FEDERAL ELECTION COMMISSION

April 1992 999 E Street NW Washington DC 20463 Volume 18, Numb

NEW PRlCEDUBES FOR PRESIDmn'IAL .NJDITS

The FEe 1& requi red by law to audit

Presidential and convention comnittees that

rece:i:ve public funds , 'Ibese au::Uts have

often taken two to four years to complete

owing to the complexity of the process and

extensions of time granted to cmmdttees.

Three factors should substantially

reduce the til1'le needed to cOlllplete the

audits of the 1992 Presidential campaigns:

o New regulations that simplify the process

of allocating primary expenses to the

state spending linrlts;

o Increased audit staffing; and

o A smaller field of candidates with a

lower volume of financial activity in

comparison with the 1988 Presidential

cycle.

Notwithstanding the above, the Commission has revised its audit procedures to

streamline the process and thereby overcome

problems that have delayed audits in past

election cycles. The new procedures are

summarized below.

Full Disclosure of All Findings in Final

Audit Report

'Ihia new procedure will result :in

fuller and more timely public disclosure of

audit findings. Under the past procedure,

if an audit revealed possible sUbstantial

violations of the law, the final audit

report was issued only after the violations

underwent legal review and the Conunission

decided whether to open an enforcement case

(Matter Urder Review or HUR) against the

committee. Furthermore, if any violations

were pur-sued 1n a MVR, all mention of the

related audit findings was purged from the

public audit report.

'lhis policy not only considerably

delayed the public release of audit reports but also withheld disclosure of serious

violations. Furthermore, the public perceived that the audit process was not

complete until the related MUR was closed,

which could.take several additional years.

under the new procedure, the final

audit report will be placed on the public

record in its entirety. It will disclos

all findings, including those that may

later be referred for enforcement (MUR)

action after legal review. The audit

reports will not make determinations as 

whether the c01ll1\ittee appeared to have

violated the law; the Commission makes

those decisions in MURs.

Records Inventoq Before Fieldwork

Another new procedure adopted to sp

the audit process is the pre-fieldwork

inventory of conan!ttee records by FEe A

staff. When fieldwork was begun in pas

election cycles, Audit Division staff

(continu

JWDITS

1 New Procedures for Presidential Audi

3 19$8 Bush Primary Campaign

PUBLIC PtH>IN3

3 LaRouche Denied Hatching Funds

4 March Matching' Fund Payments

4 Final Repayment, 1988 Dole Campaign

STATISTICS

S Presidential Campaign Activity

5 1991 National party Activity

5 LEnISlATIOO": FEe's FY 93 Budget Req

RmJIATIms

5 Revised Allocation Regulations

6 New Bank Loan Rules and Forms Effecti

7 candidate Names in "Special projects"

7 CCNFERENCES: orlando and Washington

7 R&'QRT:n«;.: Letter to Candidates

CWBT CASES

8 NRA v , FEe

a New Litigation

9 ADVISORY OP!NI(JG

12 INDEX
April 1992 FEDERAL ELECTION COMMISSION

sometitnes found cceml ttee records to be

incomplete or disorganized. In some cases,

mssing records were not available until

the audit was neatly complete. These deficiencies made the audit task more difficult

and time consusunq.

under the new procedures, Audit staff

will conduct a thorough inventory of committee records before starting fieldwork.

The inventory will, for exemple, determine

whether bankinq documents, contribution

records and Committee workpapers are properly organized and complete. If the rec- ord~ are not satisfactory, Audit staff will

postpone the start of fieldwork and natify

the committee, in writing, that it has 30

days to correct listed deficiencies or the

Comission will subpoenall the records from

the corranittee and, if necessary, from banks

and other entities holding relevant

records.

This procedure will also apply to the

computerized records submdtted before

fieldwork. If a com8dttee fails to submit

usable computerized files, the Contnission

will postpone fieldwork and issue subpoenos.

The new procedure offers several advantages. It will focus audit resources on

committees with satisfactory records.

wnile that work is going on, conunittees

wi th deficient records will be compelled to

produce required records. Furthermore, the

agency will have a clear record as to why

some awits were not conpl.eted as quickly

as ccoece,

Pre-Audit Use of JlJatching Fnnd Subnissions

and Computerized Records

.As an efficiency measure, the FEe's

Audit Division will use committees' matching fund sul:!11issions and computerized

1Recent amendments to the public funding

regulations inform candidates that the

Commission may issue subpoenas if a conunittee fails to produce requested materials.

11 ere 9007.1Ib)(1)(v) and 9038.1(bIl1I1v) .

Volume 18, Number 4

records-both subnitted before audit fieldwork .begins-to assist in identifying

possible prohibited and excessive contributions. Because the fUes contain bank

statements and related documents, auditors

can also begin the bank reconciliation

process before fieldwork.

Requests for Records During Fieldwork

Even with more complete records at the

onset of fieldwork, the need for specific

records is likely to arise during the

fieldwork itSelf. In the past, this has

been problematic. seee committees produced missing records piecemeal or only

after repeated requests and the passage of

substantial time.

Under the new procedures, if a comnittee does not respond to an informal request

for records within a fa'" days, auditors

will make a written request with a specific

due date. This forroal request will warn

the committee that the COIll1llission will subpoena the reCords if the committee fails to

produce them by the due date.

