Volume 17, Number 1

8 1\IJY'ISOOY OPINIC6S

7 COMMISSIONERS: 1991 Of~icers Elected

camT CASES

7 Cammon Cause v. FEC, NRSC Appellant

10 CCtlPLUNCE: MURs Released to the Public

3 IlEl'ORl'lI«i: Reports Due in 1991

I PUBLIC FUNDING: 1992 Shortfall

TABLE OF <INl'mTS

RmULATIOOS

6 proposed Changes to Public Funding Rule

Matching Fund Payments

Under the public funding law, if there

is insufficient money in the Fund to cover

all entitlements, the conventions and the

general election nomdnees receive priority

over primary candidates. In the event of a

1992 shortfall, the Department of the

(continued)

1990. (see Agenda Document #90-110 for

further details, including the assumptions

used in developing the current estimates

and possible revisions to the matching fund

certification process should a shortfall

occur. )

The new information suggests that the

volume of dollars checked off by taxpayers

on their 1990 returns has remained about

the same as in the previous year. Nevertheless, it appears that a shortfall of

public funds will occur in the 1992 Presidential election cycle unless Congress

intervenes. Due to changing economic

conditions, the Consumer Price Index has

increased more than originally expected.

Because payments from the Fund are indexed

to inflation while the one-dollar tax

checkoff is not, the- recent jump in inflation has caused the Commission to project a

larger shortfall for the 1992 elections

than previously estimated.

FEDERAL ELECTION COMMISSION

January 1991 999 EStreet NW Washington DC 20463

ALLOCATICti 'I'RAINItI3 FOO.

PARTY CCIIMI'l"l'EES

During January through March,

the Commission will be conducting

training sessions for party COI:IIIlittees on the new allocation rules.

Committee staff wishing to attend

one of the training sessions listed

below should call the Information

Services Division, 800/424-9530 or

202/376-3120, and ask for the

contact person.

New York, NY, January 22-23

Kathlene Martin

Boston, Mo, January 24

Patricia ttiein

Denver, 00, February 1

Dorothy Hutcheon

Des Moines, lA, February 20

Ian Stirton

Austin, TX, March 5

Greg Scott

Columbus. 00, March 19-20 (tentative)

Janet Hess

SiKJRTFAIJ.. IN PRESIDENTIAL

CAMPAI~ FUm: 1992

In its meeting of November 29, 1990,

the Commission considered revised Presidential Election Campaign Fund projections

for the 1992 election cycle. The latest

projections show that the Fund's deficit

could reach $6 million by th~ end of the

1992 election year. However, in the first

three months of 1992--a critical time for

campaigns--primary candidates could be

short-changed approximately $15 million,

depending on how the u.s. Department of

Treasury handles disbursements from the

FUnd. The overall projected cost for the

1992 primary candidates, conventions and

general election candidates is $187

million. These projections are based on

information available as of November 25,
Fede:cal Election Conmission, 999 E St:ceet, HW, Washington, DC 20463

800/424-9530 202/376-3120 202/376-3136 (TOO)

FEDERAL ELECTION COMMISSION Volume 17, Numbe

<:aoparison. The 85-percent method

differs from the set-aside method in that

primary candidates would receive a greate

proportion of their matching funds betwee

January and April 1992, during the active

primary season. For example, under the

set-aside approach, candidates would

receive approximately 67 percent of match

ing funds certified during those months.

By contrast, under the second approach,

candidates would receive as percent of

their January-through-April certification

The drawback to the second method is the

difficulty in predicting the correct

percentage, and the consequences of settin

the percentage too high (with funds runni

out in ApriljMay) or too low (with funds

left over in August that could have been

distributed dU5ing the active primary

campaign period).

Beginning in June 1992, cumulative

payments under the set-aside approach wou

exceed those under the 85 percent method.

By September, cumulative payments under

both methods would reach equality.

05--Percent Method. Under the second

approach, an attempt would be made to

establish an optimal percentage of paymen

to primary candidates, a percentage that

would remain constant from January throug

August 1992, the date of the last convention. Thereafter, payments would be on a

"pay as you go" basis. The fixed percent

age would be based on estimated future

checkoff deposits to the Fund through Jul

1992 and anticipated payments to primary

candidates. Based on the FEC Audit

Division's projections, the fixed

percentage would be about 85 percent (90

percent minus a 5 percent cushion). In

other words, 1992 primary candidates woul

receive 85 cents for every dollar o~ matc

able funds certified from January through

August. As with the set-aside method,

discussed above, the 85-percent method

would eventually result in the full payme

of matching fund certifications by spring

1993.

Walter J. stewart, Secretary of the Senate,

Ex Officio Commissioner

oonnald K. Anderson, Clerk of the House of

Representatives, Ex Officio Commissioner

2

Jolm warren P1cGany, Chairman

Joan D. Aikens, Vice Chairman

Lee Ann Elliott

'lhomas J. Josefiak

Danny L. McDonald

Scott E. '1b.omas

January 1991

1The $114 million represents the estimated

$112.98 million needed for the general

election candidates and about $1.08 million

needed for the nominating conventions of

the major parties. The major parties will

receive most of their funding--an estimated

$21.52 million--in July 1991; the 1992 payment represents a cost-oE-living adjustment

to the convention entitlements based on the

1991 inflation factor.

