April 1995

Table of Contents

Budget

FEC Argue s Against $2 .8 Milli on

Rescission for FY '95 , Requests

$29 Milli on for FY '96

Compliance

The $25,000 Annual Co ntribution

Limit

3 MURs Released to the Public

Public Funding

3 1992 Clinton Primary Election

Campaign to Repay Treasur y $ 1.3

Million

Audits

3 Tsongas ' 92 Prim ary Committee

Audit

Court Cases

4 FEC v. NRSC (93-161 2)

5 FEC v. Williams

6 Fulani v. FEC (94-1593)

6 Robertson v. FEC

7 Rove v. Th ornburgh

8 New Litigation

8 Advisory Opinions

Information

9 Flashfax Menu

II Index

Federal Election Commission

Budget

FEC Argues Against $2.8

Million Rescission for

FY '95, Requests $29

Million for FY '96

The FEC is seeking a $29 million

appropriation for FY '96. This

request comes on the heels of a

proposal passed by the House

Appropriations Committee to

rescind $2.8 million of the FEe's

$27.1 million FY '95 budget.

"Such a measure would compromise the FEe's mission to safeguard

the integrity of the electoral process," said FEC Chairman Danny L.

McDonald. "If this rescission

becomes law, both the FEC and the

American public would lose the

hard-fought strides made in disclosure and compliance."

The FEe's recent accomplishments include:

• Instituting a prioritization system

to handle the increase in enforcement matters filed with the FEC.

• Streamlining the audit process,

enabling the FEC to complete

audits of 1992 Presidential campaigns within two years-twice as

fast as in 1988.

• Improving customer service by

providing more campaign finance

information more quickly than

ever before; 15,000 public and

(continued on page 2)

Volum e 21, Numb er 4

Compliance

The $25,000 Annual

Contribution Limit

The Commission has stepped up

its enforcementof the $25,000 annual

limit. An individual may not make

contributions to federal candidates,

party committees and PACs aggregating in excess of $25,000 per year.

2 U.S.c. §441a(a)(3). In 1994, the

Commission entered into nine

conciliation agreements involving

violations of this limit. The agreements provided for civil penalties

totaling $163,179.

A Sampling of Last Year's

$25,000 Limit MURs

MUR 3892. John D. Murchison,

Jr., made $50,000 in total federal

contributions for 1992 and $32,250

for 1993. Mr. Murchison stated that

he misunderstood how the annual

limit was applied. In a conciliation

agreement, Mr. Murchison agreed to

pay a $28,000 civil penalty for this

infraction.

M UR 3899. D. Lloyd Wilson

made $52,500 in total federal contributions for 1992. Mr. Wilson stated

I that he was unaware of any limits on

contributions to national campaigns

and that none of the solicitors advised

him of the annual limit. In a conciliation agreement, Mr. Wilson agreed

(continued on page 2)
Federal Elec tion Commission RECORD

Budget

(continued from pag e 1)

media inquiries were handled per

month in 1994.

These improvements were made

in the face of the heavy work load

that accompanied the increases in

the number of candidates who ran

for office (up 34 percent in 1994

from 1990), the amount of money

raised and spent in federal elections

(up 54 percent from 1990), the

number of complaints filed (up 45

percent) and the number of requests

for campaign finance information

(up 17 percent).

"We are already straining our

resources to fulfill our duty to the

public and enforce federal election

laws, " said the Chairman. He added

that the rescission would adversely

impact:

• The quality service provided to the

public;

• The timely certification of matching funds for 1996 Presidential

candidates;

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

2021219-3420

202/501-3413 (Flashfax Service)

2021219-3336 (TOO)

Danny L. McDonald, Chairman

Lee Ann Elliott, Vice Chairman

joan D. Aikens, Commissioner

john Warren McGarry,

Commissioner

Trevor Potter, Commissioner

Scott E. Thomas, Commissioner

john C. Surina, Staff Director

Lawrence M. Noble, General

Counsel

Published by the Information

Division

Louise D. Wides, Director

Dario Bard, Editor

2

• The public disclosure of campaign

finance information;

• The availability of guidance and

assistance to the regulated community;

• The publication of informational

and educational materials;

• The development of electronic

filing; and

• The modernization of the FEe's

computer systems.

