• 

• 

• 

THE FEDERAL ELECTION 

COMMISSION 

1325 K Street N.W ., Washington, D.C. 20463 

Volume 5, Number 6 

NEW PRIMARY MATCHING 

FUND REGULATIONS 

On May 7, 1979, the Commission formally prescribed 

new Regulations governing the administration of the 

Presidential Primary Matching Payments Account. These 

Regulations define the process whereby 1980 Presidential 

candidates may receive Federal matching funds for their 

primary campaigns. The new Regulations codify and 

delineate Commission policies and procedures by: 

1. Defining the candidate's responsibility for proving that 

public funds are expended in accordance with the law; 

2. Clarifying recordkeeping procedures; and 

3. Standardizing the procedures for handling disputes 

between the Commission and the candidate. 

(For a more detailed summary of the new Regulations, 

see the Record, April 1979, p. 2.) 

The Commission submitted the proposed Regulations to 

Congress on February 16, 1979. The law stipulates that 

proposed Regulations become effective thirty legislative 

days after their submission, unless the House or the Senate 

disapproves them before that time has elasped. This 30-

day legislative period expired on May 1, 1979, without 

disapproval by either the House or the Senate. 

The new Regulations were published, in their entirety, 

in the Federal Register on April 4, 1979. Corrections 

were published in the Federal Register on April 13, 

1979, and April 30,1979. 

IRS REVISES REGULATIONS 

The Internal Revenue Service recently adopted 

several amendments to the Income Tax Regulations 

which affect Federal candidates and their campaigns, 

and individuals who contribute to Federal candidates. 

The amendments are published and explained in the 

Federal Register, March 27, 1979, Vol. 44, No. 60, 

pp. 18221·18223. 

June 

SUMMARY OF MUR's 

Beginning with this issue, the Record will summariz

files of selected compliance cases which have been c

and put on the public record. Compliance matters 

from possible violations of the Act, which come t

Commission's attention either through formal comp

originating outside the Commission or by the FEC's 

monitoring procedures. The Federal Election Campaig

of 1971, as amended (the Act) gives the FEC the exc

primary jurisdiction for the civil enforcement of the 

Potential violations are assigned case numbers by the O

of General Counsel and become 0 Matters Under Re

(MUR's). All MUR investigations are kept confidenti

the Commission, as required by the Act. 

MUR's may be closed at any one of several points d

the enforcement process, including when the Commi

Determines that no violation of the Act has occurre

Determines that there is no reason to believe, no re

able cause to believe or no probable cause to bel

violation of the Act has occurred; 

Enters into a conciliation agreement with the re

dent; 

Finds probable cause to believe a violation has occ

and decides to sue; or 

Decides at any point during the enforcement proc

take no further action. 

After the MUR is closed and released by the Offi

General Counsel, the Commission makes the MU 

available to the public. This file contains the comp

th<l findings of the General Counsel's Office and the 

mission's actions with regard to the case, including th

text of any conciliation agreement. The Commis

actions are not necessarily based on, or in agreement 

the General Counsel's analysis. 

Selection of MUR's for summary will be made only 

MUR's closed after January 1, 1979. The Record a

will not summarize every stage in the compliance pr

Rather, the summary will provide only enough backg

to make clear the Commission's final determination
full text of these MUR's and those which were closed 

between 1976 and 1978 are available for review and purchase in the Commission's Public Records Office. 

MUR 884: Receipt of Prohibited Contributions 

On January 5, 1979, the Commission found no reason to 

believe that a Federal candidate had violated 2 U.S.C. 

§441 b. 

Complaint: On November 23, 1978, an individual filed 

a complaint with the Commission alleging that a candidate 

for Federal office had violated §441 b by accepting prohibited contributions from a labor organization. The 

complaint was based on a rece-nt court decision which 

held that the labor organization had unlawfully commingled union treasury funds with voluntary contributions. 

The labor PAC had also made contributions from those 

funds to several candidates for Federal office. The com~ 

plaint named .one of the candidates who had received a 

contribution from the PAC, contending that he also was in 

violation of §441 b. 