Treasury will have to decide how to handle

matching fund payments to primary candidates. In its November meeting, the

Commission discussed two possible

approaches.

set--Aside Method. One way to handle

the shortfall would be a "pay as you gall

method under which Treasury would

reserve--or set aside--sufficient public

funds to cover the 1992 entitlements to the

convention committees and the general

election nominees at the beginning of the

election year. If this were to

happen--i.e., if Treasury were to set aside

the estimated $114 million needed to

satisfYlthe convention and general election

funding --only $12.6 million would be

available for early January 1992 matching

fund payments, currently estimated at $19.5

million. The unpaid portion from the early

January payments ($6.9) plus the remainder

of January certifications ($5.5) would be

defrayed in February on a proportional

basis using January check-off deposits

(estimated at $109,562). Unpaid certification amounts would continue to carryover

to the next month and, when added to that

month's certifications, would be paid on a

pro rata basis from check-off funds deposited that month. The Fund would probably

not have a balance sufficient to pay the

full amount of accumulated carryovers until

spring 1993 (assuming that the Treasury

Deparbnent found that the use of 1993

checkoff deposits for 1992 entitlements was

an acceptable practice).
FEDERALELECTION COMMISSION Volume 17, Number 1

New Form 3X: Special Note to PACs

and party CoPmittees

starting with 1991 activity, PACs and

party committees must file their reports on

the revised Form 3X. The Detailed Summary

Page of the revised form contains certain

changes that correspond to the new allocation rules, which became effective January

1, 1991. In the first reporting notice

sent to committees for disclosure of 1991

activity, the Commission will enclose the

revised Form ax as well' the new Schedule H

forms. These schedules must be used by

committees reporting allocated activity.

For more information on the allocation

rules, including the new reporting requirements, see the November 1990 Supplement on

Allocation. (Additional copies are available from the FEC.)

Please note that the new allocation

reporting rules apply only to political

committees that have both federal and

nonfederal accounts. committees that do

not maintain nonfederal accounts must

nevertheless use the revised 3X Detailed

Summary Page, since the line numbers have

changed.

(continued)

REPORTS OOE IN 1991

Reports Covering 1991 Activity

To find out what reports your commi ttee

must file to report 1991 activity, check

the Reporting Frequency Chart on page 5.

Then check the accompanying Reporting Dates

Charts. Please note that if any special

elections are held in 1991, committees

active in those elections may have to file

special election reports, as explained

below.

Year-EOO. Reports Covering 1990 Activity

All committees must file a 1990 yearend report due January 31, 1991. The

coverage and reporting dates are found in a

chart on page S.

Please note that the 1990 year-end

report is the last report PACs and party c~ttees will file on the old Form 3X;

see special note below.

mitted to Congress similar suggestions to

remedy the Presidential Fund shortfall.

See the May 1990 Record.}

3

January 1991

commission Discussion of

Legislative Action

Even with an education program, however, it now appears that a '1992 shortfall

may be inevitable unless Congress intervenes. The Commission discussed possible

emergency legislative recommendations that

would alleviate the shortfall. Among the

recommendations discussed at the November

29 meeting were:

o An emergency appropriation of funds to

compensate for the 1992 shortfall;

a The elimination of the Presidential

convention committee entitlements, thereby freeing approximately $22.6 million

that could be used to finance the

primaries;

o The adjustment of the checkoff amount by

the inflation factor, thereby increasing

the total amount checked off.

o The replacement of the checkoff with an

entitlement approach.

No recommendations were adopted at the

meeting. (In March 1990. the agency transccmnission Action

In addition to coordinating with the

Department of the Treasury, the Commission

has communicated with the Internal Revenue

Service on the shortfall issue and has

conducted an outreach effort--including

congressioqal testimony, speeches, news

releases and articles--to alert Congress,

the press and the public to the Presidential funding shortfall. The Commission has

also been researching public understanding

of the Presidential checkoff on the tax

forms. Using the results of this research,

the agency plans to sponsor an education

program to inform the public about the

dollar checkoff, e.g., how it works, where

the money goes, etc.

Department of Treasury's NPRM

The Department of the Treasury is the

agency responsible for deciding how to deal

with the potential shortfall in the Fund.

On December 13, 1990, the· Treasury Department's Internal Revenue Service published a

Notice of Proposed Rulemaking (NPRM) seeking comments on draft regulations that

would establish procedures for making primary matching fund payments from the Fund

in the event of a shortfall (see 55 FR

51301). The IRS proposes a set-aside

method similar to the one described above.

The Commission plans to comment on the

rulemaking notice before the February 11/

1991, conmsnt deadline. The Conmission

also plans to testify at the IRS public

hearing on the proposed rules scheduled for

February 11, 1991 (see 55 FR 51303).
January 1991 FEDERAL ELECTION COMMISSION

CoDmittees Active in Special Elections

Committees authorized by candidates

running in any 1991 special election must

file pre- and post-special election

reports, in addition to regularly scheduled

reports. 11 CFR 104.5(h).