Lee Ann Elliott, Vice Chairman

and head of the FEe's Finance

Committee, testified before Congress that, "Any budget reductions

now will completely jeopardize the

Commission's ability to keep pace

with campaign finance activity."

For 1996, Elliott predicted,

"another record election cycle for

campaign spending."

In presenting the FEe's FY '96

budget, she dispelled the notion of

the FEC as an inefficient bureaucracy, pointing out that the FEC

"has reduced the time and staff

required to certify and process

matching fund submissions for

Presidential candidates for every

election since 1980.... [T]he

Commission closed 73 [enforcement] cases in the first three months

of FY '95."

She also praised the efficiency of

each FEC division, noting, for

instance, that the Reports Analysis

Division, with a staff of roughly 40

individuals, "in the four months of

peak election activity in 1994,

reviewed an average of 4,400

reports per month."

In addition to the proposed

rescission, the FEC has been

advised that the Survey and Investigations Staff of the Appropriations

Committee is undertaking a review

of the FEe's management and

operations.

"I welcome this review and

believe that it will demonstrate that

the FEC meets its mandate effec -

tively and efficiently," said Chairman McDonald. •

April 1995

Compliance

(continued from page 1)

to pay a $15,000 civil penalty for

this and another infraction.

MUR 3925. Michael L. Keiser

made $94,750 in total federal contributions for 1990. Mr. Keiser stated

that he was unaware of the $25,000

limit and that he was told by some

solicitors that the contributions were

for nonfederal accounts. In a conciliation agreement, Mr. Keiser

agreed to pay a $28 ,000 civil penalty for this and other infractions.

MUR 3928. Roy H. Cullen made

$26 ,275 in total federal contributions for 1989 and $44,900 for 1990.

Mr. Cullen stated that he had intended that half of each year's total be

attributed to his wife. In a conciliation agreement, Mr. Cullen agreed

to pay a $9,000 civil penalty for this

and another infraction.

How the $25,000 Limit is Applied

The $25,000 limit is applied in

two different ways, depending on

the recipient of the contribution.

Contributions made to a candidate. These contributions count toward the contributor's $25,000 limit

for the year in which the candidate's

election is held. For example, a contribution made in 1993 to a Senate

candidate's 1994 campaign counts

against the contributor's $25 ,000

limit for 1994. Similarly, a contribution made in 1995 to help retire the

debt of a 1994 campaign also counts

against the contributor's $25,000

limit for 1994.

Contributions made to a PAC or

a party committee. A contribution to

a federal PAC or a feder al party committee counts toward a contributor's

$25,000 limit for the year in which

the contribution is made. Contributions to PACs and parties that are

earmarked for a specific candidate

with respect to a particular election,

howe ver, are treated as contributions

to that candidate and count toward the

$25 ,000 limit for the year in which

the candidate's election is held , as

described in the previous paragraph.
April 1995

Tips on Avoiding Common

Pitfalls

Accidental violations of the

$25,000 annual limit can be avoided

by taking a few precautions. For

example, contributors who intend to

make a joint contribution should

make sure that the signatures of both

spouses appear on the check. In this

way, they can avoid the violation

that occurred in MUR 3928 (above).

Another common pitfall occurs

when a PAC or party committee

places contributions intended for a

nonfederal account into a federal

account, as occurred in MUR 3925

(above). Contributors should write

on the check that the contribution is

for a nonfederal account to clearly

indicate their intention.

A free brochure dedicated exclusively to the $25,000 annual limit

is available through the FEC's automated Flashfax service. To have this

brochure faxed to you, use a touch

tone phone to dial 202/501-3413 and

enter 325 as the document number

for this brochure when prompted.

Alternatively, free copies are available through the mail by writing:

Federal Election Commission

Information Division

999 E Street, NW

Washington, DC 20463 •

MURs Released to the Public

Listed below are summaries of

FEC enforcement cases (Matters

Under Review or MURs) recently

released for public review. This

listing is based on the FEC press

release of February 10. Files on

closed MURs are available for

review in the Public Records Office.

