January 2003 Federal Election Commission Volume 29, Number 1

Table of Contents

Commissioners

1 Message from the Chair

2 Weintraub Joins Commission

2 Chair and Vice Chairman Elected

Reports

2 Draft Reporting Forms and Formats

3 Reports Due in 2003

Regulations

6 Contribution Limits Increase

8 Disclaimers, Fraudulent Solicitation,

Civil Penalties and Personal Use of

Campaign Funds

10 Coordinated and Independent

Expenditures

14 BCRA Reporting

Statistics

17 Party Fundraising at $1.1 Billion

Legislation

18 Help America Vote Act

Election Administration

18 Implementation Plan for VSS

Court Cases

19 Cunningham v. FEC

20 FEC v. Toledano

20 FEC v. Beaumont

20 Hawaii Right to Life, Inc., v FEC

Compliance

22 MUR 5187: Corporate Reimbursements

800 Line

23 Frequently Asked ADR Questions

Administrative Fines

25 Fines for Late and Nonfiled Reports

Outreach

25 Conferences in March and April

26 FEC Roundtables

Compliance

Message from the Chair

The year 2003 promises to be a challenging one at the FEC. Having

completed all major rulemakings to implement provisions of the Bipartisan

Campaign Reform Act of 2002 (BCRA), the Commission now looks ahead to

the task of implementing the new law.

As part of that process, the FEC is prepared to provide guidance to the

regulated community in a number of ways. The Commission will initiate

additional rulemakings in 2003 and respond to advisory opinion requests to

further clarify the requirements of the BCRA and other provisions of the

campaign finance law.

The FEC will also continue its educational outreach programs, including

roundtables workshops on different aspects of the new regulations, and

conferences in Washington DC and throughout the country designed to give a

comprehensive overview of the campaign finance law. Additionally, the

Commission will update its Campaign Guide series and many of its brochures to address the law’s requirements in the clearest possible terms.

In the weeks ahead, the Commission will approve new reporting software,

forms and instructions. As always, staff in the FEC’s Reports Analysis and

Information divisions will be available to answer questions about the new

reporting requirements and the new law. Please do not hesitate to call our 800

number (800/424-9530) for assistance.

Even as we work to implement the BCRA, the Commission recognizes

that the Supreme Court is expected to rule on the constitutionality of certain

provisions of the BCRA in June 2003. The Commission is prepared to

respond, as necessary, to that decision.

We look forward to meeting the challenges and opportunities presented to

this agency in the coming months.
Federal Election Commission RECORD January 2003

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/694-1100

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

Ellen L. Weintraub , Chair

Bradley A. Smith, Vice Chairman

David M. Mason, Commissioner

Danny L. McDonald,

 Commissioner

Scott E. Thomas, Commissioner

Michael E. Toner, Commissioner

James A. Pehrkon, Staff Director

Lawrence H. Norton, General

 Counsel

Published by the Information

 Division

Greg J. Scott, Assistant Staff

 Director

Amy Kort, Editor

http://www.fec.gov

Reports

Commissioners

Weintraub Joins

Commission

Ellen L. Weintraub was appointed to the Federal Election

Commission by President Bush on

December 6, 2002, and sworn-in on

December 9.

Before joining the Commission,

Ms. Weintraub was of Counsel at

Perkins Coie, LLP, in Washington,

DC. Prior to her work at Perkins

Coie, she was Counsel to the House

Committee on Standards of Official

Conduct (the Ethics Committee). In

that capacity, she served as editorin-chief of the House Ethics Manual

and as a principal contributor to the

Senate Ethics Manual. She has

written numerous articles on ethics

and public policy, including coauthoring the chapter on Congressional ethics for the 1998 ABA

Lobbying Manual. Ms. Weintraub

received her B.A. cum laude from

Yale College and her J.D. from

Harvard Law School.✦

—Amy Kort

New Chair and Vice

Chairman Elected

On December 18, 2002, the

Commission elected Ellen L.

Weintraub as its Chair and Bradley

A. Smith as Vice Chairman for

2003.

Chair Weintraub was appointed

to the Commission on December 6,

2002. (See related biography, at

left). Vice-Chairman Smith joined

the Commission in February 2000.

Commissioner Smith was previously Professor of Law at Capital

University Law School in Columbus, Ohio. Prior to joining the

faculty at Capital in 1993, he had

practiced with the Columbus law

firm of Vorys, Sater, Seymour &

Pease, served as United States Vice

Consul in Guayaquil, Ecuador,

worked as a consultant in the health

care field and served as General

Manager of the Small Business

Association of Michigan. Commissioner Smith received his B.A. cum

laude from Kalamazoo College in

Kalamazoo, Michigan, and his J.D.

cum laude from Harvard Law

School.✦

—Amy Kort

Draft Reporting Forms and

E-Filing Formats Available

for Public Comment

In order to implement the reporting provisions of the Bipartisan

Campaign Reform Act, the Commission has revised its current

reporting forms and electronic filing

formats and, in some cases, developed new forms. The draft forms

and electronic filing formats are

available on the FEC’s web site at

http://www.fec.gov/pages/bcra/

bcra_reporting.htm#DraftForms.

The final versions of the forms and

formats may differ considerably

from the drafts, so filers must not

use the draft forms for any actual

FEC filing. Draft instructions for the

forms will be posted as they become

available.

How to Comment

The Commission invites the

regulated community and interested

parties to comment on the draft

forms and electronic filing formats.

Comments must be received by

January 10, 2003:

• Draft Forms and Instructions

Comments: All comments should

be addressed to the FEC Information Division. Faxed comments

should be sent to (202) 219-8504.

Comments sent by mail should be

addressed to the FEC Information

Division, 999 E Street, NW,

Washington, DC 20463. E-mail

comments should be sent to

forms@fec.gov. Please label your

subject line “Form Comments.” To

make a comment by telephone, call

the FEC’s toll-free line (1-800-

424-9530) and ask to speak to a

Public Affairs Specialist. The

specialist will note your comments, and forward them for

consideration, without asking for

your identification.

• Format Comments: All comments should be addressed to Jeff

Chumley in the FEC Data Systems

Development Division. Faxed

comments should be sent to

(202)219-0613. Comments sent by

mail should be addressed to Jeff

Chumley, Data Systems Development Division, 999 E Street, NW,

Washington, DC 20463. E-mail

comments should be sent to

jchumley@fec.gov. Please label

your subject line “Form Comments.” To make a comment by

telephone, call the FEC’s toll-free

line, 1-800-424-9530 and ask for

extension 1321.✦

—Amy Kort
January 2003 Federal Election Commission RECORD

3

mail, overnight delivery or courier

must be received by the Commission on the business day preceding

the filing date. Reports filed electronically must be received by the

Commission and pass the validation

test by 11:59 Eastern time on the

filing date.

Under the Commission’s mandatory electronic filing regulations,

individuals and organizations2

 that

receive contributions or make

expenditures in excess of $50,000 in

a calendar year—or expect to do

so—must file all reports and statements with the FEC electronically.

Electronic filers who instead file on

paper or submit an electronic report

that does not pass the validation test

will be considered nonfilers and

may be subject to enforcement

actions (including administrative

fines).

Committees that file with the

Secretary of the Senate3

 are not

subject to the mandatory electronic

filing rules, but are encouraged to

file an unofficial electronic copy of

their reports with the FEC in order

to speed disclosure. 11 CFR 104.18.

The Commission’s electronic

filing software, FECFile 4, can be

downloaded from the FEC’s web

site at www.fec.gov (click on the

Electronic Filing icon). Filers may

also use commercial or privatelydeveloped software as long as the

software meets the Commission’s

format specifications, which are

available on the Commission’s web

site.

Most paper forms are available at

the FEC’s web site (http://

www.fec.gov/reporting.html) and

from FEC Faxline, the agency’s

automated fax system (202/501-

3413). The 2003 Reporting Schedule is also available on the FEC’s

web site (http://www.fec.gov/pages/

report.htm), and from Faxline, the

FEC’s automated fax system (202/

501-3413, request document 586).

For more information on reporting,

call the FEC at 800/424-9530 (press

1, then 3) or 202/694-1100.

Interim Reporting Requirements

On November 21, 2002, the

Commission approved a policy

statement on reporting requirements

during the transition period following the effective date of the BCRA.

The Commission is in the process of

updating its reporting forms,

software and instructions to incorporate all the new regulations. In the

interim, filers will continue to use

existing disclosure forms and

software for their January 31st Year

End Report and, for monthly filers

only, the February Monthly Report,

which covers January 2003.

The Commission has concluded

that a period of transition and

adjustment with respect to reporting

is needed. Currently, sample

reporting forms and electronic filing

formats are available on the FEC

web site at http://www.fec.gov/

pages/bcra/

bcra_reporting.htm#DraftForms.

While committees should not use

the sample reporting formats, or

paper reporting forms to file their

reports, the Commission invites

public comment on what changes, if

any, should be made to the sample

formats and forms. The Commission

plans to have finalized versions of

the software and forms in time for

the 2003 March Monthly report.

To assist filers during the transition period, the Commission has

developed interim disclosure

procedures that address BCRArelated transactions not contemplated by the existing reporting

forms and filing software. Questions concerning these procedures

may be directed to the FEC’s

3 See “Where to File” on page 5.

2 The regulation covers individuals and

organizations required to file reports

with the Commission, including any

person making an independent expenditure.

Reports Due in 2003

This article on filing requirements for 2003 is supplemented by

the reporting tables on the following

pages. Please note that the Bipartisan Campaign Reform Act of 2002

(BCRA), and Commission regulations that implement the BCRA,

result in a number of significant

changes to committees’ filing

procedures, including requirements

that:

• Authorized committees of House

and Senate candidates file quarterly in both election and nonelection years;

• National committees of political

parties file monthly; and

• State, district and local party

committees that participate in

“federal election activity” file

monthly.1

In addition to revising some

committees’ filing schedules, these

statutory and regulatory changes

have also affected the types of

activity that must be reported. The

Commission is in the process of

creating new electronic filing

software platforms and paper

reporting forms to allow committees

to more easily comply with these

requirements. In the interim, committees should continue using the

current software and reporting

forms, as discussed below.

General Information

It is the responsibility of the

committee treasurer to file required

reports on time. To assist treasurers,

the Commission sends committees

notices of upcoming reporting

deadlines. Please note that filing

deadlines are not extended in cases

where the filing date falls on a

weekend or federal holiday. In such

cases, reports filed by first-class

1 “Federal election activity” is a new

category of activity defined at 11 CFR

100.24. See the September 2002

Record, page 1. (continued on page 4)
Federal Election Commission RECORD January 2003

4

Information Division, Reports

Analysis Division or Electronic

Filing Office, as appropriate.

The Commission intends to

exercise its discretion by not

pursuing the committees and other

persons and entities for possible

violations of the reporting statutes

and regulations covered by the

instructions set out in the policy

statement, so long as the filers fully

adhere to those instructions and

timely file the reports. The policy

statement was published in the

December 2002 Record, page 1, and

is available on the FEC web site at

www.fec.gov/pages/bcra/

interim_reporting_policy.htm.

Year-End Reports Covering 2002

Activity

All committees must file a 2002

year-end report due January 31, 2003.

The coverage and reporting dates are

found on page 5.

Reports Covering 2003 Activity

To find out which reports your

committee must file in 2003, check

the Guide to 2003 Reporting at

right. Then check the tables on page

5 for reporting dates. Please note

that committees active in special

elections in 2003 may have to file

additional special election reports,

as explained on page 6.

Authorized Committees

of Candidates

House and Senate Candidates.

All campaigns that raise or spend

more than $5,000 (and thus trigger

registration and reporting requirements) must file quarterly reports in

2003. Under the BCRA, principal

campaign committees may no

longer file on a semiannual basis in

non-election years. 2 U.S.C.

§434(a)(2)(B).

Committees that wish to terminate must continue filing reports

until notified in writing that their

Type of Filer Reports

2002 Year- SemiEnd annual Quarterly Monthly

House and Senate ✓ ✓

Candidate Committees 1

Presidential Candidate ✓ ✓ or 2 ✓

Committees

National Party ✓ ✓

Committees

State, Local and ✓ ✓ or 3 ✓

District Party Committees

Political Action ✓ ✓ or 4 ✓

Committees

1 This category includes committees of candidates retiring debts from a previous

election or running for a future election.

2Presidential committees may file on either a quarterly or a monthly basis. Those

wishing to change their filing frequency should notify the Commission in writing.