General Counsel Reports: When the Commission filed the 

suit upon which this complaint was based, it was aware that 

several candidates had accepted and retained contributions 

from the PAC in question. At that time, the Commission 

made a decision not to pursue recipient candidates. The 

Commission established in AO 1978-53 that a candidate's 

receipt of tainted funds, in and of itself, does not place the 

candidate in violation of the Act if the candidate has no 

knowledge that the contribution was improper. Consistent 

with AO 1978-53, the General Counsel recommended that 

no action be taken against the candidate since there was no 

evidence that he had knowledge that the contributions 

consisted of voluntary money commingled with union 

treasury money in violation of §441 b. 

Commission Determination: On January 5, 1979, the 

Commission found no reason to believe that the Federal 

candidate had violated 2 U.S.C. §441 b. 

MUR 538: In-Kind Contributions 

On January 25, 1979, the Commission found no reasonable 

cause to believe that a political action committee had 

violated 2 U.S.C. §§434,441a and441bandthatacorporation had violated 2 U.S.C. §441b. 

Complaint: In 1977, a political action committee (PAC) 

created a computer corporation and then contracted with 

the corporation to perform "caging" operations (processing 

of contributions received through direct mail) for the 

PAC. At the time of the corporation's creation, the PAC 

sold all its office equipment and computer capability and 

then transferred almost its entire staff to the new corpora· 

tion. A complaint filed by an individual on February 15, 

1978, contained the following allegations: 

1. The PAC received services from the corporation at prices 

below the "usual and normal charge," thereby accepting 

a prohibited in-kind contribution from the corporation 

in violation of §441b. 

2. The PAC failed to report in-kind contributions from 

landlord for reduced rent, cost of office furniture a

subsidized rent. Failure to report such contributions w

a violation of §434; if such contributions exceed

$5,000 annually, a violation of §441a might ha

occurred. 

3. Services performed on behalf of political candidates by 

political consultant employed by the PAC constituted 

expenditure and should have been reported. Failure 

report constituted a violation of §434. 

General Counsel Reports: The General Counsel pointed o

that where a PAC creates a corporatiOn which, in turn, pr

vides services to the PAC, close scrutiny is warranted 

assure that the status of the corporation does not unla

fully benefit the PAC. For example, the appearance of d

proportionate prices being charged the PAC and a Sta

committee raised the possibility that the corporation m

have acted as a conduit for other corporation contributio

to the PAC. The General Counsel suggested that the Sta

committee may have used its funds, which contain

corporate contributions, to absorb those PAC costs excee

ing amounts actually billed by the corporation. Such 

arrangement would have permitted the corporation 

charge the PAC a lower rate for the same services. T

ensuing Commission investigation revealed that: 

1. Both committees (the State committee and the Fede

PAC) were charged at the "usual and normal charg

The difference in cost charged the two committees w

attributable to the difference in the volume of mailin

of both committees and their relative success in raisi

money. 

2. The PAC's rent was under contract, was uniformly pa

and was increased when the building changed hands a

a new contract was negotiated. 

3. The PAC maintains that consultant services were prov

ed only for State candidates. The original compla

neither specified the political candidates for whom co

sultant services were allegedly provided nor indicat

whether or not the candidates were Federal candidat

Commission Determination: On January 25, 1979, t

Commission determined that there was no reasonable cau

to believe that the PAC had violated 2 U.S.C. § §434, 44

and 441b and that the corporation had violated 2 U.S

§441b. 

DATA PROCEDURES FOR 

1980 PRESIDENTIAL ELECTIONS 

On May 3, 1979, the Commission approved data ent

procedures for the 1980 Presidential election. (Commissio

Memorandum No. 394) 

The RECORD is published by the Federal Election Commission, 1325 K Street, N.W .. Washington, D.C. 20463. Commissioners are: Joan D. Aikens, Chairman; Robert 0. Tiernan, Vice Chairman; Max L. Friedersdorf; Thomas E. Harris; 

John W. McGarry; Vernon W. Thomson; J.S. Kimmitt, Secretary of the Senate, Ex Officio; Edmund L. Henshaw, Jr., 

Clerk of the House of Representatives, Ex Officio. For more information, call 202/523-4068 or toll-free 800/424-9530. 

2 
• 

• 

• 

~ " 9 ,' ~ ~ " ~ 

' 'J ;;i;'C'' OPINIONS 

ADVISORY OPINION REQUESTS 

The following chart lists Advisory Opinion Requests 

(AOR's), with a brief description of the subject matter, the 

date the requests were made public and the number of 

pages of each request. The full text of each AOR is avail· 

able to the public in the Commission's Office of Public 

Records. 