MUR3676

Respondents: (a) Stupak for

Congress, Janet Gregorich, treasurer

(Ml); (b) Clinton/Gore '92 Committee, Robert Farmer, treasurer (AR)

Complainant: Michigan Republican State Committee

Subject: Disclaimer; independent

expenditure; engaging in activity

outside the scope of a principal

campaign committee

Disposition: (a) Insufficient number

of votes to find reason to believe;

(b) insufficient number of votes to

take no action

MUR 3966/Pre-MUR 279

Respondents: (a) KMS Fusion, Inc.

(MI); et al., (b)-(1)

Complainant: Referral by Defense

Contract Audit Agency (V A)

Subject: Corporate contributions;

contributions by government contractor; contributions in name of another

Disposition: No probable cause to

believe

MUR3970

Respondents: Citizens for Bacchus

'92, Jack Oppenheimer, treasurer

(FL)

Complainant: FEC initiated

Subject: Failure to file 48-hour

notices; excessive contributions

Disposition: $9,500 civil penalty

MUR3990

Respondents: (a) Minnesota $$

Million, Nina Rothchild, treasurer;

et al., (b)-(c)

Complainant: National Republican

Senatorial Committee (DC)

Subject: Excessive contributions

Disposition: No reason to believe

MUR4046

Respondents: (a) Representative C.

Donald Johnson (GA); (b) Don

Johnson for Congress, Robert E.

Ridgeway, Jr., treasurer (GA)

Complainant: K. G. Watson (GA)

Subject: Disclaimer

Disposition: No reason to believe

MUR 4141

Respondents: Real Estate Investment Trust Political Action Committee (REITPAC), Mark O.

Decker, treasurer (DC)

Complainant: FEC Initiated

Subject: Failure to file reports on

time

Disposition: $18,050 civil penalty;

Commission agreed to reduced

penalty of $9,000.

Federal ElectionCommission RECORD

Public Funding

1992 Clinton Primary

Election Campaign to Repay

I Treasury $1.3 Million

On February 13, 1995, the

Commission made a final determination that President William J.

Clinton and his 1992 Presidential

primary election campaign repay

$1,342,728 in public funds to the

U.S. Treasury. Additionally, the

Commission made a final determination that President Clinton and his

committee pay $40,859 to the U.S.

Treasury for stale-dated checks.

The final repayment figure is

based on the committee's Statement

of Net Outstanding Campaign

Obligations (NOCO) as well as

expenses which the Commission

determined to be nonqualified.

II CFR 9032.9, 9033.11(a) and

9034.5(a). The NOCO statement

contains a self evaluation of the

committee's financial position on

the candidate's date of ineligibility,

including the fair market value of its

capital assets, amounts owed to the

committee and the amount it owed

to vendors and other payees.•

Audits

Tsongas '92 Primary

Committee Audit

On December 28, 1994, the

Commission released the final audit

report on the Tsongas Committee,

Inc., Senator Paul Tsongas's principal campaign committee during his

1992 bid for the Democratic Presidential nomination. The report

I contains an initial determination that

the committee repay $10,567 in

public funds used for nonqualifiedcampaign expenses. The report also

(continued on page 4)

3
Federal Election Commission RECORD

Audits

(continued from page 3)

requires the committee to pay

$64,163 in connection with its

receipt of excessive contributions.

The total due to the U.S. Treasury is

$74,730.

Excessive Loans

Nicholas Rizzo, the committee's

principal fundraiser, acting as an

agent of the campaign, solicited and

accepted $794,000 in campaign

loans, most of which he diverted to

his personal use. I These loans were

made by eight individuals who

exceeded their contribution limits by

$790,750. Mr. Rizzo deposited these

loans into an account he opened in

the committee's name (the Andover

account) and into his personal and

business accounts.

These loans were treated as

contributions in the final audit

report. But because of the circumstances the Commission did not

require the committee to make any

payments to the U.S. treasury with

respect to these monies.

The committee disputed the

report's findings, claiming that Mr.