3 State, district and local party committees that engage in “federal election activity”

must file on a monthly basis. 11 CFR 300.36(c)(1). Other state, district and local

party committees may file on a semiannual basis.

4Political action committees (PACs) may file on either a semiannual or a monthly

basis. Committees wishing to change their filing frequency must notify the Commission in writing when filing a report under the committee’s current schedule. Electronic filers must file this request electronically. A committee may change its filing

frequency only once per calendar year. 11 CFR 104.5(c).

Guide to 2003 Reporting

termination report has been accepted

by the Commission.

Presidential Candidates. All

committees authorized by Presidential candidates must file on either a

monthly or a quarterly schedule in

2003. A Presidential committee

wishing to change its filing schedule

should notify the Commission in

writing. 11 CFR 104.5(b)(2).

State, District and Local Party

Committees

State, district and local party

committees that engage in “federal

election activity” must file on a

monthly schedule. 11 CFR

300.36(c)(1). Committees that do

not engage in “federal election

activity” may file on a semiannual

basis in 2003.

National Party Committees

Under the BCRA, national

committees of political parties must

file on a monthly schedule in all

years and may no longer choose to

change their filing schedule in nonelection years. 2 U.S.C.

§434(a)(4)(B).

Reports

(continued from page 3)
January 2003 Federal Election Commission RECORD

5

Political Action Committees

PACs (separate segregated funds

and nonconnected committees) that

filed on a quarterly basis during

2002 file on a semiannual basis in

2003. Monthly filers continue on the

monthly schedule. PACs may change

their filing schedule, but must first

notify the Commission in writing.

Electronic filers must file this

request electronically. A committee

may change its filing frequency only

once a year. 11 CFR 104.5(c).

Where to File

Committee treasurers must file

FEC reports with the appropriate

federal office. State filing requirements also apply to reports filed by

the principal campaign committees

of candidates seeking office in

Guam, Montana and Puerto Rico

and to reports filed by PACs and

party committees who support these

candidates. 2 U.S.C. §439(a)(2)(B).

House Candidate Committees.

Principal campaign committees of

House candidates file with the FEC.

11 CFR 105.1.

Senate Candidate Committees.

Principal campaign committees of

Senate candidates file with the

Secretary of the Senate. 11 CFR

105.2.

Presidential Committees. Principal campaign committees of Presidential candidates file with the FEC.

11 CFR 105.3.

Candidate Committees with More

Than One Authorized Committee. If

a campaign includes more than one

authorized committee, the principal

campaign committee files, with its

own report, the reports prepared by

the other authorized committees as

well as a consolidated report (FEC

Form 3Z). 11 CFR 104.3(f).

PACs and Party Committees.

Generally, PACs and party committees file with the FEC. 11 CFR

105.4. However, committees

supporting only Senate candidates,

and the national Democratic and

Republican Senatorial committees,

2002 Year-End Report

Note: All committees file this report.

Report Period Covered Filing Date 1

Year-End Closing date January 31, 2003

of last report

through 12/31/02

2003 Monthly Reports

Note: All national party committees and any state, district or local party committee that engages in “federal election activity” must file monthly reports.

Report Period Covered Filing Date 1

February January 1-31 February 20

March February 1-28 March 20

April March 1-31 April 20*

May April 1-30 May 20

June May 1-31 June 20

July June 1-30 July 20*

August July 1-31 August 20

September August 1-31 September 20*

October September 1-30 October 20

November October 1-31 November 20

December November 1-30 December 20*

Year-End December 1-31 January 31, 2004*

2003 Quarterly Reports

Note: All principal campaign committees must now file on a quarterly schedule

in non-election years as well as in election years. Presidential committees may

choose to file quarterly, rather than monthly, in non-election years.

Report Close of Books Filing Date 1

1st Quarter March 31 April 15

2nd Quarter June 30 July 15

3rd Quarter September 30 October 15

Year-End December 31 January 31, 2004*

2003 Semiannual Reports

Note: PACs that file quarterly in election years file on a semiannual schedule

in non-election years.

Report Close of Books Filing Date 1

Mid-Year June 30 July 31

Year-End December 31 January 31, 2004*

1Reports sent by registered or certified mail must be postmarked by the filing date.

Reports sent by other means—including first class mail—must be received by the

filing date. 11 CFR 104.5(e).

* Note that this filing date falls on a weekend. Filing dates are not extended for

weekends or federal holidays.

(continued on page 6)
Federal Election Commission RECORD January 2003

6

file with the Secretary of the Senate.

11 CFR 105.

Waiver of State Filing

Under the Commission’s State

Filing Waiver program, qualified

states are relieved of the requirement to make paper copies of FEC

reports available to the public. As a

result, political committees no

longer have to file copies of their

federal reports at the state level in

the states that have received the

waiver.4 Committees in states not

certified for the waiver must continue to file copies of their reports

with the appropriate state election

office. The addresses for the federal

offices (FEC and Secretary of the

Senate) appear in the instructions

for the Summary Page of FEC

Forms 3 and 3X. A list of state

filing offices is available from the

Commission.

Late Filing

The Federal Election Campaign

Act does not permit the Commission

to grant extensions of filing deadlines under any circumstances.

Filing late reports can result in

enforcement action by the Commission.

The agency pursues compliance

actions against late-filers and

nonfilers under the Administrative

Fine program and on a case-by-case

basis. For more information on the

Administrative Fine program, visit

the FEC web site at www.fec.gov

and click on the Administrative Fine

icon.

Independent Expenditures

The BCRA requires political

committees and other persons who

make independent expenditures at

any time during the calendar year—

up to and including the 20th day

before an election—to disclose this

activity within 48 hours each time

that the expenditures aggregate

$10,000 or more. This reporting

requirement is in addition to the

requirement to file 24-hour notices

of independent expenditures each

time that disbursements for independent expenditures aggregate at or

above $1,000 during the last 20

days—up to 24 hours—before an

election. 2 U.S.C. §§434(b),(d) and

(g). Political committees must report

independent expenditures that do

not trigger the 48- or 24-hour

reporting thresholds on their regularly-scheduled disclosure reports.

Other persons report these expenditures once they exceed $250. 11

CFR 104.4(b)(1) and 109.10(b).

All individuals, persons and

committees, including Senate

committees, must file 24- and 48-

hour notices of independent expenditures with the Commission. 11

CFR 104.4, 109.10, 105.1 and

105.2.

Committees Active in Special

Elections

Committees authorized by

candidates running in any 2003

special election must file pre- and

post-election reports in addition to

regularly-scheduled reports. 11 CFR

104.5(h). They are also required to

comply with the 48-hour notice

5 “Electioneering communications” are

a new category of communication,

defined at 11 CFR 100.29. See the

November 2002 Record, page 3.

Reports

(continued from page 5)

Regulations

Contribution Limits

Increased

On January 1, 2003, new regulations took effect that:

• Raise the individual contribution

limits to candidates, state, district

and local party committees and

national party committees;

• Change the $25,000 annual

contribution limit for individuals to

a $95,000 biennial limit;

• Increase the limit on contributions

from national party committees to

Senate candidates; and

• Require certain contribution limits

to be indexed for inflation.

(continued on page 8)

4 The Commission has certified that the

following states and territories qualify

for filing waivers: Alabama, Alaska,

American Samoa, Arizona, Arkansas,

California, Colorado, Connecticut,

Delaware, Florida, Georgia, Hawaii,

Idaho, Illinois, Indiana, Iowa, Kansas,

Kentucky, Louisiana, Maine, Maryland,

Massachusetts, Michigan, Minnesota,

Mississippi, Missouri, Nebraska,

Nevada, New Hampshire, New Jersey,

New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma,

Oregon, Pennsylvania, Rhode Island,

South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virgin

Islands, Virginia, Washington, West

Virginia, Wisconsin and Wyoming.

Committees that file their reports at the

FEC need not file copies in these states.

Guam, Montana and Puerto Rico are

not currently in the State Filing Waiver

Program.

requirement for contributions of

$1,000 or more (including loans)

received shortly before an election.

See 11 CFR 104.5(f).

PACs and party committees

supporting candidates running in

special elections may also have to

file pre- and post-election reports—

unless they file on a monthly basis.

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

All PACs are subject to 24-hour

reporting of independent expenditures made shortly before an election. See 11 CFR 104.4(b) and (c)

and 104.5(g).

Additionally, individuals and

other persons who make “electioneering communications”5

 that

aggregate in excess of $10,000 must

file disclosure statements with the

Commission within 24 hours of

distribution to the public. See

related article, page 14.

When timing permits, the Record

will alert committees to special

election reporting dates. ✦

—Amy Kort
January 2003 Federal Election Commission RECORD

7

Donors Recipients Special Limits

Candidate PAC1 State, District and National Party

Committee Local Party Committee2 Committee3

Individual $2,000* per $5,000 $10,000 per year $25,000* Biennial limit of

election4 per year combined limit per year $95,000*

($37,500 to all

candidates and

$57,5005

 to all

PACs and parties)

State, District $5,000 $5,000 Unlimited transfers

and Local per election per year to other party committees

Party combined combined

Committee2 limit limit

National Party $5,000 per $5,000 Unlimited transfers $35,000*

 to

Committee3 election per year to other party committees Senate candidate

per campaign6

PAC $5,000 per $5,000 $5,000 per year $15,000

Multicandidate7 election per year combined limit per year

PAC $2,000*

 per $5,000 $10,000 per year $25,000*

Not election per year combined limit per year

Multicandidate7

Contribution Limits

* These limits will be indexed for inflation.

1 These limits apply to both separate segregated funds (SSFs) and political action committees (PACs). Affiliated committees

share the same set of limits on contributions made and received.

2 A state party committee shares its limits with local and district party committees in that state unless a local or district

committee’s independence can be demonstrated. These limits apply to multicandidate committees only.

3 A party’s national committee, Senate campaign committee and House campaign committee are each considered national party

committees, and each have separate limits, except with respect to Senate candidates—see Special Limits column.

4 Each of the following is considered a separate election with a separate limit: primary election, caucus or convention with the

authority to nominate, general election, runoff election and special election.

5 No more than $37,500 of this amount may be contributed to state and local parties and PACs.

6 This limit is shared by the national committee and the Senate campaign committee.

7 A multicandidate committee is a political committee that has been registered for at least six months, has received contributions

from more than 50 contributors and—with the exception of a state party committee—has made contributions to at least five

federal candidates.
Federal Election Commission RECORD January 2003

8

The chart on page 7 details the

new contribution limits.

For a summary of these regulations—which also affect

recordkeeping requirements,

prohibit certain contributions and

donations by minors and strengthen

the prohibitions on contributions

and donations by foreign nationals—see the December 2002

Record, page 8. The final rules and

their Explanation and Justification

were published in the November 19,

2002, Federal Register (67 FR

69928) and are available on the FEC

web site at www.fec.gov/pages/bcra/

rulemakings/part_110_rules.htm.✦

—Amy Kort

Regulations

(continued from page 6)

Final Rules on Disclaimers,

Fraudulent Solicitation, Civil

Penalties and Personal Use of

Campaign Funds

On November 25, 2002, the

Commission approved final rules to

implement provisions of the Bipartisan Campaign Reform Act of 2002

(BCRA), which:

• Specify new requirements for

disclaimers accompanying radio,

television, print and other campaign communications;

• Make changes regarding the

personal use of campaign funds by

candidates and federal officeholders;

• Allow non-incumbent federal

candidates to pay themselves

salaries from campaign funds, as

described below;

• Expand the scope of the statutory

prohibition on fraudulent misrepresentation; and

• Increase the civil penalties for

violating the prohibition on

contributions made in the name of

another.

The final rules and their Explanation and Justification were published

in the December 13, 2002, Federal

Register (67 FR 76962) and are

available on the FEC web site at

www.fec.gov/pages/bcra/

rulemakings/other_provisions.htm.

Disclaimers

The new regulations replace preBCRA 11 CFR 110.11 with a new

section of the same number that

implements statutory changes to the

disclaimer requirements. The

disclaimer requirements in this new

section apply to public communications, including “communications

through any broadcast, cable or

satellite transmission, newspaper,

magazine, outdoor advertising

facility, mailing or other type of

general public political advertising.”

See 11 CFR 100.26. These requirements also apply to political committees’ web sites, to unsolicited

e-mail of more than 500 substantially-similar communications and

to any “electioneering communication.” All disclaimers must be “clear

and conspicuous” regardless of the

medium in which the communication is transmitted. A disclaimer is

not clear and conspicuous if it is

difficult to read or hear, or if its

placement is easily overlooked. 11

CFR 110.11(c)(1).

