Under the guidance of the EEO Office, the Commission developed a recruitment plan for minority 

attorneys in 1994 and arranged for external vacancy 

announcements to be mailed to special emphasis 

groups-handicapped employees, disabled veterans, 

women and minorities. In a related effort, the office 

held a series of programs celebrating ethnic diversity 

and conducted trainings in cultural diversity, sexual 

harassment and the EEO complaint process. 

Through the efforts of the EEO office, the Commission began participating in the National Urban League 

Summer Intern Program, hiring its first six interns 

during July and August. 

Ethics 

In 1994, the Commission's Ethics staff trained the 

entire agency on the government-wide standards of 

conduct issued by the Office of Government Ethics 

(OGE). The ethics staff also worked with the OGE 

during its audit of the Commission's ethics program 

and filed timely reports with that body, including the 

annual agency ethics report, the annual ethics training 

plan and semiannual travel payment reports. 

Inspector General 

The Inspector General Act requires the Commission's Office of the Inspector General (OIG) to conduct audits and investigations of FEC programs to 

detect waste, fraud and abuse. The OIG conducted 

three audits and one management review and closed 

three investigations in 1994. 

In order to protect OIG investigative files from access by individuals under investigation-which could 

compromise the office's enforcement of criminal and 

civil laws-the Commission approved proposed rules 

that would exempt those files from certain provisions 

of the Privacy Act of 197 4. The proposed rules were 

published for public comment on October 27, 1994.1 

1 There being no comment or changes made to the proposed rules, the final rules became effective on February 

21' 1995. 
32 Chapter Four 

The FEC's Budget: Fiscal Year 1995 

On May 12, 1994, FEC Vice Chairman Danny L. 

McDonald, as Chairman of the Finance Committee, 

testified before the Senate Committee on Rules and 

Administration, requesting $31,793,000 and a staffing 

level of 34 7 employees 2 for fiscal year 1995 (which 

began October 1, 1994). By contrast, the Office of 

Management and Budget (OMB) proposed an FEC 

budget of $27,216,000 and 294 employees. The final 

fiscal year 1995 appropriation approved by Congress 

was $27,106,00Q-almost $4.7 million less than the 

FEC's request-and 327 employees. 

Appropriations Oversight 

During House floor debate on the fiscal year 1995 

FEC appropriation, Congressman Bob Livingston 

proposed an amendment to reduce the OMB recommended funding by $3.5 million (which would have 

necessitated a 35 person cut in FEC staff), citing, 

among other things, the Commission's completion of 

relatively few of the 1992 Presidential audits and its 

decision to conclude some enforcement matters without taking action. The House included this amendment in its authorization for the Commission. 

In a July 1994 letter to the chairmen of the House 

and Senate Appropriations Committees, the Commission urged approval of the full funding level recommended by the Office of Management and Budget. In 

response to Congressman Livingston's criticism, the 

letter cited recent Commission efforts to streamline 

operations and put strained resources to their most 

efficient use. 

Chief among these improvements was the enforcement prioritization system, a case management 

system that focused resources on significant cases 

and accelerated the closing of less significant or stale 

cases. 3 The Commission pointed out that no case was 

closed without a careful review by the enforcement 

staff and a Commission vote. The FEC also noted 

that it had already revised its Presidential audit 

procedures, resulting in substantially improved 

timeliness for the 1992 election cycle. All mandatory 

Presidential committee audits were completed in 

1994. (See Chapter Two.) 

The letter went on to explain the dramatic increases in Commission workload, particularly in the 

areas of audit and disclosure, that resulted from 

burgeoning campaign finance activity. By June 1994, 

the FEC had processed more itemized transactions 

for the 1994 election cycle than the total transactions 

for the 1984 and 1986 cycles. The Commission 

explained that the phenomenal growth expected 

throughout the 1994 cycle would lead to delays in 

processing and reviewing reports unless the fiscal 

year 1995 staffing request was approved. 

The House-Senate Conference Committee voted to 

appropriate fiscal year 1995 funding of $27,106,000, 

$110,000 less than the OMB recommendation. 

Management Plan 

The fiscal year 1995 management plan allocated 

additional positions to the Reports Analysis, Data, 

Information and Audit Divisions. While staff increases 

in the first three divisions were aimed at alleviating 

work overloads, additional Audit staff were required to 

replace the Government Accounting Office auditors 

(who had, in previous years, helped conduct Presidential audits) and to conduct non-Presidential audits 

in the 1996 election cycle. 

Under the fiscal year 1995 management plan, a 

large portion of the $27,106,000 appropriation was 

allocated for 327 staff positions. The plan also budgeted $972,000 for internal computer enhancements 

and preliminary work on an electronic filing system for 

campaign finance reports submitted to the FEC (see 

below). Four new positions in Data were included in 

the funding for this project, in addition to $753,500 in 

hardware, software and other equipment. 

Budget allocation comparisons for fiscal years 

1994 and 1995 appear in the table and graphs on the 

pages that follow. 

2 The term "employees" is used in the budget sections to 

mean full-time equivalent (FTE) positions. 

3 See Chapter One, p. 4, for a more complete description 

of the prioritization system. 
The Commission 33 

The FEC's Budget: Fiscal Year 1996 

The Commission requested $31,820,000 in funding 

and 355 employees for fiscal year 1996. The request 

would continue funding at the fiscal year 1995 level 

but would provide an additional $2.5 million and three 

employees specifically for enhancement of the FEC's 

computer system and development of an electronic 

filing system. Recommended by the FEC's oversight 

committees, an electronic filing system would allow 

PACs and party committees to file their campaign 

finance reports on computer disks.4 

OMB proposed a funding level of $29,021 ,000 and 

a staffing level of 337 employees (a decrease of $2.8 

million and 18 positions from the FEC's request). The 

Commission agreed to support this proposal absent 

any other reductions or changes. 

Functional Allocation of Budget * 

FY 1994 FY 1995 

Salaries and Benefits $16,865,200 $19,300,000 

Travel 314,200 377,200 

Space Rental 2,236,300 2,664,600 

Equipment Rental 368,500 293,400 

Telephone/Telegraph 319,200 318,500 

Postage 287,100 260,000 

Printing/Microfilm 337,100 441,000 

Training 103,300 149,900 

Repairs and Maintenance 155,300 524,900 

Federal Agency Services 300,400 167,000 

Supplies and Materials 331,400 321,500 

Publications 257,800 296,500 

Contracts 742,100 830,000 

Administrative Expenses 351,200 227,500 

Equipment Purchases 551,400 934,000 

Lapset 43,500 0 

Total $23,564,000 $27,106,000 

* This table differs from previous annual reports to reflect 

changes in OMB accounting procedures. 

t This amount remained unspent in fiscal year 1994 and 

was returned to the U.S. Treasury. 

4 The agency plans to complete work on the project in 

fiscal years 1996 and 1997, assuming funding is available. 
34 

Divisional Allocation 

Allocation of Budget 0 5 10 

-

-

FY 1995 Projected 

FY 1994 Actual 

15 20 25 30 

Percent 

35 

* Commissioners 

Staff Director 

t Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Division 

Public Disclosure 

Reports Analysis 

Allocation of Staff* 0 5 10 15 20 25 30 

Percent 

35 

§Commissioners 

Staff Director 

Office of General Counsel 

Administration 

Audit 

Clearinghouse 

Data Systems Development 

Information Division 

Public Disclosure 

Reports Analysis 

*Includes Inspector General's office and representational funds. 

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

*The Commission averaged 300 full-time equivalent (FTE) positions in FY 1994 and projected 327 for FY 1995. 

§Includes Inspector General's office. 
35 Chapter Five 

Legislative 

Recommendations 

On February 7, 1995, the Commission submitted 

63 legislative recommendations to the President and 

Congress in a new, two-part package. The first part, 

entitled "Legislative Recommendations to Improve the 

Efficiency and Effectiveness of Current Law," contained 20 administrative and technical recommendations designed to ease the burden on political committees and streamline the administration of current law. 

The second part, "General Legislative Recommendations," contained 43 additional recommendations concerning areas of the law which have been problematic. In each case, the Commission described the 

problem and asked Congress to consider clarification 

or more comprehensive reform of the law. 

The complete set of recommendations follows. As 

in the past, each recommendation is followed by an 

explanation of the need for and expected benefits 

from the change. Parenthetical references to 1995 

indicate new recommendations or recommendations 

that were revised in 1995. 

Part/ 

Legislative Recommendations to 

Improve Efficiency and Effectiveness 

of Current Law 

Disclosure 

Waiver Authority (revised 1995) 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congress give the Commission the authority to adjust 

the filing requirements or to grant general waivers or 

exemptions from the reporting requirements of the 

Act. 

Explanation: In cases where reporting requirements 

are excessive or unnecessary, it would be helpful if 

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

the reporting requirements of authorized committees 

whose respective candidates were not on the election 

ballot. The Commission had to consider whether the 

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

the following circumstances: 

• The candidate withdraws from nomination prior to 

having his or her name placed on the ballot. 

• The candidate loses the primary and therefore is not 

on the general election ballot. 

• The candidate is unchallenged and his or her name 

does not appear on the election ballot. 

Unauthorized committees also face unnecessary 

reporting requirements. For example, the 1996 October Monthly report will be due three days before the 

12-Day Pre-General Election Report; however, both 

reports will need to be mailed on the same day. A 

waiver authority would enable the Commission to 

eliminate the requirement to file the monthly report, as 

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

The same disclosure would be available before the 

election, but the committee would only have to file 

one report. 

In other situations, disclosure would be served if 

the Commission had the authority to adjust the filing 

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

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

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

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

such a situation, the Commission should have the 

authority to adjust the filing requirements to allow for a 

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

report}, which would provide more relevant disclosure 

to the public. 

Granting the Commission the authority to waive 

reports or adjust the reporting requirements would 

reduce needlessly burdensome disclosure demands. 

Campaign-Cycle Reporting (revised 1995) 

Secuon:2 U.S.C.§434 

Recommendation: The Commission recommends that 

Congress revise the law to require authorized candi-
36 Chapter Five 

date committees to report on a campaign-to-date 

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

required. 

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

requirements, the committee must track donations on 

a calendar year basis. Second, to comply with the 

law's contribution limits, the committee must track 

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

law's recordkeeping requirements less burdensome to 

committees. (Likewise, the Commission recommends 

that contribution limits be placed on a campaign-cycle 

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

This change would also benefit public disclosure of 

campaign finance activity. Currently, contributions 

from an individual are itemized only if the individual 

donates more than $200 in the aggregate during a 

calendar year. Likewise, disbursements are itemized 

only if payments to a specific payee aggregate in 

excess of $200 during a calendar year. Requiring 

itemization once contributions from an individual or 

disbursements to a payee aggregate in excess of 

$200 during the campaign would capture information 

of interest to the public that is currently not available. 

Moreover, to determine the actual campaign finance 

activity of a committee, reporters and researchers 

must compile the total figures from several year-end 

reports. In the case of Senate campaigns, which may 

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

particularly helpful. 

Monthly Reporting for Congressional Candidates 

Section: 2 U.S.C. §434(a)(2) 

Recommendation: The Commission recommends that 

the principal campaign committee of a Congressional 

candidate have the option of filing monthly reports in 

lieu of quarterly reports. 

Explanation: Political committees, other than principal 

campaign committees, may choose under the Act to 

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

when they have a high volume of activity. Under those 

circumstances, accounting and reporting are easier 

on a monthly basis because fewer transactions have 

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

Principal campaign committees can also have a 

large volume of receipts and expenditures. This is 

particularly true with Senatorial campaigns. These 

committees should be able to choose a more frequent 

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

Reporting Deadlines for Semiannual, Year-End 

and Monthly Filers 

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

Recommendation: The Commission recommends that 

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

the close of books for the report. 

Explanation: Committees are often confused because 

the filing dates vary from report to report. Depending 

on the type of committee and whether it is an election 

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

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

that monthly, quarterly, semiannual and year-end 

reports are due 15 days after the close of books of 

each report. In addition to simplifying reporting procedures, this change would provide for more timely disclosure, particularly in an election year. In light of the 

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

fifteenth of the month would not be unduly burdensome. 

Computer Filing of Reports (revised 1995) 

Section: 2 U.S.C. §§432(g) and 434(a)(1) 

Recommendation: The Commission recommends that 

Congress clarify that the Commission is explicitly 

authorized to accept reports filed electronically and to 

prescribe rules and procedures which identify eligible 

committees and the process by which they can submit 
Legislative Recommendations 37 

their reports, including standards to ensure compliance with the signatory duties and responsibilities of 

treasurers. 

Explanation: Since the passage and amendment of 

the Act's reporting provisions in 1971 and 1979, technology has advanced dramatically. Today, computer 

technology makes it possible for committees to file 

their reports electronically. For example, taxpayers 

may now file tax returns electronically. The advantages of electronic filing include increased convenience for filers and more timely, accurate and thorough disclosure. 

The ability of the Commission to move toward electronic filing is hampered, however, in part, by uncertainty regarding the Commission's legal authority to 

require committees to file using electronic technology. 

The current law does not give the Commission explicit 

authority to require committees to use such technology. While the Commission might persuade some 

filers to voluntarily provide some or all disclosure information in an electronic format, clear authority to 

mandate that at least some committees file electronically would greatly facilitate such a program. At the 

same time, the Commission recognizes that some 

committees choose not to use computers to generate 

their reports. To alleviate the possible expense and 

burden to smaller committees, Congress could 

authorize the Commission to establish minimum financial thresholds for mandated electronic filing by different categories of committees. 

In addition, some clarification would be needed 

concerning how to meet the treasurers' signature 

requirement. The law requires an original signature by 

treasurers, attesting to the accuracy of the reports 

they file. Any statutory change should authorize the 

Commission to develop a mechanism to meet the 

signature requirement. 

Finally, electronic filing might require some 

changes within the offices of the Clerk of the House 

and the Secretary of the Senate. Under the law, these 

offices are the points of entry for House and Senate 

reports. Currently, neither office possesses the technology needed to accept electronic filings. Should 

electronic filing be adopted for House and Senate 

campaigns, the computer capabilities of the Clerk of 

the House and the Secretary of the Senate would 

have to be updated accordingly. 

Alternatively, the Commission could be made the 

point of entry for such filers. Some economies could 

be realized if separate computer equipment and facilities did not have to be maintained for receiving and 

processing disclosure information in all three offices. 

If House and Senate campaign committees filed directly with the Commission, and if the data were in an 

electronic format, easy access at Senate and House 

locations could be assured at relatively little cost. 

(See the recommendation "Commission as Sole Point 

of Entry for Disclosure of Documents" for a statement 

of the benefits of this approach.) 

Commission as Sole Point of Entry 

for Disclosure Documents 

Section: 2 U.S.C. §432(g) 

Recommendation: The Commission recommends that 

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

committees alone file their reports with the Clerk of 

the House and the Secretary of the Senate, respectively, who then forward microfilmed copies to the 

FEC. 

Explanation: The Commission has offered this recommendation for many years. The experience of handling the year-end report (filed in January 1992) provides an excellent illustration of why a single point of 

entry is desirable. Some 234 reports filed by House 

and Senate candidate committees were mistakenly 

filed with the Federal Election Commission instead of 

with the Clerk of the House and the Secretary of the 

Senate. Consequently, every day, for two weeks 

around the filing deadline, the FEC shipped back to 

the Clerk and the Secretary packages filled with 

House and Senate reports that were filed with the 

FEC in error. The result? Disclosure to the public was 

delayed, and government resources were wasted. 