PACS and party connittees supporting

candidates running in special elections may

also have to file special election reports,

unless the committee is filing on a

monthly, rather than semiannual, basis.

11 CFR 104.5(c)(3) and 104.5(hl.

The Record will publish special

election reporting requirements if any

special elections are scheduled during

1991.

Late Filing

The Federal Election Campaign Act does

not permit the Commission to grant extensions of filing deadlines under any circumstances. Failure to file a report on time

could result in enforcement action by the

Commission.

Reporting Labels

Shortly before a reporting deadline,

the Commission mails each committee treasurer a reporting notice and the appropriate

reporting form. Treasurers should use the

peel-off label from the mailing envelope to

complete Line 1 of the reporting form.

Corrections to the committee's name or

address should be made directly on the

label, but note that the committee must

also file an amended statement of Organization to reflect a change in address or any

other change in the information previously

disclosed on the Statement. Such amendments must be filed within 10 days of the

change. 11 CFR 102.2(a)(2).

For further information on reporting,

call the FEe: 800/424-9530 or 202/376-

3120.

Where to File

Listed below are the offices where

committee treasurers must file FEe reports.

Please note that a list of state filing

offices is available from the Commission.

House and Senate candidate CODmi.ttees.

principal campaign committees of House and

Senate candidates file with the Clerk of

the House or the Secretary of the Senate,

as appropriate. 11 CFR 105.1 and 105.2.

Addresses:

o Clerk of the House, Office of Records and

Registration, 1036 Longworth House Office

Building, washington, DC 20515-6612; or

4

Volume 17, Numbe

a Secretary of the Senate, office of Pub

Records, 232 Hart senate Office Buildin

Washington, DC 20510-7116.

The principal campaign committee must

also simultaneously file a copy of every

report and statement with the Secretary o

State (or other designated officer) of th

state in which the candidate seeks (or

sought) election. 2 U.S.C. §439(a)(2)(B

Note that other authorized committee

of the same candidate file their reports

with the principal campaign committee,

which then files these reports, along wit

its own, with the appropriate federal and

state offices. The principal campaign

committee must also file a consolidated

report on Form 3z. 11 eFR 102.1(b) and

104.3(f).

Presidential Committees. principal

campaign commdttees of Presidential cand

dates file with the FEC, 999 E Street, NW

washington, DC 20463. 11 CFR 105.3. The

principal campaign committee must simultaneously file a copy of each report and

statement with the Secretary of State (or

equivalent officer) of the each state in

which the cormnittee makes expenditures.

11 CFR 108.2. Other authorized committee

of the same candidate file their reports

with the principal campaign committee,

which then files their reports, along wit

its own, wi th the appropriate federal and

state offices. 11 CFR 102.1{b) and

104.3{f). The principal campaign commit

must also file a consolidated report on

Form 3P.

PACs and party Coomittees. Generally

PACs and party committees file with the

FEC, 999 E street, NW, washington, DC

20463. 11 CFR 105.4. There are, howeve

two exceptions: Committees supporting on

House candidates file with the Clerk of t

House; those suppOrting only Senate candidates file with the Secretary of the

senate. 11 CFR 105.1 and 105.2. The

addresses for these offices are given und

the instructions for House and Senate

committees, above.

PACs and party committees nrost simul

taneously file copies of reports and

statements with the Secretary of state (o

other designated officer), as follows:

a Co~ttees making contributions or exp

ditures in connection with House and

Senate campaigns file in the state in

which the candidate seeks election. T

committee is required to file only tha

portion of the report applicable to the

candidate in that state. 2 u.S.C.

§439(a)(2)(B) .
January 1991 FEDERAL ELECTION COrvlMISSION

Filing Date1

4/15/91

7/15/91

10/15/91

1/31/92

2/20/91

3/20/91

4/20/91

5/20/91

6/20/91

7,120/91

8/20/91

9/20/91

10/20/91

11/20/91

12/20/91

1/31/92

Volume 17, Number 1

1/1-3/31

4;1-6/30

7;1-9/30

10;1-12/31

Pericxi Covered Filing Date1

Period Cove red

Per1'od Covered F1'I"10g Datel

1/1-1131

~/1-2126

3/1-3/31

4/1-4/30

5/1-5/31

6/1-5/30

7/1-7/31

8/1-8/31

9/1-9/30

10/1-10/31

11/1-11/30

12/1-12/31

1/1/91-6/30/91 7/31/91

7/1/91-12/31/91 1/31/92

closing date 1/31/91

of last report

through

12/31/90

Report

1st Quarter

2nd Quarter

3rd Quarter

Year-end

1991 Quarterly Reports (option available to

Presidential CODIDittees only)

February

March

April

May

June

July

August

September

October

November

December

Year-end

1Reports sent by registered or certified

mail must be postmarked by the filing date;

otherwise they must be received by that

date. 11 CFR 104.5(e).

Report

Mid-year

Year-end

1991 Monthly Reports

Report

1991 Semiannual Reports

Report Period Covered Filing Date1

Year-end

REPORTIOO llA.TES CHARTS

1990 Year-end Beport (all coaadttees)

5

1Not e: All committees must also file a

1990 year-end report, due 1/31}91.

