Septem ber 1

FEC v, T. BERTRAM LANCE

On July 2, 1981, citing a lack of appellate jurisdict

the Supreme Court dismissed an appeal brought by 

Bertram Lance from the U.S. Court of Appeals for 

Fifth Circuit, construed Lance's papers as a petition fo

writ of certiorari and declined to hear the case. In F

v. T. Bertram Lance (Civil Action No. 78·1859), the app

court had affirmed an earlier decision by the U.S. Dis

Court for the Northern District of Georgia, which orde

enforcement of a deposition the FEC had issued to 

Lance. Motions by the appellant to stay the appeals cou

decision had been denied by the appeals court on Febru

19, 1981, and by the Supreme Court on March 11, 19

THE FEDERAL ELECTION

COMMISSION

No. of

Pages

1325 KStreet NW., Washington, D.C. 20463

Date Made

Public

AOR Subject

ADVISORY OPINION REQUESTS

Advisory Opinion Requests (AORs) pose questions on

the application of the Act or Commission Regulations to

specific factual situations described in the AOR. The

following chart lists recent AORs with a brief description of

the subject matter, the date the requests were made public

and the num ber of pages of each request. The full text of

each AOR Is available to the public in the Commission's

Office of Public Records.

Volume 7, Number 9

1981-31 Property made available 8/3/81

to ca ndi date for use

in fundraising raffle.

1981-32 Testing the waters for a 8/3/81

1984 Presidential candidacy.

1981-33 Fundraising items donated 8/3/81

by federal savings and loan

association to local

political clubs.

1981·34 Funds transferred from 8/6/81

association's special

legislative account to its

separate segregated fund.

1981·35 Committee formed by 8/10/81

Califor nia Con gressmen

solely to influence Congressional reapportionment.

4

5

5

FEC's Claim

The FEC had issued the subpoena to Mr, Lance as 

of an investigation into Mr, Lance's 1974 gubernato

campaign in Georgia, which involved possible violation

2 U.S.C. §441b (formerly §610 of the Federal Cor

Practices Act). This provision prohibits national ba

from making - or candidates from accepting - contr

tions in connection with any election to any polit

office.* The Commission's investigation began in Sept

ber 1977.

District Court Ruling

The district court ordered Mr. Lance to comply w

the subpoena. The court reasoned that the subpoena 

well within the Commission's "broad and inclusive" st

tory authority to investigate violations of the Fed

Election Campaign Act (the Act).

•

Appeals Court: Panel

A panel of the appeals court rejected the argum

made by Mr. Lance for quashing the subpoena and affir

the district court order enforcing the subpoena. Spe

contin

• Under the Act. a loan from a national bank becomes a pro

ted contribution if it is not made according to applicable b

ing laws and in the ordinary course of business. 2 U,S.C. §

(8HBHviil.
callv, Mr. Lance claimed that the FEC was investigating

matters outside its jurisdiction. He contended that both

the Constitution and the Act barred any FEC investigation

of contributions made by national banks to his 1974

campaign. The panel responded to this claim by affirming

the FEC's argument that it was " ...specifically given

authority over this provision." (P.L. 93-433, 88 Stat. 1281

(October 15, 1974).) "Moreover, the Supreme Court held

that any party seeking enforcement of §610 (now §441b)

after January 1, 1975, must seek redress with the Comm isslon." Cort v. Ash, 422 U.S. 66(1974l.

Mr. Lance further claimed that the subpoena violated the

equal protection and ex post facto provisions of the

Constitution by attempting to apply §441b to campaign

activities that occurred before the enactment of the FECft

in 1975. The panel, on the other hand, affirmed the FEC's

argument that these provisions presented no impediment to

the FEC's investigation: "The prohibition against the

making of campaign contributions by national banks has

been in effect since 1907. Tillman Act, 34 Stat. 864. The

mere recodification of 18 U.S.C. §610 as 2 U.S.C. §441b

cannot absolve the respondent ...from liability for substantive violations which were not changed by the incorporation

of §441 b into Title 2."

As to the defendant's claim that the statute of limitations

barred the investigation, the panel found that there was no

statute of limitations applicable to a civil proceeding

undertaken to enforce the Act. 2 U.S.C. 5437g. The panel

upheld the FEC's argument that the statute of limitations

applied only to criminal prosecutions. "Even assuming

arguendo that the three year statute of limitations was

applicable to a future civil action brought by the Commission," the FEC argued, "the Commission has information

suggesting that violations have occurred within the three

years. Moreover, as noted, the existence of violations

outside the statutory period themselves provide reason to

investigate to ascertai n whether further violations occurred

within the three year period."