Moreover, if the FEC received the original report, it 

could use it directly for data entry, as it now uses the 
38 Chapter Five 

reports filed by PACs, party committees and 

Presidential committees. 

Should Congress decide to codify the previous 

recommendation on computerized reports, the Commission should become the sole point of entry to process these reports, avoiding the need for all three 

offices to obtain the technology necessary to accept 

electronic filings. 

We also reiterate here the statement we have 

made in previous years because it remains valid. A 

single point of entry for all disclosure documents filed 

by political committees would eliminate any confusion 

about where candidates and committees are to file 

their reports. It would assist committee treasurers by 

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

conflicts may arise when more than one office sends 

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

personnel, equipment and data processing. 

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

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

difficult for the Commission to track responses to 

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

timely manner, even though they were sent on time 

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

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

Finally, the Commission notes that the report of the 

Institute of Politics of the John F. Kennedy School of 

Government at Harvard University, An Analysis of the 

Impact of the Federal Election Campaign Act, 1972-

78, prepared for the House Administration Committee, 

recommended that all reports be filed directly with the 

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

at 122 (1979)). 

Facsimile Machines 

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

Recommendation: The Commission recommends that 

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

Explanation: Independent expenditures that are made 

between 20 days and 24 hours before an election 

must be reported within 24 hours. The Act requires 

that a last-minute independent expenditure report 

must include a certification, under penalty of perjury, 

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

or suggestion of, any candidate or any authorized 

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

committee files, however, which covers the reporting 

period when the expenditure was made, must also 

include the certification, stating the same information. 

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

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

could be accomplished by allowing the committee to 

fax a copy of the schedule disclosing the independent 

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

such a filing method would facilitate timely disclosure 

and simplify the process for the filer. 

State Filing for Presidential 

Candidate Committees 

Section: 2 U.S.C. §439 

Recommendation: The Commission recommends that 

Congress consider clarifying the state filing provisions 

for Presidential candidate committees to specify 

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

in which the committees make expenditures. Consid-
Legislative Recommendations 39 

eration should be given to both the benefits and the 

costs of state disclosure. 

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

candidate committees when filing reports with the 

states. The statute requires that a copy of the FEC 

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

question has arisen as to whether the full report 

should be filed with the state, or only those portions 

that disclose financial transactions in the state where 

the report is filed. 

The Commission has considered two alternative 

solutions. The first alternative is to have Presidential 

candidate committees file, with each state in which 

they have made expenditures, a copy of the entire 

report filed with the FEC. This alternative enables 

local citizens to examine complete reports filed by 

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

in one state might influence a primary election in another. 

The second alternative is to require that reports 

filed with the states contain all summary pages and 

only those receipts and disbursements schedules that 

show transactions pertaining to the state in which a 

report is filed. This alternative would reduce filing and 

storage burdens on Presidential candidate 

committees and states. It would also make state filing 

requirements for Presidential candidate committees 

similar to those for unauthorized political committees. 

Under this approach, any person still interested in 

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

Public Disclosure at State Level (revised 1995) 

Section: 2 U.S.C. §439 

Recommendation: The Commission recommends that 

Congress consider relieving both political committees 

(other than candidate committees) and state election 

offices of the burdens inherent in the current requirement that political committees file copies of their reports with the Secretaries of State. One way this 

could be accomplished is by providing a system 

whereby the Secretary of State (or equivalent state 

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

Explanation: At the present time, multicandidate political committees are required to file copies of their reports (or portions thereof) with the Secretary of State 

in each of the states in which they support a candidate. State election offices carry a burden for storing 

and maintaining files of these reports. At the same 

time, political committees are burdened with the responsibility of making multiple copies of their reports 

and mailing them to the Secretaries of State. 

With advances in computer technology, it is now 

possible to facilitate disclosure at the state level without requiring duplicate filing. Instead, state election 

offices would tie into the FEC's computer data base. 

The local press and public could access reports of 

local political committees through a computer hookup 

housed in their state election offices. All parties would 

benefit: political committees would no longer have to 

file duplicate reports with state offices; state offices 

would no longer have to provide storage and maintain 

files; and the FEC could maximize the cost effectiveness of its existing data base and computer system. 

Such a system already exists in 30 states and has 

proven inexpensive and effective. Initially, we would 

propose that candidate committees and in-state party 

committees continue to file their reports both in 

Washington, D.C., and in their home states, in 

response to the high local demand for this information. Later, perhaps with improvements in information 

technology, the computerized system could embrace 

these committees as well. 

Contributions and Expenditures 

Election Period Limitations for Contributions to 

Candidates (revised 1995) 

$ection: 2 U.S.C. §441 a 

Recommendation: The Commission recommends that 

limits on contributions to candidates be placed on an 

election cycle basis, rather than the current per election basis. 
40 Chapter Five 

Explanation: The contribution limitations affecting 

contributions to candidates are structured on a "per 

election" basis, thus necessitating dual bookkeeping 

or the adoption of some other method to distinguish 

between primary and general election contributions. 

The Commission has had to adopt several rules to 

clarify which contributions are attributable to which 

election and to assure that contributions are reported 

and used for the proper election. Many enforcement 

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

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

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

failure to fully document which election was intended. 

Sometimes the apparent "excessives" for a particular 

election turn out to be simple reporting errors where 

the wrong box was checked on the reporting form. 

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

is applicable. Further, several enforcement cases 

have been generated based on the use of general 

election contributions for primary election expenses or 

vice versa. 

Most of these complications would be eliminated 

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

Thus, multicandidate committees could give up to 

$10,000 and all other persons could give up to $2,000 

to an authorized committee at any point during the 

election cycle. The Commission and committees 

could get out of the business of determining whether 

contributions are properly attributable to a particular 

election, and the difficulty of assuring that particular 

contributions are used for a particular election could 

be eliminated. 

It would be advisable to clarify that if a candidate 

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

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

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

because at the Presidential level candidates might opt 

to take public funding in the general election and 

thereby be precluded from accepting contributions, 

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

should be retained for Presidential candidates. 

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

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

fundraising and manage their resources so as not to 

be left without fundraising capability at a crucial time. 

Application of $25,000 Annual Limit 

Section: 2 U.S.C. §441a(a)(3) 

Recommendation: The Commission recommends that 

Congress consider modifying the provision that limits 

individual contributions to $25,000 per calendar year 

so that an individual's contributions count against his 

or her annual limit for the year in which they are 

made. 

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

contribution to a candidate made in a nonelection 

year counts against the individual donor's limit for the 

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

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

Candidate Smith in an election year contributes to her 

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

his limit for the year in which he contributed. Unaware 

that the contribution actually counts against the year 

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

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

requiring contributions to count against the limit of the 

calendar year in which the donor contributes, 

confusion would be eliminated and fewer contributors 

would inadvertently violate the law. The change would 

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

use of our data base, we could more easily monitor 

contributions made by one individual regardless of 

whether they were given to retire the debt of a 

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

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

limits. Nor would it affect the total amount that any 

individual could contribute in connection with federal 

elections. 
Legislative Recommendations 41 

Enforcement 

Ensuring Independent Authority of FEC in 

All Litigation (revised 1995) 

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

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

is an important component of the statutory structure 

designed to ensure nonpartisan administration and 

enforcement of the campaign financing statutes. The 

Commission recommends that Congress make the 

following four clarifications that would help solidify the 

statutory structure: 

1. Congress should clarify that the Commission is 

explicitly authorized to petition the Supreme Court for 

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

Court litigation. 

2. Congress should amend the Act to specify that 

local counsel rules (requiring district court litigants to 

be represented by counsel located within the district) 

cannot be applied to the Commission. 

3. Congress should give the Commission explicit 

authorization to appear as an amicus curiae in cases 

that affect the administration of the Act, but do not 

arise under it. 

4. Congress should require the United States 

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

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

Supreme Court for a writ of certiorari in cases relating 

to the Commission's administration of Title 2 and to 

independently conduct its Supreme Court litigation 

under that Title. The Commission explicitly has this 

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

ruled that Title 2 does not grant the Commission such 

authority. See FEC v. NRA Political Victory Fund, 63 

U.S.L.W. 4027 (U.S. No. 93-1151, Dec. 6, 1994). 

Under this ruling, the Commission must now obtain 

permission from the Solicitor General before seeking 

certiorari in a Title 2 case. The Solicitor General may 

decline to authorize this action in cases where the 

Commission believes Supreme Court review is advisable. Even where acting in accordance with the 

Commission's recommendation to seek certiorari in a 

given case, the Solicitor General would still control the 

position taken in the case and the arguments made 

on behalf of the Commission. This transfer of the 

Commission's Supreme Court litigation authority to 

the Solicitor General, who is an appointee of and subject to removal by the President, misconstrues Congressional intent in establishing the Commission as a 

bipartisan and independent civil enforcement agency. 

Pertinent provisions of Title 2 should be revised to 

clearly state the Commission's exclusive and independent authority on all aspects of Supreme Court 

litigation in all cases it has litigated in the lower courts. 

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

litigants be represented by counsel located within the 

district. The Commission, which conducts all of its 

litigation nationwide from its offices in Washington, 

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

compromising its independence by engaging the local 

United States Attorney to assist in representing it in 

courts outside of Washington, D.C. Although most 

judges have been willing to waive applying these local 

counsel rules to the Commission, some have insisted 

that the Commission obtain local representation. An 

amendment to the statute specifying that such local 

counsel rules cannot be applied to the Commission 

would eliminate this problem. 

Concerning the third recommendation, the FECA 

explicitly authorizes the Commission to "appear in and 

defend against any action instituted under this Act," 2 

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

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

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

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

instances in which the Commission appears as an 

amicus curiae in cases that affect the administration 

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

the Commission's role as an amicus curiae would 

remove any questions concerning the Commission's 

authority to represent itself in this capacity. 

Concerning the final recommendation, prior to its 

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

of the Federal Rules of Civil Procedure provided that 

a summons and complaint shall be served by the 

United States Marshal's Service on behalf of the 

United States or an officer or agency of the United 

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

the Commission, to seek and obtain a court order 

directing that service of process be effected by the 

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

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

expensive for it to enlist the aid of a private process 

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

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

task of serving process for the Commission to the 

United States Marshal's Service would alleviate this 

problem and assist the Commission in carrying out its 

mission. 

Enhancement of Criminal Provisions 

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

Recommendation: The Commission recommends that 

it have the ability to refer appropriate matters to the 

Justice Department for criminal prosecution at any 

stage of a Commission proceeding. 

Explanation: The Commission has noted an upsurge 

of §441f contribution reimbursement schemes, that 

may merit heavy criminal sanction. Although there is 

no prohibition preventing the Department of Justice 

from initiating criminal FECA prosecutions on its own, 

the vehicle for the Commission to bring such matters 

to the Department's attention is found at 

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

the Commission has found probable cause to believe 

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

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

case merits criminal referral, the Commission must 

pursue the matter to the probable cause stage before 

1 The Commission has the general authority to report apparent violations to the appropriate law enforcement authority (see 2 U.S.C. §437d(a)(9)), but read together with 

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

referring it to the Department for criminal prosecution. 

To conserve the Commission's resources, and to 

allow the Commission to bring potentially criminal 

FECA violations to the Department's attention at the 

earliest possible time, the Commission recommends 

that consideration be given to explicitly empower the 

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

Random Audits 

Section: 2 U.S.C. §438(b) 

Recommendation: The Commission recommends that 

Congress consider legislation that would require the 

Commission to randomly audit political committees in 

an effort to promote voluntary compliance with the 

election law and ensure public confidence in the election process. 

Explanation: In 1979, Congress amended the FECA 

to eliminate the Commission's explicit authority to 

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

deter abuse of the election law. Random audits can 

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

the public that committees are complying with the law. 

Random audits performed by the IRS offer a good 

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

have also helped create the public perception that tax 

laws are enforced. 

There are many ways to select committees for a 

random audit. One way would be to randomly select 

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

amount of campaign receipts and, in the case of candidate committees, the percentage of votes won. With 

this approach, audits might be conducted in many 

states throughout the country. 

Another approach would be to randomly select 

several Congressional districts and audit all political 

committees in those districts (with the exception of 

certain candidates whose popular vote fell below a 

certain threshold) for a given election cycle. This sys-
Legislative Recommendations 43 

tern might result in concentrating audits in fewer geographical areas. 

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

they be published and publicized. Committees with no 

problems should be commended. 

Regardless of how random selections were made, 

it would be essential to include all types of political 

committees-PACs, party committees and candidate 

committees-and to ensure an impartial, evenhanded 

selection process. 

Expedited Enforcement Procedures and Injunctive 

Authority 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

Congress consider whether the FECA should provide 

for expedited enforcement of complaints filed shortly 

before an election, permit injunctive relief in certain 

cases, and allow the Commission to adopt expedited 

procedures in such instances.2 

Explanation: The statute now requires that before the 

Commission proceeds in a compliance matter it must 

wait 15 days after notifying any potential respondent 

of alleged violations in order to allow that party time to 

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

2 Commissioner Elliott filed the following dissent: 

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

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

§437g(a)(6)(A).) 

I am unaware of any complaint filed with the Commission 

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

forth in the legislative recommendations. Assuming a case 

was submitted which met these standards, I believe it would 

be inappropriate for the Commission to seek injunctive relief 

prior to a probable cause finding. 

First, the very ability of the Commission to seek an injunction, especially during the "heat of the campaign," 

opens the door to allegations of an arbitrary and politically 

motivated enforcement action by the Commission. The 

Commission's decision to seek injunction in one case while 

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

recommendations for probable cause. Under ordinary 

circumstances such provisions are advisable, but they 

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

effort to avert intentional violations that are committed 

with the knowledge that sanctions cannot be enforced 

prior to the election and to quickly resolve matters for 

which Commission action is not warranted, Congress 

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

Even when the evidence of a violation has been 

clear and the potential impact on a campaign has 

been substantial, without the authority to initiate a civil 

suit for injunctive relief, the Commission has been 

unable to act swiftly and effectively in order to prevent 

a violation. The Commission has felt constrained from 

seeking immediate judicial action by the requirement 

of the statute that conciliation be attempted before 

court action is initiated, and the courts have indicated 

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

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

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

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

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

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

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

expedited handling of compliance matters, it should 

authorize the Commission to implement changes in 

Second, the Commission might easily be flooded with 

requests for injunctive relief for issues such as failure to file 

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

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

of an immediate review of the factual issues. 

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

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

the Commission to seek an injunction during the final weeks 

of a campaign would cause a diversion of time and money 

and adverse publicity for a candidate during the most important period of the campaign. 

For these reasons, I disagree with the recommendation 

to expand the power of the Commission to seek injunctive 

relief except as presently provided for the Act. 
44 Chapter Five 

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

to promptly initiate a civil suit for injunctive relief in 

order to preserve the status quo when there is clear 

and convincing evidence that a substantial violation of 

the Act is about to occur. Congress should consider 

whether the Commission should be authorized to 

initiate such civil action in a United States district 

court, under expressly stated criteria, without awaiting 

expiration of the 15-day period for responding to a 

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

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

The Commission suggests the following legislative 

standards to govern whether it may seek prompt injunctive relief: 

1. The complaint sets forth facts indicating that a 

potential violation of the Act is occurring or will occur; 

2. Failure of the Commission to act expeditiously 

will result in irreparable harm to a party affected by 

the potential violation; 

3. Expeditious action will not result in undue harm 

or prejudice to the interests of other persons; and 

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

Public Financing 

State Expenditure Limits for Publicly Financed 

Presidential Primary Campaigns (revised 1995) 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends that 

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

Explanation: The Commission has now administered 

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

limitations could be removed with no material impact 

on the process. 