Date Made No. of 

AOR Subject Public Pages 

1979·13 Article about separate segregated 4/13/79 2 

fund carried in corporation's 

publication. 

1979·14 Registration and reporting 4/13/79 2 

requirements of political 

party and its State committees. 

1979·15 Solicitations for separate segre- 4/18/79 3 

gated fund made through article 

in trade association's magazine. 

1979·16 Fundraising by two separate 4/27/79 3 

segregated funds established 

temporarily within a single trust 

prior to their contemplated 

merger into a single multicandidate committee . 

1979·17 Republican National Committee 4/25/79 5 

participation in bank credit card 

program with income to RNC 

based on acceptance or use of cards. 

1979·18 Purchase of committee 4/25/79 2 

contributor list. 

1979·19 Tickets for separate segregated 5/1 /79 2 

fund's reception purchased 

through association. 

1979·20 Establishment of separate segre- 5/8/79 2 

gated fund by general partnership 

composed of two corporations. 

1979·21 Reimbursement of corporation 5/9/79 2 

for assistance in establishing 

payroll deduction plan for union's 

separate segregated fund. 

1979·22 Reporting obligations of candi- 5/10/79 2 

date committee for part-time 

services of attorney and use of 

law firm facilities and personnel. 

1979·23 Reporting extinguished "debts" 5/11 /79 2 

and "obligations" on Schedules 

8 and C. 

ADVISORY OPINIONS: SUMMARIES 

Designated as AO's, Advisory Opinions discuss the 

application of the Act or Commission Regulations to 

specific factual situations. Any qualified person requesting 

an Advisory Opinion who in good faith acts in accordance 

3 

with the opinion will not be subject to any sanctions u

the Act. The opinion may also be relied upon by any o

person involved in a specific transaction which is indi

guishable in all material aspects from the activity discu

in the Advisory Opinion. Those seeking guidance 

their own activity should consult the full text of 

Advisory Opinion and not rely only on the summary g

here. 

AO 1978-91: Transfers from District Committees 

To State Party 

The Commission approved three methods proposed by 

North Dakota Democratic-NPL Party (the State Pa

for reporting funds transferred to the State Party from l

legislative district committees (the District Committees)

The State Party is organized so that each District Com

tee shares in the financial responsibility by raising a q

of funds from individual contributions and district f

raising events. In its request, the State party outlined 

methods it had been using to receive and report contr

tions from the District Committees. It also proposed sev

methods (described below) whereby it would not 

necessary, in most cases, for the District Committee

register and report. 

1. Contributions Received Directly by the State P

Individual, itemizible contributions received dire

by the State Party will continue to be itemized on S

Party reports to the Commission. Any person at 

district level who receives a contribution for the p

which exceeds $50 must provide a detailed accoun

the contribution to the State Party treasurer. The S

Party treasurer, upon receipt of the contribution, m

deposit it in a designated campaign depository wi

ten days. 

2. Transfers of Proceeds from District Fundraisers 

The State Committee must itemize each transfer 

proceeds from district fundraising events as sepa

"transfers in from affiliated committees." In addit

the State Party must clearly identify the District C

mittee (by number or in some other fashion) as 

source of the transfer. 

3. Transfers Exceeding $1,000 

If the State Party establishes a separate Federal c

paign committee with a segregated Federal acco

the amount over $1,000 transferred by a District C

mittee to the State Party within a calendar year could 

placed in another account whose funds are not used 

influence Federal elections (i.e., a State and/or l

account). Under this procedure, District Commit

which did not wish to be considered "political comm

tees" as defined in the Act could retain that status

this case, however, it would be the responsibility of 

State Party to request assurance from the transferr

District Committee that the contributions origna

from sources which are permissible under the Act. 

If however, the State Party maintains a single acco

for Federal and non-Federal candidates, any Dis

Committee which transfers more than $1,000 to 

State Party during the calendar year must register 

report to the Commission. (Length: 4 pages) 
AO 1978-102: Union Get-Out-the-Vote Drive 

The Coal Miners Political Action Committee (the Committee) must reimburse the general treasury of the United Mine 

Workers (UMW) for union funds which were used to 

conduct a get-out-the-vote drive. 