Political committees. Any

communication made by a political

committee—including communications that do not expressly advocate

the election or defeat of a clearlyidentified federal candidate or solicit

a contribution—must display a

disclaimer. 11 CFR 110.11(a)(1).

The disclaimer for a communication paid for and authorized by a

candidate or candidate’s committee

must state that the communication is

paid for by the candidate’s committee. The disclaimer for a communication authorized by the candidate

or candidate’s committee, but paid

for by any other person, must state

both who paid for the communication and that it was authorized by

that candidate.

Communications not authorized

by a candidate or his/her campaign

committee, including any solicitation, must disclose the permanent

street address, telephone number or

web site address of the person who

paid for the communication, and

also state that the communication

was not authorized by any candidate. 11 CFR 110.11(b).

Specific requirements for radio

and television communications. For

radio and television communications authorized by a candidate, the

candidate must deliver an audio

statement identifying himself or

herself, and stating that he or she

has approved the communication.

For a television communication, this

disclaimer must be conveyed by

either:

• A full-screen view of the candidate

making the statement; or

• A “clearly identifiable photographic or similar image of the

candidate” that appears during the

candidate’s voice-over statement.

11 CFR 110.11(c)(3)(ii)(A) and

(B).

Additionally, television communications must contain a “clearly

readable” written statement that

appears at the end of the communication for a period of at least four

seconds with a reasonable degree of

color contrast between the background and the disclaimer statement. The written statement must

occupy at least four percent of the

vertical picture height. 11 CFR

110.11(c)(3)(iii).

For a radio or television communication that is not authorized by a

candidate, the name of the political

committee or other person who is

responsible for the communication

and, if applicable, the name of the

sponsoring committee’s connected

organization is required in the

disclaimer.1

1 In addition, communications transmitted through telephone banks, as defined

by 11 CFR 100.28, must carry this

same disclaimer statement.
January 2003 Federal Election Commission RECORD

9

In the case of a televised ad, the

disclaimer must also include a

statement that is conveyed by a full

screen view of a representative of

the political committee or other

person making the statement, or a

voice-over by the representative. In

addition, the disclaimer must appear

in writing at the end of the communication in a “clearly readable”

manner with a reasonable degree of

color contrast to the background,

and it must be shown for a period of

four seconds. 11 CFR 110.11(c)(4).

The regulations include safe

harbor guidelines for television

communication disclaimers:

• A still picture of the candidate

shall be considered “clearly

identifiable” if it occupies at least

80 percent of the vertical screen

height; and

• Disclaimers that are printed in

black text on a white background,

as well as disclaimers that have at

least the same degree of contrast

with the background color as the

degree of contrast between the

background color and the color of

the largest text used in the communication, will be considered

“clearly readable.” 11 CFR

110.11(c)(3)(iii)(C).

Specific requirements for printed

communications. Printed materials

must contain a printed box that is set

apart from the contents in the

communication. The disclaimer

print in this box must be of sufficient type size to be “clearly readable” by the recipient of the

communication, and the print must

have a reasonable degree of color

contrast between the background

and the printed statement. 11 CFR

110.11(c)(2)(ii) and (iii).

The regulations contain a safe

harbor that establishes a fixed,

twelve-point type size as a sufficient

size for disclaimer text in newspapers, magazines, flyers, signs and

other printed communications that

are no larger than the common

poster size of 24 inches by 36

inches. 11 CFR 110.11(c)(2)(i).

Disclaimers for larger communications will be judged on a case-bycase basis.

The regulations additionally

provide two safe harbor examples

that would comply with the colorcontrast requirement:

• The disclaimer is printed in black

text on a white background; or

• The degree of contrast between the

background color and the disclaimer text color is at least as

great as the degree of contrast

between the background color and

the color of the largest text in the

communication. 11 CFR

110.11(c)(2)(iii).2

Personal Use of Campaign Funds

The new rules retain the existing

prohibition against the personal use

of campaign funds as well as the socalled “irrespective test.” Candidates may not, therefore, use funds

in a campaign account to “fulfill a

commitment, obligation, or expense

of any person that would exist

irrespective of the candidate’s

campaign or duties as a Federal

officeholder.” 11 CFR 113.1(g).

Personal use of campaign funds

includes, but is not limited to,

payment of the following: household items or supplies, clothing

(except for clothing items of de

minimis value), tuition payments,

mortgage, rent or utility payments,

vacations and health or country club

dues. 11 CFR 113.1(g)(1)(i). The

regulations have, however, been

amended as follows.

Candidate salaries. The most

notable change permits a candidate

for federal office to receive a salary

from his or her principal campaign

committee.3

 According to the

regulations, a salary may be received under the following conditions:

• The salary must be paid by the

principal campaign committee.

• The salary must not exceed the

lesser of either the minimum

annual salary for the federal office

sought or what the candidate

received as earned income in the

previous year.4

• Individuals who elect to receive a

salary from their campaign committees must provide income tax

records and additional proof of

earnings from relevant years upon

request from the Commission.

• Payments of salary from the

committee must be made on a prorata basis.5

• Incumbent federal officeholders

may not receive salary payment

from campaign funds.

• The first payment of salary shall be

made no sooner than the filing

deadline for access to the primary

election ballot in the state in which

the candidate is running for office.6

Members of a candidate’s family.

The new regulations amend the

definition of a candidate’s family at

2 Please note these examples do not

constitute the only ways to satisfy the

color contrast requirement.

3 This amendment to the regulations

supersedes Advisory Opinion 1999-1.

4 Any salary paid by the campaign

committee will be equal to the lesser of

these two amounts. Furthermore,

additional salary or wages received

from other sources will count toward

the limit that may be received by the

candidate.

5 This provision will prevent a candidate from receiving a whole year’s

salary if he or she is not a candidate for

an entire twelve-month period.

6 The filing deadline for the primary

election for federal candidates is

determined by state law. In those states

that do not have a primary election,

candidates may not receive payment

until after January 1st of each evennumbered year.

(continued on page 10)
Federal Election Commission RECORD January 2003

10

11 CFR 113.1(g)(7). The previous

regulations included as a member of

a candidate’s family, “a person who

has a committed relationship with a

candidate, such as sharing a household and having mutual responsibility for each other’s welfare or living

expenses.” 11 CFR 113.1(g)(7)(iv).

This section has been removed from

the new regulations and replaced

with a provision that includes any

person who shares a residence with

the candidate.

The Commission recognized that

any person living with the candidate

may pay a share of his or her living

expenses without making a contribution to the campaign. The

Commission further noted that the

personal funds of a candidate would

include his or her share of a joint

account held with the person(s) with

whom a residence is shared. However, gifts from the campaign to

family members or anyone residing

with the candidate are prohibited

because they may be used support

personal expenses of the candidate.

11 CFR 113.1(g)(4).

Recordkeeping of personal uses.

Recordkeeping requirements for

expenses that may be partly personal in nature have been added to

the regulations. Such expenses may

include, but are not limited to, the

costs of vehicles, travel, meals and

legal services.7

 The new provision

requires that logs of these expenses

be maintained to help the Commission determine on a case-by-case

basis what portion was for personal

use rather than for campaign related

activity or officeholder duties.

“Any other lawful purpose.” The

BCRA deleted the phrase “for any

other lawful purpose” from the list

of permitted uses of campaign funds

at 2 U.S.C. §439a. Therefore, the

Commission has removed the

section referring to “any other

lawful purpose” regarding the use of

campaign funds. Thus, in addition to

paying expenses in connection with

the campaign for federal office,

campaign funds may be used only

for non-campaign purposes included

in an exhaustive list found at 11

CFR 113.2 (a), (b), and (c).

Contributions to other candidates. In a previous rulemaking, the

Commission amended the regulations regarding contribution limits

(see the December 2002 Record,

page 8). The Commission has noted,

however, that the contribution limits

for authorized candidate committees

has not changed as a result of the

BCRA. Authorized committees may

make contributions of $1,000 or less

to authorized committees of other

federal candidates. They may also

make contributions to state and local

candidates in furtherance of the

federal candidate’s election. See 2

U.S.C. §439a(a)(1).

Payment of campaign and

officeholder expenses from campaign accounts. Congress has

deleted the phrase “in excess of any

amount to defray” campaign expenses from 2 U.S.C. §439a.

Therefore, the Commission has

revised 11 CFR 113.1 and 113.2 so

that officeholders may spend money

from campaign accounts to pay for

campaign and non-campaign

expenses incurred as a consequence

of holding federal office. Such

expenses, according to the Commission, may be paid in any order.

Prohibitions on Fraudulent

Solicitations

The final rule prohibits a person

from fraudulently misrepresenting

that the person is speaking, writing

or otherwise acting for, or on behalf

of, a federal candidate or political

party, or an employee or agent of

either, for the purpose of soliciting

contributions or donations. Persons

are also banned from willfully and

knowingly participating in, or

conspiring to participate in, any

scheme to do so. 11 CFR

110.6(b)(1) and (2). The regulation

implementing this new provision,

together with the pre-BCRA fraudulent misrepresentation regulation

formerly found at 11 CFR 110.9(b),

is combined in new 11 CFR 110.16.

Civil Penalties

The BCRA amends the Federal

Election Campaign Act (the Act) to

impose greater penalties for knowing and willful violations of the Act

regarding contributions made in the

name of another.8

 The Commission

has amended the regulations to

impose a civil penalty for such

violations that is not less than 300

percent of the amount of any

contribution, but is no more than

$50,000 or 1,000 percent of the

amount of the contribution involved.

11 CFR 111.24.

—Kathy Carothers and

Michelle Ryan

8 The Act’s civil penalties are set forth

in two tiers of monetary penalties at 2

U.S.C. §§437g(a)(5), (6), and (12). The

first tier addresses violations of the Act,

whereas the second tier speaks to

“knowing and willful” violations of the

Act. The Commission addressed

changes to the second tier regarding

contributions in the name of another.

7 See 11 CFR 113.1(g)(1)(ii)(A), (B),

(C), and (D) and 11 CFR 113.2.

Regulations

(continued from page 9)

Final Rules on Coordinated

and Independent

Expenditures

On December 5, 2002, the

Commission approved final rules to

implement provisions of the Bipartisan Campaign Reform Act (BCRA)

that:

• Define coordination between a

candidate or a political party and a

person making a communication;

and

• Set forth requirements for political

party committees regarding the

permitted timing of independent

and coordinated expenditures, and

transfers and assignments.
January 2003 Federal Election Commission RECORD

11

Note that new reporting requirements for certain independent

expenditures are included in the

final rules on BCRA reporting,

approved on December 12, 2002.1

The final rules and their Explanation and Justification are available

on the FEC web site at

www.fec.gov/pages/bcra/

rulemakings/

coordinated_independent_expenditures.htm.

These rules will take effect after the

30-legislative day Congressional

review period.

Coordination

The BCRA repealed Commission

regulations defining a “coordinated

general public political communication” (old 11 CFR 100.23), and

instructed the Commission to

promulgate new rules on “coordinated communications paid for by

persons other than candidates,

authorized committees of candidates, and party committees.” Pub.

L. 107-155, sec. 214(c) (March 27,

2002).

New 11 CFR 109.20(a) implements 2 U.S.C. §§441a(a)(7)(B)(i)

and (ii) by defining “coordinated” to

mean “made in cooperation, consultation or concert with, or at the

request or suggestion of, a candidate, a candidate’s authorized

committee, or their agents, or a

political party committee or its

agents.”2

The rules in section 109.21 define

a “coordinated communication,”

which is treated as an in-kind

contribution to the candidate,

authorized committee or party

committee the communication is

coordinated with, and must be

reported as such. The new regulations provide for a three-part test to

determine whether a communication

is coordinated. Satisfaction of all of

the three specific tests justifies the

conclusion that payments for the

coordinated communication are for

the purpose of influencing a federal

election. The three parts of the test

consider:

• The source of payment;

• A “content standard” regarding the

subject matter of the communication; and

• A “conduct standard” regarding

the interactions between the person

paying for the communication and

the candidate or political party

committee.

11 CFR 109.21(a).

Source of Payment. A coordinated communication is paid for by

someone other than a candidate, an

authorized committee or a political

party committee. However, a

person’s status as a candidate would

not exempt him or her from the

coordination regulations with

respect to payments he or she makes

on behalf of a different candidate.