Finally, the defendant contended that, since the FEC

already had information available to it from other government agencies, enforcement of the subpoena should be

denied on grounds of undue burden and harassment. The

panel rejected this claim, confirming the FEC's argument

that "the existence of prior investigations by other agencies

touching on similar issues does not preclude an agency from

investigating matters within its jurisdiction." FEC v. Texaco,

555 F. 2d at 878-79. The appeals court panel determined,

however, that the constitutional challenges asserted by Mr.

Lance should be heard by the court sitting en bane.

Appeals Court: En Bane

On January 16, 1981, the appeals court, sitting en ba

issued an opinion that adopted the earlier panel decisi

affirmed the district court's subpoena enforcement or

and rejected a claim, presented by Mr. Lance in his app

that §441 b was unconstitutional on its face. The appe

court adopted three of the arguments given by the appe

court panel, but rejected the ex post facto argume

stating that it was not ripe for adjudication. The co

concluded that the prohibition on unsound banki ng pr

tices (extensions of credit to a campaign that are outs

the ordinary course of business) did not violate the F

Amendment because the transactions in question involv

"no speech elements at all," The bank drafts were tra

acted privately and were " ...not the sort of public expre

ion or support for Lance and his views that would m

them even 'symbolic speech:"

As to Mr. Lance's argument that §441 b was unconstituti

ally vague, the court noted, "The vagueness doctr

has been developed in the context of, and it is applica

to, penal statutes." The court concluded that the vaguen

issue was not ripe for adjudication because the court w

" ...unwilling to assume that the present investigation 

Lance will result in his criminal prosecution."

The court also rejected Mr. Lance's claim that §44

abridged Fifth Amendment rights by imposing grea

restrictions on national banks in connection with electio

than on other entities. The court held that since ", , .

Banks' contributions contain no cognizable elements 

speech .. ,we think the statute must be upheld if th

is a rational relationship between the prohibition ...and 

purpose that proh ibition serves....Since we have 

difficulty in concluding that a proh lbition against ba

engaging in unsound banking practices is rational, we rej

Lance's equal protection claim."

FEC v, PHILLIPS PUBLISHING, INC.

On July 16, 1981, the U.S. District Court for the Dist

of Columbia denied an FEC petition for court enforcem

of two subpoenas the Commission had issued to Phil

Publishing, tnc. (FEC v. Phillips Publishing, lnc., C

Action No. 81-0079). The court granted the responde

motion to enjoin any further FEC investigation of eit

Phillips Publishi ng, Inc. or its biweekly newsletter, 

Pink Sheet on the Left (The Pink Sheer).

FEC's Claim

The FEC had issued the subpoenas to the staff 

Phillips Publishing, Inc. as part of an investigation int

complaint filed by the Kennedy for President Commit

on March 18, 1980. The Kennedy Committee claimed t

continu

The RECORD is published by the Federal Election Commission, 1325 K Street, N.W., Washington, D.C. 20463. Commissioners are: John Warren McGarry, Chairman,' Frank P. Reiche, Vice Chairman; Joan D. Aikens, Thomas E. Harris;

Vernon W. Thomson; Robert O. Tiernan; William F. Hildenbrand, Secretary of the senate, Ex Officio; Edmund L.

Henshaw, Jr., Clerk of tne House of Representatives, Ex Officio. For more information, call 202/523-4068 or toll-free

800/424·9530.

2
the publishing company hap distributed a promotional

mailing for The Pink Sheet that expressly advocated the

defeat of Senator Edward Kennedy (D·Mass.) in his bid for

the 1980 Presidential nomination. The Kennedy Committee

alleged that, in making expenditures for the rnaili ng, the

respondent had violated the following provisions of the

Act:

§433, by fai ling to register <IS a political comm ittee;

§434(cl(l), by failing to report independent expendi·

tures for the mailing in excess of $250;

§435(b),· by failing to include a notice on the mailing

indicating that committee reports were available at the

FEC and could be purchased;

§441 (b), by making a prohibited corporate expenditure

advocating the defeat of a candidate in a federal election; and

§441(d), by failing to identify who had paid for and

authorized the mailing.