2Including committees of candidates retiring debts from a previous election or

running for a future election.

3presidential committees wishing to change

their filing frequency during 1991 should

notify the Commission.

4pACS and party committees wishing to

change their filing frequency during 1991

must notify the Commission in writing when

filing a report under the committee's

current schedule. A committee may change

its filing frequency only once a year.

11 eFR 104.5(c).

Reporting Frequency

Presidential

Candidate

CoIllllittees

Type of SemiFiler annual Quarterly Monthly

House/Senate I

Candidate 2

committees

PACS or party

Committees

-/ ---or-- -/

(Choice)3

I

I --------or------- -/

__________I_(_Ch_O_i_C_e_}_4 _

o Cormdttees making contributions or expenditures in connection with Presidential

candidates file in the states in which

the Presidential committee and the donor

committee have their headquarters.

11 ern 108.4,

1991 REPORTIOO
FEDERAL 8£CTION COrvlMISSION Volume 17, Numbe

Proposed Change Affecting All CcDnittee6:

Redesignations and Reattributions

To monitor compliance with the 60-day

time period for obtaining reattributions

and redesignations of contributions, a

proposed change to 11 eFR 110.1(1) would

require committees to retain documentatio

demonstrating that the redesignation or

reattribution was received within the 60-

day deadline.

o Candidate agreements;

o Projected deficiency in the Presidentia

Election campaign Fund (see article on

page 1);

a High error rates in matching fund

submissions;

o Inclusion of computer tapes or diskette

in matching fund submissions, if the

committee has computerized its

contributor records;

o Matching of redesignated and reattribute

contributions;

a Application of the 10 percent rule in

determining a primary candidate's date 

ineligibility;

o Contributions received by a candidate w

continues to campaign after his or her

date of ineligibility;

o Documentation of qualified campai90

expenses allocated to particular states

o Transfers and loans from a candidate's

publicly funded committee to a committe

authorized by the candidate for a

different election;

o Reimbursements by media personnel and th

Secret service for travel costs;

a Joint fundraising;

a Subpoenas issued during Commission

audits;

o Double counting of repayable amounts;

o Repayment of interest received on publi

funds;

o Repayments for exceeding both the state

and the overall spending limits; and -

o Notification of repayment determination

and failure to provide needed records.

6

January 1991

CC»IMI!NI'S soo:;m' C6 PROPOSED

'10 PUBLIC FDWCIN3 :ROLES

On January 2, 1991, the Commission

published a Notice of Proposed Rulemaking

in the Federal Register seeking conments on

proposed changes to the public financing

rules for Presidential primary and general

election candidates. The Commission also

seeks comments on a proposed change to the

general regulations that would affect all

types of conunittees. Written comments on

the rulemakiog notice will be due 00

February 19, 1991. To order a copy of the

Federal Register notice, call the FEC's

Information Services Division (800/424-

9530; 202/376-3120).

Based on its experience in administering the 1988 public financing program, the

Commission proposed several modifications

to its regulations at 11 CFR Parts 9001-

9007, 9012 and 9031-9039. These regulations implement 26 U.S.C. Chapters 95 and

96, the public financing statutes. l Moreover,one proposed change implementing the

Federal Election Campaign Act (Title 2 of

the united States Code) would also affect

non-Presidential candidates and committees.

Listed beiow are the topics addressed

in the proposed ru1emaking.

Proposed Changes to the Presidential

Public Funding program.

The Rulemaking Notice proposes

substantive changes in two areas that

affect primary election candidates:

o The allocation of expenditures to the

state spending lim!ts; and

o The fundraising exemption from the state

spending limits.

other changes are proposed in the

following areas:

1Please note that, on October 3, 1990, the

Commdssion prescribed final rules regarding

the format of coqruterized information subm~tted during the audit process by

publicly funded Presidential candidates.

See 55 FR 40377; see also the summary in

the August 1990 Record. Note also that the

Commission recently published a rulemaking

notice seeking comments on proposed changes

to the rules governing publicly funded

Presidential nominating conventions. see

55 FR 34267, August 22, 1990; see also the

surrmary in the OCtober 1990 ~cord.
Volume 17, Number 1

FEe ELECTS NDl OFFICERS

on December IB, 1990, the Commission

unanimously elected the 1991 officers:

John Warren McGarry as Chairman and Joan D.

Aikens as Vice Chairman. Mr. McGarry

succeeds former Chairman Lee Ann Elliott;

Mrs. Aikens succeeds Mr. McGarry as Vice

Chaieman.

Commissioner MCGarry, a Democrat, was

first appointed to the Commission in 1978,

after serving as Special Counsel on Elections to the House Administration Commdttee. Before that, he combined private law

practice with service as Chief Counsel for

the Special Committee to Investigate

Campaign Expenditures-~a House commdttee

created every two years through 1972 to

oversee House elections. Before his work

with Congress, Mr. McGarry served as Assistant Attorney General for Massachusetts.