11 CFR 109.21(a)(1).

Content Standard. The purpose of

the four content standards is to

determine whether the subject

matter of a communication is

reasonably related to an election. A

communication that meets any of

these four standards meets the

content requirement:

1. A communication that is an

“electioneering communication”;

2. A public communication that

republishes, disseminates or

distributes candidate campaign

materials, unless the activity

meets one of the exceptions at 11

CFR 109.23(b) discussed in the

conduct standards below;

2

 “Agent” is defined at 11 CFR 109.3,

for the purposes of 11 CFR part 109

only.

1 This rulemaking is summarized on

page 14. The full text of the rulemaking

is available on the FEC’s web site at

http://www.fec.gov/pages/bcra/

rulemakings/

consolidated_reporting.htm.

(continued on page 12)

PACronyms, Other

PAC Publications

Available

The Commission annually

publishes PACronyms, an

alphabetical listing of acronyms,

abbreviations and common names

of political action committees

(PACs).

 For each PAC listed, the index

provides the full name of the

PAC, its city, state, FEC

identification number and, if not

identifiable from the full name,

its connected, sponsoring or

affiliated organization.

 The index is helpful in identifying PACs that are not readily

identified in their reports and

statements on file with the FEC.

 To order a free copy of

PACronyms, call the FEC’s

Disclosure Division at 800/424-

9530 (press 3) or 202/694-1120.

PACronyms also is available on

diskette for $1 and can be

accessed free at www.fec.gov/

pages/pacronym.htm.

Other PAC indexes, described

below, may be ordered from the

Disclosure Division. Prepayment

is required.

• An alphabetical list of all

registered PACs showing each

PAC’s identification number,

address, treasurer and

connected organization ($13.25).

• A list of registered PACs

 arranged by state providing the

 same information as above

 ($13.25).

• An alphabetical list of

organizations sponsoring PACs

 showing the PAC’s name and

identification number ($7.50).

The Disclosure Division can

also conduct database research to

locate federal political committees

when only part of the committee

name is known. Call the telephone

numbers above for assistance or

visit the Public Records Office in

Washington at 999 E St., NW.
Federal Election Commission RECORD January 2003

12

1. Request or Suggestion. This test

has two prongs, and satisfying

either satisfies the test. The first

prong is satisfied if the person

creating, producing or distributing the communication does so at

the request or suggestion of a

candidate, authorized committee,

political party committee or

agent of any of these. The second

prong of the “request or suggestion” conduct standard is satisfied if a person paying for the

communication suggests the

creation, production or distribution of the communication to the

candidate, authorized committee,

political party committee or

agent of any of the above, and

the candidate or political party

committee assents to the suggestion. 11 CFR 109.21(d)(1).

2. Material Involvement. This test is

satisfied if a candidate, candidate

committee, political party

committee or an agent of any of

these was “materially involved in

decisions” regarding any of the

following aspects of a public

communication paid for by

someone else:

• Content of the communication;

• Intended audience;

• Means or mode of the communication;

• Specific media outlet used;

• Timing or frequency of the communication; or

• Size or prominence of a printed

communication or duration of a

communication by means of

broadcast, cable or satellite. 11

CFR 109.21(d)(2).

3. Substantial Discussion. A

communication meets this

standard if it is created, produced

or distributed after one or more

substantial discussions between

the person paying for the communication, or the person’s

agents, and the candidate clearly

identified in the communication

or that candidate’s committee,

that candidate’s opponent or

opponent’s committee, a political party committee, or an agent

of the above. A discussion would

be “substantial” if information

about the plans, projects, activities or needs of the candidate or

political party committee that is

material to the creation, production or distribution of the communication is conveyed to the

person paying for the communication. 11 CFR 109.21(d)(3).

4. Employment of Common Vendor.

This conduct standard explains

what a common vendor is and

provides that the use of a common vendor in the creation,

production or distribution of a

communication satisfies the

conduct standard if:

• The person paying for the communication contracts with, or employs, a “commercial vendor” to

create, produce or distribute the

communication.3

• The commercial vendor, including

any officer, owner or employee of

the vendor, has a previous or

current relationship with the

candidate or political party committee that puts the commercial

vendor in a position to acquire

information about the campaign

plans, projects, activities or needs

of the candidate or political party

committee. This previous relationship is defined in terms of nine

specific services related to campaigning and campaign communications. Note that these services

would have to have been rendered

during the election cycle in which

the communication is first publicly

distributed.

• The commercial vendor uses or

conveys information about the

campaign plans, projects, activities

or needs of the candidate or

political party committee, or

3 The term “commercial vendor” is

defined at 11 CFR 116.1(c).

Regulations

(continued from page 11)

3. A public communication that

expressly advocates the election

or defeat of a clearly identified

candidate for federal office; or

4. A public communication that:

• Refers to a clearly-identified

federal candidate or political party;

• Is publicly distributed or disseminated 120 days or fewer before a

primary or general election or a

convention or caucus with the

authority to nominate a candidate;

and

• Is directed to voters in the jurisdiction of the clearly identified

candidate or to voters in a jurisdiction where one or more candidates

of the political party appear on the

ballot.

11 CFR 109.21(c)(1)-(4).

Conduct Standard. Under the

final rules, if one of the conduct

standards is met, and the first two

parts of the test (the content standards and the source of payment)

are also met, then the communication is coordinated. 11 CFR

109.21(d). The conduct standards

are as follows:

Need FEC Material

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material fast. It operates 24 hours

a day, 7 days a week. Hundreds

of FEC documents—reporting

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January 2003 Federal Election Commission RECORD

13

information previously used by the

commercial vendor in serving the

candidate or political party committee, to the person paying for the

communication, and that information is material to the creation,

production or distribution of the

communication. 11 CFR

109.21(d)(4).

5. Former Employee/Independent

Contractor. This standard applies

to communications paid for by a

person who has previously been

an employee or an independent

contractor of a candidate’s

campaign committee or a political party committee during the

election cycle. The standard

requires that the former employee use or convey material

information about the plans,

projects, activities or needs of the

candidate or political party

committee, or material information used by the former employee in serving the candidate

or political party committee, to

the person paying for the communication, and the information

is material to the creation,

production or distribution of the

communication. 11 CFR

109.21(d)(5).4

6. Dissemination, distribution or

republication of campaign

material. A communication that

republishes, disseminates or

distributes campaign material

only satisfies the first three

conduct standards on the basis of

the candidate’s conduct—or that

of his or her committee or

agents—that occurs after the

original preparation of the

campaign materials that are

disseminated, distributed or

republished. 11 CFR

109.21(d)(6).5

Agreement or formal collaboration. Neither agreement (defined as

a mutual understanding on any part

of the material aspect of the communication or its dissemination) nor

formal collaboration (defined as

planned or systematically-organized

work) is necessary for a communication to be a coordinated communication. 11 CFR 109.21(e).

Safe harbor for responses to

inquires about legislative or policy

issues. A candidate’s or political

party committee’s response to an

inquiry about that candidate’s or

party’s positions on legislative or

policy issues, which does not

include discussion of campaign,

plans, projects, activities or needs,

will not satisfy any of the conduct

standards. 11 CFR 109.21(f)

Party Coordinated Communications. Although Congress did not

specifically direct the Commission

to promulgate a new regulation on

coordinated communications paid

for by political party committees,

the Commission is promulgating

final rules to set forth the circumstances under which communications paid for by a party committee

would be considered to be coordinated with a candidate, a candidate’s

authorized committee or their

agents. These rules would generally

apply the same coordination standards that would be applied to

communications paid for by other

persons. 11 CFR 109.37.

Coordinated and Independent

Expenditures by Party

Committees

National, state and subordinate

committees of political parties may

make expenditures up to prescribed

limits in connection with the general

election campaigns of federal

candidates without counting such

expenditures against the committees’ contribution limits. 2 U.S.C.

§441a(d). These expenditures are

commonly referred to as “coordinated party expenditures,” and the

limits for these expenditures can be

found in new section 11 CFR

109.32.6

When coordinated party expenditures can be made. Political party

committees can make coordinated

party expenditures in connection

with the general election campaign

before or after the party’s candidate

has been nominated. All prenomination coordinated expenditures continue to be subject to the

coordinated party expenditure

limitations, whether or not the

candidate on whose behalf they are

made receives the party’s nomination. 11 CFR 109.34.

Restrictions on making both

independent expenditures and

coordinated expenditures. In the

BCRA, Congress prohibits political

party committees, under certain

4 Under the final rules, a candidate or

political party committee would not be

held responsible for receiving or

accepting an in-kind contribution that

resulted only from conduct described in

the fourth and fifth conduct standards.

11 CFR 109.21(d)(4) and (d)(5).

However, the person paying for a

communication that is coordinated

because of conduct described in the

fourth or fifth conduct standards would

still be responsible for making an inkind contribution for purposes of the

contribution limitations, prohibitions

and reporting requirements of the Act.

11 CFR 109.21(b)(2).

5 Please note that the financing of the

distribution or republication of

campaign materials, while considered

an in-kind contribution by the person

making the expenditure, is not considered an expenditure by the candidate’s

authorized committee unless the

dissemination, distribution or republication of campaign materials is

coordinated. Additionally, republications of campaign materials coordinated with party committees are in-kind

contributions to such party committees,

and are reportable as such. 11 CFR

109.23(a).

(continued on page 14)

6 These limits were formerly located at

11 CFR 110.7.
Federal Election Commission RECORD January 2003

14

ity to make coordinated party

expenditures under 2 U.S.C.

§441a(d) to, or receive a transfer of

funds from, a “committee of the

political party” that has made or

intends to make an independent

expenditure with respect to the

candidate. 2 U.S.C. §441a(d)(4)(C).

The final rules generally track this

statutory language. 11 CFR

109.35(c).

National party independent

expenditures on behalf of Presidential candidates. Prior to the enactment of the BCRA, the

Commission’s rules prohibited a

national committee of a political

party from making independent

expenditures in connection with the

general election campaign of a

Presidential candidate. See former

11 CFR 110.7(a)(5). However,

section 441a(d)(4), added by the

BCRA, precludes such a broad

prohibition. As a result, the Commission has added a new section

that specifically prohibits a national

committee of a political party from

making independent expenditures

with respect to a Presidential

candidate if it serves as the principal

campaign committee or authorized

committee of its Presidential

candidate under 11 CFR 9002.1(c).

11 CFR 109.36.✦

—Jim Wilson

Regulations

(continued from page 13)

Final Rules on BCRA

Reporting

On December 12, 2002, the

Commission approved final rules on

reporting requirements related to the

Bipartisan Campaign Reform Act of

2002 (BCRA), including:

• Reporting of independent expenditures;

• Reporting of electioneering

communications;

• Quarterly reporting by the principal campaign committees of House

and Senate candidates;

• Monthly reporting by national

committees of political parties; and

• Reporting funds for state and local

party office buildings.

The final rules and their Explanation and Justification are available

on the FEC web site at http://

www.fec.gov/pages/bcra/

rulemakings/

consolidated_reporting.htm. The

new rules will take effect after the

30-legislative day Congressional

review period.

Please note that the Commission

has also recently issued a policy

statement explaining that during the

transition period following the

BCRA’s effective date, the Commission does not intend to pursue

reporting violations so long as

individuals and committees comply

with the Interim Reporting Procedures set out in the policy statement.

The policy statement was published

in the November 29, 2002, Federal

Register (67 FR 71057) and in the

December 2002 Record, page 1. The

Commission is also currently

developing new reporting forms,

instructions and software, which

will be available for reports due

March 20 and April 15, 2003.

Committees should continue to use

the old forms and software until that

time, as detailed in the Interim

Reporting Procedures. Samples of

the proposed new forms and formats

can be viewed on the Commission’s

web site at http://www.fec.gov/

pages/bcra/

bcra_reporting.htm#DraftForms.

Committees should not use the

sample forms to file their reports.

Independent Expenditures

The BCRA requires political

committees and other persons who

make independent expenditures at

any time during a calendar year—up

to and including the 20th day before

an election—to disclose this activity

within 48 hours each time that the

expenditures aggregate $10,000 or

more. This reporting requirement is

in addition to the pre-BCRA requirement to file 24-hour notices of

independent expenditures each time

conditions, from making both

coordinated party expenditures and

independent expenditures with

respect to the same candidate, and

from making transfers and assignments to other political party

committees. 2 U.S.C. §441a(d)(4).

Congress plainly intended to

combine certain political party

committees into a collective entity

or entities for purposes of these

restrictions. 2 U.S.C.

§441a(d)(4)(B).