This procedure should encourage the

timely production of materials and thus

shorten the audit process.~J

EXtensions of Time to Respond to

Audit RepJrts

Under the public funding rules, a c0mmittee has 30 days from its receipt of the

interim audit report to submit comments on

audit findings. During the 1988 Presidential audits, however, some committees

received up to three extensions of time,

which delayed their responses by several

months.

Under the new procedures J each cororoittee will be given only one 45-day extensdon

of time to the 30-day response date. Because it generally takes 90 days from. the

edt conference, when corrmittees are fully

briefed on all findings, until the

2Thi s procedure was used informally in the

198B Presidential cycle.

.---~-~---~------~-

Federal ElectiOfl CoIImission. 999 E Street, Nit, washington, DC 20463

800/424-9530 202;219-3420 202;219-3336 (TOO)

Joan D. Aikens, Chairman

Scott E. '1boaIas, Vice Chairman

Lee Ann Elliott

D;mny L. MCDonald

John Harren McGarry

Trevor Potter

walter J. Stewart, Secretary of the senate,

EX Officio Commissioner

Donnald R. Alderson, Clf!rk of the House of

Representatives, EX Officio Commdssioner

2
FEDERAL ELECTION COMMISSION

•

•

•

April 1992

commdttee receiV9S the interim audit

report, 'comnri.ttees will effectively have

165 days to submit their responses. Audit

staff will encourage committees to use the

intervening time to prepare their responses

and to discuss questions and problems with

the auditors.

The commission has also limited extensions of time for responses to the final

audit report; committees will be given only

one 45-day extension.

FmAL AUDIT REPORr (If

1988 BUSH PRIMRY CAKPAIW

on February 24, the commission released

the final audit report on George Bush for

president', Inc' r President Bush's 1988

primary campaign cotmrl.ttee. The Committee

had received a total of $8.393 million in

matching funds. J3ased on the initial

repayrrent determinations described below,

the committee must repay $79,235 in matching funds to the U.S. Treasury. The Comndttee made a partial repayment in response

to the interim audit report and completed

repayment in March.

, The final audit report found that the

Committee had exceeded the national spending limit by $214,220 and the state spending lindts for Iowa and ~ew Hampshire by a

total of $260,460. The Commission decided

to base the repayment on the larger of

these amounts--the $260,460 spent in excess

of the state limits. lIpplying the formula

used to calculate what portion of that

amount was paid with public funds (as

opposed to p~ivate contributions), the Co~

mission made an initial determination that

the Con'fnittee repay $69,35l.

'!he commission also made an initial

determination that the Committee repay $9,884, the total of stale-dated COmmdttee

checks that had never: been cashed by the

payees.

3

Volume 18, Numbe

PUBLIC FUNDING

IAROUCBE DENIED FUNDS:

FINAL DE'J.'ElUItINATOO

In a final determination made Februar

27, the commission denied matching funds 

Lyndon H. LaRouche, Jr., for his 1992 Pre

idential campaign. This decision was bas

on Mr. LaRouche's past record: o His 198B criminal conviction and curren

imprisonment for fraudulent fundraising

practices, including those related to a

previous publicly financed campaign;

o His IS-year pattern of abuse of the

matching fund p~ogram, including submit

ting false information, fraudulently

inducing individuals to contribute and

submitting contributions that lacked th

requisite dencr intent to make a campa

contribution;