Mr. McGarry graduated cum laude from

Holy Cross College, performed graduate waek

at Boston University and earned a J.D.

degree from Georgetown university Law

School. He was reappointed to the Commission in 19B3 and 1989. His current term as

Commissioner expires in 1995.

Commissioner Aikens, one of the original members of the Commission, was first

appointed in 1975. Before her appointment,

Mrs. Aikens was an executive with Lew

Hodges Communications, a public relations

firm in Valley Forge, pennsylvania. She

was also a member of the pennsylvania

Republican State Committee, president of

the Pennsylvania Council of Republican

WOmen and on the Board of Directors of the

National Federation of Republican Women.

A native of Delaware County, pennsylvania .. Mrs. Aikens has been active in a

variety of volunteer organizations. She is

currently a member of the Commonwealth

Board of the Medical College of Pennsylvania and a member of the Board of

Directors of Ursinus college, where she

received her B.A. and an honorary Doctor of

Law degree. Most recently reappointed to

the Commission in'1989, Mrs. Aikens'

current tenn expires in 1995.

7

January 1991 FEDERAL ELECTION COMMISSION

I For a summary of the district court

decision, see the March 1990 Record.

2FEC v. NRSC, Civil Action No. 90-

2055 (GAG), August 24, 1990i see the octobe r

1990 Record for a summary of this suit.

CAUSE v. FEC;

Nl\.TICNU. REPUBLICAN SEN\'lURIAL CCMlITrEE,

APPELI:.MT (90-5317)

on November 13, 1990, the U.s. Court of

Appeals for the District of Columbia, in a

per curiam decision, ruled that the

district court had properly denied as moot

a motion to intervene filed by the National

Republican Senatorial committee (NRSC).

on August 20, 1990, NRSC filed a motion

with the U.s. District Court for the

District of Columbia seeking to intervene

in COlmllon cause v. FEe (Civil Action No.

89-0524'(GN3»). NRSC wished to intervene

in the case to oppose a motion filed by

Cbmmon Cause seeking enforcement of a

mandate issued by the court in January

1990. In its January decision, the court

had declared that the Commission's

dismissal of an administrath'e complaint

filed by Common Cause against NRSC was

contrary to law. The court remanded the

case to the FEC with instructions to 1

conform with the court's declaration. In

June 1990, Common Cause asked the court to

enforce that mandate by requiring the FEC

either to reach a conciliation agreement

with NRSC or file an enforcement action

against the cOlllnittee. Common cause withdrew its motion as moot on AuguSt 24, when

the FEC filed suit against NRSC. In light

of Conanon Cause's withdrawal of its motion,

the district court ruled that the case was

closed and that NRSC's motion to intervene

in the motion was therefore moot.

The appeals court, granting the FEC's

motion for summary affirmance, upheld the

district court order denying NRSC's motion

to intervene. The appeals court noted

that NRSC's motion, although it criticized

the January order, sought to intervene only

for the purpose of opposing -Common Cause's

motion, which was later withdrawn. The

court also noted that "NRSC is currently

able to challenge the Federal Election

Commission's allegations of election violations in [FEC v. NRSC} ••. , which remains

pending in district court."
FEDERAL ELECTION COMMISSION Volume 17, Numb

IThe Commission noted that this advisor

opinion does not reach any issues conce

ing the committee's debts for campaign

services. The opinion also does not

address the prospective conduct of the

committee, as the committee is not a

requester. 11 CFR 112.1(b).

would resell the goods to raise funds.!

under the proposal, Suarez would purcha

the items from the suppliers and sell th

to the committee at a profit. The comm

tee would pay Suarez for the items in

advance and then sell them at a mark-up

using the profits to repay campaign deb

Suarez would repurchase any items not s

by the committee within a commercially

reasonable time. Suarez would then mar

the repurchased items to the general pu

and to other political committees who

contracted with Suarez for the same typ

"sale-far-resale" arrangement. Althoug

Suarez does not normally sell merchandi

for resale, the corporation plans to ma

such arrangements with other political

conanitteest pending Commission approval 

the proposal.

Under the Federal Election campaign

Act, corporations are prohibited from

making contributions or expenditures in

connection'with a federal election.

2 U.S.C. §441b{a). Contributions and

expenditures are defined to include

"anything of value" given in connection

with a federal election, including good

and services provided at less than the

usual and normal charge. 2 U.S.C. S441

(b)(2)~ 11 eFR 100.7{a)(1) (ii1)(B) and

114.1(a)(1).

In determining whether vendor/comm

fundraising arrangements result in

contributions from the vendor, the

Commission has considered whether the

committee--rather than the vendor--assum

the financial risk of the venture. ADs

1990-1 and 1989-21; see also ADs 1988-1

1979-36 and 1976-50. The Suarez propos

meets this concern, in part, because th

committee wi11:

o Pay for the goods in advance; and

o Exercise complete control over the go

including the assumption of marketing

costs.

TWo other conditions, however, shou

also be met:

o If Suarez repurchases any items (thos

that the co~ttee is unable to sell)

the repurchase price may not be highe

than the usual and normal charge

prevailing at the time of repurchase

8

January 1991

AD\7ISORY OPINICfi SU'lMARIES

ADVISORY OPINI~

Recent requests for advisory opinions

(AORs) are listed below. The full text of

each AOR is available for public review and

comment in the FEe's Public Records Office.