Our experience has shown that, in past years, the 

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

New Hampshire. In most other states, campaigns 

have been unable or have not wished to expend an 

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

administration of the entire program has resulted in 

limiting disbursements in these two primaries alone. 

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

York, California and Texas) will move their primaries 

to February and March. Consequently, a campaign 

will have to diversify its resources among more states 

in the early primaries in order to secure the nomination, and will be far less likely to exceed the spending 

limit for any particular state. 

With an increasing number of primaries vying for a 

campaign's limited resources, however, it would not 

be possible to spend very large amounts in these 

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

limit would serve as a constraint on state spending, 

even in the early primaries. At the same time, 

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

Our experience has also shown that the limitations 

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

fundraising limitation, the compliance cost exemption, 

the volunteer service provisions, the unreimbursed 

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

complex series of allocation schemes have developed 

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

Finally, the allocation of expenditures to the states 

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

task for the Commission. For all these reasons, the 

Commission decided to revise its state allocation 

regulations for the 1992 Presidential election. Many of 

the requirements, such as those requiring distinctions 

between fundraising and other types of expenditures, 

were eliminated. However, the rules could not undo 

the basic requirement to demonstrate the amount of 

expenditures relating to a particular state. Given our 

experience to date, we believe that this change to the 

Act would still be of substantial benefit to all parties 

concerned. 
Legislative Recommendations 45 

Fundralslng Limitation for Publicly Financed 

Presidential Primary Campaigns 

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

Recommendation: The Commission recommends that 

the separate fundraising limitation provided to publicly 

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

candidate's having a $1 0 million (plus COLA 3) limit for 

campaign expenditures and a $2 million (plus COLA) 

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

candidate would have one $12 million (plus COLA) 

limit for all campaign expenditures. 

Explanation: Campaigns that have sufficient funds to 

spend up to the overall limit usually allocate some of 

their expenditures to the fundraising category. These 

campaigns come close to spending the maximum 

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

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

do not spend up to the overall expenditure limit, the 

separate fundraising limit is meaningless. Many 

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

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

the state limitations are eliminated or appropriately 

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

recommendation, however, are substantial. They 

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

and a reduction in the Commission's auditing task. 

For example, the Commission would no longer have 

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

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

days of the primary held within the state where the 

expenditure was made. 

Eligibility Threshold for Public Financing 

(revised 1995) 

Section: 26 U.S.C. §9033 

Recommendation: The Commission recommends that 

Congress raise the eligibility threshold for publicly 

funded Presidential primary candidates. 

Explanation: The Federal Election Commission has 

administered the public funding provisions in five 

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

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

remains exactly the same as it was in 197 4. An adjustment to the threshold requirement would ensure 

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

reach this higher threshold, the Commission 

recommends increasing the number of states in which 

the candidate had to raise the qualifying amount of 

matchable contributions; and/or increase the total 

amount of qualifying matchable contributions that had 

to be raised in each of the states. 

Eligibility Requirements for Public Financing 

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

Recommendation: The Commission recommends that 

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

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

or who are not eligible to serve as President will not 

be eligible for public funding. 

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

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

matter how severe. And yet public confidence in the 

integrity of the public financing system would risk 

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

requirements to ensure that such candidates do not 

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

annually. 
46 Chapter Five 

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

candidate would be ineligible for public funds if he or 

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

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

willfully disregarded the statute or regulations. In addition, Congress should make it clear that eligibility to 

serve in the office sought is a prerequisite for eligibility 

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

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

(1993). 

Deposit of Repayments 

Section: 26 U.S.C. §9007(d) 

Recommendation: The Commission recommends that 

Congress revise the law to state that: All payments 

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

Presidential Election Campaign Fund established by 

§9006(a). 

Explanation: This change would allow the Fund to 

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

by general election grant recipients. Currently the 

Fund recaptures only repayments made by primary 

matching fund recipients. 

Part II: 

General Legislative 

Recommendations 

Disclosure 

Consolidated Reporting of Events 

Section: 2 U.S.C. §434(b) 

Recommendation: The Commission recommends that 

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

from a political fundraising event that grosses over 

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

require committees to file an event schedule, listing all 

event-related contributions that meet the itemization 

threshold. 

Explanation: Under present law, it is difficult to see 

the contribution patterns of major fundraising events. 

More detailed reporting of major fundraising events 

would give the public an improved picture of how 

Presidential committees raise campaign funds. 

Candidates and Principal Campaign Committees 

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

Recommendation: The Commission recommends that 

Congress revise the law to require a candidate and 

his or her principal campaign committee to register 

simultaneously. 

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

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

designating the principal campaign committee, which 

will subsequently disclose all of the campaign's financial activity. This committee, in turn, has 1 0 days from 

the candidate's designation to register. This schedule 

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

financial activity that occurred prior to the registration 

is not disclosed until the committee's next upcoming 

report. This period is too long during an election year. 
Legislative Recommendations 47 

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

individual becomes a candidate, the unregistered 

committee would not have to file a report on that date 

and disclosure would be delayed. The next report 

might not be filed for 3 more months. By requiring 

simultaneous registration, the public would be 

assured of more timely disclosure of the campaign's 

activity. 

PACs Created by Candidates 

Section: 2 U.S.C. §441 a(a) 

Recommendation: The Commission recommends that 

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

candidate's principal campaign committee. 

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

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

considered authorized committees. Therefore, they 

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

limit permitted for unauthorized committees in a calendar year and may make contributions of up to $5,000 

per election to other federal candidates once they 

achieve multicandidate status. In contrast, authorized 

committees may not accept more than $1 ,000 per 

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

The existence of PACs created by candidates can 

present difficult issues for the Commission, such as 

when contributions are jointly solicited with the 

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

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

two committees can be difficult to distinguish. 

If Congress concludes that there is an appearance 

that the limits of the Act are being evaded through the 

use of PACs created by candidates, it may wish to 

consider whether such committees are affiliated with 

the candidate's principal campaign committee. As 

such, contributions received by the committees would 

be aggregated under a single contribution limit and 

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

Require Monthly Filing for Certain Multicandldate 

Committees 

Section: 2 U.S.C. §434(a)(4) 

Recommendation: The Commission recommends that 

multicandidate committees which have raised or 

spent, or which anticipate raising or spending, over 

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

an election year. 

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

during an election year. Quarterly filers that make 

contributions or expenditures on behalf of primary or 

general election candidates must also file pre-election 

reports. 

Presidential candidates who anticipate receiving 

contributions or making expenditures aggregating 

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

requirement to multicandidate committees which have 

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

The requirement would simplify the filing schedule, 

eliminating the need to calculate the primary filing 

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

more influential committees' reports. Although the 

total number of reports filed would increase, most 

reports would be smaller, making it easier for the 

Commission to enter the data into the computer and 

to make the disclosure more timely. 

Reporting of Last-Minute Independent 

Expenditures 

Section: 2 U.S.C. §434(c) 

Recommendation: The Commission recommends that 

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

Explanation: The statute requires that independent 

expenditures aggregating $1 ,000 or more and made 

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

election be reported within 24 hours after they are 

made. This provision is in contrast to other reporting 

provisions of the statute, which use the words "shall 

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

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

mail and postmarked within 24 hours of when the 

expenditure is made? Should Congress decide that 

committees must report the expenditure within 24 

hours after it is made, committees should be able to 

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

Reporting Last-Minute Coordinated Party 

Expenditures by Party Committees 

Section: 2 U.S.C. §§434 and 441a(d) 

Recommendation: The Commission recommends that 

Congress consider requiring state and national party 

committees to file 48-hour notices when they make 

coordinated expenditures shortly before an election. 

Explanation: Party committees must file pre-general 

election reports when they make contributions or expenditures supporting general election candidates 

prior to the 19th day before the election. Candidate 

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

Coordinated expenditures made after the close of 

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

disclosed until after the election. In order to disclose 

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

national party committees to file 48-hour notices when 

they make coordinated expenditures during the period 

beginning with the close of books of the pre-election 

report and continuing through 48 hours before the 

election. The Commission shall receive this notice 

within 48 hours of the committee making the expenditure. 

Reporting and Recordkeeping of Payments to 

Persons Providing Goods and Services 

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

and (6)(8) 

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

an expenditure in an aggregate amount or value in 

excess of $200 within the calendar year is made by 

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

amount, and purpose of such operating expenditure." 

The Commission recommends that Congress clarify 

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

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

made to an intermediary contractor or consultant who, 

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

that disclosure of secondary payees is required, the 

Act should require that committees maintain the 

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

and disclose it to the public on their reports. Congress 

should limit such disclosure to secondary payments 

above a certain dollar threshold or to payments made 

to independent subcontractors. 

Explanation: The Commission has encountered on 

several occasions the question of just how detailed a 

committee's reporting of disbursements must be. See, 

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

Camp. Fin. Guide (CCH), 1!5742 (Dec. 22, 1983) 

(Presidential candidate's committee not required to 

disclose the names, addresses, dates or amounts of 

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

1 Fed. Election Camp. Fin. Guide (CCH), 11 5756 (Apr. 

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

travel and subsistence, not the payments made by the 

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

Primary Election Candidates Receiving Public Financing, Federal Election Commission, pp. 123-130 (1992) 
Legislative Recommendations 49 

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

from other advances or reimbursements to such staff 

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

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

where the Commission is responsible for monitoring 

whether candidate disbursements are for qualified 

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

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

Incomplete or False Contributor Information 

Section: 2 U.S.C. §434 

Recommendation: The Commission recommends that 

Congress consider amending the Act to address the 

recurring problem of committees' inability to provide 

full disclosure about their contributors. 

Explanation: Concern has been expressed by the 

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

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

their "best efforts" to obtain and report contributor 

information, Congress may want to strengthen the law 

further. 

Excluding Political Committees from Protection of 

the Bankruptcy Code 

Section: 2 U.S.C. §433(d) 

Recommendation: The Commission recommends that 

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

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

one hand, and the authority of the bankruptcy courts, 

on the other hand. 

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

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

"orderly liquidation of an insolvent political committee," 

the "application of its assets for the reduction of outstanding debts," and the ''termination of an insolvent 

political committee after such liquidation ... " However, 

the Bankruptcy Code, 11 U.S.C. § 1 01 et seq., generally grants jurisdiction over such matters to the bankruptcy courts, and at least one bankruptcy court has 

exercised its jurisdiction under Chapter 11 of the 

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

expenditure activities. In re Fund for a Conservative 

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

only does the exercise of such jurisdiction by the 

bankruptcy court conflict with the evident intent in 2 

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

but permitting a political committee to compromise 

debts and then resume its political activities can result 

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

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

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

matters could undermine the Commission's ability to 

enforce it. Accordingly, Congress may want to clarify 

the distribution of authority between the Commission 

and the bankruptcy courts in this area. In addition, 

Congress should specify whether political committees 

are entitled to seek Chapter 11 reorganization under 

the Bankruptcy Code. 

Fundraising Projects Operated by Unauthorized 

Committees 

Section: 2 U.S.C §432(e) 

Recommendation: The Commission recommends that 

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

that has not been authorized by a candidate as his/ 

her campaign committee) be made payable to the 

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

payable to any other name. 
50 Chapter Five 

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

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

by candidates) often raise funds through fundraising 

efforts that name specific candidates. As a result, 

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

the nonauthorized committee that sponsors the event. 

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

disclaimers, and inability to monitor contributor limits. 

Contributor awareness might be enhanced if Congress were to modify the statute by requiring that all 

checks intended for an unauthorized committee be 

made payable to the registered name of the unauthorized committee and by prohibiting unauthorized committees from accepting checks payable to any other 

name. 

Disclaimer Notices (revised 1995) 

Section: 2 U.S.C. §441d 

Recommendation: The Commission recommends that 

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

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

how it is distributed. Congress should also revise the 

Federal Communications Act to make it consistent 

with the FECA's requirement that disclaimer notices 

state who paid for the communication. 

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

two types of communications made through "public 

political advertising": (1) communications that solicit 

contributions and {2) communications that "expressly 

advocate" the election or defeat of a clearly identified 

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

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

suggesting that the requirement does not apply to 

disbursements that are exempt from the definition of 

"expenditure" such as "exempt activities" conducted 

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

make clear that all types of communications to the 

public would carry a disclaimer. 

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

preparation or distribution of the communication. 

Third, the Commission has devoted considerable 

time to determining whether a given communication in 

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

need. 

The Commission has issued a Notice of Proposed 

Rulemaking and plans to schedule a public hearing to 

seek comments on revising its regulations to address 

these issues. See 59 FR 50708 (October 5, 1994). 

Most of these problems would be eliminated, however, if the language of 2 U.S.C. §441 d were simplified to require a registered committee to display a 

disclaimer notice whenever it communicated to the 

public, regardless of the purpose of the communication and the means of preparing and distributing it. 

The Commission would no longer have to examine 

the content of communications or the manner in which 

they were disseminated to determine whether a disclaimer was required. 

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

is inconvenient or impracticable to display a disclaimer. 

Finally, Congress should change the sponsorship 

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

disclaimer notice requirements found in the FECA. 

Under the Communications Act, federal political 

broadcasts must contain an announcement that they 

were furnished to the licensee, and by whom. See 

FCC and FEC Joint Public Notice, FCC 78-419 (June 

19, 1978). In contrast, FECA disclaimer notices focus 

on who authorized and paid for the communication. 

The Communications Act should be revised to ensure 

that the additional information required by the FECA 

is provided without confusion to licensees and political 

advertisers. In addition, the FECA should be 
Legislative Recommendations 51 

amended to require that the disclaimer appear at the 

end of all broadcast communications. 

Fraudulent Solicitation of Funds 

Section: 2 U.S.C. §441 h 

Recommendation: The current §441 h prohibits 

fraudulent misrepresentation such as speaking, writing or acting on behalf of a candidate or committee on 

a matter which is damaging to such candidate or committee. It does not, however, prohibit persons from 

fraudulently soliciting contributions. The Commission 

recommends that a provision be added to this section 

prohibiting persons from fraudulently misrepresenting 

themselves as representatives of candidates or political parties for the purpose of soliciting contributions 

which are not forwarded to or used by or on behalf of 

the candidate or party. 

Explanation: The Commission has received a number 

of complaints that substantial amounts of money were 

raised fraudulently by persons or committees purporting to act on behalf of candidates. Candidates have 

complained that contributions which people believed 

were going for the benefit of the candidate were diverted for other purposes. Both the candidates and 

the contributors were harmed by such diversion. The 

candidates received less money because people desirous of contributing believed they had already done 

so. The contributors' funds were used in a manner 

they did not intend. The Commission has been unable 

to take any action on these matters because the statute gives it no authority in this area. 

Draft Committees 

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

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

Recommendation: The Commission recommends that 

Congress consider the following amendments to the 

Act in order to prevent a proliferation of "draft" committees and to reaffirm Congressional intent that draft 

committees are "political committees" subject to the 

Act's provisions. 

1. Bring Funds Raised and Spent for Undeclared 

but Clearly Identified Candidates Within the Act's 

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

include in the definition of "contribution" funds contributed by persons "for the purpose of influencing a 

clearly identified individual to seek nomination for 

election or election to Federal office .... " Section 

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

within the definition of "expenditure" funds expended 

by persons on behalf of such "a clearly identified individual." 

2. Restrict Corporate and Labor Organization Support for Undeclared but Clearly Identified Candidates. 

Section 441 b(b) should be revised to expressly state 

that corporations, labor organizations and national 

banks are prohibited from making contributions or 

expenditures ''for the purpose of influencing a clearly 

identified individual to seek nomination for election or 

election..." to federal office. 