o His past repudiation of promises made i

letters of candidate agreements and ce

tifications;l/~

~~~omnUssionalso considered Mr. L

Roue e s 1988 criminal conviction for con

spiring to defraud another federal agency

the Internal Revenue Service.

In making its determination, the Com

mission applied the statute, regulations

and case law to the unique facts of Hr.

LaRouche'S situat1on--his past egregious

abuse of the public funding law and his

criminal convictions. Given these facts

the Commission concluded that it could n

rely on his current promises to comply w

the law submitted in his candidate lette

for 1992 matching funds. Therefore, in

order to protect public money, the agency

denied him matching funds.

A1though the Commission considered M

LaRouche'S erqumenta against the initial

determination to deny him matching funds

made December 19, 1991, the agency found

little in his response to refute his pas

record of violations.

On March 3, ~r. tegouche challenged 

Comnission's final decision in a suit fil

in the U.S. Court of Appeals pursuant to

26 U.S.C 59041 (see page 8).

(Public Funding continue

lcandidates seeking to qualify for match

funds must sign a letter of agreements an

certifications in which they promise to

comply with the law.
FEDERAL ELECTION COMMISSION

*These candidates have withdrawn from the

Presidential race. Governor Wilder withdrew on January 8, Senator Kerrey on March

6, Senator Harkin on March 9 and former

Senator Tsongas on March 19.

IWtCB MMU1Jl'G FOOD PAYJIII!Nl'S

on February 27, the Commission

certified $3.3 million in matching fund

payments to eight candidates. The U.S.

Treasury made the payments early in March.

As of the March payment, 1992 presidential

primary candidates have received $12.6 mil110n in matching funds, as shown in the

table. candidates have requested $4.3 million for the April payment.

Republicans

Patrick Buchanan $ 947,730 $ 1,047,730

George Bush 593,330 4,234,220

Dedk>ctats

Jerry Brown 157,660 550,708

Bill Clinton 656.265 2,056,864

*Tom Harkin 221,566 1,548,686

"'aob Kercey 433,279 1,266,642

"'"Paul Tsonqas 189,297 745,142

*Douglas Wilder 0 289,027

New Alliance Party"

Lenora Fulani 125,473 889,401

'l'Otals $3,324,600 $12,629,020 

Volume 18, Number4

DOLE aJlIMITTEE: FINMo REP'.MMJiNl' ND.INT

on February 6, the Coumission made a

final determination that the Dole for President Committee, Inc., repay $235,822 in

matching funds to the U. S. Treasury. The

Committee was Senator Robert nole's 1988

Presidential primary campaign committee,

which had received a total of $7.6 million

in matching funds. me Committee made the

full repayment in Match.

The final determination consisted of

three separate repayments:

o $3,757: The pro rata portionl/ of

$13,470 in undocumented disbursements

delegate committees affiliated with the

Dole campaign;'

o $164,039: The pro rata portionl/ of

amounts spent in excess of the Iowa and

New Hampshire e~penditure limits;

o $68,025: The total of stale-dated Committee checks never cashed by the payees.

The Commission had made an initial

deteramatdon that the COmmittee repay

$245,534. The final determination reduced

that amount $9,712, based on three

adjustments.

First, the Commission reconsidered its

initi~l deterndnation that the Commdttee's

Manchester office functioned solely as a

New Hampshire office. To reflect the

office's dual nature as both a state and

regional office, the C~ssion reduced the

~t of Office-related expenditures allocated to the New Hatnpshin limit.

The agency also reconsidered the

allocation of commissions paid to a media

firm. Concluding that the payments were

production costs, which are not allocable

to a particular state, the Commission

accordingly reduced the amounts allocated

to the Iowa and New Hampshire limits.

Finally, based on new documentation

submitted by the committee, the cOllIlIission

decreased the repayment for stale datedchecks. by $3,708.

QJDUl.ative

'l'Otal

March

Payment

April 1992

l'btching Fwld Payments

CDST-OF-LlVING AOJUS'DIERT ClmrIFIED

The coordinated party and Presidential expenditure limits that appeared

in the March 1992 Record were based on

a 1991 cost.:..af-living adjustment of

2.762. That figure, which was unofficial at the time of the March publication. has now been certified by the

Secretary of Labor. Therefore, the

spending limits in the March issue are

correct.

lA formula is used to determine mat portion of an undocumented expense or an excessive expenditure was paid wi th public

funds (rather than private contributions);

only the portion paid with public funds is

subject to repayment. See 11 CFR 9036.2(b)

(2)1iiil.

4
LEGISLATION •

April 1992 FEDERAL ELECTION COMMISSION

STATISTICS

Volume 18, Numb

•

PRESIDm'I'IAL CMPAIaf ACTIVITY 'IBRCOiJ

~1992

The table below compares the financial

activity of selected 1992 Presidential

candidates with that of past Presidential

campaigns through January 31 of the election year. The table is taken from a March

3 press release, which provides additional

data on Presidential campaign activity

through January 1992 as well as detailed

comparisons with past election cycles. To

order a copy, call 800/424-9530 and ask for

Public Records or call the office directly,

202/219-4140.

Presidential Activity '1tlrough January

of Election Year

Disburse- NuDiler of

Receipts ",nts Candidates

1992 $ 32.8 $ 23.3 13

1988 $149.4 $120.3 18

1984 $ 40.0 $ 36.3 10

1991 ACTIVI'lY OF NMICH\L PAR'l"L (D9D.'rI'Et;S

The Commission has released statistics

on national party activity for 1991 and

previous nonelection years. The information appears in a March 6 press release,

which also presents data on the nonfederal

and building fund accounts of the nationallevel party committees.

The table below is based on the press

release. To order a copy, call 800/424~

9530 and ask for Public Records or call the

office directly, 202;219-4140.

1991 National Party Activityy