AOR 1990-27

Transfer to party committeets federal

account of funds mistakenly deposited in

nonfederal account. (Date Made Public:

December 5, 1990; Length: 2 pages)

NJ 1990-19: Vendoc/COIIlIlittee Relationship:

sale and Repurchase of

Fund.caising Items

The Suarez Corporation may sell jewelr::y and

similar items to a campaign committee,

which will resell the items for profit;

SUarez may also repurchase the items,

subject to 'certain restrictions. To ensure

that a corporate contribution does not

result from the transactions, certain

conditions must be met: (1) The committee

must pay Suarez in advance for the goods;

(2) in the event the goods are repurchased

by Suarez, the repurchase price must not

exceed the usual and normal charge then

prevailing and must be reduced by any

adnUnistrative costs incurred by Suarez;

and (3) Suarez must make the proposed plan

available, on equal terms, to both poEtical and nonpolitical customers.

suarez, a mail order business, normally

retails merchandise such as jewelry, coins

and medalst which it obtains from suppliers

at the fair market cost. In order to help

a campaign committee that now owes Suarez

$82,OOO--a debt incurred through a division

of Suarez that provides advice to candidates--SUarez proposes a new venture: It

would sell merchandise at a reduced price

to the political committee, which in turn

1\OR 1990-28

Telephone secvlce bureau's provision of

900-1ine fundraising services to committees. (Date Made public: December 7,

1990~ Length: 16 pages)

AOR 1990-26

Campaign committee's liquidation of asset

(computer). (Date Nade Public: December

3, 1990~ Length: 1 page)
January 1991 FEDERALELEC1l0N COMMISSION

(even if the original price paid by the

conunittee was higher) i and

o The repurchase price must be reduced by

the administrative costs incurred by

Suarez in selling and taking back the

items, costs that Suarez will nnt

otherwise recapture fr01l\ the committee.

Finally, in approving vendor/committee

relationships, the Commdssion has also

required the vendor to charge the committee

the same charge offered to nonpolitical

customers in the ordinary course of .

business. ADs 1989-14, 1985-28, 1982-30

and 1978-45. In this regard, the Suarez

proposal must also meet the following

conditions:

o Suarez must make all features of the

proposed plan (including the wholesale

price and repurchase provisionsI available to nonpolitical customers on the

same tenms Offered to political

customers; and

o The plan must conform to the normal

industry practice of companies engaged in

volume sales of jewelry and similar merchandise. See AD 1979-36.

The Suarez Corporation's failure to

comply with the conditions set forth in the

advisot"y opinion will result in prohibited

in-kind contributions , (Date Issued:

November 15, 1990; Length: 5 pages)

NJ 1990-22: Blue Cross/Blue Shield's

Solicitation of Member Plans"

Personnel

Blue Cress and Blue Shield Association

(BCBSA), a nonprofi t corporation, may

solicit PAC contributions from the

executive and administrative persormel of

its Regular Member plans since these plans

function as affiliated local units of

BCB$A. If affiliation between BCBSA and

the Plans did not exist, the plans'

executive and administrative personnel

could not be solicited for contributions to

BCSSA's PAC, not ever. under the collection

agent rules.

Affiliation Rules

BCBSA is a national association that

licenses Blue Cross and Blue Shield Plans

throughout the United States. Currently

SCBSA has 74 Regular Member Plans, each

organized locally. (8CBSA has other types

of Member plans, but its advisory opinion

request related only to Regular Member

Plans.) Under FEC regulations, a corporation may solicit contributions to its

separate segregated fund from the executive

and administrative personnel (and families)

of any affiliated organizations. 11 CPR

9

Volume 17, Number 1

114.5(g)(1). The Federal Election Campaign

Act and FEe rules treat a corporation and

its lllocal units" as affiliated; the

regulations clarify that a "local uni t n

may, under certain conditions, include a

franchisee, licensee or state or regional

association. 2 U.S.C. s441a(a)(5)i 11 CFR

100.5(9)(2) and 110.3(a)(1)(ii). The regulations also provide specific factors the

Commission may examine to determine whether

affiliation exists between organizations--

such as BCBSA and its Member Plans-that

are not auto~tically affiliated by virtue

of a parent/subsidiary relationship.

Several of these factors are present in the

relationship between BSBSA and its Regular

Member Plans, as explained below. 11 CFR

lOO.5{g)(4)(ii)(Bl, (C), (E) and (I)j see

also 11 CFR 110.3(a)(3)(1i).

o Factor 1: The organization has the

authority to direct or participate in the

governance of the other organizations.

BCBSA exerts substantial control over the

operations of the Member Plans by requiring adherence to all its membership

standards and by subjecting the Member

plans to close scrutiny.

o Factor 2: 'lbe organization has the

author!ty to hire, demote or otherwise

control the officers of the other

orqanizations. Although BCBSA does not

select the individuals to run the Plans,

it does exert control over the composition of the plans' governing boards.

o Factor 3: '!be orqanizations have COOIOOIl

or ovedapping officers indicative of a

fonml 0[" ongoing relationship. The

composition of BCBSA's own Board of

Directors--pred~inantlycomposed of Plan

CEOs--denotes an overlap of officers

indicative of such a relationship. See

AD 1983-46.

a Factor 4: '!'he organization has an active

or significant role in the fomation of

the other organizations. In orner for

Member Plans to function as Blue Cross/

Blue Shield plans, they must be admitted

for membership and licensed to operate by

BCMSA.