3. Limit Contributions to Draft Committees. The law 

should include explicit language stating that no person shall make contributions to any committee (including a draft committee) established to influence the 

nomination or election of a clearly identified individual 

for any federal office which, in the aggregate, exceed 

that person's contribution limit, per candidate, per 

election. 

Explanation: These proposed amendments were 

prompted by the decisions of the U.S. Court of Appeals for the District of Columbia Circuit in FEC v. 

Machinists Non-Partisan Political League and FEC v. 

Citizens for Democratic Alternatives in 1980 and of 

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

FEC v. Florida for Kennedy Committee. The District of 

Columbia Circuit held that the Act, as amended in 

1979, regulated only the reporting requirements of 

draft committees. The Commission sought review of 

this decision by the Supreme Court, but the Court 

declined to hear the case. Similarly, the Eleventh 

Circuit found that "committees organized to 'draft' a 

person for federal office" are not "political committees" 

within the Commission's investigative authority. The 

Commission believes that the appeals court rulings 

create a serious imbalance in the election law and the 

political process because a nonauthorized group 

organized to support someone who has not yet become a candidate may operate completely outside the 
52 Chapter Five 

strictures of the Federal Election Campaign Act. However, any group organized to support someone who 

has in fact become a candidate is subject to the Act's 

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

and private, into the federal electoral process through 

unlimited contributions made to nonauthorized draft 

committees that support a person who has not yet 

become a candidate. These recommendations seek 

to avert that possibility. 

Contributions and Expenditures 

Candidate's Use of Campaign Funds (1995) 

Section: 2 U.S.C. §439a 

Recommendation: Congress may wish to examine 

whether the use of campaign funds to pay a salary to 

the candidate is considered to be a "personal use" of 

those funds. 

Explanation: Under §439a of the Act, excess campaign funds cannot be converted by any person to 

personal use. The Commission has recently approved 

final draft rules on what would constitute "personal 

use" of excess funds. It was unable, however, to decide whether excess campaign funds may be used to 

pay a salary to the candidate. In the past, some have 

argued before the Commission that candidate salary 

payments are legitimate campaign expenditures, 

while others have felt that such payments constitute a 

personal use of excess funds prohibited by §439a. 

Congressional guidance on this issue would be helpful. 

Disposition of Excess Campaign Funds 

Section: 2 U.S.C. §439a 

Recommendation: In those cases where a candidate 

has largely financed his campaign with personal 

funds, the Commission recommends that Congress 

consider limiting the amount of excess campaign 

funds that the campaign may transfer to a national, 

state or local committee of any political party to 

$100,000 per year. 

Explanation: Under current law, a candidate may 

transfer unlimited amounts of excess campaign funds 

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

campaign, declare these funds excess and transfer 

them to a political party, thus avoiding the limit on 

individual contributions to political parties. 

Contributions and Expenditures to Influence 

Federal and Nonfederal Elections 

Section: 2 U.S.C. §§434 and 441 

Recommendation: The Commission recommends 

that Congress consider whether new legislation is 

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

elections. 

Explanation: The law requires that all funds spent to 

influence federal elections come from sources that 

are permissible under the limitations and prohibitions 

of the Act. Problems arise with the application of this 

provision to committees that engage in activities that 

support both federal and nonfederal candidates. The 

Commission attempted to deal with this problem by 

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

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

however, has been equally concerned about the 

source of money that directly or indirectly influences 

federal politics. Much discussion has centered on the 

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

understood to mean funds that do not comply with the 

federal prohibitions and limits on contributions.) Even 

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

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

public concern, Congress should consider amending 

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

money. Such changes could include any or all of the 

following: (1) more disclosure of nonfederal account 

receipts (as well as "building fund" proceeds exempted under 2 U.S.C. §431 (8)(B)(viii)); (2) limits on 
Legislative Recommendations 53 

nonfederal account donations coupled with tighter 

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

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

confining soft money fundraising to nonfederal election years. 

In addition, further restrictions on the spending of 

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

activity that is not exclusively related to nonfederal 

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

party activity which is not exclusively on behalf of 

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

to nonfederal election year activity. 

Broader Prohibition Against Force and Reprisals 

Section: 2 U.S.C. §441b(b)(3)(A) 

Recommendation: The Commission recommends that 

Congress revise the FECA to make it unlawful for a 

corporation, labor organization or separate segregated fund to use physical force, job discrimination, 

financial reprisals or the threat thereof to obtain a 

contribution or expenditure on behalf of any candidate 

or political committee. 

Explanation: Current §441b(b)(3)(A) could be interpreted to narrowly apply to the making of contributions or expenditures by a separate segregated fund 

which were obtained through the use of force, job 

discrimination, financial reprisals and threats. Thus, 

Congress should clarify that corporations and labor 

organizations are prohibited from using such tactics in 

the solicitation of contributions for the separate segregated fund. In addition, Congress should include language to cover situations where the funds are solicited on behalf of and given directly to candidates. 

Use of Free Air Time 

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

Recommendation: The Commission recommends that 

Congress revise the FECA to indicate whether an 

incorporated broadcaster may donate free air time to 

a candidate or political committee and, if so, under 

what conditions and restrictions. 

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

to a candidate without full payment. However, 

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

require that broadcast stations provide "reasonable 

access" to federal candidates, and prohibit stations 

from charging candidates more than the "lowest unit 

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

same time period. Under FCC rules, broadcasters 

may satisfy their "reasonable access" obligations by 

providing free air time to candidates, although the 

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

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

whether such a donation comes within the exemption 

for news stories, commentaries and editorials. The 

Commission has twice considered and been unable to 

resolve this issue. Hence, Congress may want to 

consider offering guidance on whether donations of 

free air time are permissible under the FECA and, if 

so, under what conditions and restrictions. 

Distinguishing Official Travel from 

Campaign Travel 

Section: 2 U.S.C. §431 (9) 

Recommendation: The Commission recommends that 

Congress amend the FECA to clarify the distinctions 

between campaign travel and official travel. 

Explanation: Many candidates for federal office hold 

elected or appointed positions in federal, state or local 

government. Frequently, it is difficult to determine 

whether their public appearances are related to their 

official duties or whether they are campaign related. A 

similar question may arise when federal officials who 

are not running for office make appearances that 

could be considered to be related to their official duties or could be viewed as campaign appearances on 

behalf of specific candidates. 
54 Chapter Five 

Another difficult area concerns trips in which both 

official business and campaign activity take place. 

There have also been questions as to how extensive 

the campaign aspects of the trip must be before part 

or all of the trip is considered campaign related. Congress might consider amending the statute by adding 

criteria for determining when such activity is campaign 

related. This would assist the committee in determining when campaign funds must be used for all or part 

of a trip. This will also help Congress determine when 

official funds must be used under House or Senate 

Rules. 

Coordinated Party Expenditures (revised 1995) 

Section: 2 U.S.C. §441a(d) 

Recommendation: The Commission recommends that 

Congress clarify the number of coordinated party 

expenditure limits that are available to party committees during the election cycle. 

In addition, Congress may want to clarify the distinction between coordinated party expenditures 

made in connection with general elections and generic party building activity. 

Explanation: Section 441a(d) provides that national 

and state party committees may make expenditures in 

connection with the general election campaigns of the 

party's nominees for House and Senate. The national 

party committees may also make such expenditures 

on behalf of the party's general election Presidential 

and Vice Presidential nominees. The Commission has 

interpreted these provisions to permit party committees to make nearly any type of expenditure they 

deem helpful to their nominees short of donating the 

funds directly to the candidates. Expenditures made 

under §441a(d) are subject to a special limit, separate 

from contribution limits. 

The Commission has been faced several times 

with the question of whether party committees have 

one or two coordinated party expenditure limits in a 

particular election campaign. In particular, the issue 

has been raised in special election campaigns. Some 

state laws allow the first special election either to narrow the field of candidates, as a primary would, or to 

fill the vacancy if one candidate receives a majority of 

the popular vote. If a second special election becomes necessary to fill the vacancy, the question has 

arisen as to whether the party committees may spend 

against a second coordinated party expenditure limit 

since both special elections could have filled the vacancy. In a parallel manner, the Commission has 

been faced with the question of whether party committees have one or two coordinated party expenditure limits in a situation that includes an election on a 

general election date and a subsequent election, required by state law, after the general election. Although in the latter situation, a district court has concluded that only one coordinated party expenditure 

limit would apply (see Democratic Senatorial Campaign Committee v. FEC(No. 93-1321) (D.D.C., November 14, 1994)), broader Congressional guidance 

on this issue would be helpful. 

Party committees may also make expenditures for 

generic party-building activities, including get-out-thevote and voter registration drives. These activities are 

not directly attributable to a clearly identified candidate. In contrast to coordinated party expenditures, 

these activities are not subject to limitation. 

When deciding, in advisory opinions and enforcement matters, whether an activity is a §441a(d) expenditure or a generic activity, the Commission has 

considered the timing of the expenditure, the language of the communication, and whether it makes 

reference only to candidates seeking a particular office or to all the party's candidates, in general. However, the Commission still has difficulty determining, in 

certain situations, when a communication or other 

activity is generic party building activity or a coordinated party expenditure. Congressional guidance on 

this issue would be helpful. 

Volunteer Participation in Exempt Activity 

Section: 2 U.S.C. §§431 (B)(B)(x) and (xii); 

431 (9)(B)(viii) and (ix) 

Recommendation: The Commission recommends that 

Congress clarify the extent to which volunteers must 

conduct or be involved in an activity in order for the 

activity to qualify as an exempt party activity. 

Explanation: Under the Act, certain activities conducted by state and local party committees on behalf 
Legislative Recommendations 55 

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

Among these conditions is the requirement that the 

activity be conducted by volunteers. However, the 

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

Congress may want to clarify the extent to which 

volunteers must be involved in an activity in order for 

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

they be the ones to stuff the envelopes and sort the 

mail by zip code or can a commercial vendor perform 

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

post office? 

Colleges and Universities 

Section: 2 U.S.C. §§441a and 441b 

Recommendation: The Commission recommends that 

Congress consider amending the FECA to spell out 

the circumstances in which colleges, universities and 

other educational institutions may engage in political 

activities such as sponsoring candidate appearances 

and candidate debates, and conducting voter registration drives. 

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

private educational institutions, like other corporations, are prohibited from making contributions in connection with any Federal election. Similarly, stateoperated educational institutions, if unincorporated, 

are "persons" and thus subject to the contribution 

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

framework of the FECA, the Commission is currently 

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

or candidate debate or conduct a voter drive, and the 

conditions under which such activities will constitute 

in-kind contributions. However, Congress may wish to 

consider whether the important educational role these 

institutions play in the democratic process warrants 

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

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

For example, under the Internal Revenue Code, private 

schools that qualify as nonprofit corporations under 

§501 (c)(3) of the Internal Revenue Code may not participate or intervene in political campaigns. Similarly, 

state-operated schools may be required to ensure that 

state funds are not used for political purposes. 

Direction or Control 

Section: 2 U.S.C. §441a(a)(8) 

Recommendation: The Commission recommends that 

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

the concept in the legislative history that contributions 

count toward a conduit's or intermediary's contribution 

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

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

Explanation: Under 2 U.S.C. §441 a(a)(8), contributions made by any person which are earmarked 

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

the candidate. The Commission has seen an increase 

in conduit activity in recent years. 

Congress has indicated that "if a person exercises 

any direct or indirect control over the making of a 

contribution, then such contribution shall count toward 

the limitation imposed with respect to such person 

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

toward such a person's contribution limitation when it 

is demonstrated that such person exercised no direct 

or indirect control over the making of the contribution 

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

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

FECA should be amended to expressly reflect 

Congressional intent that contributions count toward a 

conduit's limits if the conduit exercises direction or 

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

of a conduit or intermediary constitute direction or 

control has presented difficulties for the Commission. 

Therefore, an amendment to the Act should also in-
56 Chapter Five 

elude standards for determining when "direction or 

control" has been exercised over the making of a 

contribution. 

Nonprofit Corporations (revised 1995) 

Section: 2 U.S.C. §441 b 

Recommendation: In light of the decision of the U.S. 

Supreme Court in FEC v. Massachusetts Citizens for 

Life, Inc. (MCFL), the Commission recommends that 

Congress consider amending the provision prohibiting 

corporate and labor spending in connection with federal elections in order to incorporate into the statute 

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

wish to include in the Act a definition for the term "express advocacy." 

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

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

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

determined, however, that these nonprofit corporations had to disclose some aspect of their financial 

activity-in particular, independent expenditures exceeding $250 and identification of persons who contribute over $200 to help fund these expenditures. 

The Court further ruled that spending for political activity could, at some point, become the major purpose 

of the corporation, and the organization would then 

become a political committee. The Court also indicated that the prohibition on corporate expenditures 

for communications is limited to communications expenditures containing express advocacy. 

Since the Court decision and subsequent related 

decisions (e.g., Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990)), the Commission has 

engaged in a rulemaking proceeding to consider what 

regulatory changes are needed. However, the Commission believes that statutory clarification would also 

be beneficial. 

Congress should consider whether statutory 

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

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

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

definition of express advocacy. 

Transfer of Campaign Funds from 

One Committee to Another 

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

Recommendation: The Commission recommends that 

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

one federal campaign to another federal campaign of 

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

transferee committee. 

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

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

transfer. Congress may wish to re-examine whether 

such transfers are acceptable, and if so, how should 

they affect the original contributor's contribution limit 

vis-a-vis both committees. 

Contributions from Minors 

Section: 2 U.S.C. §441 a(a)(1) 

Recommendation: The Commission recommends that 

Congress establish a presumption that contributors 

below age 16 are not making contributions on their 

own behalf. 

Explanation: The Commission has found that contributions are sometimes given by parents in their 

children's names. Congress should address this potential abuse by establishing a minimum age for contributors, or otherwise provide guidelines ensuring 

that parents are not making contributions in the name 

of another. 

Application of Contribution Limitations 

to Family Members 

Section: 2 U.S.C. §441 a 

Recommendation: The Commission recommends that 

Congress examine the application of the contribution 

limitations to immediate family members. 
Legislative Recommendations 57 

Explanation: Under the current posture of the law, a 

family member is limited to contributing $1 ,000 per 

election to a candidate. This limitation applies to 

spouses and parents, as well as other immediate 

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

93d Cong., 2d Sess., 58 (1974) and Buckley v. Valeo, 

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

has caused the Commission substantial problems in 

attempting to implement and enforce the contribution 

limitations. 4 

Problems have arisen in enforcing the limitations 

where a candidate uses assets belonging to a parent. 

In some cases, a parent has made a substantial gift to 

his or her candidate-child while cautioning the candidate that this may well decrease the amount which 

the candidate would otherwise inherit upon the death 

of the parent. 

Problems have also occurred in situations where 

the candidate uses assets held jointly with a spouse. 

When the candidate uses more than one-half of the 

value of the asset held commonly with the spouse (for 

example, offering property as collateral for a loan), the 

amount over one-half represents a contribution from 

the spouse. If that amount exceeds $1 ,000, it becomes an excessive contribution from the spouse. 

The Commission recommends that Congress consider the difficulties arising from application of the 

contribution limitations to immediate family members. 

Lines of Credit and Other Loans Obtained by 

Candidates 

Section: 2 U.S.C. §431 (8)(B)(vii) 

Recommendation: The Commission recommends that 

Congress provide guidance on whether candidate 

committees may accept contributions which are derived from advances on a candidate's brokerage account, credit card, or home equity line of credit, and, if 

so, Congress should also clarify how such extensions 

of credit should be reported. 