Prior to the 1978 general election, the UMW used general 

treasury funds to finance radio and television ads encouraging UMW members to vote. &>me of the ads, which 

were broadcast in several States, endorsed specific candidates for State office. Others, described as "nonpartisan" 

by the Committee, were more general, urging UMW members to vote for candidates friendly to labor but not identifying or endorsing specific candidates or political parties. 

No candidates for Federal office were specifically identified 

or endorsed in any ads. 

The Commission noted that the announcements supporting 

specific State candidates were outside the scope of the Act. 

However, with regard to the nonpartisan ads, the Commission determined that they were not permissible under the 

Act because: 

1. The Act prohibits expenditures by labor unions in 

connection with Federal elections; although 2 U.S.C. 

§441 (b)(2)(B) permits the use of general treasury funds 

to conduct get-out-the-vote drives, it restricts those 

drives to union members and their families. 

2. Furthermore, Commission Regulations require that any 

get-out-the-vote drive which extends beyond union 

members and their families must be jointly sponsored by 

the union and a nonprofit or civic organization which 

does not endorse candidates or political parties (11 CFR 

114.4(d)). 

FEC PUBLIC APPEARANCES 

In keeping with its objective of making information available to the public, the Federal Election 

Commission regularly accepts invitations to address 

public gatherings on the subject of campaign finance 

laws and the Commission itself. This regular column 

lists scheduled Commission appearances, detailing the 

name of the sponsorjng organization, the location of 

the event and the name of the Commission's speaker. 

For additional information on any scheduled appearance, please contact the sponsoring organization. 

6/12 National Association of Business PAC's 

National Association of Manufacturers 

New York, New York 

Jan Baran, Executive Assistant 

to Commissioner Aikens 

6/26 International Association of Clerks, 

Recorders and Election Officials 

and Treasurers 

Las Vegas, Nevada 

Gary Greenhalgh, Clearinghouse Director 

4 

Since the UMW get-out-the-vote drive reached the general 

public and was sponsored solely by the UMW, it was not 

conducted in compliance with the Act or Commission 

Regulations. To be in compliance, the Committee must 

allocate a reasonable portion of expenses for the nonpartisan activity between Federal and non-Federal elections. In this case, a reasonable allocation would be as 

follows: The amount allocated to Federal candidates should 

have the same ratio to total expenses for nonpartisan 

announcements as the number of Federal candidates has to 

the total number of candidates (local, State and Federal) 

supported by the union and its PAC. That amount should 

then be transferred from the Committee to the UMW 

treasury. (Length: 4 pages) 

AO 1979-2: Refunds to Committee 

NOTE: The Commission emphasized that the following 

opinion should be narrowly read. Persons wishing guidance 

in this area should submit separate requests even though 

their factual situations may appear to be "indistinguishable 

in all ..• material aspects" from the situation discussed in 

this opinion. 

Congressman Badham is coproducer, with the U.S. Departments of Commerce and Defense, of a Federal Procurement 

Conference (the Conference). The 8adham Congressional 

Committee (the Committee) may not accept refunds from 

the Conference for amounts which the Committee 

advanced to cover Conference costs because of the source 

of Conference funds. Nor may the Committee accept 

refunds directly from vendors to whom the Committee paid 

deposits after those vendors have been paid by the Conference. 

Conference income, derived from attendee registration fees, 

will consist of funds from corporations, many of which are 

Federal government contractors. In view of that fact, 

repayment of the advances to the Committee by the 

Conference or by vendors would result in the Committee's 

acceptance of indirect prohibited contributions from 

corporations and Government contractors. 

The Commission noted, however, that if the Committee 

followed the procedures below, no enforceable violation of 

the Act would occur: 

1. Before the Conference date, Representative Badham 

uses his personal funds to pay the vendors the same 

amounts the Committee has previously paid those 

vendors. 

2. The vendors immediately refund to the Committee the 

deposits the Committee has advanced. 