In addition to these factors that

indicate affiliation, the Blue Cross and

Blue Shield system appears to operate as a

single corporate entity. Subscribers ~eceive uninterrupted medical coverage

regardless of the geographic area of

treatment, and there are certain significant centralized operations within the

system.

Therefore, based on the information

presented in the request, the Regular

Member Plans are affiliates of BCBSA,

(cont.inued)
FEDERAL ELECTION COMMISSION Volume 17, Num

MUR 1866

Respondents: (a) New York State Conse

tive party State Committee/1984 Victory

Fund, Vincent G. Downing, Jr., treasur

(b) Sullivan for Senate Committee, Jose

M. SUssillo, treasurer (NY)

CoIIplainant: Muriel F. Siebert and wh

North Seymour, Jr. (NY)

SUbject: Excessive contributions; fail

to disclose in-kind contribution

Disposition: (al U.S. district court j

ment: $15.000 civil penalty; (b) conc

tion agreement: $5~OOO civil penalty

SUbject: Disclaimer

Disposition: U.S. district court judgm

$3,000 civil penalty (case was closed 

1987)

MUR 2345

Respondents~ Republican State Coromitt

Delaware-1984 Victory CoImtittee, John

Shopa, treasurer

Complainant: FEC initiated

Subject: Excessive contributions; exc

sive and unauthorized coordinated expe

tures; inadequate reporting; use of no

federal account containing impermissib

funds

Disposition: $9,000 civil penalty

I'lUR 2636 

Respondents: (a) National Secority

political Action Committee, Elizabeth '

Fediay, treasurer (DC) (re: The PAC's

special project, "Americans For Bush" l

al. (b)-(h) 

Coqtl.ainant: Jan W. Baran, General

Counsel, George Bush for president, In

(DC)

Subject: Disclaimer; failure to repor

contributions accurately

Disposition: (al $6,000 civil pen~lty

(b}-(h) no reason to believe

I'lUR 2691

Respondents: (a) Dave Moss (AZ); (b) D

Moss for U.S. Congress, Dave MosS,

treasurer (AZ)

Complainant: John Parsons (AZ)

SUbject: Destruction of campaign reco

inaccurate reporting; failure to repor

time; failure to file disclosure repor

with the Office of the Arizona Secreta

State

Oisposition: (a) No probable cause to

believe; (b) $1,500 civil penalty

l'IUR 2752

Respondents: (a) Jerry Yudelson (CA);

(b) yudelson for Congress, Jessica Stu

treasurer (CA)

10

January 1991

Collecting Agent Rules

If BCBSA and the regular member Plans

were not affiliated, the Plans could not

function as collecting agents for contributions to BCBSA's PAC. Under 11 CFR

l02.6(b)(1), a collecting agent must, by

definition, be affiliated with the connected orgenization or with the PAC. Thus,

the collecting agent regulations do not

expand an organization's solicitable class.

(Date Issued: November 15, 1990;

Length: 8 pages)

functioning in effect as local units of

SCBSA. SCBSA may therefore solicit the

executive and administrative personnel of

Regular Member Plans for contributions to

BCBSA!s PAC.

I'IJRS RE:LF.N;ED TO THE PUBLIC

Listed below aCe MURs (FEe enforcement

cases) recently released for public review.

The list is based on the FEC press releases

of November 16 and 20, and Decembe r 3,

1990. Files on closed MURs are available

for review in the Public Records Office.

Unless otherwise noted, civil penalties

resulted fram conciliation agreements

reached between the respondents and the

Commission.

IlIlJR 1818

Respondents: (a) Ingham County Democratic

Federal Campaign Fund (MI)~ (b) friends of

Bob Carr, Dennis M. Ritter, treasurer (MI];

(c) Riegle for Senate in '82 Committee,

M.P. patten, treasurer (MI); (d) Howard

WOlpe campaign Committee, wayne M. Deering,

treasurer (MI)

cqU,ainant; FEe initiated

SUbject: Excessive contributions; failure

to file reports; failure to report complete

information on contributions

Disposition: (a) $2,000 civil penalty~

(b) $250 civil penalty; (e) reason to

believe but take no further action;

(d) $250 civil penalty (case was closed in

1986)

MUR 1835

Respondents: National Conservative

Political Action Committee, Leif E. Noren,

treasurer, and Americans to Re-Elect

President Reagan (VA)

OXlplainant: Referral by U.S. Department

of Justice, Public Integrity Section
January 1991 FEDERALELECTION COMMISSION

Complainant: Robert K. Dornan (CA)

SUbject: Disclaimer

Disposition: (a) No reason to believe;