Explanation: The Act currently exempts from the definition of "contribution" loans that are obtained by political committees in the ordinary course of business 

from federally-insured lending institutions. 2 U.S.C. 

§431 (8)(B)(vii). Loans that do not meet the requirements of this provision are either subject to the Act's 

contribution limitations, if received from permissible 

sources, or the prohibition on corporate contributions, 

as appropriate. 

Since this aspect of the law was last amended in 

1979, however, a variety of financial options have 

become more widely available to candidates and 

committees. These include a candidate's ability to 

obtain advances against the value of a brokerage 

account, to draw cash advances from a candidate's 

credit card, or to make draws against a home equity 

line of credit obtained by the candidate. In many 

cases, the credit approval, and therefore the check 

performed by the lending institution regarding the 

candidate's creditworthiness, may predate the 

candidate's decision to seek federal office. Consequently, the extension of credit may not have been 

made in accordance with the statutory criteria such as 

the requirement that a loan be "made on a basis 

which assures repayment." In other cases, the 

extension of credit may be from an entity that is not a 

federally-insured lending institution. The Commission 

recommends that Congress clarify whether these 

alternative sources of financing are permissible and, if 

so, should specify standards to ensure that these 

advances are commercially reasonable extensions of 

credit. 

Honorarium 

Section: 2 U.S.C. §431 (8)(B)(xiv) 

Recommendation: The Commission recommends that 

Cqngress should make a technical amendment, deleting 2 U.S.C. §431 (8)(B)(xiv), now contained in a list of 

definitions of what is not a contribution. 

Explanation: The 1976 amendments to the Federal 

Election Campaign Act gave the Commission jurisdiction over the acceptance of honoraria by all federal 

officeholders and employees. 2 U.S.C. §441 i. In 1991, 

the Legislative Branch Appropriations Act repealed 

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

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

resolution is required in this area. 
58 Chapter Five 

§441 i. As a result, the Commission has no jurisdiction 

over honorarium transactions taking place after August 14, 1991, the effective date of the law. 

To establish consistency within the Act, the Commission recommends that Congress make a technical 

change to §431 (8)(B)(xiv) deleting the reference to 

honorarium as defined in former §441 i. This would 

delete honorarium from the list of definitions of what is 

not a contribution. 

Acceptance of Cash Contributions 

Section: 2 U.S.C. §441g 

Recommendation: The Commission recommends that 

Congress modify the statute to make the treatment of 

2 U.S.C. §441 g, concerning cash contributions, consistent with other provisions of the Act. As currently 

drafted, 2 U.S.C. §441 g prohibits only the making of 

cash contributions which, in the aggregate, exceed 

$1 00 per candidate, per election. It does not address 

the issue of accepting cash contributions. Moreover, 

the current statutory language does not plainly prohibit cash contributions in excess of $1 00 to political 

committees other than authorized committees of a 

candidate. 

Explanation: Currently this provision focuses only on 

persons making the cash contributions. However, 

these cases generally come to light when a 

committee has accepted these funds. Yet the Commission has no recourse with respect to the committee in such cases. This can be a problem, particularly 

where primary matching funds are received on the 

basis of such contributions. 

While the Commission, in its regulations at 11 CFR 

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

return the excess over $1 00, the statute does not 

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

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

the name of another) all prohibit both the making and 

accepting of such contributions. 

Secondly, the statutory text seems to suggest that 

the prohibition contained in §441 g applies only to 

those contributions given to candidate committees. 

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

prohibit any cash contributions which exceed $100 in 

federal elections. 

Independent Expenditures by Principal 

Campaign Committees 

Section: 2 U.S.C. §432(e)(3) 

Recommendation: The Commission recommends that 

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

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

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

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

same section states that the term "support" does not 

include a contribution by any authorized committee to 

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

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

of independent expenditures. The current language 

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

other committees, or whether Congress intended to 

preclude authorized committees from making independent expenditures. 

Certification of Voting Age Population Figures and 

Cost-of-Living Adjustment 

Section:2 U.S.C. §441a(c) and (e) 

Recommendation: The Commission recommends that 

Congress consider removing the requirement that the 

Secretary of Commerce certify to the Commission the 

voting age population of each Congressional district. 

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

the remaining information concerning the voting age 
Legislative Recommendations 59 

population for the nation as a whole and for each 

state. In addition, the same deadline should apply to 

the Secretary of Labor, who is required under the Act 

to provide the Commission with figures on the annual 

adjustment to the cost-of-living index. 

Explanation: In order for the Commission to compute 

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

the Secretary of Commerce certifies the voting age 

population of the United States and of each state. 2 

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

not needed. 

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

of Labor is required to certify the annual adjustment in 

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

receipt of these figures would enable the Commission 

to inform political committees of their spending limits 

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

has sometimes been unable to release the spending 

limit figures before June. 

Enforcement 

Candidate Liability 

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

Recommendation: The Commission recommends that 

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

Congress may want to include in this review whether 

candidates should be jointly and severally liable for 

civil penalties incurred by their campaign committees. 

Explanation: In enforcement cases, the Commission 

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

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

change treasurers several times before a matter is 

resolved, and it may be very difficult to locate the 

individual who was treasurer at the time the violation 

occurred, the Commission generally proceeds against 

the individual who is currently treasurer at the time of 

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

sufficient funds to pay the civil penalty. Treasurers 

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

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

liability may also make it more difficult for candidates 

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

While the Commission does make findings against 

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

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

candidates are agents of their campaign committees 

for purposes of receiving contributions and loans, and 

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

actions absent personal involvement. Accordingly, 

Congress may want to review whether it would be 

preferable for liability to be placed on the current 

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

or the candidate. 

Persons Who Can Be Named As Respondents 

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

Recommendation: The Commission recommends that 

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

violation for anyone to actively assist another party in 

violating the Act. 

Explanation: Many sections of the Act specifically list 

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

and 441f. Oftentimes, however, parties other than 

those listed are actively involved in committing the 

violations. For example, §441 b makes it illegal for an 

officer or director of a corporation, national bank or 

labor union to consent to the making of a contribution 

prohibited under that section. The Commission has 

seen many instances where these types of organiza-
60 Chapter Five 

tions have made prohibited contributions which were 

consented to by individuals who have the authority to 

approve the making of the contributions, even though 

those individuals did not hold the titles listed in the 

statute. 

This issue has also been addressed on a limited 

basis in the context of 2 U.S.C. §441f. That section 

prohibits anyone from making or knowingly accepting 

a contribution made in the name of another, or from 

knowingly allowing his/her name to be used to effect 

such a contribution. In many situations involving this 

section, there are additional parties, not specified in 

the statute, who are actively involved in carrying out 

the violation. Without an "assisting" standard, those 

active participants cannot be found to have violated 

that section. The court has recognized such a standard with regard to §441f, FEC v. Rodriguez, No. 86-

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

order denying motion for summary judgment), and the 

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

Although these actions have provided a basis for 

pursuing additional violators in a limited context, the 

preferable approach would be to codify the explicit 

statutory authority to pursue those who actively assist 

in carrying out all types of violations. 

Audits for Cause 

Section: 2 U.S.C. §438(b) 

Recommendation: The Commission recommends that 

Congress expand the time frame, from 6 months to 12 

months after the election, during which the Commission can initiate an audit for cause. 

Explanation: Under current law, the Commission must 

initiate audits for cause within 6 months after the election. Because year-end disclosure does not take 

place until almost 2 months after the election, and 

because additional time is needed to computerize 

campaign finance information and review reports, 

there is little time to identify potential audits and complete the referral process within that 6-month window. 

Modifying Standard of "Reason to Believe" 

Finding 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

Congress modify the language pertaining to "reason 

to believe," contained at 2 U.S.C. §437g, so as to 

allow the Commission to open an investigation with a 

sworn complaint, or after obtaining evidence in the 

normal course of its supervisory responsibilities. Essentially, this would change the "reason to believe" 

standard to "reason to open an investigation." 

Explanation: Under the present statute, the Commission is required to make a finding that there is "reason 

to believe a violation has occurred" before it may investigate. Only then may the Commission request 

specific information from a respondent to determine 

whether, in fact, a violation has occurred. The statutory phrase "reason to believe" is misleading and 

does a disservice to both the Commission and the 

respondent. It implies that the Commission has evaluated the evidence and concluded that the respondent 

has violated the Act. In fact, however, a "reason to 

believe" finding simply means that the Commission 

believes a violation may have occurred if the facts as 

described in the complaint are true. An investigation 

permits the Commission to evaluate the validity of the 

facts as alleged. 

It would therefore be helpful to substitute words 

that sound less accusatory and that more accurately 

reflect what, in fact, the Commission is doing at this 

early phase of enforcement. 

In order to avoid perpetuating the erroneous conclusion that the Commission believes a respondent 

has violated the law every time it finds "reason to 

believe," the statute should be amended. 

Protection for Those Who File Complaints 

or Give Testimony 

Section: 2 U.S.C. §437g 

Recommendation: The Commission recommends that 

the Act be amended to make it unlawful to improperly 

discriminate against employees or union members 

solely for filing charges or giving testimony under the 

statute. 
Legislative Recommendations 61 

Explanation: The Act requires that the identity of anyone filing a complaint with the Commission be provided to the respondent. In many cases, this may put 

complainants at risk of reprisals from the respondent, 

particularly if an employee or union member files a 

complaint against his or her employer or union. This 

risk may well deter many people from filing complaints, particularly under §441 b. See, e.g., NLRB v. 

Robbins Tire & Rubber Company, 437 U.S. 214,240 

(1978); Brennan v. Engineered Products, Inc., 506 

F.2d 299, 302 (8th Cir. 1974); Texas Industries, Inc. v. 

NLRB, 336 F.2d 128, 134 (5th Cir. 1964). In other 

statutes relating to the employment relationship, Congress has made it unlawful to discriminate against 

employees for filing charges or giving testimony under 

the statute. See, e.g., 29 U.S.C. §158(a)(4) (National 

Labor Relations Act); 29 U.S.C. §215(3) (Fair Labor 

Standards Act); 42 U.S.C. §2000e-3(a) (Equal Employment Opportunity Act). The Commission recommends that Congress consider including a similar 

provision in the FECA. 

Public Financing 

Compliance Fund 

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

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

Recommendation: The Commission recommends that 

Congress clarify what funds Presidential Election 

Campaign Fund recipients may utilize to meet the 

accounting and compliance requirements imposed 

upon them by the Federal Election Campaign Act. If 

private funds are not to be used, Congress may wish 

to either raise the spending limits to accommodate 

such costs or establish a separate fund of the 

Treasury to be used for this purpose. 

Explanation: Through regulation, the Commission has 

provided for the establishment by Presidential committees of a General Election Legal and Accounting 

Compliance Fund (GELAC fund) consisting of private 

contributions otherwise within the limits acceptable for 

any other Federal election. The GELAC funds, which 

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

may be used to pay for costs related to compliance 

with the campaign laws. Determining which costs may 

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

election campaigns may not solicit or accept private 

contributions. Congress should clarify whether 

GELAC funds are appropriate and, if not, specify 

whether additional federal grants are to be used. If 

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

payable from such funds. 

Supplemental Funding for Publicly Funded 

Candidates 

Section: 26 U.S.C. §§9003 and 9004 

Recommendation: The Commission recommends that 

Congress consider whether to modify the general 

election Presidential public funding system in instances where a nonpublicly funded candidate exceeds the spending limit for publicly funded candidates. 

Explanation: Major party Presidential candidates who 

participate in the general election public funding process receive a grant for campaigning. In order to receive the grant, the candidate must agree to limit expenditures to that amount. Candidates who do not 

request public funds may spend an unlimited amount 

on their campaign. Congress may want to consider 

whether the statute should ensure that those candidates who are bound by limits are not disadvantaged. 

Applicability of Title VI to Recipients of Payments 

from the Presidential Election Campaign Fund 

Section: 26 U.S.C. §§9006(b), 9008(b)(3) and 9037. 

Recommendation: The Commission recommends that 

Congress clarify that committees receiving public 

financing payments from the Presidential Election 

Campaign Fund are exempt from the requirements of 

Title VI of the Civil Rights Act of 1964, as amended. 

Explanation: This proposed amendment was 

prompted by the decision of the U.S. District Court for 

the District of Columbia in Freedom Republicans, Inc., 

and Lugenia Gordon v. FEC, 788 F. Supp. 600 
62 Chapter Five 

(1992), vacated, No. 92-5214 (D.C. Cir. January 18, 

1994). The Freedom Republicans' complaint asked 

the district court to declare that the Commission has 

jurisdiction to regulate the national parties' delegate 

selection process under Title VI. It also requested the 

court to order the Commission to adopt such regulations, direct the Republican Party to spend no more of 

the funds already received for its 1992 national nominating convention, and seek refunds of moneys already disbursed if the Republican Party did not 

amend its delegate selection and apportionment process to comply with Title VI. The district court found 

that the Commission "does have an obligation to promulgate rules and regulations to insure the enforcement of Title VI. The language of Title VI is necessarily broad, and applies on its face to the FEC as well 

as to both major political parties and other recipients 

of federal funds." 788 F. Supp. at 601. 

The Commission appealed this ruling on a number 

of procedural and substantive grounds, including that 

Title VI does not apply to the political parties' apportionment and selection of delegates to their 

conventions. However, the court of appeals overruled 

the district court decision on one of the non-substantive grounds, leaving the door open for other lawsuits 

involving the national nominating conventions or other 

recipients of federal funds certified by the Commission. No. 92-5214, slip op. at 15. 

In the Commission's opinion, First Amendment 

concerns and the legislative history of the public funding campaign statutes strongly indicate that Congress 

did not intend Title VI to permit the Commission to 

dictate to the political parties how to select candidates 

or to regulate the campaigns of candidates for federal 

office. Nevertheless, the potential exists for persons 

immediately prior to an election to invoke Title VI in 

the federal courts in a manner that might interfere with 

the parties' nominating process and the candidates' 

campaigns. The recommended clarification would 

help forestall such a possibility. 

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

financing provision cited above: ''The acceptance of 

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

Civil Rights Act of 1964, as amended." 

Enforcement of Nonwlllful Violations 

Section: 26 U.S.C. §§9012 and 9042 

Recommendation: The Commission recommends that 

Congress consider amending the Presidential Election Campaign Fund Act and the Presidential Primary 

Matching Payment Account Act to clarify that the 

Commission has authority for civil enforcement of 

nonwillful violations (as well as willful violations) of the 

public funding provisions. 

Explanation: Section 9012 of the Presidential Election 

Campaign Fund Act and §9042 of the Presidential 

Primary Matching Payment Account Act provide only 

for "criminal penalties" for knowing and willful violations of the spending and contribution provisions and 

the failure of publicly funded candidates to furnish all 

records requested by the Commission. The lack of a 

specific reference to nonwillful violations of these 

provisions has raised questions regarding the 

Commission's ability to enforce these provisions 

through the civil enforcement process. 

In some limited areas, the Commission has invoked other statutes and other provisions in Title 26 

to carry out its civil enforcement of the public funding 

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

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

Similarly, the Commission has used the candidate 

agreement and certification processes provided in 26 

~.~.C. §§9003 and 9033 to enforce the spending 

llm1ts, the ban. on private contributions, and the requirement to furnish records. Congress may wish to 

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

provisions. 

Contributions to Presidential Nominees Who Receive Public Funds in the General Election 

Section: 26 U.S.C. §9003 

Recommendation: The Commission recommends that 

Congress clarify that the public financing statutes 

prohibit the making and acceptance of contributions 
Legislative Recommendations 63 

(either direct or in-kind) to Presidential candidates 

who receive full public funding in the general election. 