3. The Committee reports those refunds on its next 

required report. Subsequently, the vendors may refund 

to Congressman Badham the payments advanced by him 

from personal funds on behalf of the Conference. These 

refunds would be outside the purview of the Act and 

Commission Regulations since the financing of the Conference does not appear to involve "contributions" or 

"expenditures" made for the purpose of influencing 

Congressman Badham's nomination or election to 

Federal office. 
• 

• 

• 

The Commission expressed no opm1on regarding application of House Rules or the possible tax ramifications of this 

situation since those issues are not within its jurisdiction. 

(Length: 3 pages) 

AO 1979-7: Delegate Selection 

Reporting obligations governing Presidential nominating 

conventions do not apply to activities which the New 

Jersey State Democratic Committee (the State Committee) 

undertakes to implement an Affirmative Action Program 

for selection of delegates to the 1980 Democratic National 

Convention. Those obligations relate specifically to the 

convention and do not extend to the delegate selection 

process which precedes the convention. Funds received and 

payments made- for activitites would not constitute "contributions" or "expenditures" within the meaning of 

the Act since they are not made for the purpose of influencing the election of any person to Federal office 

or of influencing the results of a primary. Therefore, 

they are not subject to the Act's limitations and need 

not be paid from the State Committee's Federal account. 

However, other aspects of the Affirmative Action Program 

may be subject to the provisions of the Act and Commission Regulations, as follows: 

1. The State Committee's expenses for such actiVIties are 

in connection with the Federal election process. Therefore, these expenses may not be paid from prohibited 

contributions; that is, from foreign nationals or from 

the treasuries of labor unions, corporations and national 

banks. 

2. It is not necessary that a separate account subject to the 

limits of the Act be established to finance the program 

activities. However, if the State Committee's regular 

non-Federal account contains contributions from prohibited sources or foreign nationals, it would be necessary to establish a special account to pay costs associated 

with the delegate activities. 

3. Funds received and disbursed need not be reported 

unless they are paid from the Federal account of a registered Federal campaign committee; if that is the case, 

usual reporting procedures would be followed. (Length: 

6 pages) 

AO 1979-8: Administration of Trade 

Association PAC 

Executive and administrative personnel of member corporations which have given prior solicitation approval to the 

China Clay Producers Group, a trade association, may 

participate in the operation, administration and solicitation 

activities of the China Clay Producers Political Action 

Committee (the PAC) by performing occasional (4 hours 

per month) services which are incidental to their regular 

employment. 

Since, under the Act, a trade association may use dues 

monies from its corporate members for the establishment, 

administration and solicitation activities of the PAC, it may 

also have the benefit of incidental services of the members' 

executive and administrative personnel to conduct those 

same activities. (Length: 4 pages) 

5 

AO 1979-9: SUbordinate State Party Committee 

Retires Candidate's Debts 

The Texas Democratic Voter Participation Project (t

Committee), an authorized subordinate committee of t

Texas Democratic Party, may help five Federal candidat

retire their 1978 campaign debts provided the Committ

observes certain conditions outlined by the Commissio

Three of the candidates were candidates in the gene

election; the other two were candidates only in t

primary. 

In retiring debts, the Committee may make direct paymen

to the candidates' creditors. In the case of primary can

dates, a direct payment to a candidate's creditors wou

constitute a contribution. Any such payment, when co

bined with a preprimary contribution to the same candida

by the Committee, must not exceed the $5,000 per can

date limit applicable to primary election contributions. 

With regard to general election candidates, direct payme

to a candidate's creditors would constitute coordinat

party expenditures for purposes of 2 U.S.C. §441a(d)(

All other expenditures the Committee has made for t

same candidate during the general election campaign m

be combined with the contemplated payments to credito

and the sum may not exceed the §441a(d)(3) expenditu

limits. The Committee may make additional payments 

the creditors to the extent it has not yet exhausted 

candidate contribution limits prior to the general electi

In soliciting funds to retire the 1978 campaign deb

the Committee is not required to issue a notice stating th

contributions will be used to retire debts of specific can

dates. However, those notices specified by 11 CFR 10

are required. 

Individual contributions to the Committee are subj

to the $5,000 limit on a calendar year basis. Any contri

tions made by an individual to the Committee during 

1979 calendar year will be attributed to the $25,000 li

for 1979, despite the fact that they will be used for de

incurred during 1978 elections. 11 CFR 110.5 (Length

pages) 

AO 1979-10: "Union Bug" on 

Printed Materials 

Payments for all candidate printed campaign mater

are expenditures which must be reported, regardless 

whether a "union bug" appears on them. (A union 

indicates that the printing was done in a unionized p

shop.) 