Rizzo was not acting as a committee

agent when he collected the funds,

that the funds were not contributions, that the Andover account was

not a committee account and that the

committee had been unaware of Mr.

Rizzo's activity.

Excessive Contributions from

Individuals and a Partnership

In addition to the loans discussed

above, the committee received

$64,163 in excessive contributions,

of which $29,314 had been collected

by Mr. Rizzo and deposited into the

Andover account. The Commission

rejected the committee's argument

that these funds were not contributions because they were embezzled.

I Mr. Rizzo received a 52-month

sentence in a federal penitentiary for

his embezzlement activities.

4

The committee also argued that

the audit report incorrectly characterized $21,500 as a partnership

contribution. This amount, the

committee maintained, was not

contributed by a partnership, which

has a $1,000 per election contribution limit, but by the individual

partners, each of whom has a $1,000

per election contribution limit. The

Commission did not find this

argument persuasive; the checks

were drawn on the partnership's

account.

Excessive Contributions from

Advances and Extended Credit

The committee did not provide

any documentation to refute the

interim audit report's finding that it

had accepted $60,844 in excessive

contributions resulting from staff

advances. Nor did the committee

submit evidence to refute that same

report's finding that it had accepted

$13,591 in excessive contributions

resulting from an extension of credit

by a law partnership outside the

partnership's normal course of

business, and that it had accepted

$6,295 in excessive contributions

from each of the two partners in the

law firm.

Misstatement of Financial Activity

The committee misstated its

financial activity in reports filed

with the FEC in 1991 and 1992.

Subsequently, the committee filed

amended reports for 1992. The

financial misstatements for 1991

were in large part a consequence of

Mr. Rizzo's embezzlement activity.

The committee disputed the characterization of these monies as contributions and therefore argued that

their disclosure was not its responsibility.

Excessive Press and U.S. Secret

Service Reimbursements

The final audit report found that

the committee had received excessive reimbursements for travel

services it provided to members of

the press and the U.S. Secret

April 1995

Service. The committee had to

refund these excess amounts,

totaling $15,262 for members of the

press and $4,471 for the U.S. Secret

Service.

Nonqualified Campaign Expenses

The audit report identified

$693,212 worth of nonqualified

campaign expenditures paid through

the Andover account. Because of the

circumstances, the Commission did

not seek a repayment for these

nonqualified expenditures.

The report also found that the

committee had spent campaign

funds totaling $74,531 in connection

with attendance at the Democratic

National Convention-a nonqualified campaign expense. The Commission made an initial determination

that the committee repay the U.S.

Treasury $10,567, representing the

portion of these expenses that were

paid for with public funds. •

Court Cases

FEC v. NRSC (93-1612)

On February 24, 1995, the U.S.

District Court for the District of

Columbia partially granted the

National Republican Senate Committee's (NRSC) motion for summaryjudgment. The FEC is precluded

from recovering monetary penalties

in this action because the 5-year

statute of limitations expired before

this suit was filed. The statute of

limitations, however, does not apply

to injunctive and declaratory relief.

Background

The FEC alleges that the NRSC

violated the Federal Election Campaign Act (the Act) by making unlawful excessive contributions of

$183,563 to the Jim Santini for Senate Committee and by failing to disclose these contributions to the FEe.

These alleged violations occurred
April 1995

between November 1985 and November 1986. An administrative complaint was filed with the FEC on

January 9,1987. On March 10, 1992,

the FEC found probable cause to

believe that the NRSC had violated

the Act. Attempts to reach conciliation failed. This led the FEC to file

this suit on April 21, 1993, 7 years

after the violations allegedly occurred and 6 years after the administrative complaint was filed.

Statute of Limitations

"Except as otherwise provided by

Act of Congre ss, an action, suit or

proceeding for the enforcement of

any civil fine, penalty, or forfeiture ,

pecuniary or otherwise, shall not be

entertained unless commenced within five years from the date when the

claim first accrued." 28 U.S.c. §2462.