Explanation: The Presidential Election Campaign 

Fund Act prohibits a publicly financed general election 

candidate from accepting private contributions to defray qualified campaign expenses. 26 U.S.C. 

§9003(b)(2). The Act does not, however, contain a 

parallel prohibition against the making of these contributions. Congress should consider adding a section 

to 2 U.S.C. §441 a to clarify that individuals and committees are prohibited from making these contributions. 

Miscellaneous 

Statutory Gift Acceptance Authority 

Section: 2 U.S.C. §437c 

Recommendation: The Commission recommends that 

Congress give the Commission authority to accept 

funds and services from private sources to enable the 

Commission to provide guidance and conduct 

research on election administration and campaign 

inance issues. 

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

to finance topical research, studies, and joint projects 

with other entities because it does not have statutory 

gift acceptance authority. In view of the Commission's 

expanding role in this area, Congress should consider 

amending the Act to provide the Commission with 

authority to accept gifts from private sources. Permitting the Commission to obtain funding from a broader 

range of private organizations would allow the Commission to have more control in structuring and conducting these activities and avoid the expenditure of 

government funds for these activities. If this proposal 

were adopted, however, the Commission would not 

accept funds from organizations that are regulated by 

or have financial relations with the Commission. 
65 Chapter Six 

Campaign Finance 

Statistics 

House and Senate Activity 

by Election Cycle 

-Receipts 

- Disbursements 

Millions of Dollars 

800~-----------------------------------------------------------

1986 1988 1990 1992 1994 

(1 ,873) (1 ,792) (1 ,759) (2,950) (2,378) 

(Number of candidates) 
66 Chapter Six 

Congressional Campaign Spending 

-1992 

-1994 

Median Disbursements by House Candidates 

Democratic Incumbents 

Republican Challengers 

Republican Incumbents 

Democratic Challengers 

Republican Open Seat 

Democratic Open Seat 

0 100 200 

Median Disbursements by Senate Candidates 

300 400 

Thousands of Dollars 

500 600 700 

Democratic Incumbents 

Republican Challengers 

Republican Incumbents 

Democratic Challengers 

Republican Open Seat 

Democratic Open Seat 

0 1000 2000 3000 

Thousands of Dollars 

4000 5000 
Campaign Finance Statistics 67 

Median Disbursements by House Candidates 

Where Winner Received More Than 60 Percent of Vote 

Democratic Incumbents 

Republican Challengers 

Republican Incumbents 

Democratic Challengers 

Republican Open Seat 

Democratic Open Seat 

0 100 200 300 400 500 600 

Thousands of Dollars 

Median Disbursements by House Candidates 

Where Winner Received Less Than 55 Percent of Vote 

Democratic Incumbents 

700 800 900 

Republican Challengers 

Republican Incumbents 

Democratic Challengers 

Republican Open Seat 

Democratic Open Seat 

0 100 200 300 400 500 600 

Thousands of Dollars 

700 800 900 
68 Chapter Six 

House Candidates' 

Sources of Receipts: 

Two-Year Election Cycle 

Individuals 

-PACs 

-Candidate 

-Otherloans* 

- Other Receiptst 

Open Seat Candidates 

Millions of Dollars 

100 

801--------

1990 1992 1994 

(308) (706) (460) 

(Number of candidates) 

Incumbents* 

Millions of Dollars 

250 

1990 1992 1994 

(409) (371) {393) 

(Number of candidates) 

Challengers 

Millions of Dollars 

100 

801-------

601-------

1990 1992 1994 

(863) (1508) (1185) 

(Number of candidates) 

*Other loans include loans from individuals (other than the candidate) and loans from banks. 

t Other receipts consist of contributions from party committees, transfers (such as joint fund raising proceeds but not funds 

transferred from committees authorized by the candidate for the current campaign), refunds, rebates and interest income. 

*Note change in scale between the chart for Incumbents and those for Challengers and Open Seat Candidates. 
Campaign Finance Statistics 69 

Senate Candidates' 

Sources of Receipts: 

Two-Year Election Cycle 

- Individuals 

-PACs 

-Candidate 

- Other Loans* 

- Other Receipts t 

Incumbents 

Millions of Dollars 

120 ----------------------

100 

1990 1992 1994 

(32) (29) (26) 

(Number of candidates) 

Challengers 

Millions of Dollars 

120 

40 

20 

1990 1992 1994 

(66) (125) (105) 

(Number of candidates) 

Open Seat Candidates* 

Millions of Dollars 

80 

1990 1992 1994 

(14) (54) (72) 

(Number of candidates) 

*Other loans include loans from individuals (other than the candidate) and loans from banks. 

t Other receipts consist of contributions from party committees, transfers (such as joint fund raising proceeds but not funds 

transferred from committees authorized by the candidate for the current campaign), refunds, rebates and interest income. 

*Note changes in scale between the chart for Open Seat Candidates and those for Incumbents and Challengers. 
70 Chapter Six 

Activity of Party Committees 

Federal Receipts and Disbursements* 

-Receipts 

- Disbursements 

Millions of Dollars 

300 

2501----------

2QQI----

50 

0 

Dem Rep Dem Rep Dem Rep 

1990 Cycle 1992 Cycle 1994 Cycle 

Fundraising by National 

Party Committees: 1994 Election

- Federalt 

- Nonfederal * 

Republican National Committee 

$133.5 Million 

Democratic National Committee 

$83.2 Million 

*Includes federal receipts and disbursements at all levels of the party: national, state and local. 

tMoney raised subject to the prohibitions and limitations of federal election Jaw. 

*Money raised outside the prohibitions and limitations of federal election law. 
71 

- Democratic - Democratic 

-Republican - Republican 

Millions of Dollars Millions of Dollars 

3.5 35 

1.0 

0.5 5 

0.0 

1990 1992 1994 

0 

1990 1992 1994 

Cycle Cycle Cycle Cycle Cycle Cycle 

Campaign Finance Statistics 

National Party Contributions to 

Federal Candidates 

National Party Coordinated Expenditures* 

on Behalf of Federal Candidates 

*National and state party committees may make special expenditures, subject to limits, in connection with the general election campaigns of U.S. House and Senate candidates. These "coordinated party expenditures" are not considered contributions. 
72 Chapter Six 

PAC Receipts by Type of PAC 

-Corporate 

-Labor 

- Nonconnected 

- Trade/Membership/Health 

-Other* 

Millions of Dollars 

400----------------------------------------------------------------------

350 

300 

250 

200 

150 

100 

50 

0 

1986 1988 1990 1992 1994 

Cycle Cycle Cycle Cycle Cycle 

*"Other'' consists of PACs formed by cooperatives and corporations without capital stock. 
Campaign Finance Statistics 73 

PAC Contributions to Federal 

Candidates* 

- Incumbents 

- Challengers 

-OpenSeats 

PAC Contributions to House Candidates 

Millions of Dollars 

150 

90 

60 

30 

0 

1990 1992 1994 

Election Election Election 

Cycle Cycle Cycle 

PAC Contributions to Senate Candidates 

Millions of Dollars 

60 

40 

30 

20 

10 

0 

1990 1992 1994 

Election Election Election 

Cycle Cycle Cycle 

*The graphs show PAC contributions given to candidates actively seeking election in the cycle. They do not show contributions for debt retirement or future elections. 
74 

Distribution of Contributions by PACs * 

1994 Election Cycle 

Contribution Range Number of PACs Percentage of Total Percentage of Total Amount 

In Range Number of PACs of PAC Contributions 

$0 1,640 35.5% 0% 

$1·$5,000 1,015 22% 1.1% 

$5,001-$50,000 1,279 28% 13.2% 

$50,001-$100,000 271 6% 10.1% 

$100,001-$250,000 246 5% 20.6% 

$250,001-$500,000 82 1.8% 15.1% 

$500,001-$1 ,000,000 41 1% 14.4% 

$1 ,000,001 and over 30 0.6% 25.4% 

Total 4,618 100% 100% 

*For each contribution range shown in the first column, this table shows the number of PACs that made contributions within 

that range, the percentage of total PACs that number represents and the percentage of total PAC dollars contributed by these 

PACs. For example, the first row across shows that 1 ,640 registered PACs did not make any contributions to federal candidates during the 1994 election cycle. These 1,640 PACs represented 35.5 percent of total registered PACs. By contrast, the 

last row shows that 30 PACs each contributed over $1 million dollars during the cycle. They represented only 0.6 percent of 

total PACs, but their contributions accounted for 25.4 percent of all PAC dollars contributed to candidates during the cycle. 
75 

Commissioners 

Trevor Potter, Chairman 

April 30, 1997 1 

Mr. Potter was confirmed by the Senate as a Commissioner in November of 1991. He served as Vice 

Chairman of the Commission's Finance Committee 

and Chairman of its Regulations Task Force during 

1992. He was elected Commission Vice Chairman for 

1993 and Chairman for 1994. 

Before his appointment, Mr. Potter specialized in 

campaign and election law as a partner in a Washington, D.C. law firm. His previous experience in government includes serving as Assistant General Counsel 

at the Federal Communications Commission from 

1984 to 1985, and as a Department of Justice attorney from 1982 to 1984. 

Mr. Potter is a graduate of Harvard College. He 

earned his J.D. degree at the University of Virginia 

School of Law, where he served as Editor-in-Chief of 

the Virginia Journal of International Law and was a 

member of the Order of the Coif. He is currently Chair 

of the American Bar Association Committee on Election Law, Administrative Law Section. Mr. Potter is a 

resident of Fauquier County, Virginia. 

Danny L. McDonald, VIce Chairman 

April 30, 1999 

Now serving his third term as Commissioner, Mr. 

McDonald was first appointed to the Commission in 

1981 and was reappointed in 1987 and 1994. Before 

his original appointment, he managed 1 0 regulatory 

divisions as the general administrator of the Oklahoma Corporation Commission. He had previously 

served as secretary of the Tulsa County Election 

Board and as chief clerk of the board. He was also a 

member of the Advisory Panel to the FEC's National 

Clearinghouse on Election Administration. 

A native of Sand Springs, Oklahoma, Mr. McDonald 

graduated from Oklahoma State University and attended the John F. Kennedy School of Government at 

Harvard University. He served as FEC Chairman in 

1983 and 1989, and in 1994 was elected as the 1995 

Chairman. 

1 Term expiration date. 

Appendix 1 

Biographies of 

Commissioners 

and Officers 

Joan D. Aikens 

April 30, 1995 

One of the original members of the Commission, 

Commissioner Aikens was first appointed in 1975. 

Following the reconstitution of the FEC that resulted 

from the Supreme Court's Buckley v. Valeo decision, 

President Ford reappointed her to a five-year term. In 

1981, President Reagan named Commissioner 

Aikens to complete a term left open because of a 

resignation and, in 1983, once again reappointed her 

to a full six-year term. Most recently, Commissioner 

Aikens was reappointed by President Bush in 1989. 

She served as FEC Chairman in 1978, 1986 and 

1992. 

Before her 1975 appointment, Commissioner 

Aikens was an executive with Lew Hodges Communications, a public relations firm in Valley Forge, Pennsylvania. She was also a member of the Pennsylvania 

Republican State Committee, president of the Pennsylvania Council of Republican Women and on the 

board of directors of the National Federation of Republican Women. A native of Delaware County, Pennsylvania, Commissioner Aikens has been active in a 

variety of volunteer organizations and was a member 

of the Commonwealth Board of the Medical College of 

Pennsylvania and a past President of Executive 

Women in Government. She is currently a member of 

the board of directors of Ursinus College, where she 

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

Law degree. 

Lee Ann Elliott 

April 30, 1999 

Commissioner Elliott was first appointed in 1981 

and reappointed in 1987 and 1994. She served as 

chairman in 1984 and 1990. Before her first appointment, Commissioner Elliott was vice president of a 

political consulting firm, Bishop, Bryant & Associates, 

Inc. From 1961 to 1979, she was an executive of the 

American Medical Political Action Committee. Commissioner Elliott was on the board of directors of the 

American Association of Political Consultants and on 

the board of the Chicago Area Public Affairs Group, of 

which she is a past president. She was also a member of the Public Affairs Committee of the U.S. Chamber of Commerce. In 1979, she received the Award 
76 Appendices 

for Excellence in Serving Corporate Public Affairs 

from the National Association of Manufacturers. 

A native of St. Louis, Commissioner Elliott graduated from the University of Illinois. She also completed Northwestern University's Medical Association 

Management Executive Program and is a Certified 

Association Executive. 

John Warren McGarry 

April 30, 1995 

First appointed to the Commission in 1978, Commissioner McGarry was reappointed in 1983 and 

1989. He served as FEC Chairman in 1991, 1985 and 

1981 . Before his 1978 Commission appointment, 

Commissioner McGarry served as special counsel on 

elections to the House Administration Committee. He 

previously combined private law practice with service 

as chief counsel to the House Special Committee to 

Investigate Campaign Expenditures, a special committee established by Congress every election year 

through 1972. Before his work with Congress, Commissioner McGarry was the Massachusetts assistant 

attorney general. 

After graduating cum laude from Holy Cross College, Commissioner McGarry did graduate work at 

Boston University and earned a J.D. degree from 

Georgetown University Law School. 

Scott E. Thomas 

April 30, 1997 

Mr. Thomas was appointed to the Commission in 

1986 and reappointed in 1991. He was the 1993 

Chairman, having earlier been Chairman in 1987. He 

previously served as executive assistant to former 

Commissioner Thomas E. Harris and succeeded him 

as Commissioner. Joining the FEC as a legal intern in 

1975, Mr. Thomas eventually became an Assistant 

General Counsel for Enforcement. 

A Wyoming native, Mr. Thomas graduated from 

Stanford University and holds a J.D. degree from 

Georgetown University Law Center. He is a member 

of the District of Columbia bar. 

Statutory Officers 

John C. Surlna, Staff Director 

Before joining the Commission in 1983, Mr. Surina 

was assistant managing director of the Interstate 

Commerce Commission, where he was detailed to the 

"Reform 88" program at the Office of Management 

and Budget. In that role, he worked on projects to 

reform administrative management within the federal 

government. He was also an expert-consultant to the 

Office ?f Control and Operations, EOP-Cost of Living 

Council-Pay Board and on the technical staff of the 

Computer Sciences Corporation. During his Army 

service, Mr. Surina was executive officer of the Special Security Office, where he supported senior U.S. 

delegates to NATO's civil headquarters in Brussels. 

Mr. Surina served as 1991 chairman of the Council on 

Government and Ethics Laws (COGEL). 

A native of Alexandria, Virginia, Mr. Surina holds a 

degree in Foreign Service from Georgetown University. He also attended East Carolina University and 

American University. 

Lawrence M. Noble, General Counsel 

Mr. Noble became General Counsel in 1987, after 

serving as Acting General Counsel. He joined the 

Commission in 1977, becoming the Deputy General 

Counsel in 1983. He previously served as Assistant 

General Counsel for Litigation and as a litigation attorney. Before his FEC service, he was an attorney with 

the Aviation Consumers Action Project. 

A native of New York, Mr. Noble holds a degree in 

Political Science from Syracuse University and a J.D. 

degree from the National Law Center at George 

Washington University. He is a member of the bars for 

the U.S. Supreme Court, the U.S. Court of Appeals 

for the D.C. Circuit and the District of Columbia. He is 

also a member of the American and District of Columbia Bar Associations. 
Appendices 77 

Lynne Mcfarland, Inspector General 

Ms. McFarland became the FEC's first permanent 

Inspector General in February 1990. She came to the 

Commission in 1976, first as a reports analyst and 

then as a program analyst in the Office of Planning 

and Management. 