The Act and Commission Regulations do not cover qu

tions related to the appearance of the union bug on prin

materials mailable under the franking privilege. {Len

3 pages) 

AO 1979-12: Joint Fundraising Effort by 

State and Federal Committees 

Congressman Bill Burlison may proceed with an arran

ment he has made with the Butler County Democrats 

continu
the Truman Day Committee to sell tickets for their annual 

fundraiser and retain 50 percent of the proceeds he collects 

for the Burlison Committee (the Committee). The Commit· 

tee would be required to assume a pro rata share of 

expenses for ticket production (and perhaps other fundraising expenses) to avoid accepting in-kind contributions 

from the Butler County Democrats and the Truman Day 

Committee. Similarly, the Committee must regard its share 

of ticket proceeds as contributions subject to all the limits 

and reporting requirements of the Act. 

With regard to reporting requirements, the Commission 

noted that neither the Butler County Democrats nor 

the Truman Day Committee is a registered political com· 

mittee. Consequently, they have no reporting requirements, 

assuming that they do not engage in activities which would 

require them to be registered and file reports. The Committee, on the other hand, is subject to reporting requirements. 

It needs to report only its 50 percent share of the gross 

price of each ticket sold as itemized or unitemized contributions. 

To avoid treating all funds collected by check as contributions to the Committee, checks made payable to the Butler 

County Democrats or the Truman Day Committee must be 

deposited within 10 days of receipt in a transmittal or 

clearing account; 50 percent of the proceeds would then be 

forwarded to the Committee by a check drawn on that 

account. The transmittal account, as well as the Commit· 

tee's regular account, must be designated as a campaign 

depository on the candidate's and Committee's Statements 

of Organization (Form 1 ). Neither the Committee nor the 

transmittal account may accept any funds which are 

prohibited under the Act (e.g., cash contributions exceeding $100, treasury funds from corporations and labor 

organizations). The Commission also emphasized the 

importance of the notice to contributors required by 11 

CFR 102.6(b). (Length: 5 pages) 

LITIGATION STATUS INFORMATION 

The following is a list of new litigation involving the 

Commission, together with the date the suit was filed, the 

Court involved, the Docket Number and a brief description 

of the major issue(s) involved in the case. Persons seeking 

additional information on a particular case should contact 

the Court where the suit is filed or the Commission. 

FEC v. People's Democratic Action Organization, et al., 

U.S. District Court for the District of Maryland, Docket 

No. H-79-431, March 5, 1979. 

The Commission alleges that the defendants violated 

the Act by failing to file the r_equired Statement of 

Organization (FEC Form 1) and failing to report 

a contribution. 

6 

FEC v. Eastside Democratic Committee, et al., U.S. Distric

Court for the District of Maryland, Docket No. T-79430

March 5, 1979 (amended April 17, 1979). 

The Commission alleges that the defendant violated 

the Act by failing to report a contribution. 

FEC v. Rudasill for Congress Committee, et al., U.S

District Court for the Eastern District of North Carolina

Docket No. 79-172-CIV-5, March 30, 1979. 

The Commission alleges that the defendant violated 

the Act by making excessive cash expenditures, 

failing to maintain records to support reported 

receipts, failing to document reported expenditures 

and failing to provide particulars on expenditures. 

FEC v. COMMITTEE FOR A CONSTITUTIONAL 

PRESIDENCY- McCARTHY 76 

On March 7, 1979, the U.S. District Court for the 

District of Columbia granted summary judgment to the 

Committee for a Constitutional Presidency - McCarthy 

'76, defendants in a suit filed by the FEC on August 22

1977. 

The FEC alleged that the defendants had improperly classi

fied a series of payments (speaking fees from universities

as "other receipts" rather than as "contributions," and 

requested a mandatory injunction from the Court requiring 

the defendant to amend its reports accordingly. 

The Court agreed with both parties that there were no 

material issues in dispute. The Court also agreed with the 

FEC that the payments in question were, in fact, "contri

butions" rather than "other receipts." However, while the 

Court concluded that the defendant may have committed 

a technical error, it declined to enter the requested orde

for the following reasons: 

1. The defendant had acted in good faith and had fully 

reported all payments on appropriate FEC forms. 