This statute applies in all instances

except those involving other statutes

in which Congress specifically included another time limitation. The court

ruled that the Act does not contain

such an alternative statute of limitations. Accordingly, the court applied

the 5-year limit to this case. I

In applying §2462, the court determined that the statute of limitations started running from the date

of the alleged violations-the period

between November 1985 and November 1986. Since the time between

the dates of the violations and the

date the FEC filed this case with the

court exceeded the 5-year statute of

limitations, the FEC may not pursue the imposition of civil penalties.

This case will proceed so that the

court may determine appropriate

injunctive and declaratory relief. •

J This conclusion is inconsistent with

the U.S. District Court for the Central

Distri ct of California 's denial of

defendant's motion to dismiss in FEC v.

Williams. In that case, Mr. Larry

Williams argued that because the 5-

year statut e oflimitations in §2462 had

expired, the court should dismiss the

cas e. The court rejected this motion

without issuing an op inion. FEC v.

Williams, No. CV 93-6231 ER.

FEe v. Williams

On January 31,1995, the U.S.

District Court for the Central District of Californ ia granted the FEC' s

motion for summary judgment and

denied the defendant's motion for

summary judgment. I The court ordered Larry R. Williams to pay $10,000

in civil penalties and enjoined him for

10 years from making contributions

in the name of another and exceeding the $ 1,000 individual contribution limit to a federal candid ate. Mr.

Williams has filed an appeal.

The Facts of the Case

Jack Kemp's 1988 Presidential

campaign had a fundraising program

which enabled anyone who contributed$1,000 to purchasea Super Bowl

ticket for $100 from the Philadelphia

Eagles. Mr. Williams, a campaign

fundraiser at the time, purchased 40

tickets from the Eagles at the $100

special price and then offered them

to employees and friends in exchange

for a $ 1,000 contribution to the campaign. He then advanced or reimbursed 22 of his employees and

friends $1,000 each to make a

contribution to the Kemp campaign.

Additionally , Mr. Williams

contributed $1,694 on his own

behalf to the Kemp campaign.

District Court Ruling

Mr. Williams argued that the

FEC v. NRA Political Victory Fund

ruling 2 precluded the FEC from

pursuing this case because the

I Previously, Mr. Williams had moved

to dismiss this case pursuant to the 5-

year statut e oflimitations in 28 U.S.C.

§2462. The court dismissed this motion

without issuin g an opinion.

21n the NRA case, the Court ofAppeals

for the District of Columbia concluded

that the presence of the ex officio members on the Commission violated the

separation ofpowers principle. See page

2 ofthe December 1993 Record f or a

summary ofthis decision. The Commission has since reconstituted itselfso as

to exclude the ex officiosfrom its body.

Federal Election Commission RECORD

structure of the agency violated the

separation of powers doctrine.

The court denied the defendant's

motion because the court did not

believe that the presence of the ex

officio members on the Commission

rendered the Commission ' s actions

unconstitutional under the separation of powers doctrine. The court

reasoned that this doctrine was not

violated because the ex officio

members did not "hold an 'Office

Under the United States'" and

because the ex officios merely

exercised an advisory role and could

not vote on Commission action. In

its opinion , the court disagreed with

the reasoning in the FEC v. NRA

Politi cal Victory Fund decision, and

cited the decisions of the Court of

Appeals for the Ninth Circuit in

Lear Siegler, Inc. v. Lehman and

Comm odities Futures Trading

Commission v. Schor in support of

its conclusion. 3

Further, the court stated that even

if the presence of the ex officio

members were deemed unconstitutional, the de facto officer doctrine

established in Buckley v. Valeo

applied and the case could continue .

In Buckley v. Valeo, the Supreme

Court accorded validity to the

FEC's past actions even though the

composition of the Commission in

1976 violated the separation of

powers doctrine .

Lastly, the court rejected the

defendant's arguments that the Act

was unconstitutionally vague, that

the FEC waived its right to impose a

civil penalty by not pursuing its

claims in bankruptcy court or that

(continued on pag e 6)

3 Citing Lear Siegler, the court f ound

that Congress did not usurp an executive fun ction by placing the ex officio

members on the Commission because

the ex officio members did not vote.