(millions of dollars)

DisburseReceipts uents

FEe 'IESTIFIES CN FISCAL YEAR 1993

BUDGET_T

In February and March appearances

before House subcormd ttees, Vice Chairma

Scott E. Thomas urged approval of the FE

$21.031 million budget request for IT 19

The FEC's request, the same as the Pres

dent's appropriation request for the age

cy, represents a $2.223 million increase

over the Fee's funding for FY 1992, whic

was $18.808 million.

Testifying in his capacity as Chairm

of the FEC"'s Budget Comnittee, Vice Cha

man Thomas said that the requested fundi

would enable the FlOC to complete the wo

load for the 1992 elections. The reque

would fund a staffing level of 276 fulltime positions. It would also provide

$345,000 to replace outmoded microfilm

equipment and $500,000 to purchase enhan

automated data processing technology for

the ~dit and Reports Analysis Division

Mr. Thomas pointed out that the budg

request focuses on several areas: e~for

ment actions involving "ever more comple

and controversial violations", additiona

workloads generated by new regulations a

reporting requirements and by increased

financial activity in federal elections

and the timely release of audits on 1992

Presidential campaigns receiVing public

funds.

Citing recent studies that show pub

mdsgiving about the political process, h

stated that "it is iltlp@rative" for the F

to receive adequate funding to meet its 

forcement and disclosure responsibilitie

"which should in turn help to increase

public confidence in the p:>litical syste

REGULATIONS

lTable lists aggregate activity of the

three national-level committees of each

party (the national committee and the House

and Senate campaign committees).

•

Federal Activity

Democratic

Republican

Nonfederal Activity

Democratic

Republican

$22.9

$75.1

$ 7.9

~18.4

$22.4

$69.1

$ 7.6

$15.8

5

REVISIQm 'IO ALUlCATIW lmiUIATIOOS

On March 9, 1992, the Commission sen

to congress revised re9Ulations on the

allocation of federal and nonfederal

expenses. The revisions and their expla

tion and justification appear in the Ma

13 Federal Register (57 FR 8990). The

Commission will announce the effective d

of the new rules following the 30-day le

islative review period required by 2 U.S

§438(d) .

(continu
April 1992 FEDERAL ELECTION COMMISSION

The revised rules are su.mroarized below.

While the ballot ratio section applies only

to state and local party cormnittees, the

other sections apply to all comadttees

subject to the allocation rules, including

separate segregated funds and nonconnected

committees.

Ballot COIDpOSition Datio

The revised rule at 11 CFR l06.5(d)(1)

{ii) gives state and local party committees

an additional nonfederal point in their

ballot cceccsttton ratios. This ratio

deter.mines the allocatiDn of administrative

and generic voter drive expenses over a

two-year congressional election cycle.

The rule was also amended, consistent

with AD 1991-25, to allow nonfederal points

for partisan local offices in states that

hold statewide elections in even years and

local eiections only in odd years. under

the revised l.anguage, committees may

include nonfederal point(s}l/ in their

ballot ratios if partisan local candidates

are expected on the ballot "in regularly scheduled election during the two-year

congressional election cycle. II

M'len revised 11 CFR 106.5(d)(1)(ii)

becomes effective, state and local party

committees will have the opportunity to

adjust their ballot composition ratios for

the eunent cycle, which began January 1,

1991. Commdttees who choose this option

will have 30 days from the rule's effective

date to reallocate expenses according to

the adjusted ratio and make the necessary

transfers from their nonfederal accounts to

their federal accounts.

window for Transfers frCD. Nonfederal

ACcOWlt: 70 DayS

The revised rules expand from 40 to 70

days the time during which the nonfederal

account may transfer its share of an allocable expense to the federal account.

Under the new roles, the 70-day ,,-indOW'

begins 10 days before the federal account

makes the payment to the vendor and ends 60

days after the payment. The current rules

allow- only 30 days after payment. This

change. which appeare in revised 11 CFR

106.5(g)(2)(ii)(B) and 106.6(e)l2)(ii)(B),

applies to all cotlltlitt€es that must allocate expenses between their federal and

nonfedaral accounts.

Istat~ coromitt€es may add one nonfederal

point foe local offices on the ballot, and

local committees may add a naximum of two

points.

6

Volume 18, Number 4

Adjustments to Flmdraising Batio

Current rules at 11 eFR 106.5(£) and

106.6(d) do not specify when a committee

must adjust the estimated ratio initially

used to allocate the costs of a fundraising

program or event that collects both federal

and nonfederal funds for the committ.ee.

'!'he ratio is based on the amount of federal

funds raised to total receipts for the

program or event. (This formula is used by

all committees subject to the allocation

rules. )

Under the revised rules, committees are

still required to allocate their program or

event disbursements based on the estimated

ratio. However, they are given additional

time--up to 60 days after the date of a

fundraisiog program or event-to adjust the

ratio, based on ecccet. funds received, and

to make transfers between their federal and

nonfederal accounts to reflect the revised

allocation. (This does not, however, rule

out the possibility of further adjustments

and subsequent transfers from the federal

to the nonfederal account should additional

federal receipts come in.) When reporting

adjustment transfers, committees must enter

the date of the event, a new requirerrent.

For purposes of the new rule, the date of a

telemarketing campaign is the last day of

the program; the date of a direct mail

program is the last day solicitations are

mailed.

IUf BANK LOAN mx;uLAT.[(H; AND FORMS