A Maryland native, Ms. McFarland holds a sociology degree from Frostburg State College and is a 

member of the Institute of Internal Auditors. 
79 Appendix 2 

Chronology of Events 

January 

1 - Chairman Trevor Potter and Vice Chairman 

Danny L. McDonald begin their one-year 

terms of office. 

5 - Commission releases final audit report on 

1992 Houston Host Committee. 

12 - FEC holds public hearing on proposed rules 

governing personal use of campaign funds. 

- U.S. district court finds that public communications hostile to President Reagan did not 

expressly advocate his defeat in the 1984 

Presidential race (FEC v. Survival Education 

Fund, Inc.). 

31 - 1993 year-end report due. 

February 

1 FEC publishes 11th edition of Selected 

Court Case Abstracts. 

- FEC publishes two brochures: Using Campaign Finance Information and The FEC and 

the Federal Campaign Finance Law. 

11 - FEC holds conference for candidate committees in Washington, DC (due to snow storm, 

conference was repeated on April 15). 

- Commission releases 1993 year-end PAC 

count. 

17 - FEC complies with court mandate and certifies $100,000 in matching funds to 1992 

Presidential candidate Lyndon LaRouche. 

25 - FEC releases 1993 year-end campaign 

finance statistics on 1994 Congressional 

candidates. 

March 

1 - FEC publishes updated Campaign Guide for 

Corporations and Labor Organizations. 

2 - Vice Chairman McDonald testifies on FEC's 

fiscal year 1995 budget request before 

House Administration Committee's Subcommittee on Elections. 

3 - Effective date of revised "best efforts" regulations on disclosure of contributor information. 

- Commission releases final audit report on 

Kerrey for President. 

4 - FEC releases 1993 year-end campaign finance statistics on national party committees. 

1 0 - Commission releases final audit report on 

1992 Democratic National Convention Committee, Inc. 

- FEC releases 1994 coordinated party expenditure limits. 

14 - FEC begins two-day regional conference in 

New Orleans, Louisiana. 

15 - Commission releases final audit report on 

Americans for Harkin, Inc. 

17 - Vice Chairman McDonald testifies on FEC's 

fiscal year 1995 budget request before 

House Appropriations' Subcommittee on 

Treasury, Postal Service and General Government. 

April 

1 - FEC publishes 1994 Combined FederaV 

State Disclosure Directory. 

6 - FEC sends Congress revised final rule on 

use of candidate names in opposition 

projects. 

15 - FEC repeats candidate conference in Washington, DC. 

- Quarterly report due. 

21 - Commission releases final audit report on 

Wilder for President and on Lenora B. Fulani 

for President. 

26 - South Africans living in United States vote at 

U.S. polling stations in first South African 

all-race elections. 

28 - FEC sends President and Congress 62 legislative recommendations. 

- FEC begins two-day regional conference in 

Pittsburgh, Pennsylvania. 

May 

1 - Commission publishes Foreign Nationals 

brochure. 

9 - FEC releases 15-month campaign finance 

statistics on Congressional candidates. 

1 0 - Oklahoma holds special general election in 

6th Congressional District (primary, March 8; 

runoff, April 5). 
80 Appendices 

12 - Vice Chairman McDonald testifies on FEC's 

fiscal year 1995 budget request before Senate Committee on Rules and Administration. 

24 - Kentucky holds special general election in 

2nd Congressional District. 

- Commission releases final audit report on 

Brown for President. 

June 

1 - FEC publishes Annual Report 1993. 

10 - FEC automates its 800 number. 

15 - FEC releases 15-month figures on campaign finance activity of PACs and national 

party committees. 

21 - FEC announces $120,000 in civil penalties 

for violations of law by 1988 Kemp Presidential campaign. 

23 - Commission releases final audit report on 

Committee on Arrangements for the 1992 

Republican National Convention. 

30 - Revised rule on use of candidate names in 

opposition projects becomes effective. 

July 

1 - U.S. Senate confirms reappointment of 

Commissioners Lee Ann Elliott and Danny 

L. McDonald. 

- FEC publishes supplements to Campaign 

Guides for party and nonconnected committees. 

6 - FEC announces closing of cases under 

MUR prioritization system. 

8 - U.S. court of appeals upholds FEC repayment determination for 1988 LaRouche 

Presidential campaign. 

11 - FEC announces $65,000 civil penalty for 

violations of law by 1984 Glenn Presidential 

campaign. 

15 - FEC releases mid-year PAC count. 

- Quarterly report due. 

19 - Chairman Potter sends letter to Congress 

responding to Congressman Livingston's 

proposal to reduce FEC appropriation by 

$3.5million. 

21 - Chairman Potter sends letter asking national 

parties to inform contributors about $25,000 

individual annual limit. 

22 - U.S. district court rejects challenge by Republican National Committee to revised 

"best efforts" regulations. 

25 - Effective date of rules implementing National 

Voter Registration Act of 1993. 

August 

1 FEC initiates "Fiashfax," an automated 

document access system. 

- FEC publishes new supplement to the Campaign Guide for Congressional Candidates 

and Committees. 

3 - Chairman Trevor Potter announces that 

investigation into foreign national contributions resulted in $162,225 in penalties. 

8 - FEC releases 18-month figures on party 

committee activity. 

12 - Commission releases final audit report on 

Republican Leadership Fund Ooint fundraising committee for the Bush--Quayle Primary 

Committee). 

- FEC releases 18-month campaign finance 

statistics on Congressional candidates. 

25 - Revised regulations on publicly funded 

Presidential nominating conventions become effective. 

September 

1 -- FEC's Clearinghouse publishes Campaign 

Finance Law 94. 

9 - FEC submits fiscal year 1996 budget request to Office of Management and Budget 

and Congress. 

14 - Commission releases final audit report on 

Dr. John Hagelin for President Committee. 

19 - FEC releases 18-month campaign finance 

statistics on PAC activity. 

28 - U.S. district court orders Lyndon 

LaRouche's 1988 Presidential campaign to 

repay $146,464 in primary matching funds to 

U.S. Treasury. 

30 - FEC announces $57,000 civil penalty for 

violation of foreign national prohibition. 
Appendices 81 

October 

1 - FEC publishes new edition of Pacronyms, a 

list of PAC abbreviations. 

5 - In open hearing, Wilder for President Committee disputes FEC's initial repayment determination. 

6 - FEC publishes Notice of Proposed 

Rulemaking on public financing of Presidential candidates. 

- Commission approves fiscal year 1995 management plan. 

11 - Commission releases final audit report on 

Buchanan for President. 

- Supreme Court hears oral argument in FEC 

v. NRA Political Victory Fund. 

15 - Quarterly report due. 

27 - FEC publishes Notice of Proposed 

Rulemaking on implementation of Privacy 

Act. 

- Pre-general election report due. 

28 - U.S. district court dismisses Chamber of 

Commerce of the U.S.A., eta/. v. FEC, finding that plaintiffs lack standing to bring suit 

and upholding FEC's revised definition of 

member. 

November 

2 - FEC releases statistics on pre-election activity of national party committees. 

3 - FEC approves national mail voter registration form, mandated by the National Voter 

Registration Act of 1993 (forms available 

January 1 , 1995). 

4 - FEC releases pre-election statistics on Congressional candidates. 

8 - General election. 

- Oklahoma holds special general election to 

fill Senate seat (primary, August 23; runoff, 

September 20). 

14 - U.S. district court rules as contrary to law 

FEC's dismissal of DSCC complaint alleging 

NRSC exceeded party expenditure limit in 

1992 Georgia Senate race. 

30 - Commission releases final audit report on 

Democrats for Economic RecoveryLaRouche in 92. 

December 

6 - Supreme Court, in FEC v. NRA Political 

Victory Fund, finds FEC lacks authority to 

petition Court under Title 2; decision leaves 

intact appellate court decision finding FEC 

makeup unconstitutional. 

8 - Post-general election report due. 

12 - Commission releases final audit report on 

The Tsongas Committee. 

15 - Commission elects Danny L. McDonald as 

1995 Chairman and Lee Ann Elliott as 1995 

Vice Chairman. 

22 - FEC releases record 1994 Congressional 

spending figures. 

- FEC announces that enforcement case 

against Prudential Securities results in 

$550,000 penalty, largest in agency's history. 

27 - Commission releases final audit reports on 

1992 Bush primary and general election 

committees. 

- Commission releases final audit reports on 

1992 Clinton primary and general election 

committees. 
---

The Commissioners 

Trevor Potter, Chairman 1 

Danny L. McDonald, Vice Chairman 2 

Joan D. Aikens, Commissioner 

Lee Ann Elliott, Commissioner 

John Warren McGarry, Commissioner 

Scott E. Thomas, Commissioner 

I I I 

- Inspector General General Counsel Staff Director

Deputy Staff Director Public Funding for Management Commission Ethics and I-- ~ Audit Secretary Special Projects 

Congressional

- I--

- Policy3 Administration Clearinghouse Affairs 

I-- Data Systems ~ Equal Employment Information

- Enforcement Development - Opportunity

Planning and ~ Public Personnel

- - Management Disclosure Labor/Management Litigation 

Reports ...... Press Office Analysis 

83 Appendix 3 

FEC Organization Chart 

1 Danny L. McDonald was elected 1995 Chairman. 

2 Lee Ann Elliott was elected 1995 Vice Chairman. 

3 Policy covers regulations, advisory opinions, legal review and administrative law. 
85 Appendix 4 

FEe Offices 

This appendix briefly describes the offices within the 

Commission, located at 999 E Street, I'JW, Washington, D.C. 20463. The offices are listed alphabetically, 

with local telephone numbers given for offices that 

provide services to the public. Commission offices 

can also be reached toll-free on 800-424-9530 and 

locally on 202-219-3420. 

Administration 

The Administration Division is the Commission's 

"housekeeping" unit and is responsible for accounting, 

procurement and contracting, space management, 

payroll, travel and supplies. In addition, several support functions are centralized in the office such as 

printing, document reproduction and mail services. 

The division also handles records management, telecommunications, inventory control and building securityand maintenance. 

Audit 

Many of the Audit Division's rcsponsiblllties concern 

the Presidential publlc funding program. The division 

evaluates the matching fund submissions of Presidential primary candidates and determines the amount of 

contributions that may be matched with federal funds. 

As required by law, the division audits all public funding recipients. 

In addition, the division audits those committees 

which, according to FEC determinations, have not met 

the threshold requirements for substantial compliance 

with the law. Audit Division resources are also used in 

the Commission's investigations of complaints. 

Clearinghouse 

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

election officials by responding to inquiries, publishing 

research and conducting workshops on all matters 

related to election administration. Additionally, the 

Clearinghouse answers questions from the public and 

briefs foreign delegations on the U.S. election process, 

including voter registration and voting statistics. 

Local phone: 202-219-3670; toll-free phone: 800­

424-9530 (press 4 on a touch-tone phone). 

Commission Secretary 

The Secretary to the Commission handles all administrative matters relating to Commission meetings, 

including agenda documents, Sunshine Act notices, 

minutes and certification of Commission votes. The 

office also circulates and tracks numerous materials 

not related to meetings, and records the Commissioners' tally votes on these matters. 

Commissioners 

The six Commissioners-three Democrats and 

three Republicans-are appointed by the President 

and confirmed by the Senate. 

The Commissioners serve full time and are responsible for administering and enforcing the Federal Election Campaign Act. They generally meet twice a 

week, once in closed session to discuss matters that, 

by law, must remain confidential, and once in a meeting open to the public. At these meetings, they formulate policy and vote on significant legal and administrative matters. 

Congressional, Legislative and 

Intergovernmental Affairs 

This office serves as primary liaison with Congress 

and Executive Branch agencies. The office is responsible for keeping Members of Congress informed 

about Commission decisions and, in turn, for keeping 

the agency up to date on legislative developments. 

Local phone: 202-219-4136; toll-free 800-424-9530. 

Data Systems Development 

This division provides computer support for the 

entire Commission. Its responsibilities are divided into 

two general areas. 

In the area of campaign finance disclosure, the 

Data Systems Development Division enters into the 

FEC database information from all reports filed by 
86 Appendices 

political committees and other entities. The division is 

also responsible for the computer programs that sort 

and organize campaign finance data into indexes 

These indexes permit a detailed analysis of campaign finance activity and, additionally, provide a tool 

for monitoring contribution limits. The indexes are 

available online through the Data Access Program 

(DAP), a subscriber service managed by the .divisi?n. 

The division also publishes the Reports on Finenoie! 

Activity series of periodic studies on campaign finance 

and generates statistics for other pUblication~.

Among its duties related to internal operations, the 

division provides computer support for the agency's 

automation systems and for administrative functions 

such as management information, document tracking, 

personnel and payroll systems as well as the MUR 

prioritization system. 

Local phone: 202-219-3730; toll-free phone: 800­

424-9530. 

Equal Employment Opportunity 

(EEO) Office 

The EEO Office advises the Commission on the 

prevention of discriminatory practices and manages 

the agency's EEO Program. 

The office is also responsible for: developing a 

Special Emphasis Program tailored to the training and 

advancement needs of women, minorities, veterans, 

special populations and disabled employees; recommending affirmative action recruitment, employment 

. and career mobility; and encouraging informal resolution of complaints during the counseling stage. 

General Counsel 

The General Counsel directs the agency's enforcement activities, represents and advises the Commission in any legal actions brought against it and serves 

as the Designated Agency Ethics Official. The Office 

of General Counsel handles all civil litigation, including Title 26 cases that come before the Supreme 

Court. The office also drafts, for Commission consideration, advisory opinions and regulations as well as 

other legal memoranda interpreting the federal campaign finance law. 

Information 

In an effort to promote voluntary compliance with 

the law, the Information Division provides technical 

assistance to candidates, committees and others 

involved in elections. Responding to phone and written inquiries, members of the staff conduct research 

based on the statute, FEC regulations, advisory opinions and court cases. Staff also direct workshops on 

the law and produce guides, pamphlets and videos on 

how to comply with the law. Located on the second 

floor, the division is open to the public. Local phone: 

202-219-3420; toll-free phone: 800-424-9530 (press 1 

on a touch-tone phone). 

Inspector General 

The FEC's Inspector General (IG) has two major 

responsibilities: to conduct internal audits and investigations to detect fraud, waste and abuse within the 

agency and to improve the economy and effectiveness of agency operations. The IG files reports notifying Congress of any serious problems or deficiencies 

in agency operations and of any corrective steps 

taken by the agency. 

Law Library 

The Commission law library, part of the Office of 

General Counsel, is located on the eighth floor and is 

open to the public. The collection includes basic legal 

research tools and materials dealing with political 

campaign finance, corporate and labor political activity and campaign finance reform. The library staff 

prepares indices to advisory opinions and Matters 

Under Review (MURs) as well as a Campaign Finance and Federal Election Law Bibliography, all 

available for purchase at the Public Records Office. 

Local phone: 202-219-3312; toll-free: 800-424-9530. 
Appendices 87 

Personnel and Labor/Management 

Relations 

This office handles employment, position classification, training and employee benefits. It also provides 

policy guidance on awards and discipline matters and 

administers a comprehensive labor-relations program 

including contract negotiations and resolution of disputes before third parties. 

Planning and Management 

This office develops the Commission's budget and, 

each fiscal year, prepares a management plan determining the allocation and use of resources throughout 

the agency. Planning and Management monitors adherence to the plan, providing monthly reports measuring the progress of each division in achieving the 

plan's objectives. 