For the purposes of these restrictions only, all political parties

established and maintained by a

national political party (including all

Congressional campaign committees), and all political committees

established and maintained by a

state political party (including any

subordinate committee of a state

committee), shall be considered to

be a single political committee. 11

CFR 109.35(a).

Under the BCRA and the new

regulations, a political party committee is prohibited from making

any post-nomination coordinated

party expenditure in connection with

the general election campaign of a

candidate at any time after that

political party committee makes any

post-nomination independent

expenditure with respect to the

candidate. 11 CFR 109.35(b)(1).

Similarly, a political party committee is prohibited from making any

post-nomination independent

expenditure with respect to a

candidate at any time after that

political party committee makes a

post-nomination coordinated

expenditure in connection with the

general election campaign of the

candidate. 11 CFR 109.35(b)(2).

Prohibited Transfers. Congress

provided in the BCRA that a

“committee of a political party” that

makes coordinated party expenditures with respect to a candidate

must not, during an election cycle,

transfer any funds to, assign author-
January 2003 Federal Election Commission RECORD

15

that disbursements for independent

expenditures aggregate at or above

$1,000 during the last 20 days—up

to 24-hours—before an election. 2

U.S.C. §§434(b), (d) and (g). The

new rules address when and how

such reports should be filed.

Independent expenditures aggregating less than $10,000. Committees must report on Schedule E of

Form 3X independent expenditures

that aggregate less than $10,000

with respect to a given election

during the calendar year that are

made up to and including the 20th

day before an election. The report

must be filed no later than the filing

date of the committee’s next regularly-scheduled report. 11 CFR

104.4(a) and (b)(1). Individuals

other than political committees

disclose on FEC Form 5 independent expenditures aggregating in

excess of $250 with respect to a

given election during the calendar

year that are made during this time

period. The report must be filed by

the filing deadline of the next report

under the quarterly filing schedule.

11 CFR 109.10(b).

Both committees and individuals

must file an additional report each

time that independent expenditures

made less than 20 days, but more

than 24 hours, before an election

aggregate in excess of $1,000.

These reports must be received by

the Commission by the end of the

day following the date that the

communication is publicly disseminated. All individuals and committees, even those supporting or

opposing Senate candidates, must

file 24-hour notices of independent

expenditures with the Commission.

Electronic filers must file these

reports electronically, and paper

filers may file by fax or e-mail.

Additionally, electronic filers and

paper filers may file 24-hour reports

using the FEC web site’s online

program. 11 CFR 104.4(c),

109.10(d) and 100.19(d)(3).

Independent expenditures aggregating $10,000 and above. Once an

individual’s or committee’s independent expenditures reach or

exceed $10,000 in the aggregate at

any time up to and including the 20th

day before an election, they must be

reported within 48 hours of the date

that the expenditure is publicly

distributed. All 48-hour reports must

filed with and received by the

Commission at the end of the

second day after the independent

expenditure is publicly distributed.

Electronic filers must file these

reports electronically, and paper

filers may file by fax or e-mail. 11

CFR 104.4(b)(2), 109.10(c) and

100.19(d)(3).

Verification of independence. All

24- and 48-hour reports must

contain, among other things, a

verification under penalty of perjury

as to whether the expenditure was

made in cooperation, consultation or

concert with a candidate, a

candidate’s committee, a political

party committee or an agent of any

of these. 11 CFR 104.4(d)(1) and

109.10(e)(1)(v).

Aggregating independent expenditures for reporting purposes.

Independent expenditures are

aggregated toward the various

reporting thresholds on a perelection basis within the calendar

year. Consider, as examples, the

following scenarios, all of which

occur outside of the 20-day window

before an election when 24-hour

notices are required:

• If a committee makes $5,000 in

independent expenditures with

respect to a Senate candidate, and

$5,000 in independent expenditures with respect to a House

candidate, then the committee is

not required to file 48-hour reports,

but must disclose this activity on

its next regularly-scheduled report.

• If the committee makes $5,000 in

independent expenditures with

respect to a clearly-identified

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office, on the FEC web

site at http://www.fec.gov/

register.htm and from the FEC

faxline, 202/501-3413.

Notice 2002-25

Final Rules on Disclaimers,

Fraudulent Solicitation, Civil

Penalties and Personal Use of

Campaign Funds (67 FR 76962,

December 13, 2002).

candidate in the primary, and an

additional $5,000 in independent

expenditures with respect to the

same candidate in the general, then

again no 48-hour notice is required

and the expenditures are disclosed

on the committee’s next report.

• If the committee makes $6,000 in

independent expenditures supporting a Senate candidate in the

primary election and $4,000

opposing that Senate candidate’s

opponent in the same election, then

the committee must file a 48-hour

report.

The date that a communication is

publicly disseminated serves as the

date that a person or committee

must use to determine whether the

total amount of independent expenditures has, in the aggregate,

reached or exceeded the threshold

reporting amounts of $1,000 or

$10,000. The calculation of the

aggregate amount of the independent expenditures must include both

disbursements for independent

expenditures and all contracts

obliging funds for disbursements of

independent expenditures. 11 CFR

104.4(f).

(continued on page 16)
Federal Election Commission RECORD January 2003

16

airing1 one or more electioneering

communication aggregating in

excess of $10,000; or

• Any other date during the same

calendar year on which an electioneering communication is

publicly distributed, provided that

the person making the communication has made disbursement(s) or

executed contract(s) to make

disbursements for the direct costs

of airing one or more electioneering communication aggregating in

excess of $10,000 since the most

recent disclosure date. 11 CFR

104.20(a)(1)(i).

Disbursements made at any time

for the direct costs of producing or

airing the publicly-distributed

electioneering communication, or

other unreported electioneering

communications, count toward the

threshold. However, costs already

reported for earlier electioneering

communications are not included.

Each statement must disclose:

• The identification of the person

who made the disbursement, or

who executed a contract to make a

disbursement, and the person’s

principal place of business if the

person is not an individual;

• The identification of any person

sharing or exercising direction or

control2

 over the activities of the

person who made the disbursement

or executed the contract;

• The identification of the custodian

of books and accounts from which

the disbursements were made;

• The amount of each disbursement

or amount obligated in excess of

$200 during the period covered by

the statement, the date of the

transaction and the person who

received the funds;

• All clearly-identified candidates

referred to in the electioneering

communication and the elections

in which they are candidates;

• The disclosure date; and

• The name and address of each

donor who, since the first day of

the preceding calendar year, has

donated in the aggregate $1,000 or

more to the person making the

disbursements, or to the separate

segregated bank account if the

disbursements were paid exclusively from that bank account. 11

CFR 104.20(c).

Filing Frequency for House and

Senate Committees and National

Party Committees

House and Senate Candidates.

The BCRA requires that all principal campaign committees of House

and Senate candidates file quarterly

in non-election years as well as in

election years. 2 U.S.C.

§434(a)(2)(B). As a result, House

and Senate campaign committees

may no longer file on a semi-annual

basis during non-election years. 11

CFR 104.5(a).

National party committees. Under

the BCRA, national party commit1 The direct costs of producing or airing

electioneering communications are

defined as the costs charged by a

vendor, such as studio rental time, staff

salaries, costs of video or audio

recording media and talent, or the cost

of airtime on broadcast, cable and

satellite radio and television stations,

studio time, material costs and the

charges for a broker to purchase the

airtime. 11 CFR 104.20(a)(2).

2 Persons sharing or exercising

direction or control means officers,

directors, executive directors or their

equivalent, partners and, in the case of

unincorporated organizations, owners

of the entity or person making the

disbursement for the electioneering

communication. 11 CFR 104.20(a)(3).

Electioneering Communications

The BCRA requires persons who

make electioneering communications that aggregate more than

$10,000 to file disclosure statements

with the Commission within 24

hours of the disclosure date. 2

U.S.C. §434(f)(1). The new regulations implement this provision, and

require that the statement be received by the Commission by 11:59

on the day following the disclosure

date. Electronic filers must file

these reports electronically, and

paper filers may file by fax or email.

11 CFR 100.19(f).

The regulations define “disclosure date” as:

• The first date on which an electioneering communication is

publicly distributed, provided that

the person making the electioneering communication has made

disbursement(s), or has executed

contract(s) to make disbursements,

for the direct costs of producing or

Back Issues of the

Record Available on

the Internet

This issue of the Record and all

other issues of the Record starting

with January 1996 are available

through the Internet as PDF files.

Visit the FEC’s World Wide Web

site at http://www.fec.gov and

click on “What’s New” for this

issue. Click “Campaign Finance

Law Resources” to see back issues. Future Record issues will be

posted on the web as well. You

will need Adobe® Acrobat®

Reader software to view the publication. The FEC’s web site has

a link that will take you to Adobe’s

web site, where you can download

the latest version of the software

for free.

Regulations

(continued from page 15)
January 2003 Federal Election Commission RECORD

17

tees must file on a monthly basis in

all years. 2 U.S.C. §434(a)(4)(B).

Thus, under the new regulations a

national committee of a political

party, including a national Congressional campaign committee, must

always file monthly and may no

longer file on a quarterly basis in

election years and semi-annually in

non-election years. 11 CFR

104.5(c)(4).

Funds for Party Office Buildings

Commission regulations on

nonfederal funds (or “soft money”)

provide that donations used by a

state, district or local party committee for the purchase or construction

of an office building are subject to

state law if they are donated to a

nonfederal account. However, if

funds or things of value are contributed to or used by the party’s federal

account to buy or build an office

building, then the amounts donated

are contributions. 11 CFR 300.12

and 300.35. The new rules clarify

that any funds or things of value

received by a federal account and

used for the purchase or construction of an office facility, regardless

of any specific contributor designation, are contributions and not

treated any differently from other

funds or goods donated to the

federal account. 11 CFR 104.3(g).✦

—Amy Kort

BCRA on the FEC’s

Web Site

 The Commission has added a

new section to its web site

(www.fec.gov) devoted to the

Bipartisan Campaign Reform Act

of 2002 (BCRA).

The new page provides links to:

• The Federal Election Campaign

 Act, as amended by the BCRA;

• Summaries of major BCRA-

 related changes to the federal

 campaign finance law;

• Summaries of current litigation

 involving challenges to the new

 law;

• Federal Register notices

announcing new and revised

Commission regulations that

 implement the BCRA; and

• Information on educational

 outreach offered by the

Commission, including

upcoming Roundtable sessions

 and the Commission’s tentative

2003 conference schedule.

 The new section also allows

individuals to view the

Commission’s calendar for

rulemakings, including projected

dates for the Notices of Proposed

Rulemaking, public hearings,

final rules and effective dates for

regulations concerning:

• Soft money;

• Electioneering Communications;

• Contribution Limitations and

 Prohibitions;

• Coordinated and Independent

 Expenditures;

• The Millionaires’ Amendment;

• Consolidated Reporting rules;

 and

• Other provisions of the BCRA.

 The BCRA section of the web

site will be continuously updated.

Visit www.fec.gov and click on

the BCRA icon.

Statistics

Party Fundraising Reaches

$1.1 Billion in 2002 Election

Cycle

The Republican and Democratic

parties reported raising a total of

$1.1 billion in federal and

nonfederal funds from January 1,

2001, through November 25, 2002.

Post-election reports to the Commission include the final nonfederal

receipts (“soft money”) for national

parties, which are barred by the

Bipartisan Campaign Reform Act of

2002 (BCRA) from raising or

spending new nonfederal funds after

November 5, 2002. See the September 2002 Record, page 1.

Receipt totals were nearly equal

to the party fundraising totals in the

2000 election cycle, which included

a competitive Presidential campaign. Receipts were 72 percent

higher than in 1997-98, the most

recent non-Presidential cycle.

Federally permissible funds (hard

money) declined from 2000 levels,

as they have consistently in nonPresidential cycles. When compared

with 1998, however, Democratic

Party federal receipts were up 43

percent, and Republican federal

receipts were 47 percent higher than

their 1998 totals.

Nonfederal receipts reached the

highest levels ever in 2002, even

without a Presidential campaign.

Totals for Democratic committees

were nearly triple their 1998 values

(up 168 percent), while Republican

nonfederal totals nearly doubled (up

90 percent) when compared with

1998.

Additional Information

A press release dated December

18, 2002, provides detailed information about the financial activity of

the Democratic and Republican

parties, including tables chronicling

overall party receipts dating back to

1992. The press release is available:

• On the FEC web site at

www.fec.gov/news.html;

• From the Public Records office

(800/424-9530, press 3) and the

Press Office (800/424-9530, press

5); and

• By fax (call the FEC Faxline at

202/501-3413 ).✦

—Amy Kort
Federal Election Commission RECORD January 2003

18

Help America Vote Act

On October 29, 2002, Congress

passed the Help America Vote Act

(the Act) to improve election

administration in federal elections.