!Of EFfOC'l'IVE

political committees must now

comply with the new regulations on

bank loans and lines of credit, which

became effective in early April 1~92.

The new rules <lpply to all lines of

credit established on or after the

effective date and to all loans whose

proceeds were disbursed by the bank on

or after that date. These loans and

lines of eredit must be reported on

the new loan forms: Schedule c-i and,

for Presidential committees, Schedule

C-p-l. A schedule must be filed with

the next due report for each bank loan

obtained or line of credit established

during the reporting period. The new

forms may be ordered from the FEe

(800/424-9530 or 202/219-3420).

The new regulations were published

in the December 27, 1991, Federal

Register (56 FR 67118) and summarized

in the February 1992 Record.
FEDERALELECTION COMMISSION

•

•

•

April 1992

f'EIC 10 INITIME m "SPECIAL

PROJI!X:TS" us:m:; CNIDIDM'E NNmS

On February 13, the COJIlllission voted to

develop new regulations for "special projectsll whose names include candidate names.

party cozmni eeees. PACs and other unauthorized committees (Le., committees not

authorized by a candidate) are prohibited

from using a candidate's name in their

comittee names.!1 They may, however, use

candidates~ names in special project names. Thes~ projects are generally organized to

raise funds for the unauthorized committee.

Use of a candidate's name in a special

project name does not have to be authorized

by the candidate.

Concerned that the public may be confused or misled by the use of candidates'

names in special project names, the Commission decided to draft new rules that would

specify disclaimer language for special

projects and provide other mechanisms to

protect the public, such as a requirement

that contribution checks be made payable to

the cormnittee rather than to the special

project. The agency therefore directed the

Office of General Counsel to prepare a

draft Notice of proposed Rulemak1nq in

these areas.

CONFERENCES

ORI.ANDO AND WASBING'RIt, IX:, cttft'EBENCES

The FEe is planning to hold a Florida

Regional Conference in Orlando on April

30-May 1. The FEC has also scheduled a

Washington. DC. conference on May 21-22 for

corporations. trade associations, labor

organizations and their PACS.

call the FEe to place your name on a

mailing list to receive an invitation to

either of these conferences (800/424-9530

or 202/219-3420). Invitations provide

registration forms and schedules of workshops. 'I'hose planning to attend the

Orlando conference should call riqht away.

Each of the conferences lasts one and

one-half days. The conference fees listed

below include materials, breakfasts. lunch

and refreshments.

i soo 2 U.S.C. 1432(0)(4) and 11 CrR 102.14

(a). This pcohibition does not apply to

delegate camudttees and draft commdttees.

11 ern 102.14(b)(1) and (2).

7

Volume 18, Numb

Florida conference. April 3o-Kay 1

This conference will be held at the

Clarion plaza Hotel, 9700 International

Drive, Orlando; 407/352-9700. Reserve 

room by April a to receive the group ra

of $75 pee night; notify th& hotel that 

will be attendinq the FEe conference.

The $80 conference fee must be post

marked by April 16 to avoid a $10 late 

%e conference will offer assistanc

House and Senate candidates, political

party organizations, and corporations a

labor organizations and their PACs. It

will feature an introduction to the c~

paign finance law, and workshops on fund

raising, candidate support, reporting, 

allocation of federal and nonfederal ac

ity. The Florida State Division of Ele

tions and the Florida Elections Commis

will give a workshop on state campaign 

nance law. Additionally, a representa

from the Internal Revenue service will 

available to answer federal tax questio

Washington, DC, COrporate/Labor Confere

May 21-22

This conference will focus on the

canpaign finance law' £ nqui resents for

corporations, trade associations, labor

organizations and their PACs.

The conference will be held at the

Washington Court on Capi tol Hill. 525 N

Jersey Avenue, NW, Washington, DC 20001

1527; 202/628-2100. Reserve your room 

April 22 to receive the group rate of $

per night; notify the hotel that you w

be attending the FEC conference.

The $105 conference fee must be pos

marked by May 7 to avoid a $10 late fee

FEe ALERTS CANDIIlM'ES ro CCI9J:fi

REI?OOTll'«l

FEe Chairman Joan D. Aikens recen

ly wrote to all registered candidate

advising them of several reporting

problems cceecn to candidate committees. To help these committees avoi

compliance problems, she set out the

specific rules in three areas:

o Redesignations and reattributions;

o Candidate loans and contributions;

and

o 48-hour reporting of last-minute

contributions.

The Chairman sent another letter 

treasurers of candidate committees

alerting them to the candidate lette

and enclosing a Record supplement on

cedesignations and reattributions.
April 1992 FEDERAL ELECTION COMMISSION

",COURT CASES

Nm'ICIW.o RIFLE ASSOCIATIm OF.MJ!R[CA (NlIA)

v , FEe (09-3011)

on February 27, 1992, the U.S. District

Court for the District of Columbia rejected

NRA's challenge to the FEe's dismissal of

an administrative complaint. The court

ruled that the statutory time bar removed

its jurisdiction to review the FEe's decision, since the same issues were considered

and dismissed in a previous complaint and

NRA failed to challenge that decision within the 60 daY6 allowed by law.

NRA had filed several admdnistrative

complaints against Handgun Control, Inc.

(HeI), an incorporated meDbership organization. The first complaint challenged HeI's

status as a membership organization, alleg- in9 that it illegally solicited nonmembers

for contributions to its separate segregated fW1d. This first complaint resulted in

a conciliation agreement in which Hel paid

a civil penalty and amended its bylaws to

qualify as a membership organization with