Press Office 

Staff of the Press Office are the Commission's 

official media spokespersons. In addition to publicizing Commission actions and releasing statistics on 

campaign finance, they respond to all questions from 

representatives of the print and broadcast media. 

Located on the first floor, the office also handles requests under the Freedom of Information Act. Local 

phone: 202-219-4155; toll-free 800-424-9530. 

Public Records 

Staff from the Public Records Office provide information on the campaign finance activities of political 

committees and candidates involved in federal elections. Located on the first floor, the office is a library 

facility with ample work space and a knowledgeable 

staff to help researchers locate documents and computer data. The FEC encourages the public to review 

the many resources available, including committee 

reports, computer indexes, advisory opinions and 

closed MURs. 

The Public Records Office also manages Flashfax, 

an automated faxing service for ordering FEC documents, forms and publications, available 24 hours a 

day, 7 days a week. 

Local phone: 202-219-4140; toll-free phone: 800­

424-9530 (press 3 on a touch-tone phone); Flashfax: 

202-501-3413. 

Reports Analysis 

Reports analysts assist committee officials in complying with reporting requirements and conduct detailed examinations of the campaign finance reports 

filed by political committees. If an error, omission or 

prohibited activity (e.g., an excessive contribution) is 

discovered in the course of reviewing a report, the 

analyst sends the committee a letter which requests 

that the committee either amend its reports or provide 

further information concerning a particular problem. 

By sending these letters (RFAls), the Commission 

seeks to ensure full disclosure and to encourage the 

committee's voluntary compliance with the law. Analysts also provide frequent telephone assistance to 

committee officials and encourage them to call the 

division with reporting questions or compliance problems. Local phone: 202-219-3580; toll-free phone 

800-424-9530 (press 2 on a touch-tone phone). 

Staff Director and Deputy Staff 

Director 

The Staff Director carries the responsibilities of 

appointing staff, with the approval of the Commission, 

and implementing Commission policy. The Staff Director oversees the Commission's public disclosure 

activities, outreach efforts, review of reports and the 

audit program, as well as the administration of the 

agency. 

The Deputy Staff Director has broad responsibility 

for assisting in this supervision, particularly in the 

areas of budget, administration and computer systems. 
89 

Appendix 5 

Statistics on Commission 

Operations 

Summary of Disclosure Files 

Total Filers 

Existing in 

1994 

Filers 

Terminated 

as of 

12/31/94 

Continuing 

Filers as of 

12/31/94 

Number of 

Reports and 

Statements 

in 1994 

Gross Receipts 

in 1994 

Gross 

Expenditures 

in 1994 

Presential Candidate 

Committees 

454 42 412 492 $9,280,109 $7,056,753 

Senate Candidate Committees 846 144 702 2,301 $259,219,443 $299,316,785 

House Candidate Committees 4,015 1,152 2,863 13,490 $330,503,975 $353,783,117 

Party Committees 634 159 475 3,367 $429,995,340 $435,980,255 

Federal Party Committees 

Reported Nonfederal 

585 159 426 2,989 $351,484,957 $361,736,781 

Party Activity 49 0 49 378 $78,510,383 $74,243,474 

Delegate Committees 81 0 81 0 $0 $0 

Nonparty Committees 4,657 703 3,954 19,204 $219,254,320 $255,822,255 

Labor Committees 372 39 333 1,673 $46,873,881 $56,689,723 

Corporate Committees 1,887 227 1,660 8,404 $60,265,239 $73,782,579 

Membership,Trade and 

Other Committees 2,398 437 1,961 9,127 $112,115,200 $125,349,953 

Communication Cost Filers 205 0 205 94 N/A $4,226,849 

Independent Expenditures by 

Persons Other Than 

Political Committees 

288 34 254 153 N/A $441,726 
90 Appendices 

Divisional Statistics for Calendar Year 1994 

Total 

Reports Analysis Division 

Documents processed 63,830 

Reports reviewed 43,987 

Telephone assistance and meetings 12,337 

Requests for additional information (RFAls) 9,169 

Second RFAls 3,616 

Data coding and entry of RFAls and 

miscellaneous documents 21,201 

Compliance matters referred to Office 

of General Counselor Audit Division 69 

Data Systems Development Division· 

Documents receiving Pass I coding 68,581 

Documents receiving Pass III coding 45,624 

Documents receiving Pass I entry 72,096 

Documents receiving Pass III entry 44,857 

Transactions receiving Pass III entry 

<ln-house 80,545 

- Contract 872,245 

Public Records Office 

Campaign finance material processed 

(total pages) 2,042,632 

Requests for campaign finance reports 12,547 

Visitors 14,705 

Total people served 27,252 

Information telephone calls 19,579 

Computer printouts provided 79,363 

Total income (transmitted to U.S. Treasury) $97,222 

Cumulative total pages of documents 

available for review 12,844,161 

Contacts with state election offices 2,579 

Notices of failure to file with state 

election offices 478 

Total 

Administrative Division 

Contracting and procurement transactions 3,193 

Pieces of outgoing mail processed 127,854 

Publications prepared for print 66 

Pages of photocopying 9,093,794 

Information Division 

Telephone inquiries 91,192 

Information letters 92 

Distribution of FEC materials 13,952 

Prior notices (sent to inform filers 

of reporting deadlines) 52,054 

Other mailings 39,495 

Visitors 171 

Public appearances by Commissioners 

and staff 208 

State workshops 3 

Publications 45 

Press Office 

Press releases 179 

Telephone inquiries from press 14,670 

Visitors 1,765 

Freedom of Information Act 

(FOIA) requests 645 

Fees for materials requested under FOIA 

(transmitted to U.S. Treasury) $20,959 

Clearinghouse on Election Administration 

Telephone inquiries 4,986 

Informational letters 3,778 

Visitors 81 

Publications 6 

Foreign briefings 63 

• Computer coding and entry of campaign finance information 

occur in two phases. In the first phase, Pass I, summary information is coded and entered into the computer within 48 hours of the 

Commission's receipt of the report. During the second phase, Pass 

III, itemized information is coded and entered. 
Appendices 91 

Total 

Office of General Counsel 

Advisory opinions 

Requests pending at beginning of 1994 4 

Requests received 40 

Issued 30 

Not Issued' 6 

Pending at end of 1994 8 

Compliance cases t 

Pending at beginning of 1994 318 

Opened 342 

Closed 340 

Pending at end of 1994 320 

Litigation 

Cases pending at beginning of 1994 40 

Cases opened 20 

Cases closed 15 

Cases pending at end of 1994 45 

Cases won 11 

Cases lost 3 

Cases voluntarily dismissed o 

Cases dismissed as moot 1 

Law Library 

Telephone inquiries 1,593 

Visitors 781 

'Three advisory opinion requests did not present sufficient 

facts, two resulted in a 3-3 split vote and one did not qualify for an 

opinion because it concerned activity that had already taken place. 

t In previous annual reports, the category "compliance cases" 

included only Matters Under Review (MURs). As a result of the 

enforcement prioritization system, the category has been expanded 

to include internally-generated matters in which the Commission 

has not yet made reason to believe findings. 

Audit Reports Publicly Released 

Year Title 2* Title 26 t Total 

1976 3 1 4 

1977 6 6 12 

1978 98 t 10 108 

1979 75 t 9 84 

1980 48 t 11 59 

1981 27 t 13 40 

1982 19 1 20 

1983 22 0 22 

1984 15 2 17 

1985 4 9 13 

1986 10 4 14 

1987 12 4 16 

1988 8 0 8 

1989 2 7 9 

1990 1 6 7 

1991 5 8 13 

1992 9 3 12 

1993 10 2 12 

1994 5 17 22 

Total 379 113 492 

Audits Completed by Audit Division, 1975-1994 

Total 

Presidential 93 

Presidential Joint Fundraising 11 

Senate 16 

House 135 

Party (National) 46 

Party (Other) 116 

Nonparty(pACs) 75 

Total 492 

, Audits for cause: The Commission may audit any federally 

registered political committee: 1) whose reports do not substantially 

comply with the law; or 2) if the Commission has found reason to 

believe that the committee has committed (or is about to commit) a 

violation of the law. 2 U.S.C. §§438(b) and 437g(2). 

tTitle 26 audits: The statute requires the Commission to give 

priority to these mandatory audits of publicly funded Presidential 

candidates and committees and convention committees. 

t Random audits: The majority of these audits were performed 

under the Commission's random audit policy (pursuant to the 

former 2 U.S.C. §438(a)(8)), which provided for random audits of all 

categories of political committees. The authorization for random 

audits was repealed by Congress in 1979. 
92 

Status of Audits, 1994 

Pending 

at Beginning 

of Year 

Opened Closed Pending 

at End 

of Year 

Presidential 16 " 

15 1 0 

Presidential Joint Fundraising 1 0 1 0 

Senate 5 0 1 4 

House 5 0 4 1 

Party (National) 0 0 0 0 

Party (Other) 3 8 0 11 

Nonparty (PACs) 0 0 0 0 

Total 29 9 22 16 
93 Appendix 6 

1994 Federal Register 

Notices 

1994-1 

Filing Dates for the Oklahoma Special Elections (59 

FR 5769, February 8, 1994) 

1994-2 

11 CFR Part 1 04: Recordkeeping and Reporting by 

Political Committees; Best Efforts; Final Rule; 

Announcement of Effective Date (59 FR 10057, 

March 3, 1994) 

1994-3 

11 CFR Part 8: National Voter Registration Act of 

1993; Notice of Proposed Rulemaking (59 FR 11211, 

March 1 0, 1994; corrections, 59 FR 14022, March 24, 

1994) 

1994-4 

Rulemaking Petition: Center for Responsive Politics 

[re Presidential Compliance Funds]; Notice of 

Availability (59 FR 14794, March 30, 1994) 

1994-5 

11 CFR Part 102: Special Fundraising Projects and 

Other Use of Candidate Names by Unauthorized 

Committees; Final Rule; Transmittal to Congress (59 

FR 17267, April12, 1994) 

1994-6 

Filing Dates for the Kentucky Special Election (59 FR 

22161, April29, 1994) 

1994-7 

Filing Dates for the Oklahoma Special Elections (59 

FR 32207, June 22, 1994) 

1994-8 

11 CFR Part 8: National Voter Registration Act of 

1993; Final Rule (59 FR 32311, June 23, 1994) 

1994-9 

11 CFR Parts 107, 114 and 9008: Presidential 

Election Campaign Fund and Federal Financing of 

Presidential Nominating Conventions; Final Rule; 

Transmittal to Congress (59 FR 33606, June 29, 

1994) 

1994-10 

11 CFR Part 1 02: Special Fund raising Projects and 

Other Use of Candidate Names by Unauthorized 

Committees; Final Rule; Announcement of Effective 

Date (59 FR 33643, June 30, 1994) 

1994-11 

11 CFR Parts 1 00 and 113: Expenditures; Personal 

Use of Campaign Funds; Proposed Rule; Request for 

Additional Comments (59 FR 42183, August 17, 

1994) 

1994-12 

11 CFR Parts 107, 114 and 9008: Presidential 

Election Campaign Fund and Federal Financing of 

Presidential Nominating Conventions; Final Rule; 

Announcement of Effective Date (59 FR 43726, 

August 25, 1994) 

1994-13 

11 CFR Parts 9003, 9004, 9006, 9007, 9033, 9034, 

9037 and 9038: Public Financing of Presidential 

Primary and General Election Candidates; Notice of 

Proposed Rulemaking (59 FR 51006, October 6, 

1994; corrections, 60 FR 3700, January 18, 1995) 

1994-14 

11 CFR Part 11 0: Communications Disclaimer 

Requirements; Notice of Proposed Rulemaking (59 

FR 50708, October 5, 1994) 

1994-15 

11 CFR Part 1: Privacy Act; Implementation [re 

Inspector General Investigatory Files]; Proposed Rule 

with Request for Comments (59 FR 53946, October 

27, 1994) 

1994-16 

Privacy Act; Proposed Notice of New and/or Revised 

Systems of Records (59 FR 53977, October 27, 1994) 

1994-17 

11 CFR Parts 9001-9007: Rulemaking Petition [re 

Post-Presidential Election Activity]; Anthony F. 

Essaye and William Josephson; Notice of Availability 

(59 FR 63274, December 8, 1994) 
94 

1994-18 

11 CFR Parts 9003, 9004, 9006, 9007, 9033, 9034, 

9037 and 9038: Public Financing of Presidential 

Primary and General Election Candidates; Extension 

of Comment Period (59 FR 64351, December 14, 

1994) 

1994-19 

11 CFR Part 8: National Voter Registration Act of 

1993; Technical Amendment; Final Rule (59 FR 

64560, December 15, 1994) 
95 Appendix 7 

House and Senate 

Campaign Finance Reform 

During 1994, the House and Senate continued 

discussion of two major campaign finance reform bills, 

H.R. 3 and S. 3. The proposed legislation would have 

had a substantial impact on the campaign finance 

laws, which have remained essentially unchanged 

since 1980. However, the legislation was never enacted. 

At the heart of H.R. 3 and S. 3 was a system of 

voluntary campaign spending limits in conjunction 

with publicly funded benefits for participating candidates. 

The Senate passed S. 3 on June 17, 1993, and the 

House passed H.R. 3 on November 22, 1993. Congress debated the bills during 1994 until September 

30, when a procedures vote in the Senate effectively 

killed the legislation. 

The proposed bills addressed 35 of the 63 legislative recommendations that the Commission had sent 

to Congress in 1993. (See Annual Report 1993, 

p. 37.) 

The summary of the two bills that appears below 

has been excerpted from material prepared by the 

Congressional Research Service.1 

The bills [S. 3 and H.R. 3] reflected the positions of 

the Democratic leadership in each House and were 

based on a bill ... passed by both Houses in the 102d 

Congress and vetoed by President Bush. ... 

The Senate-passed S. 3-the Congressional Campaign Spending Limit and Election Reform Act of 

1993-establishes voluntary spending limits for Senate candidates (only) in exchange for a broadcast rate 

of 50 percent of the lowest unit rate and two mailings 

at the third-class non-profit rate (in general election), 

with public funding as a backup mechanism to compensate a candidate opposed by independent expenditures or by a non-complying opponent who exceeds 

the limit. Additional spending is allowed to compen1 CRS Report for Congress, "Campaign Finance Reform: 

Comparison of Current Law with H.R. 3 and S. 3, As 

Passed by the House and Senate in the 1 03d Congress," 

Joseph E. Cantor, Specialist in American National Government, Government Division, and L. Paige Whitaker, Legislative Attorney, American Law Division, December 29, 1993 

(93-1067 GOV). 

sate for excess spending by an opponent or independent expenditures. The bill calls for a tax on candidates who exceed the limit .... 

The House-passed H.R. 3-the House of Representatives Campaign Spending Limit and Election 

Reform Act of 1993-estab/ishes voluntary spending 

limits for House candidates in exchange for voter 

communication vouchers, based on a matching fund 

system, equal to one-third of the spending limit; additional vouchers are provided to participating candidates opposed by independent expenditures or by a 

non-complying opponent, or who win closely contested primaries. It establishes a Make Democracy 

Work Fund to finance vouchers, but makes the bill's 

provisions contingent on subsequent enactment of 

revenue legislation .... 

Both bills address the issue of restraining political 

action committees (PACs): the House bill imposing an 

aggregate limit on PAC receipts (and also large donor 

contributions) by House candidates and the Senate 

bill prohibiting PAC contributions to Federal candidates (with a fallback of an aggregate PAC receipts 

limit and lower PAC contribution limit if the ban is 

declared unconstitutional). Both bills add restrictions 

on such perceived loopholes in the current system as 

independent expenditures, bundling, and soft money.