In responding to these allegations, Phillips Publishing, Inc,

contended that, since The Pink Sheet was a periodical and

was not controlled by any political party, candidate or

committee, the promotional mailing constituted a news

activity exempted from the Act's definition of contribution

or expenditure. 2 U.S.C. §431(9) (B) (i). In finding reason

to believe the alleged violations had occurred, the FEC

concluded that th is issue, as well as others, had to be

investigated further to make a factual determination with

regard to the respondent's claim that the prornotlonal

mailing constituted an exempted news activity. Based on a

facial comparison, the Commission noted, for example,

that the title of the solicitation letter was not printed in the

same format as that of the regular Pink Sheet newsletter,

that the mailing did not contai n legends normally carried

on The Pink Sheet and that the respective contents of the

mailing and The Pink Sheet were dissimilar. Moreover, the

promotional mailing was not distributed through the

facilities of a periodical publication.

On April 8, 1981, after company officials to whom the

subpoenas had been directed failed to respond, the Comm is·

sion filed its petition with the district court. On May 29.

1981, Phillips Publishing, Inc. filed a motion to dismiss the

FEC's petition and a motion to bar any further investigation of The Pink Sheet and the promotional mailing.

District Court Ruling

In denying the FEC's petition for enforcement of the

subpoenas, the court found that the FEC had sufficient

information to determine that the mailing met the criteria

for the news story exemption. "As early as April 1980, the

FEC received responses from Phillips Publishing, through its

counsel, stating that The Pink Sheet and its publisher 'are

not political committees, do not solicit or receive any

political contributions, or make any contributions to any

candidate ... .' " Moreover, the court said, " .. .the solicitation letter was to publicize The Pink Sheet and to obtain

new subscribers, both of which are normal, legitimate press

functions...." The court concluded, therefore, that the

FEC's petition for further information should be denied.

• This section was stricken from the Federal Election Campaign Act

(the Act) by the 1979 Amendments to the Act (PUb. L. No.

96-187, January 8, 1980).

3

INT ERNATIONAL ASSOCIATION

OF MACHINISTS AND

AEROSPACE WORKERS v. FEC

On December 16, 1980, the U.S. District Cou rt for t

District of Columbia dismissed International Association 

Machinists and Aerospace Workers (lAM) v, FEC (C

Action No. 8Q.0354). The court's decision upheld an F

determination dism issing an administrative complaint th

lAM and six other parties had filed with the Commissio

The court granted, however, plaintiffs' motion to have t

court certify constitutional challenges raised in the suit 

an en bane appeals court, pursuant to 2 U .S.C. §437

Accordi ngly, on June 3, 1981, the district court certified 

the U.S. Court of Appeals for the District of Colum

Circuit three questions as to the constitutionality of 

U.S.C. §441b(b)(3), The FEC filed a motion to dismiss t

claims on July 15, 1981.

Plaintiffs' Claims

In their suit, plaintiffs cl aimed that the' FEC had ac

contrary to law in dismissing an administrative compla

filed by plaintiffs on October 9, 1979. The compla

alleged that eleven corporations had systematically violat

2 U .S.C. §441 b(b) (3) by soliciting contributions to th

separate segregated funds (political action committees 

PACs) from "unprotected" administrative personnel und

"inherently coercive" conditions. Citi ng the Supre

Court's ruling in Civil Service Commission v, Natio

Association of Letter Carriers (413 U.S. 548( 1973

plai ntiffs claimed that the corporate solicitation metho

were coercive because immed iate supervisors approach

their employees for contributions at work. Plaintiffs cite

num ber of examples as evidence of coercion, including 

fact that employees had made larger contributions, on 

average, than members of the general public with compa

ble incomes and the fact that some of the PAC contri

tions were made to out-of-state candidates and to can

dates whose party affiliation differed from that of 

employees.

District Court Ruling: Merits of the Case

In reviewing plaintiffs' claims, the district court rec

nized the deference to be accorded the FEC's determi

tion and concluded that the Commission's disrn issal 

lAM's complaint was not arbitrary. capricious or contr

to law. Applying the standard for permissible corpor

solicitations set forth in Pipefitters Local Union No. 562 

U.S. (407 U.S. 385 (1972)). and later codified in §44

(b)(31 of the Act: the court stated: "[N] owhere d

FECA [Federal Election Campaign Actl forbid corpor

supervisors from asking their subordinates for contributio

as long as they comply with the provisions of Sect

441 btb) (3)," The court concluded that"[pl laintiffs' p

sentation to the FEC, although detailed, is compos

entirely of circumstantial evidence. Neither the administ

tive complaint nor the complaint in this Court, offers dir

evidence of wrongdoing."