solicitable members.

NEA's second complaint. MUR 1891.

alleged that HCI'S membership still did not

have sufficient rights to qualify as members. The Conunission dismissed the cosplaint, concluding that HCI's amended bylaws satisfactorily established the rights

of members by allowing them to participate

in annual meetings and to elect a board

director. NRA did not seek judicial review

of the Commdssion's dismissal of MUR 1891.

The Commission also dismissed NRA's

third c01llplaint against HCI, MUR 2115,

because the allegations were "virtually

identical" to those raised in the second

complaint. This time, NRA sought judicial

revtes of the dismi6sal. Ruling on this

suit, the district court held that NRA's

petition constituted an untimely challenge

to the FE:C's dismissal of MUR 1891, since

the issues in both MURs were substantially

similar. A court of appeals affirmed that

decision. National Rifle Association of

America v. FEe, 854 F.2d 1330 (D.C. cir.

1986T.

NRA's most recent administrative complaint, the subject of the present suit,

again challenged the status of HeI members.

The FEe dismissed this fourth complaint,

MUR 2836. because the issues had already

been resolved in MUR 189l.

In this court case, NRA argued that the

two MURs raised different issues, MUR 1891

dealing with member participation, and MUR

8

Volume 18, Number 4

2836 focusing on member control. The

court, however, found that "id}espite the

change in language, there reeatns no

material variance between NRA's allegations

in MUR 1891 and MUR 2836." 'the court

therefore ruled that, because NItA did not

appeal the FEC's decision in MUR 1891 within the 60 days allowed by law, it wes

barred from doing so in the present case.

The court al.so rejected NRA's argwnent

that the FEe's dismissal of MUR 2836 qualified for judicial review because the FEe

had considered the substantive merits of

the complaint. 'rna court found that the

FEe did not consider the merits wt simply

stated that the issues had been resolved in

l'IUR 1891.

The court ruled thAt it lacked jurisdiction by virtue of the 60-day time bar

and accordingly granted the FEe's motion to

dismiss the suit. The NRA has appealed the

decision.

NEW LITIGM'IOO

LaRouche v, E'EC

Lyndon H. LaRouche and his presidential

campaign committee, Democrats for Economic

Recovery-LaRouche 92, ask the court to

reviewl/ the CODIllission's decision to deny

Mr. Leiouche matching funds for the 1992

primary election (see pa~ 3). Petitioners

claim that the FEe's reliance on Mr.

LaRouche's past actions in denying him

matchin9 funds 16 contrary to the statute.

U.S. eourt of Appeals for the District

of Columbill Circuit, Civil Action No. 92-

1100, March 3, 1992.

ion Karch 11, the court denied the petitioners' motion for an expedited schedule.
April 1992 FEDERAL ELECTION COMMISSION Volume 18, Numbe

ADVISORY OPINIONS

AWISORY OPINICN RJQJES'1'S

Recent requests for advisory opinions

(AORS) ace listed below. The full text of

each AOR is available for review and c~

ment in the FEC's Public Records Office.

[Editor's Note: Beginning with this

issue, the Record will name requesters.]

AOR 1992~

Tax. seminars given by' candidate as fundraising event. (Requested by Congressman

William H. Orton; Date Made Public: February 28, 1992: Length: 2 pages)

AOR 1992-9

Use of raffle for twice-yearly solicitation; solicitable personnel of cooperative.

(Requested by KAMa Power; Date Made Public:

February 2B, 1992; Length: a pages plus

attachments)

AOR 1992-10

Multicandidate committee's donation to pay

legal expenses of nonprofit organization.

(Requested on behalf of The Conunittee for a

Democratic Consensus; Date Made Public:

March 5, 1992; Length: 2 pages)

AOR 1992-11

Computer-produced Form ax summary and

oetailed Stnnmary pages. (Requested by

Coopers & Lybrand; Date Made Public: March

10, 1992; Length: 4 pages)

NJ 1991-39: Contributions SUspected of

Being Made in Names of others

Because Friends of Senator D'Amato, Senator

Alfonse M. D'!lmato'S campaign committee,

cannot now dete~ine the original donors or

donor of contributions suspected of being

tllade in the names of others, the committee

should disburse the funds for a lawful purpose unrelated to federal elections.

The Committee received a November 5,

1991, letter from the Department of Justice

indicating that several contributions received by the Committee between 1986 and

1988 were actually from one individual making contributions in the names of others, a

violation of 2 U.S.C. §441f and 11 CFR

110.4 (b) • 'Ibe individual has been indi cted

for causing the committee to file false

statements with the FEe. The Conunittee

immediately deposited the questionable

9

contributions in a separate account and

held them there pending adVice from the

FEC.

If a committee discovers that a cont

bution was made by one person in the name

of another "based on new evidence not

available to the political committee at t

time of receipt," the treasurer must refu

the contribution to the original contribu

tor within 30 days. 11 CFR 103.3(b)(2)i

see also ADs 1989-5 and 1984-52.

In this case, the criminal indictmen

and the Department of Justice letter pro

vide sufficient basis for the O'Amato Com

mittee to question the lawfulness of the

contributions under 103.3(b). However,

since the criminal proceeding is still

pending, the Conmti ttee cannot determine w

should receive the contribution refunds.

In these unusual circumstances, the funds

should be disbursed for a puqpose unrela

to federal elections (e.g., to the feder

gavermnent, to a state or local governme

or to a chadty described under 26 U.s. c

S170(c).) The disbursement should be ma

within 10 days after the Comodttee receiv

the advisory opinion and should be itemiz

as an offset to the questionable contribu

tions. (Date Issued: February 7, 1992;

Length: 4 pages)

N) 1992-1: campaign salary Paid to

candidate: Reimbursetllents to