PL 107-252. The Act includes

provisions that establish:

• A funding program to replace

punch card voting systems;

• Minimum election administration

standards for states and local

entities responsible for the administration of federal elections; and

• A new agency—the Election

Assistance Commission—to assist

in the administration of federal

elections.

Legislation

Election

Administration

Implementation Plan for

Voting Systems Standards

On December 5, 2002, the

Commission approved an Implementation Plan for the 2002 Voting

System Standards. The Plan provides guidance to assist states,

voting system vendors and local

jurisdictions in the transition from

the 1990 Voting System Standards

to the 2002 Standards. See the June

2002 Record, page 7.

The Commission developed the

1990 Standards to ensure that voting

machines met certain baselines for

accuracy, reliability and durability.

• Maintenance of a clearinghouse of

information on the experiences of

state and local governments in

operating voting systems in accord

with federal guidelines;

• Testing and certification of voting

system hardware and software;

• Conducting studies and other

research to promote the effective

administration of federal elections;

and

• Providing information and training

on the management of payments

and grants provided by the EAC.

The EAC will be composed of

four Commissioners appointed by

the President and approved by the

Senate. Also, the EAC will have a

“Standards Board” composed of 110

members (55 state election officials

and 55 local election officials). The

Standards Board is subject to

certification by the chair of the

Federal Election Commission

(FEC). All of the duties, liabilities,

assets and personnel of the FEC’s

Office of Election Administration

will be transferred to the EAC upon

the appointment of the EAC

Commissioners.✦

—Gary Mullen

Campaign Guides

Available

 For each type of committee, a

Campaign Guide explains, in

clear English, the complex

regulations regarding the activity

of political committees. It shows

readers, for example, how to fill

out FEC reports and illustrates

how the law applies to practical

situations.

 The FEC publishes four

Campaign Guides, each for a

different type of committee, and

we are happy to mail your

committee as many copies as you

need, free of charge. We

encourage you to view them on

our web site (go to www.fec.gov,

then click on “Campaign Finance

Law Resources” and then scroll

down to “Publications”).

 If you would like to place an

order for paper copies of the

Campaign Guides, please call

800-424-9530, press 1, then 3.

Over the six months following

the passage of the bill, the funding

program will disburse funds to state

election administrators who announce their official intention to use

the funds for:

• Improving the administration of

elections for federal office;

• Educating voters concerning

voting procedures, rights and

technologies;

• Training election officials, poll

workers and election volunteers;

• Improving, modifying or replacing

voting systems for casting and

counting votes;

• Improving polling places by

making them more physically

accessible to the disabled and by

providing assistance to individuals

with limited proficiency in the

English language; and

• Creating hotlines for providing

voting information and reporting

voter fraud.

The Act includes extensive

provisions to standardize voting

system standards nationwide. For

instance, under the Act, all voting

systems used in federal elections

must:

• Permit the voter to verify the votes

selected on the ballot before the

ballot is cast and to change or

correct any errors;

• Be accessible for individuals with

disabilities;

• Provide alternative language

accessibility; and

• Adopt a uniform standard definition of what constitutes a vote and

what will be counted as a vote for

each voting system used in the

state.

The Act also establishes the

Election Assistance Commission

(EAC). The EAC will serve as a

national clearinghouse and resource

for the compilation of information

and review of procedures with

respect to the administration of

federal elections. The duties of the

EAC will include:
January 2003 Federal Election Commission RECORD

19

Court Cases

Jeremiah T. Cunningham v.

FEC

On October 28, 2002, the U.S.

District Court for the Southern

District of Indiana granted the

Commission’s motion for summary

judgment against the Robert W.

Rock for Congress committee (the

Committee) and its treasurer,

Jeremiah T. Cunningham. The

Committee had filed suit challenging the Commission’s determination

that the Committee had failed to file

timely its 2000 Post-General report

and alleging that the civil money

Court Case

Under the Administrative Procedure Act, a district court may set

aside an agency action only if it is

found to be “arbitrary, capricious,

an abuse of discretion, or otherwise

not in accordance with law.” 5

U.S.C. §706(2)(A). The Committee

argued that the penalty was excessive and unwarranted because:

• The report had been filed with the

Commission by the time the

Commission made its final determination and assessed the $4,500

civil money penalty; and

• The Commission did not take the

Committee’s cash-on-hand into

account when determining the

amount of the penalty.

The court found that the Committee had received adequate notice of

the Commission’s action and that it

had waived any arguments before

the court by not raising them before

the Commission during its administrative proceedings.1

 See 11 CFR

111.38.

The court also held that the

Commission’s determination was

rationally based on the administrative record before it. It further

found that the Federal Election

(continued on page 20)

The 2002 Standards, approved on

April 30, 2002, account for the rapid

development of technologies over

the last 12 years, and for the changing needs of election officials.

The Commission and its Office of

Election Administration developed

the Implementation Plan with

assistance from vendors, state and

local officials, testing authorities

and members of the election administration community. The Plan

addresses the roles of the primary

participants, the implementation of

the 2002 Standards in national

testing, recommendations to states

implementing the 2002 Standards

and the approach that the Commission anticipates using for future

revisions to the Standards.

Although the Help America Vote

Act of 2002 will affect the longterm implementation of the Standards, it is unclear when and how

these changes will take effect. The

2002 Standards will serve as a

necessary policy directive until the

new federal law is implemented.

The Standards and the Implementation Plan are available on the

Commission’s web site at http://

www.fec.gov/pages/vssfinal/

vss_implementation.html.✦

—Amy Kort

penalty assessed by the Commission

was excessive, erroneous and

unwarranted.

The court granted the FEC’s

motion for summary judgment and

denied the Committee’s crossmotion for summary judgment,

finding that:

• The Committee had waived before

the court any arguments it failed to

raise before the Commission

during its administrative proceedings; and

• The Commission’s penalty determination, assessed in accordance

with its administrative fines

regulations, was not arbitrary and

capricious.

Background

On March 20, 2001, the Commission found reason to believe that the

Committee had filed its 2000 PostGeneral Report on February 1,

2001, more than 30 days after the

December 7, 2000, deadline. If a

report is not filed within 30 days of

the deadline, it is considered not

filed.

As part of its Administrative Fine

program, the Commission made a

preliminary determination that the

Committee had violated the Act’s

reporting requirements and thus

owed a $4,500 civil penalty. Commission regulations provide for an

administrative process through

which respondents can challenge the

preliminary finding and proposed

civil penalty. See 11 CFR 111.35-

111.37. The Commission informed

the Committee that it had 40 days to

challenge the Commission’s finding,

but the Committee failed to raise

any arguments before the Commission challenging that finding. The

Commission then made a final

determination that the plaintiffs

violated the Federal Election

Campaign Act (the Act) and assessed the civil money penalty in

accordance with its administrative

fines regulations.

1 Notice of the Commission’s preliminary determination as well as its final

determination was sent to the

Committee’s address of record as listed

on its Statement of Organization, which

was also the same address of Mr. Rock,

the candidate and attorney for the

Committee and its treasurer in this

case. A signed certified mail receipt

indicated that the preliminary determination notice was received by the

Committee, even if Mr. Cunningham

did not specifically receive it. The

court concluded that mailing a document to the last known address constitutes adequate notice, and the Committee was not deprived of an opportunity

for administrative review.
Federal Election Commission RECORD January 2003

20

FEC v. Christine Beaumont,

et al.

On November 18, 2002, the U.S.

Supreme Court granted a petition

for writ of certiorari, agreeing to

review this case on its merits. On

January 25, 2002, the U.S. Court of

Appeals for the Fourth Circuit found

that the Federal Election Campaign

Act’s prohibitions on corporate

contributions and expenditures were

unconstitutional as applied to North

Carolina Right to Life, Inc., a

nonprofit, MCFL-type corporation.

See the March 2002 Record, page

4.✦

—Amy Kort

FEC v. Toledano

On November 7, 2002, the U.S.

Court of Appeals for the Ninth

Circuit affirmed the decision of the

U.S. District Court for the Central

District of California granting the

Commission summary judgment in

this case and imposing a $7,500 fine

against James Toledano. The

Hawaii Right to Life, Inc. v.

FEC

On November 26, 2002, the U.S.

District Court for the District of

Columbia granted the motions of

Hawaii Right to Life, Inc., (HRTL)

for a temporary restraining order

and a preliminary injunction. The

order and injunction bar the Commission from acting inconsistently

with the court’s finding that HRTL

is currently a so-called “MCFLcorporation,” and is thus exempt

from the Federal Election Campaign

Act’s (the Act) ban on corporate

expenditures in connection with

federal elections. On December 16,

2002, the court entered a final order

that effectively converted the

preliminary injunction into a

permanent injunction.

Court Complaint

In a complaint filed on November

22, 2002, the plaintiff asked the

court to find that it qualifies for a

Campaign Act states that, when

calculating civil penalties, the

Commission must consider the

amount of the violation involved

(that is, the level of activity of the

report that was untimely filed) and

the existence of any prior violations.

The Act delegates solely to the

Commission the determination of

what other factors to take into

account in calculating the civil

penalty, a decision that the court

concluded was not for courts “to

second guess.” 2 U.S.C.

§437g(a)(4)(C)(i)(II).

U.S. District Court for the

Southern District of Indiana,

Indianapolis Division (IP 01-0897-C

B/S).✦

—Phillip Deen

Court Cases

(continued from page 19)

late Commissioner for a determination of the Commission’s attorney’s

fees and related expenses in defending this case on appeal. See the

December 2001 Record, page 4.

U.S. Court of Appeals for the

Ninth Circuit, 01-56762.

—Amy Kort

Web Access to

Senate Candidates’

Campaign Finance

Reports

Senate campaign finance reports

are available to the public on the

FEC web site. All Senate reports

received after May 15, 2000, are

currently accessible on the site,

and the FEC will make future

reports available within 48 hours

of receiving them.

To view these reports, go to

www.fec.gov, click on

“Campaign Finance Reports and

Data,” and then select “View

Financial Reports.”

appeals court also ordered Mr.

Toledano to pay the Commission’s

attorney’s fees on this appeal as a

sanction for his “bad-faith conduct

and abuse of the judicial process.”

The appeals court found that Mr.

Toledano violated 2 U.S.C. §432(b),

which requires persons who receive

contributions in excess of $50 to

forward these contributions to the

committee’s treasurer within ten

days after receiving them. In 1996

Mr. Toledano, who was then the

chairman of the Orange County

Democratic Party (the Party),

received a $10,000 contribution

check made out to the Party, which

he used to print and mail pamphlets

supporting a Congressional candidate. Mr. Toledano did not forward

the contribution to the committee

treasurer within ten days or even

inform him of it.

On appeal, Mr. Toledano argued,

among other things, that his actions

did not violate 2 U.S.C. §432(b)

given that he “had de facto authority

to act as treasurer” because he was

convinced that the real treasurer was

“incompetent and failed to discharge

his duties responsibly.” The court

found that Mr. Toledano was not a

designated agent of the treasurer and

could not exercise the treasurer’s

authority under the statute or

Commission regulations. The court

further concluded that “to recognize

unauthorized ‘de facto agents’ of the

treasurer and thus open up multiple

points of entry and exit through

which campaign funds may flow is

to create predictable confusion and

unravel the whole statutory

scheme.” The court concluded that

by failing to forward the contribution to the Party’s treasurer, Mr.

Toledano prevented the contribution, which turned out the be

excessive, from being scrutinized by

the Party’s treasurer for its legality.

The court affirmed all aspects of

the district court’s order granting the

Commission summary judgment and

imposing a $7,500 fine. The court

also referred the case to the Appel-
January 2003 Federal Election Commission RECORD

21

Requested Relief.

HRTL asked that the court,

among other things:

• Declare that HRTL is an “MCFLcorporation”;

• Declare the definition of a “qualified nonprofit corporation” at 11

CFR 114.10(c) is unconstitutional,

unlawful and invalid; and

• Preliminarily enjoin the Commission from enforcing 11 CFR

114.10(c) with respect to broadcast

communications by HRTL concerning federal candidates in the

November and January Hawaii

special elections.