District Court Ruling: Constitutional Issues

Plaintiffs had also asked the district court to certify 

the appeals court three constitutional challenges to §44

(b)(3) if the court upheld the FEC's determination to 

miss plaintiffs' administrative complaint. Plaintiffs claim

contin
that the corporate solicitations described in its complaint

violated:

First Amendment rights of free speech by sanctioning

"coercive" solicitations of employees;

Fifth Amendment rights of equal protection by denying

labor unions " ...comparable economic power over

thousands of career employees...."; and

First Amendment rights of shareholders by compelling

them to fi nance coercive political solicitations.

The FEC moved that these challenges be dismissed on

grounds that they failed to state a claim on which relief

cou Id be granted and plaintiffs lacked standing to raise the

issues. The court found, however, that " ...plaintiffs'

claims are neither frivolous nor so insubstantial as to

warrant dismissal for failure to state a claim." As to plaintiffs' standing to raise the constitutional issues, the court

held that ", , .the plaintiffs have made a threshold showing

of a 'disti net and palpable injury' of a level sufficient to

satisfy Article III [of the Constitution] ."

NEW LITIGATION

Citizens for LaRouche v, FEC

Plaintiffs' suit challenges pending FEC investigations

concerning contributions submitted for primary matching

funds by the Citizens for LaRouche Committee, Lyndon H.

LaRouche's principal carnparqn committee for the 1980

Presidential primaries. Plaintiffs ask the district court to

declare that:

The FEC's investigation was motivated "solely by bad

faith";

Constituted an abuse of due process;

Violated plaintiffs' constitutional rights; and

Unconstitutionally applied the provisions of the Act

permitting an FEC investigation (2 U.S.C, § §437g and

437 (a) (2)).

Plaintiffs further seek preliminary and permanent injunctions directing the FEC to:

Refrain from any further investigation until it can

demonstrate to the court that its investigations are

within the scope of its investigative and enforcement

authority; and

Provide the LaRouche Committee with a detailed,

factual notice of any F EC investigation sanctioned by

the court, including identification of any ind ividuals

involved in the investigation. Further, the FEC must

limit its investigation to relevant facts.

(Ll.S, District Court for the Southern District of New York,

July 17, 1981, Civil Action No. 81 Civ. 4468)

• Under this provision of the election law, solicitations are considered noncoercive if they inform employees of: 1) the pol itical

purposes for which contributions will be used and 2) of their right

to refuse to contribute without reprisal.

4

POLITICAL ADS

AND SOLICITATIONS

Do political ads have to include any type of special 

Yes. When a public communication expressly ad

the election or defeat of a clearly identified cand

solicits contributions (through any broadcasting 

newspaper, magazine, outdoor advertlsing facility

mailing or any other type of general public politica

tising), it must display one of the following autho

notices (2 U.S.C. R441d(a)}, as appropriate:

1. Authorized and Financed by Candidate's Aut

Committee. If the communication is authoriz

financed by the campaign (e.g., the candidate or 

authorized political committees or agents), the co

cation must state that it has been paid for by th

mittee.

Example: Paid for by the John Doe for Congress 

mittee,

Note: Where a candidate or his/her committee 

or furnishes the material, authori zation by the c

'IS assumed and need not be specifically stated.

2. Authorized but Not Financed by Candidate's 

ized Committee. If the communication ts autho

the campaign but paid for by another pers

communication must identify the person who 

for it and state that it has been authorized 

candidate or the candidate's committee.

Example: Paid for by the XYZ Committee and 

ized by the John Doe for Congress Com

3. Not Authorized andNot Paid for by Candidate's 

ized Committee. If the communication is not 

and not authorized by the campaign, the commu

must identify the person who has paid for it a

that it has not been authorized by the candidat

candidate's committee.

Example: Paid for by the XYZ Committee 

authorized by any candidate.

Do solicitations for funds also require a notice?

Yes. Any solicitation to the general public 

publ ic media (e.q., television, maqazi ne or direct 

must include the same kind of notice as describe

Is a political committee required to use the autho

notice when it solicits funds for its own use? For 

date?

Yes. If a political comm ittee uses any type o

media for a solicitation (see above), it must inc

authorization notice.

co
Note: A separate segregated fund (PAC) or the corporation

or labor organization that sponsors it is not required to

use the authorization notice on solicitations it makes to

solicitable personnel because the solicitations are sent to a

restricted audience - not the general public. (See AD

1980·71,)

Must the authorization notice always appear on the first

page of the solicitation?