candidate for CaJtpaign Expen

Roger Faulkner, a 1992 senate candidate,

proposed receiving a salary from his

campaign ccmuni.ttee to pay for his person

living expenses during the campaign. Th

Commission, however, failed to reach a

majority decision on whether the payment

would fall within the committee's wide

discretion in making expenditures or

whether it would constitute the candidat

personal use of excess campaign funds,

which is prohibited under 2 U.S.C. §439a

With respect to a second issue, the wide

discretion principle would allow the

committee to reimburse Mr. Faulkner for

travel, subsistence and other campaignrelated expenses he pays from his person

funds. See AD 1984-8.

Mr. Faulkner's payments for campaign

related expenses are considered contribu

tions to the committee, even though he w

be reimbursed.1/ 11 crn 116.1 (b) • Ther

- (continu

INote that candidates may make unlimited

contributions from personal funds to the

own campaigns. See 11 CFR 110.10(a).
April 1992 FEDERAL ELECTION COMMISSION

is one exception: payreots for his own

travel expenses are not considered reportable contributions if the commi ttee reimburses him within the time limits specified

in 11 CFR 116.5(b)(2).

other than that one exception, campaign expenses paid by Mr. Faulkner are

reportable in-kind contributions (or inkind advances), which llIUst be itemized when

his aggregate contributions for the year

(minus any reimbursements he receives)

exceed $200. His conmittee should itemize

such an in-kind advance as a memo entry on

Schedule A. The reimbursement should be

reported as an operating expend!ture on

Schedule B and should reference the related

memo entry on Schedule A. An advance that

is not reimbursed dudn<J the same reporting

period is also reportable as a debt on

Schedule D if it exceeds $500 or has been

outstanding: m::)[e than 60 days. 11 em

104.11.

As Mr. Faulkner is the candidate and

thus a campaign agent, he should provide

the ccsmnittee wi th the necessary documentation when he pays for campaign expenses.

2 U.S.C. 5432(0)(2), 11 CFR 102.9(b)(1) and

(2); N) 1984-8.

The Commission did not address possible

state law or tax ramifications in this

opinion, since they are outside its jurisdiction. (Date Issued: March 6, 1992;

Length: 4 pages)

III 1992-2: party Reallocation of Staff

Salaries as Ftmdraising

Expenses

The Democratic National Cammdttee (ONC)

treated all of its 1991 salary expenses as

administrative expenses for purposes of

allocating them between its federal and

nonfederal accounts. The ONe may now

reallocate, as fundraising QxpenSQS, the

staff salaries and benefits of employees

who worked full time on fundraising activities. This retroactive reallocation must

be made within 30 days from the date of

this opinion. Special reporting is

required.

Retroactive Reallocation

Recognizing that the new allocation

regulations require a brief period for

committees to adjust, the Commission has

permitted retroactive changes to allocation

formulas due to a mistake or intervening

event. 1>.05 1991-25 and 1991-15. In a

similar vein, the ONe may retroactively

reallocate the salaries and benefits of

staff members who spent 100 percent of

their time on f1J11draising. These costs,

previously allocated according to the fixed

10

Volume 18, Number 4

percentage method that applies to a national party committee's administrative

expenses, may now be reallocated au direct

fundraising costs according to the ratio of

federal funds received to total receipts

for each fundraising program or event.

(Each pcogram oc event has its own ratio.)

11 eFR 106.5(b)(2) and 106.5(f). However,

the DNC may reallocate only salary and

benefit costs that are directly attributable to time spent on a particular fundraisi09 program or event. Furthermore, the

ONC may not allocate the salaryjbenefit

costs of a program or event that raised

funds for the federal account only, since

those costs must be paid entirely from the

federal account. The ONC must reallocate

salary and benefit costs within 30 days

from the date of the opinion.

Beportin9 lIdjustments

In the next report due after that date,

the ONC should include a letter explaining

the adjustments to past transfers from the

nonfederal account (i.e., Schedule H3

transfers) • For each former transfer that

included payment of administrative expenses, the letter should provide the

following:

o The amount recategorized as a fundraising

cost;

o The revised administrative total; and

o The revised fundraising total broken down

by the amount for each program and event.

The ONC should also include in the letter

the total amount the nonfederal account has

underpaid (assuming that is the case). The

transfer of that amount must be reported on

line 18 of the Detailed summary page.

Additionally, the ONe should attach a

revised Schedule H4 to show new amounts

allocated as fundraising salaries by program or event. Additional and changed entries should be marked with an asterisk.

(Date Issued: March 6. 1992; Length:

11 pages, including sanple forms)

N) 1992-4, campaign's Payment of

candidate's Living Ekpenses end

spouse's Salary

John Michael Cortese, a 1992 Senate cendrdate, proposed using campaign contributions

to pay his own living expenses and those of

his wife, Who would assist in the campaign.

The Commdssian, however, failed to reach a

majority decision on whether the payments

would fall within the call1pai90'S wide discretion in making expenditures or whether

they would constitute the candidate's personal use of excess campaign funds, which

is prohibited under 2 u.s.c. S439a. A comrdttee's wide discretion does, however,
FEDERAL ELECTION COMMISSION

•

•

•

April 1992

extend to the choice of campaign staff.

Therefore, the campaign may pay Mrs. Cortese a salary for her campaign services.

Because Mr. COrtese's tmemployment benefits are considered his personal funds, he

may use them to make contributions or