In case the court did not find that

HRTL is an “MCFL-corporation,”

HRTL asked the court to find, in the

alternative, that the Commission’s

definitions of “electioneering

communication” at 11 CFR 100.29

and “expressly advocating” at 11

CFR 100.22(b) are unconstitutional,

unlawful, invalid and beyond the

Commission’s statutory authority.

Based on the allegations in

HRTL’s complaint and motions, the

Commission conceded that HRTL

should be treated as a “qualified

nonprofit corporation” for 2002.

Nonetheless, HRTL submitted an

affidavit declaring that it had

received contributions, or commitments for contributions, from

business corporations in an amount

not expected to exceed $50, which it

claimed prevented it from qualifying

under the regulations as a “qualified

nonprofit corporation.”

Preliminary Injunction and Final

Order

The court ruled that HRTL

currently is a nonprofit organization

that qualifies under the MCFL

decision (as interpreted in the DC

Circuit) for the exemption from the

ban on corporate expenditures,

despite the fact that it engages in de

minimis business activities and

“qualified nonprofit corporation”

under the Commission’s regulations

at 11 CFR 114.10(c). HRTL also

claimed that these ads would

contain issue advocacy rather than

express advocacy, and that it would

be unable to participate in its

planned activity unless the court

enjoined the Commission from

enforcing against HRTL the “electioneering communication” and

“expressly advocating” regulations.

Qualified nonprofit corporations.

Under Commission regulations a

corporation is considered a “qualified nonprofit corporation” if it

meets the following criteria:

• Its only express purpose is the

promotion of political ideas;

• It cannot engage in business

activities;

• It has no shareholders and no

persons who are offered or receive

any benefit that is a disincentive to

disassociate from the corporation

on the basis of the corporation’s

position on a political issue;

• It was not established by a business corporation and does not

directly or indirectly accept

donations or anything of value

from business corporations; and

• It is described in the Internal

Revenue Code at 26 U.S.C.

§501(c)(4). 11 CFR 114.10(c).

HRTL alleged that it meets some

but not all of these criteria because

it engages in business activities,

such as selling pins and T-shirts,

and because it hopes to receive

some contributions from business

corporations. The plaintiff contended that the Commission’s

criteria for identifying “qualified

nonprofit corporations” are too

narrow and that, because its business activities and corporate contributions are de minimis, it should

qualify for the exemption under the

Supreme Court’s decision in MCFL.

FEC Accepts Credit

Cards

 The Federal Election

Commission now accepts

American Express, Diners Club

and Discover Cards in addition to

Visa and MasterCard. While most

FEC materials are available free

of charge, some campaign finance

reports and statements, statistical

compilations, indexes and

directories require payment.

Walk-in visitors and those

placing requests by telephone

may use any of the above-listed

credit cards, cash or checks.

Individuals and organizations

may also place funds on deposit

with the office to purchase these

items. Since pre-payment is

required, using credit cards or

funds placed on deposit can speed

the processing and delivery of

orders. For further information,

contact the Public Records Office

at 800/424-9530 (press 3) or 202/

694-1120.

(continued on page 22)

constitutionally-mandated exception

from the Act’s prohibition on

corporate expenditures in connection with a federal election. See

FEC v. Massachusetts Citizens for

Life, Inc., (MCFL) 479 U.S. 238

(1986). In the alternative, HRTL

challenged the constitutionality of

the Commission’s definitions of

“electioneering communication”

and “expressly advocating.” 11 CFR

100.29 and 100.22. HRTL planned,

among other things, to air radio ads

in advance of the Hawaii special

elections to fill the remainder of the

late Patsy Mink’s term in the

current Congress and her seat in the

next Congress.

HRTL asserted that it could run

these ads because it met the requirements of a protected nonprofit

corporation under MCFL, even

though it did not meet the test of a
Federal Election Commission RECORD January 2003

22

Compliance

MUR 5187

Corporate Reimbursements

of Contributions

On December 3, 2002, the

Commission entered into conciliation agreements with Mattel, Inc.,

(Mattel) former Mattel Senior Vice

President Fermin Cuza and former

Mattel consultant Alan Schwartz,

resulting in civil penalties of

$477,000—one of the highest

cumulative civil penalties in the

history of the Commission. The

conciliation agreements settle

violations of the Federal Election

Campaign Act (the Act) resulting

ing Mr. Cuza, for contributions to

various federal political committees.

As a result, Mr. Cuza and Mr.

Schwartz, their spouses and family

members and other individuals

made reimbursed contributions

totaling $120,714 to federal political

committees.

The Commission acknowledged

that there was evidence that Mr.

Cuza concealed these payments

from his superiors at Mattel. The

Commission found no evidence that

any of the recipient political committees were aware that Mattel was

the true source of the contributions

or that any Mattel executive other

than Mr. Cuza was aware that the

payments to Mr. Schwartz and AMS

were for the purpose of reimbursing

federal political contributions.

In his conciliation agreement, Mr.

Cuza admitted to “knowing and

willful” violations by:

• Consenting to prohibited corporate

contributions by Mattel;

• Allowing his name to be used to

make contributions in the name of

another; and

• Assisting Mattel in making contributions in the name of another.

Similarly, Mr. Schwartz and

AMS admitted to “knowing and

willful” violations by:

• Allowing Mr. Schwartz’s name to

be used to make contributions in

the name of another;

• Making contributions in the name

of another; and

• Assisting Mattel and Mr. Cuza in

making contributions in the name

of another.

Mattel admitted to violations by

making prohibited corporate contributions and by making contributions

in the name of another.

Mattel, Mr. Cuza and Mr.

Schwartz are required to:

• Pay the civil penalties;

• Cease and desist from violating

these sections of Act;

receives insubstantial sums from

business corporations. In FEC v.

National Rifle Association, the court

held that $1,000 in contributions

from for-profit corporations in a

single year was de minimis, and

therefore did not disqualify the

NRA from treatment as an exempt

“MCFL-corporation” during that

year.1 254 F.3d 173 (D.C. Cir.

2001).

On December 16, 2002, at the

request of the parties, the court

entered a final order, which declares

that, as of the time of this ruling,

HRTL qualifies as an “MCFLcorporation,” and enjoins the

Commission from acting inconsistently with the order. The court

chose not to rule at any time on

HRTL’s challenge regarding the

constitutionality of Commission

regulations.

U.S. District Court for the

District of Columbia,

1:02CV02313.✦

—Amy Kort

1 See the August 2001 Record, page 3.

Court Cases

(continued from page 21)

from Mattel’s reimbursement to

individuals of $120,714 in federal

political contributions to 23 candidates, two party committees and five

PACs between 1996 and 2000. The

agreements provide that Mattel will

pay $94,000, Mr. Cuza will pay

$188,000 and Mr. Schwartz will pay

$195,000 in civil penalties. The

Commission’s investigation

stemmed from a sua sponte complaint filed by Mattel. In the

complaint, Mattel voluntarily

disclosed that it had discovered that

a former senior executive, Mr. Cuza,

had caused Mattel to reimburse

various individuals for federal

political contributions.

The Act prohibits corporations

from making contributions or

expenditures from their general

treasury funds in connection with

any election of any candidate for

federal office. 2 U.S.C. §441b. In

addition, the Act prohibits making

contributions in the name of another, knowingly permitting one’s

name to be used to effect such a

contribution and knowingly accepting such a contribution. Further, no

person may knowingly help or assist

any person in making a contribution

in the name of another. This prohibition also applies to any person

who provides the money to others to

effect contributions in their names. 2

U.S.C. §441f.

Mr. Cuza, who was in charge of

Government Affairs at Mattel,

directed the hiring of Alan

Schwartz—the sole proprietor of

Asset Management Systems

(AMS)—as a consultant to Mattel.

According to the conciliation

agreements, beginning in 1996, at

Mr. Cuza’s direction, Mattel made

payments to AMS for various

consulting services and for other

purposes. In consultation with Mr.

Cuza, Mr. Schwartz used these

funds to make contributions to

federal candidates and political

committees. Mr. Schwartz also used

funds received from Mattel to

reimburse other individuals, includ-
January 2003 Federal Election Commission RECORD

23

800 Line

the complaint or referral, and agree

in writing to the terms for participation in ADR. The terms to participate in ADR are:

• Commit to engage in the ADR

process;

• Participate in negotiations to reach

settlement, and, if unsuccessful, to

engage in mediation; and

• Waive the statute of limitations

provisions governing the case as

long as it is being processed in the

FEC’s ADR program.

Q: Can I opt out of ADR?

A: If you have been advised that

your case has been assigned for

ADR but determine that you do not

want to avail yourself of the option,

you should inform the ADRO. Your

case will then be sent to the Office

of General Counsel (OGC) for

processing in the traditional enforcement program. If your case originated as an audit or a reporting

referral, opting out of ADR will

likely result in increased scrutiny of

your committee’s activities during

the next election cycle.

Q: What is the difference

between negotiations and mediation as applied to the ADR program?

A: Negotiations at the FEC

involve direct, bilateral discussions

between the respondent (and/or their

representative) and a representative

of the FEC’s ADRO. The negotiations focus on future compliance

and are aimed at resolving the

complaint. Mediation involves the

same two parties, but with the

addition of a neutral, impartial third

party—the mediator—who assists

the parties in resolving the complaint. The mediator does not have

the authority to resolve the matter

himself or herself, but works with

the parties to facilitate their discussions and guide them in their

negotiations.

• Waive their right to a refund of all

political contributions from the

recipient committees; and

• Instruct each recipient to disgorge

all illegal contributions that have

not been previously refunded or

disgorged to the U.S. Treasury.

In addition to the Commission’s

action in this case, the California

Fair Political Practices Commission

(FPPC) and the Los Angeles Ethics

Commission entered into settlements with Mattel, Mr. Cuza and

Mr. Schwartz, regarding similar

conduct with regard to state and

local political contributions during

the same time period. These settlements provide for an additional

$454,000 in penalties—$218,000 to

the FPPC and $236,000 to the Los

Angeles Ethics Commission.✦

—Amy Kort

Frequently Asked Questions

About ADR

The FEC’s Alternative Dispute

Resolution Pilot program was made

permanent on September 12, 2002,

and is now the Alternative Dispute

Resolution Office.

Alternative Dispute Resolution

(ADR) is a series of constructive

and efficient procedures for resolving disputes through the mutual

consent of the parties involved.

(continued on page 24)

Unlike more formal procedures of

the Federal Election Commission’s

(FEC) enforcement process, ADR

encourages parties to engage in

negotiations that focus on compliance and promptly lead to the

resolution of a dispute. By expanding the tools for resolving administrative complaints, referrals from the

Reports Analysis Division (RAD)

and Title 2 audit referrals, the ADR

program aims to:

• Resolve complaints and referrals

faster;

• Reduce costs for respondents; and

• Bring cases to a mutually satisfactory resolution.

In the course of processing cases

through the ADR program, the ADR

Office (ADRO) has received a

number of inquiries, some of which

are addressed below.

Q: How can a committee get

more information about the ADR

option and whether a specific case

might qualify for processing

through the use of ADR?

A: Interested individuals can

learn about the ADR program

through the FEC’s brochure “Alternative Dispute Resolution Program,” which describes how cases

qualify for the program. The brochure is now available to the public

on the FEC’s web site at

www.fec.gov—go to the “Campaign

Finance Law Resources” link and

look under “Publications.” A

request can be made to have the free

brochure sent by mail by calling

800/424-9530 (press 1 and then 3)

or 202/694-1100.

Q: How do I know if my case

qualifies for ADR?

A: It is important to understand

that having your case processed

under ADR is not a right, but is an

option only for appropriate cases.

The FEC will conduct an initial

review and evaluation process to

determine if your case is appropriate

for ADR. In order to have your case

considered for the ADR program,

you must file a complete response to

FECFile Help on Web

 The manual for the Commission’s FECFile 4 electronic filing

software is available on the

FEC’s web site. You can download a PDF version of the manual

at http://herndon.sdrdc.com/

fecfile4.pdf.
Federal Election Commission RECORD January 2003

24

Q: Who decides if a case should

proceed to mediation if no agreement can be made in negotiations?

A: If the parties are unable to

reach a settlement during bilateral

negotiations, then the case will

proceed by mutual agreement to

mediation. If both parties do not

agree on proceeding to mediation,

the case is returned to OGC for

traditional enforcement processing.

Q: Is the mediator a member of

the ADRO or the FEC staff?

A: No. The mediator is selected

from a list of independent, nongovernmental, neutral mediators who

work outside the FEC.