Additionally, quoting the Schor

decision, the court held that the

presen ce ofthe ex offic io members on

the Commission did not impermissibly

undermine the executive branch's role.

5
Federal Election Commission RECORD

Court Cases

(continued from page 5)

the defendant suffered prejudice as a

result of an excessive delay in the

prosecution of this action.

The court concluded that Mr.

Williams committed the fol1owing

violations of the Federal Election

Campaign Act:

• Contributions in the name of

another. It is illegal to make a

contribution in the name of

another. Mr. Williams violated this

provision of the law when he

advanced or reimbursed $1,000 to

22 contributors. 2 U.S.c. §44lf;

and

• Exceeding the $1,000 contribution

limit for individuals. It is il1egal for

an individual to give more than

$1,000 per election to any federal

candidate. Mr. Williams made

$28,694 in contributions to a single

candidate, exceeding his legal limit

(11 CFR 110.1 (b)(1)).

U.S. District Court for the

Central District of California, No.

CV 93-6321-ER (BX), January 31,

1995 ...

Fulani v. FEe (94-1593)

On February 9, 1995, the U.S.

Court of Appeals for the District of

Columbia dismissed this case.

Dr. Fulani and her principal

campaign committee for the 1994

Presidential race had asked the court

to review an FEC decision to

conduct an investigation into the

campaign's finances pursuant to the

public funding statute. 26 U.S.c.

§9039(b). See page 9 of the October

1994 Record for a summary of the

plaintiff's petition for review.

The court dismissed the case

because the action in question was

not a final agency action and was

therefore not subject to judicial

review under 26 U.S.c. §9041 (a), as

previously construed by the court. ..

6

Robertson v, FEe

On February 3, 1995, the U.S.

Court of Appeals for the District of

Columbia partially denied the

petitioner's request for review of the

FEe's final repayment determination; the court did grant the petition

with respect to one of four disputed

expenditures. The court also rejected petitioner's constitutional and

statutory challenges.

Petitioner Marion (Pat) Robertson

was an unsuccessful candidate for

the 1988 Republican Presidential

nomination. Petitioner's campaign

received more than $10 million

from the FEC-administered Presidential public funding program.

The FEC audits all campaigns

which receive public funding and

may seek a pro rata repayment for

any expenditures that are in excess

of statutory limits, that are not

qualified campaign expenses, or that

lack sufficient documentation to

verify their campaign-related

purpose.

After an audit and a public

hearing, the FEC determined that

petitioner was obligated to repay

$290,793 in public funds. At issue

were:

• Expenditures made in excess of the

limit for the Iowa primary;

• Expenditures made in excess of the

limit for the New Hampshire

primary;

• Funds claimed to have been transferred between the campaign's

national and state accounts; and

• Expenditures made in connection

with the candidate's attendance at

the 1988 Republican National

Convention.

The FEe's Repayment

Determination

The court examined the four

expenditures in question and arrived

at the following decisions with

respect to each .

Iowa limit. Petitioner argued that

$14,000 of a $20 ,000 deposit for

telephone service in Iowa should not

April 1995

be counted against his Iowa expenditure limit because it was later

refunded to the committee. The

court found, however, that the FEC

had reasonably concluded that the

evidence provided by Robertson's

campaign committee did not estab -

lish that the refund was attributable

to this Iowa deposit.

Transfer offunds. Petitioner

claimed that $17,000 purportedly

transferred from the campaign 's

national account to its state accounts

was incorrectly characterized as

nonqualified expenditures. Petitioner did not present any supporting documentation to verify that this

money actually had been deposited

in the campaign's state accounts or

had been spent on qualified campaign expenses. The court found the

FEC's demand for such documentation to be reasonable.

Attendance at the 1988 Republican National Convention. Petitioner

argued that $74,000 in costs associated with his attendance at the

convention, after he had withdrawn

from the campaign, constituted valid

winding down costs for which he

could receive public funding. In

support of this position, he argued

that video and audio recordings of

his speech at the convention were

offered as an inducement in a

fundraising mailing to retire his

campaign debt. The FEC rejected

this line of reasoning and the court

concurred.