loans, without limit, to his campaign.

11 eFR 110.10.

The Commission did not address pbssible

state law or tax ramifications, since they

are outside its jurisdiction. (Date

Issued: March 6, 1992; Length: 3 pages)

NJ 1992-6: Honorarium. Paid to candidate

for Speech on campaign Issues

Not COnsidered a contribution

vanderbilt University's payment of an honorarium and travel expenses to David Duke

for a speech is not considered a contribution to his Presidential campaign, based on

the particular circumstances in this situation.

The university Lnvfted Me. Duke to make

a speech at an event hosted by IMPACT Symposium. a student group that hosts a lecture series each February. Mr. Duke has

chosen to speak on affi~tive action.

Nwnerous advisory opinions have concluded that an activity involving or referring to a candidate is "caJtl)aign related"-

and thus results in a contribution or

expenditure by the person financing the

activity-if it includes either of two elements: (1) solidtatioo or acceptance of

contributions to the candidate's campaign;

or (2) express advocacy of the election or

defeat of any candidate.

However, several advisory opinions have

stated that, even in the absence of these

two elements, an activity may nevertheless

be considered campaign related. ADs 1990-

5, 1988-27, 1986-37, 1986-26, 1984-13 and

1983-12.

of particular relevance is AD 1988-27,

which concerned a corporation's honorarium

payment to a candidate for a speech given

at a fundraising event for the corporation's PAC. The opinion concluded that the

honorarium was not a contribution, relying

on the particular facts of the situation.

The situation presented by Mr. Duke is similar in several material respects:

o He will receive the payment as personal

income (rather than as a campaign contribution) ;

o The staging of the speech will not afford

him an opportunity to solicit or collect

contributions from attendees;

o He will not mention his own or anyone

else'S candidacy;

11

Volume 18,Numb

o Neither he nor his campaign staff will

solicit contributions or campaign support;

o The university and IMPACT, and not Mr.

Duke, will control the event and who i

admitted;

o Neither he nor his campaign staff will

coordinate or encourage the display of

campaign decorations or the distributio

of campaign materials;

o Neither he nor his staff will conduct 

participate in collateral campaign eve

(e.g., rallies. press conferences, lun

eons); and

o Vanderbilt's invitation and Mr. Duke's

appearance are not based entirely on h

status as Presidential candidate but m

partly reflect his career as a recent

state legislator and as a college and

university speaker who has discussed l

and legislation.

Based on the facts and representatio

in the advisory opinion request. Vanderbilt's payment of honorarium and travel

expenses will not constitute a contribut

or expenditure to Mr. Duke's campaign.

However. his appearance will be consider

election related if he refers to his

canpaign or to the campaign or qualifica

tions of another Presidential candidate,

either during his speech or during the

question and answer period. The Commis

pointed. out the significance of the ques

tion and answer period given that the

speech would take place just before the

Tennessee Presidential primary and that

questions about the Presidential campaig

were therefore a foreseeable developmen

(The university is located in Nashville.

Tennessee. )

Chairman Joan D. Aikens and Commissioner Trevor Potter filed concurring

opinions. (Date Issued: February 14,

1992; Length: 12 pages, including concu

ring opinions)
April 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 4

'lbe first number in each

citation refers to the "rl\llIIber"'

(UIOnth) of the 1992 RoCOl"d

issue in which the article

appeared; the second nUlllber.

folla.n.ng the colon, indicates

the page IlUlllber in that isaue.

MNlsm 0PDaC8S

1991-29t Contdbutions received

and IIlade by corporation's

8IlIployee plec1gtl progl"am. 1: 4

1991-33: Allocation of expenses

when party COIIIIlittee administers pl"1ma~ el1J1;tion, 1:6

1991-34: Comadttee sale of

access to voter data base as

oogoing venture, 1:6

1991-35: Application. of allocation roles when 55F's nonfederal account pay$ its ow.

administrative expenses, 2:10 1991-36~ Corporation's payment

of employee's travel expenses

to attend ~rty fundraiser,

3:5

1991-37: Non~Qcted PAC'a

payment to incorporated fi rm for shared facilities and

services contributed to eeemitt"S, 3:5

1991-]8: Repayment of embezzled

funds to candidate cClllD1 ttee,

3:6

1991-39. Contributions suspected of being IlIade rn narres

of others, 4:9

1992-1: ~ign salary paid to

cardidateJ reimbursements for

campaign expenses. 4: 9

199Z-2: Party reallocation of

staff salaries as fundraisin9

expenses, 4:10

1992-4; campaiqn's payment of

candidate's living expenses

and spouse's salary, 4:10

1992-6: Honocarium paid to

c:endldate for speech on campaign issues. 4:11

COJR'l' CASES

FEe v ,

-Af~,1:7

- NP.A Poh,Ucal Victory Fund,

1:7

v ; FE<:

-----=--Ak~: 8, 3: 7

- ~tool, 3:8

- comon cause (91-2914), 1:9 - CaD:lR Clluse (92-0249), l:8

- FreedQii Republicans. Inc••

3:1

- LallOUche. 4:8 - NadonaI Rifle Association

of America {NPAI (89"=301l J,

4:8 - 'l'dnsey, 3:7

ltBKItl'Jl«i

pre-primary ['eporting dates

- Houae and senate; 1;14

- Presidential. 2:10, 3:10

Schedule for 1992, 1:10; 3:8

SPlH)nG LDIlTS lOR 1992

COOrdinated party, 3:1

presidential, 3: 14

800 I.INB

Compliance with laws DUtside

FEe's jurisdiction, 3:12

Last-minute contributions: 48-

hour no\::ices required, 1:18

Registration by candidates and

their committees, 2t12

caamittees aJst Now caaply with

NeW Bank Loan Regulations and Forms

See article on page 6.

FEDERAL ELECTrON COMMISSION

999 E Street, NW

Washington. DC 20463

Offic'lal Business

Bulk RateMail

Postage and FeesPaid

Federal Election Commission

Permit Number 0-31