(h) $400 civil penalty

MUR 2771

Respondents: (a) Democratic Senatorial

Campaign Committee, G. Wayne Smith, treasurer (DC); (b) Committe on Letter Carriers

political Education, Florence Johnson,

treasurer (DC); (c) John P. Vinich (WY):

(d) John P. Vinich for U.S. Senate

Committee, Mabel vinich, treasurer (WY)i

(e) united Steelworkers of America Political Action Fund, Local Union 13214 (ILl

Complainant: Jann L. Olsten, Executive

Director, National Republican senatorial

Campaign Committee (DC)

SUbject: Disclaimer:; prohibited union

contributions; excessive contributions

Disposition: (a) $1,000 civil penalty;

(b) $750 civil penalty; (c) no reason to

believe; (d) and (e) reason to believe but

took no further action

MUR 2932

Respondents: (a) Terry Gaudet and

Associates, Inc. (LA); (b) Terry Gaudet

(lA); (c) Beverly Gaudet (IA)

Cc::JDplainant: Refecral by Defense Contract

Audit Agency (VA)

SUbject: Prohibited corporate and govemment contractor contributions; contributions in the name of another

Disposition: (a)-(c) No probable cause to

believe

MUR 2936

Res[XJJXlents: (a) Republican National Committee (DC)i (b) Carroll County Republican

Central Commit tee (Federa I Account), Louis

E. Wiser, Jr., treasurer (MO); (c) Gary W.

Bauer (MO); (d) Helen Delich Bentley (MO);

(e) Richard P. Taylor (MO); (f) James F.

Keenan (SC)

aonplainant: Carroll County Republican

Central Committee (Federal Account), sua

s~nte - S ject: Failure to forward contributions

within time limit; failure to maintain

contribution records; failure to disclose

contributor identities; inaccurate and

incomplete reporting

Disposition: (a) $1,427 civil penalty;

(b) reason to believe but took no further

action; (c) $1,000 civil penalty; (d)-

(f) reason to believe but took no further

action

11

Volume 17, Number 1

MUR 3047

Respondents: (a) simon for Senate, Edward

T. Joyce, treasurer (IL); et al. (b)-(d)

Complainant: John J. CUrry, Jr. (IL)

Subject: Excessive contributions through a

conduit; corporate contribution through

improper sale of campaign assets

Disposition: (a)-(d) No reason to believe

MlJR 3055

Respondents: Friends of Senator David

Karnes Committee, Jon D. Hoffmaster,

treasurer (NE)

Complainant: FEC initiated

SUbject: Excessive contributions

Disposition: $1,000 civil penalty

I«JR 3060/3052

Respondents: (a) Scott E. sidwell (NE);

(b) Sidwell for Congress, Mary S. Berglund,

treasurer (NE); et al. (c)-(el

Complainant: Bill Haivala (NE)

SUbject: Excessive contributions; failure

to disclose in-kind contributions

Disposition: (a)-(e) No reason to believe

MUR 3073

Respondents: Voluntary Contributors for

Better Government: A program of Employees

of International Paper, Arthur W. Brownell,

treasurer (DC)

Complainant: FEe initiated

Subject: Failure to tl::ansfer contributions

from corporate treasury account to PAC

account in a timely fashion

Disposition: $3,500 civil penalty

.KUR 3080

Respondents: (a) Phillip Klinger (IA);

(b) Klinger, Robinson, McCuskey & Ford

(IA); (c) Fred F. Ertl, Jr. (IA); (d) The

Ertl company, Inc., George Volanakis,

President (IA) C~lainant: Carolyn Seeley, Campaign

Manager, Ertl for Congress (IA)

Subject: Corporate contributions/expenditures

Disposition: (a)-(c) No reason to believe;

(d) reason to believe but took no further

action

I«JR 3084

Respondents: The Ray Ellison Industries,

Inc. Political Action Committee, Walter E.

Neilsen, treasurer (TX)

Complainant: FEC initiated

SUbject: Excessive contributions

Disposition: $1,600 civil penalty

(continued)
FEDERAL ELECTIOI\J COlVlrvIISSIOI\J Volume 17, Num

KJR 3116

Respondents: Democratic Party of Oklah

Maxine F. McFalls, treasurer (OK) 

Complainant: FEC initiated

SUbject: Failure to report on time

Disposition: $750 civil penalty

Bulk Rate Mail

Postageand Fees Paid

Federal Election Commission

PermitNumberG-31

I'tlJR 3120

Respondents: National Republican Sena

ial committee, James L. Hagen, treasure

(DC)

CCIllPlainant: Gary J. LaPaille, Chairm

Democratic party of Illinois (IL)

SUbject: Disclaimer

Disposition: No reason to believe

Official Business

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

JIIJR 3094

Respondents: William Lehman campaign Fund

Committee, Edward Mahler, treasurer (FL)

Complainant: Earl Rodney (FL)

SUbject: Failure to file disclosure

reports with the Florida Secretary of State

Disposition: No reason to believe

I'tlJR 3092

Respondents: Kasten for Senate Conunittee I

Inc., John sturm, treasurer (WI)

CcsIplainant: Marvin J. Freedman (WI)

SUbject: Disclaimer

Disposition: No reason to believe

, Jaouary 1991