New Hampshire limit. Petitioner

claimed that a $120,000 fundraising

mailing was incorrectly allocated to

the state's limit. FEC regulations

provide that fundraising expenses

need not be allocated to a state 's

expenditure limit unless incurred

within 28 days of the state's primary. Petitioner presented dated

checks showing that the postage had

been purchased more than 28 days

before the primary, and an affidavit

from a campaign official asserting

that the mailing had preceded the

28-day period. The Commission

concluded that it could not be
April 1995

determined that the mailing had

actually been sent before the 28-day

period and therefore attributed its

cost to the New Hampshire limit.

The court reversed the Commission's

finding on this issue because the

Commission did not address what

the court deemed to be unopposed

evidence presented by plaintiff.

The Constitutional Challenge:

Ex Officios

Petitioner's challenge was based

on the court's decision in FEe v.

NRA Political Victory Fund (see

page I of the February 1995 Record).

In that case, the court held that the

Commission's composition violated

the principle of separation of powers

because it included two nonvoting,

ex officio members appointed by

Congress. Petitioner argued that

despite the Commission's subs equent removal of those members

from its body and its ratification of

all actions it had undertaken in

petitioner's case up to that point, the

FEC's proceedings in this case

remained unconstitutional.

The court concluded that petitioner was estopped from challenging the constitutionality of the

Commission's composition because

he had already accepted $10 million

in public funds authorized by the

very Commission he now argued

was unconstitutional.

"[A] party wishing to make such

a challenge must do so before it

accepts and spends federal fundsnot after, as a ploy to avoid its part

of a bargain," the court stated in its

opinion.

Statutory Challenge: Statute of

Limitation

Petitioner based this challenge on

a provision of the statute that

required the Commission to issue

petitioner a notice of a repayment

determination within 3 years of the

1988 Republican nomination.

Within that time frame, petitioner

received a preliminary repayment

calculation (contained in the FEC's

interim audit report), which an FEC

regulation says is sufficient to

satisfy the 3-year requirement.

The court declined to resolve

petitioner's challenge to the adequacy of the notification he

received within 3 years. The FEC

had concluded that petitioner had

waived his right to address this issue

because he had not raised it until his

public hearing. Under the Commission 's rules, such an issue must

be raised in a candidate's written

comments submitted to the Commission before the public hearing.

The court found that the FEC was

within its rights in enforcing its own

procedures in this manner. The court

"cannot conclude that ... the

Commission's interpretation [of its

regulations] is unreasonable."

U.S. Court of Appeals for the

District of Columbia, No. 93-1698,

February 3, 1995. ..

Rove v, Thornburgh

The U.S. Court of Appeals for the

Fifth Circuit ruled that the Federal

Election Campaign Act (the Act)

does not imm unize a federal candidate , under state law, from personal

liability for the debts of his unincorporated campaign committee. Karl

Rove & Company may, under the

laws of Pennsylvania and Texas,

pursue monetary redress for unpaid

campaign debts from Richard

Thornburgh, a candidate for the U.S.

Senate in a 1991 special election.

[Although the FEC was not a

party to this suit, this case is summarized here because of the decision's

relevance to federal campaigns.]

Background

In the course of his 1991 campaign, Mr. Thornburgh's unincorporated committee contracted with

Rove & Company for mail solicitation services. A balance of $169,732

for these services remained outstanding after the election. Rove &

Company brought suit against Mr.

Thornburgh, his committee and the

committee's treasurer. The district

Federal Ele ction Commission RECORD

court found Mr. Thornburgh and his

committee jointly and severally

liable for breach of contract under

the laws of Pennsylvania and Texas,

but dismissed the claim against the

committee treasurer for lack of

personal jurisdiction.

Court of Appeals Decision

Mr. Thornburgh brought this

appeal, arguing that the Act pre -

empts state law and immunizes

federal candidates from personal

liability. He cited 2 U.s.c. §453 in

support of this motion :

"The provisions of this Act , and

the rules prescribed under this Act,

supersede and preempt any provision of State law with respect to

election to Federal office."