2. In 1976, Congress amended the reporting provision

of §434(b), which now provide that when candidate

and committees "show that best efforts have been used 

to obtain and submit the information required by thi

subsection, they shall be deemed in compliance with 

this subsection." Since the events of this case occurred 

before Congress adopted the amendment, the amend

ment does not control the case. However, it does provide 

support for the Court's view that a candidate could ac

in good faith and yet technically violate a provision of 

the Act; it also corroborates the Court's conclusion tha

sanctions should not be imposed on a public figure who 

acts in good faith. 

3. The public interest would not be served by the requested 

court order. The public interest in disclosure is already 

satisfied by the detailed information supplied by the 

defendant. Furthermore, a court·imposed remedy would 

not ensure better compliance in the future since a candi

date who acted in the same manner today would 

probably not be considered in violation of the Act due 

to the "best efforts" amendment. 
• 

• 

• 

HENRY WALTHER v. FEC 

On April 17, 1979, the U.S. District Court for the 

District of Columbia denied the FEC's motion to dismiss 

the claim of Henry L. Walther in a suit filed against the 

FEC on November 21, 1978, in accordance with 2 U.S.C . 

§437g(a)(9). 

The suit contends that the Commission acted contrary 

to law in dismissing 45 complaints filed with the Commission by Walther and the National Right to Work Committee 

pursuant to 2 U.S.C. §437g(a)(1 ). Each complaint asserted 

that both a candidate for Federal office and the candidate's 

committee had accepted illegal contributions in excess of 

the $5,000 contribution limitation established by 2 U.S.C. 

§441 a(a)(2)(A). The alleged violations occured when 

contributions were accepted from both the AF L-CIO 

political committee (COPE) and from political committees 

set up by member unions of the AFL-CIO (union committees). 

The plaintiff claims that COPE and some union committees 

are subject to the same control and, therefore, share one 

contribution limitation under §441a(a)(5). The §441a 

(a)(5) antiproliferation provision provides that contribu· 

tions from separate PAC's which are "established or 

financed or maintained or controlled" by the same person 

or group of persons shalt be considered to have been made 

by a single political committee. 

The FEC contends, on the other hand, that, as a matter of 

law, §441a(a)(5) was not intended by Congress to apply to 

the relationship between the AFL-CIO Federation and its 

membership (union locals). The FEC also maintains that 

since the agency had publicly construed the antiproliferation provision to exclude cooperation between COPE and 

union PAC's, no candidate could knowingly violate the 

statute by accepting contributions from both. (In 1977 

the FEC had dismissed a complaint filed by the National 

Right to Work Committee against the AFL·CIO alleging 

that the AFL-CIO and member unions were affiliated. That 

determination was never appealed to the Court by the 

National Right to Work Committee.) Therefore, the FEC 

filed a motion to dismiss the complaint. 

The Court identified the central question presented by the 

Commission's motion to dismiss as one of statutory construction: What is the correct application of §441 a(a)(5) to 

the relationship between COPE and union committees? 

CHANGE OF ADDRESS 

After examining the language of the statute and the po

underlying the Act, the Court refused to accept the F

interpretation of the statute for the following reasons: 

1. The Court found nothing in the antiproliferation 

guage of §441a(a)(5) to support the proposition 

certain PAC's were intended to be exclud.ed from 

scope. On the contrary, the statute enunciates an in

sionary rule wherein the PAC's of a labor organiza

and its locals are automatically treated as one PAC. 

statute does not identify any relationships exce

from the §441a(a)(5) rule. 

2. The Court accepted neither the FEC's reliance 

the legislative history of the statute nor its interpreta

of that history to support the FEC position that C

and union PAC's were intended to be exempt from 

antiproliferation provision. 

3. FEC Regulations, cited by the Commission in suppo

its position, declare the circumstances under which 

PAC's will always be treated as one. The Court d

mined that cited Regulations do not address the iss

hand: when two PAC's are never treated as one. 