Q: Why is it necessary for the

respondent to suspend the statute

of limitations in order to participate in the ADR program?

A: Requiring the respondent to

suspend the statute of limitations:

• Ensures that the respondent is

committed to the process and a

speedy resolution of the dispute;

• Protects the integrity of the FEC’s

regular enforcement program in

the event the case needs to be

returned to the OGC for final

resolution; and

• Reminds the respondent that no

benefit can be derived from

delaying the resolution of the

complaint.

Q: Are negotiations and mediation ever held simultaneously?

A: No. Mediation is initiated

only if the negotiations between the

parties are unsuccessful, and both

parties agree.

Q: Will the complainant be

involved in either the negotiations

or mediation stage when the case

is being processed by the ADR

Office?

A: No.

Q: What is the time frame for

reaching an agreement during the

FEC’s negotiations or mediation

processes?

A: The ADR Office is committed

to resolving cases within five

months from the date the Commission concurs that the case should be

processed by the ADRO.

Q: How will the schedule for

negotiations be set?

A: The schedule for negotiations,

and, if necessary, mediation, will be

set by mutual consent of the respondent and the FEC’s ADRO. Negotiations may be held via telephone

conference call, or in-person

meetings.

Q: Can the respondent select a

mediator other than one listed on

the FEC’s list of mediators?

A: No. The mediators on the

FEC’s mediator list have received

training on the requirements of the

Federal Election Campaign Act (the

Act) and the role and responsibilities of the FEC.

Q: Will there be a “standard

form” for the agreement once it is

negotiated?

A: No. The agreement will be

tailored to address the issues raised

in the complaint or referral, and will

be shaped by the terms of the

settlement negotiated by the parties.

Q: How do the ADRO’s negotiations and final agreement

compare with the standard

“conciliation agreement” traditionally used to settle a FEC

enforcement case?

A: The ADR program’s negotiation process is similar to the procedures used by OGC to obtain a

conciliation agreement, but there are

some important differences. Both

processes aim to arrive at a mutually

agreeable settlement. A conciliation

agreement, however, usually

includes civil penalties; whereas the

agreements negotiated by the

ADRO may or may not contain a

monetary penalty, but are likely to

include other terms negotiated by

the parties. Moreover, an admission

of having violated the Act is usually

included in a conciliation agreement; whereas the ADR negotiated

settlements may modify or exclude

that admission.

Q: What happens to documents

used during negotiations and

mediation sessions? Will those

documents be used by OGC in

subsequent proceedings if the

parties fail to reach an agreement?

A: In the event that the parties do

not achieve a settlement through

negotiations or mediation, and the

case is returned to OGC for processing, the ADRO will remove from

the file internal documents used

during the negotiations or the

mediation process. None of these

documents may be used or will be

available to OGC for any subsequent efforts, including possible

litigation.

Q: What about the costs if the

case proceeds to mediation?

A: During the initial years of the

ADR program, the Commission will

pay the mediator’s fee and travel

costs, if any, unless the respondent

prefers to split the costs with the

ADRO. The mediation costs covered by the FEC will not include the

costs the respondent and their

representative incur, such as lodging

or transportation costs.

Q: What role does precedent

play in the settlements concluded

under the ADR Program?

A: Neither a negotiated settlement achieved through negotiations

with the ADRO, nor a mediated

settlement, will provide a precedent

for resolving subsequent matters

that come before the Commission,

including those matters handled

through enforcement by OGC.✦

—Gary Mullen

800 Line

(continued from page 23)
January 2003 Federal Election Commission RECORD

25

Committees Fined and Penalties Assessed

1 This civil money penalty has not been collected.

2 This penalty was reduced from $900 based on information provided in a

challenge showing that the committee is not required to file electronically;

a paper copy of report was filed late.

 1. Campbell for Senate $6,500

 2. Chevy Chase Bank FSB PAC $725

3. CWA-COPE Political Contributions Committee $4,550

4. Federation of American Hospitals PAC (FEDPAC)

(FKA American Health Systems PAC) $625

5. International Longshoremen’s Association AFL-CIO

Committee on Political Education ILA-COPE $2,900

 6. John Taylor for Congress $7001

 7. Kirkland & Ellis PAC (FKA WSS PAC) $3,350

8. Montgomery Watson Americas Inc., Employee PAC $1,725

 9. National Italian American PAC $1,1251

10. Neill for Congress Committee $6002

11. New Mexicans for Bill Richardson $4,500

12. Philip Lowe for Congress $9,5001

13. PSEA PACE for Federal Elections

(FKA Pennsylvania PACE for Federal Elections) $5,700

14. Service Employees International Union

Local 434-B Federal COPE $3,3751

15. Service Employees International Union

No 99 Federal PAC $3,375

16. Sony Pictures Entertainment Inc. PAC $900

17. Voters for Choice/Friends of Family Planning

August Monthly Report 2001 $2,7001

18. Voters for Choice/Friends of Family Planning

March Monthly Report 2002 $2,2501

Committees Fined for

Nonfiled and Late Reports

The Commission recently

publicized its final action on 18 new

Administrative Fine cases, bringing

the total number of cases released to

the public to 464.

Civil money penalties for late

reports are determined by the

number of days the report was late,

the amount of financial activity

involved and any prior penalties for

violations under the administrative

fines regulations. Penalties for late

reports—and for reports filed so late

as to be considered nonfiled—are

also determined by the financial

activity for the reporting period and

any prior violations. Election

sensitive reports, which include

reports and notices filed prior to an

election (i.e., 12 day pre-election,

October quarterly and October

monthly reports), receive higher

penalties. Penalties for 48-hour

notices that are filed late or not at all

are determined by the amount of the

contribution(s) not timely reported

and any prior violations.

The committees and the treasurers are assessed civil money penalties when the Commission makes its

final determination. Unpaid civil

money penalties are referred to the

Department of the Treasury for

collection.

The committees listed in the chart

above, along with their treasurers,

were assessed civil money penalties

under the administrative fines

regulations.

Closed Administrative Fine case

files are available through the FEC

Press Office, at 800/424-9530 (press

2), and the Public Records Office, at

800/424-9530 (press 3).✦

—Amy Kort

Administrative

Fines

Outreach

FEC Conferences in March

and April

Conference for House and Senate

Campaigns and Political Party

Committees

The Federal Election Commission will hold a conference in

Washington DC for House and

Senate campaigns and political

party committees. The conference

will be held March 12-13, 2003,

and will consist of a series of

interactive workshops presented by

Commissioners and experienced

FEC staff, who will explain how the

requirements of the federal election

law apply to House and Senate

campaigns and political parties.

Discussion topics will include

fundraising and reporting, and many

workshops will address provisions

of the Bipartisan Campaign Reform

Act of 2002 that apply to federal

candidates and officeholders,

campaign committees and political

parties. In addition, a representative

from the Internal Revenue Service

(continued on page 26)
Federal Election Commission RECORD January 2003

26

FEC Roundtables

The Commission will host three

roundtable sessions in February,

addressing the FEC’s new regulations governing:

• Disclaimers, use of campaign

funds and fraudulent solicitations;

• Coordinated and independent

expenditures; and

• The so-called “Millionaires

Amendment,” which addresses

contribution limits for candidates

whose opponents spend large

amounts of personal funds on the

campaign.

 Each roundtable is limited to 35

participants, and will be conducted

at the FEC’s headquarters in Washington, DC. The roundtables will

begin at 9:30 a.m. and last until

11:00. Please arrive no later than

9:15, in order to allow for security

screening.

Registration is $25 and will be

accepted on a first-come, firstserved basis. Please call the FEC

before registering or sending money

to be sure that openings remain in

the session. Prepayment is required.

The registration form is available at

the FEC’s web site at http://

www.fec.gov/pages/infosvc.htm and

from Faxline, the FEC’s automated

fax system (202/501-3413, request

document 590). For more information, call 800/424-9530 (press 1,

then 3) or 202/694-1100.✦

—Amy Kort

election law apply to corporations

and their PACs, including provisions

governing fundraising, contributions, reporting and communications, and some workshops will

address new requirements under the

BCRA. In addition, a representative

from the Internal Revenue Service

will be available to answer electionrelated tax questions.

Registration Information

The registration fee for each

conference is $385, which covers the

cost of the conference, materials and

meals. Registrations for the March

conference must be received by

February 19, and registrations for

the April conference must be

received by March 28. A ten dollar

late fee will be assessed for late

registrations.

The conferences will be held at

the Loews L’Enfant Plaza Hotel,

480 L’Enfant Plaza, SW., Washington, DC. The hotel is located near

the L’Enfant Plaza Metro and

Virginia Railway Express stations.

A room rate of $189 per night is

available to conference attendees.

This room rate is only available for

reservations made on or before the

registration deadline for each

conference.

Complete conference registration

information will become available in

January. Conference registrations

will be accepted on a first-come,

first-served basis. Attendance is

limited, and FEC conferences have

sold out in the past, so please

register early. For registration

information:

• Call Sylvester Management

Corporation at 800/246-7277;

• Visit the FEC web site at

www.fec.gov/pages/

infosvc.htm#Conferences; or

• Send an e-mail to

toni@sylvestermanagement.com.✦

—Amy Kort

FEC Conference

Schedule for 2003

Conference for House and

Senate Campaigns and Political

Party Committees

March 12-13, 2003

Washington, DC

Conference for Corporations

and their PACs

April 29-30, 2003

Washington, DC

Conference for Trade

Associations, Membership

Organizations and their PACs

May 21-22, 2003

Boston, MA

Conference for Labor

Organizations and their PACs

June 17-18, 2003

Washington, DC

Regional Conference for House

and Senate Campaigns,

Political Party Committees and

Corporate/Labor/Trade PACs

September 9-10, 2003

Chicago, IL

Regional Conference for House

and Senate Campaigns,

Political Party Committees and

Corporate/Labor/Trade PACs

October 28-29, 2003

San Diego, CA

Public Appearance

American Association of Political

Consultants

Washington, DC

Commissioner Mason

will be available to answer electionrelated tax questions.

Conference for Corporations and

their PACs

The Commission will hold a

conference for corporations and

their PACs April 29-30, 2003, in

Washington, DC. Commissioners

and experienced FEC staff will

conduct workshops to explain how

the requirements of the federal

Outreach

(continued from page 25)
January 2003 Federal Election Commission RECORD

27

Date Subject Intended Audience

Roundtable Schedule

February 5 • Requirements for print television • Campaign committee

and radio advertisements treasurers

9:30 - 11 a.m. and solicitations • Political committees

• Permitted and prohibited uses • Attorneys and

 of campaign funds consultants to

• Salary payments to candidates above

• Prohibitions on fraudulent

misrepresentation

 • Prohibitions on contributions

 and expenditures by foreign

 nationals

Date Subject Intended Audience

February 12 • Communications coordinated • Party committee

with candidates, campaigns treasurers

9:30 - 11 a.m. or party committees • Political committees

• Definitions of “coordination” • Attorneys and

 and “independent expenditure” consultants to

• Rules for the timing of above

 independent expenditures and

 coordinated expenditures by

 political committees

Date Subject Intended Audience

February 19 • Requirements for Statements • House and Senate

of Candidacy candidates

9:30 - 11 a.m. • Modified contribution limits • Treasurers for above

for opponents of candidates • Attorneys and

spending large amounts of consultants to

personal funds above

• Reporting and recordkeeping

requirements for candidates

expending personal funds and

for their opponents

New Rules on Disclaimers, Use of Campaign Funds and Fraudulent

Solicitations

New Rules on Coordinated and Independent Expenditures

New Rules on the “Millionaires Amendment”

Index

The first number in each citation

refers to the “number” (month) of

the 2003 Record issue in which the

article appeared. The second

number, following the colon,

indicates the page number in that

issue. For example, “1:4” means

that the article is in the January

issue on page 4.

Compliance

Committees fined under Administrative Fine program, 1:25

MUR 5187: Corporate reimbursements of contributions; 1:22

Court Cases

_____ v. FEC

– Cunningham, 1:19

– Hawaii Right to Life, Inc., 1:20

FEC v. _____

– Beaumont, 1:20

– Toledano, 1:20

Regulations

BCRA reporting, final rules, 1:14

Contribution limits increase, 1:6

Coordinated and independent

expenditures, final rules, 1:10

Disclaimers, fraudulent solicitation,

civil penalties and personal use of

campaign funds, final rules, 1:8

Reports

Draft forms and e-filing formats

available for public comment, 1:2

Reports due in 2003, 1:3
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Federal Election Commission RECORD January 2003