No. FEe Regulations require only that the notice be

displayed clearly and conspicuously on the solicitation or

political ad. 11 CFR 110.11(a)(1).

If a mailing is made to solicit contributions to a candidate's

campaign, must the authorization notice appear on each

item in the mailing?

No. The solicitation notice need appear on only one of

the items in the mailing (e.g., the contributor card), provided

it isdisplayed clearly and conspicuously. (See AD 1980·145.)

Must the political committee sponsoring the communication include its address andlor the name of its treasurer in

the notice?

No.

Must the political committee sponsoring the ad or solicitation include its full name or may it use an abbreviated title?

It must use its full, official name.

Must the authorization notice include a statement that IIA

copy of our report is filed with the Federal Election Commission and is available for purchase from the Federal

Election Commission, Washington, D.C.''?

No. This used to be a requirement, but it was deleted

from the Act with the passage of the 1979 Amendments.

Must a political committee display the authorization notice

on small campaign items such as concert tickets sold for a

fundraiser?

No. The authorization notice does not have to be

used on small campaign items (e.g., concert tickets for a

fundraiser, bumper stickers, pins, buttons or pens).

Must an authorization notice also comply with the requirements of state law?

No. To the extent that contributions and expenditures

are made with respect to federal elections, the Act and FEC

Regulations preempt applicable provisions of state law covering their reporting and disclosure. 2 U.S.C. §453 and 11

CFR 108.7(bl. (See also AD 1981·27,)

May a newspaper or magazine charge higher rates for

political ads than for regular commercial advertisements?

No. The rates for political ads must be comparable to

those charged for noncampaign advertisements. 11 CF R

110.11 (bl.

5

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STREAMLINED ORDERING SYSTEM

FOR CLEARINGHOUSE TOPICAL REPORTS

The FEC's National Clearinghouse on Election Adrninlstration recently announced a new, simplified system for

ordering its topical reports on election administration. By

depositing $75 in an account with the Superintendent of

Documents, U.S. Government Printing Office, election

administrators and other interested parties may establish a

standing order to purchase reports issued during 1981,

rather than ordering each report separately. Subscribers will

automatically receive all topical reports issued after the

date of their deposit.

For information on this new system, as well as a description

of reports available, please call the Clearinghouse on the

Commission's toll-free line: 800-424·9530 or locally

202·523·4183.

1979·80 FINANCIAL ACTIVITY

OF NONPARTY POLITICAL COMMITTEES

Nonparty (noncandidate) committees contributed a

total of $60.5 million to Congressional and Presidential

candidates during the 1979·80 election cycle, according to

summary fjgures released by the Commission on August 4,

1981. U.S. Senate and House candidates received a total of

$55.3 million from nonparty committees for their 1979·80

election campaigns, and Presidential campaigns received $2

million, Nonparty committees also contributed $3,2 million

for other purposes, such as retiring debts from former

Congressional campaigns.

The FEC's computer data shows that nonparty committees

began the election cycle with almost $15 million cash on

hand. They raised an additional $137.8 million and spent

$133.2 million between January 1, 1979, and December

31, 1980. Contributions to 1980 Congressional campaigns

alone represented 42 percent of all nonparty committee

spending. Contributions to all federal candidates, including

Presidential candidates and candidates for past, present and

future Congressional elections, represented 45 percent of

spending.

Nonparty committees spent approximately $14 million, or

10.5 percent of their funds, on independent expenditures

to promote or defeat certain candidates. They also contributed to political parties and other noncandidate groups,

but the Commission has not yet released final figures for

these contributions.

continued
47

$55.2 million

44 TOTAL

6B

I11III DEMOCRATS

I I REPUBLICAN

$0.7 million

Source: FEC press release, "Costs of Campaigning Increa

August 10, 1981.

$4.8 million

NON

CONNECTED

CORPORATlONS

WITHOUT STOCK

35

$1.4 million

$13.1 million

LABOR

COOPERATIVES

56

64

$19.2 !T'illion

CORPORATE

$16.1 million

TRADE/

MEMBERSHIP/

HEALTH

NONPARTY CONTRIBUTIONS TO

1980 CONGRESSIONAL CANDIDATES

These graphs show, on a percentage basis, how each type of

nonparty committee divided its contributions between

1979-80 Democratic and Republican Congressional candidates (1/1/79 - 12/31/80).

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