Accordingly, the Court concluded that §441a(a)(5) ap

to all political committees controlled by the same pers

group of persons except for certain exemptions not rel

to this case. Therefore, the relationship alleged by 

plaintiff may constitute a violation. Furthermore, the C

rejected the FEC's contention that the agency's interp

tion of the statute precluded commission of civ

criminal violations of the Act by candidates. The C

concluded that, although an incorrect administrative 

pretation may have some bearing on determining wheth

not a party acted knowingly, it does not provide imm

to the party. 

Finally, in denying the FEC motion to dismiss, the C

held that the plaintiff had alleged facts sufficient to 

stand a motion to dismiss. However, the Court pointe

that this opinion could not be construed as concluding 

a violation had occured or that the FEC had actually f

to perform its statutory duty. 

The Commission has requested the District Court's app

to seek an appeal of the decision. 

Record subscribers, when calling or mailing in a change of address, are asked to provide the following information

1) Name of person to whom the Record is sent; 2) Old address; 3) New address; 4) Subscription number. 

The subscription number is located in the upper left hand corner of the mailing label. It consists of three letters and five 

numbers. Without this number, there is no guarantee that your subscription can be located on the computer. 

NOTE: Registered candidates -and committees are automatically sent the Record and do not have this subscription 

number on their mailing labels. Any change of address by a registered entity ·must, by law, be made in writing as an 

amendment to FEC Form 1 (Statement of Organization for a Political Committee) or FEC Form 2 {Statement o

Candidate). and be placed on the public record. 

7 
FEC TESTIFIES ON 

CONGRESSIONAL PUBLIC FINANCING 

On March 15, 1979, FEC Chairman Joan Aikens testified before the House Administration Committee on H.R. 

1, a proposed House bill which would provide public 

financing for general election campaigns for the House of 

Representatives. At the Committee's request, Chairman 

Aikens, accompanied by Vice Chairman Robert Tiernan, 

testified on the FEC's experience in administering public 

financing in the 1976 Presidential election. 

In its testimony, the Commission took no position on 

the substantive merits of public financing for Congressional 

elections. However, the Commission: 

1. Stressed the importance of effective safeguards to ensure 

the integrity of the public financing system, including a 

certification review process and postelection audits; 

2. Recommended a repayment provision for situations 

where public money is certified in excess of eligibility 

or used for nonqualified campaign purposes; and 

3. Expressed concern about the administrative problems in 

enforcing expenditure limits. 

The Commission estimated, in response to a question 

from the Committee, that the checkoff fund would require 

an additional $35 to $44 million if public financing were 

extended to House candidates. In additional testimony 

prepared at the request of the Committee, on April 10, 

1979, Chairman Aikens responded to questions concerning 

the assumptions on which the cost estimates had been 

based. On April 23, 1979, the Commission submitted 

another estimate based on assumptions specified by the 

House Administration Committee. The revised figures 

projected that the cost to the checkoff fund would be $27 

to $29 million if House candidates received public 

financing. 

FEDERAL ELECTION COMMISSION 

1325 KSTREET, NW 

WASHINGTON, DC 20463 

OFFICIAL BUSINESS 

8 

AUDITS RELEASED 

TO THE PUBLIC 

The Federal Election Campaign Act requires the Co

mission to periodically make audits and field investigati

with respect to reports and statements filed under the A

The Commission is also required to conduct audits of 

campaigns of Presidential candidates who receive pub

funds. Once an audit is completed and an audit repor

approved by the Commission, the report is made public a

is available in the Office of Public Records and the Pr

Office. The following is a chronological listing of aud

released between April 2, 1979, and May 7, 1979: 

Date Ma

Audit Public 

1. Comite Pro Baltasar Corrada 

Santurce, Puerto Rico 

2. Comite Amigos de Jaime Benitez 

San Juan, Puerto Rico 

3. Republican State Committee of Delaware 

4. Democratic State Committee of Delaware 

5. Minnesota Independent Republican 

Finance Committee 

6. National Republican Congressional 

Committee 

7. Krasnoff for Congress Committee, LA/1 

8. Washington State Democratic Committee, 

Washington State Democratic Committee/ 

Federal 

9. Washington State Democratic Telethon 

Committee 

4!4

4/4

4/17

4/17

4/23

4/23

4/27

4/27

4/27

FIRST CLASS MAIL 

POSTAGE & FEES PAID 

FEC 

WASHINGTON, D.C. 

PERMIT NO. G-31