In rejecting this argument, the

court noted that: §453 has had a

historically narrow reading; that the

FEC, in Advisory Opinion 1989-2,

has deferred to state law in matters

concerning liability for campaign

debts; and that the Act does not

address the issue of cand idate

liability for campaign debts anywhere in its provisions.

The court stated, "Although we

recognize that Congress has constructed a somewhat analogousand anomalous-legal regime to

shield candidates from liability for

violations of [the Act], absent

express direction from that branch,

we decline to extend further such an

apparently inequitable rule ."

The court noted that federal

candidates can protect themselves

from personal liability in most states

by incorporating their principal

campaign committees, by stipulating

in contracts that the candidate is not

personally liable or by taking both

steps.

U.S. Court of Appeals, No. 93-

8451, November 30, 1994.•

(Courl Cases continued on page 8)

7
Federal Election Commission RECORD

Court Cases

(continued from page 7)

New Litigation

DSCC v. FEC (95-0349)

Plaintiff Democratic Senatorial

Campaign Committee (DSCC) asks

the court to order the FEC to take

action with respect to a complaint it

filed on May 14, 1993 (MUR 3774).

MUR 3774 concerns alleged improprieties by the National Republican

Senatorial Committee (NRSq,

specifically the alleged contribution

of "soft money" to other groups to

influence U.S. Senate elections. I

In its MUR complaint, plaintiff

alleged that the NRSC funneled

$187,000 in "soft money" to several

nonparty groups, which then undertook activities to influence Georgia's

November 24, 1992, U.S. Senate

runoff election.

Plaintiff filed a second MUR

complaint with the FEC on February

22, 1994, alleging more of this sort

of activity, including a $175,000

"soft money" contribution made by

the NRSC to the National Right to

Life Committee just weeks before

the 1994 elections.

Plaintiff therefore asks the court to:

• Rule that the FEe's failure to take

timely action on MUR 3774 is contrary to 2 U.S.c. §437g(a)(8)(C) ;

• Order the FEC to complete an

investigation of the matters

contained in MUR 3774 within 30

day s of this court's order; and

• Impo se any and all penalties

grounded in violations alleged in

MUR 3774.

U.S. District Court for the

District of Columbia, No. 95-0349,

February 22 , 1995. ..

I "Soft monies " are funds raised and

spent outside the limits and prohibitions

ofthe f ederal election law. This includes

contributions that exceed federal limits

and corporate and/or labor organization

treasury funds. Such monies cannot legally be used in connection withfederal elections, but can be used for other purposes.

8

Advisory

Opinions

AO 1995-1

Respondents and the

Confidentiality Provisions

Respondents in MUR 3938 may

disclose in whole or in part any

response they made to the FEC with

regard to the complaint itself. Doing

so would not compromise the

confidentiality of any unreleased

materials in the MUR file as pro -

vided under 2 U.S .c. §437g(a)(12)

and 11 CFR 111.21.

This conclusion does not extend

to information relating to any

notification of findings issued by the

Commission or any action taken by

the Commission in an investigation.

See Advisory Opinion 1994-32. Nor

does it affect the Commission's

right to withhold information from

public disclosure pursuant to its

investigatory or other privileges.

11 CFR 4.5(a)(I ) through (7)(vi ).

A MUR file becomes a matter of

public record once the Commission

closes the case.

Issued: February 10, 1995;

Length: 4 pages...

AO 1995-3

Running Simultaneous

Senate and Presidential

Campaigns

Senator Phil Gramm may simultaneously run a U.S. Senate reelection campaign and a Presidential

campaign. The Gramm '96 Committee (the Senate committee) and the

Phil Gramm for President Committee (the Presidential committee) will

maintain completely sep arate

operations, staffs and facilities. The

committees will not transfer funds

between each other, nor will they

make loans to each other. They will

each cover their own expenses.

Apri/1995

This arrangement fulfills the

requirements at 11 CFR lI0.8(d)(l )

and (2), and 110.3(c)(5). Although

the regulations at 11 CFR 11O.8(d)(3)

allow dual campaigns to share

personnel and fac ilities, Senator

Gramm's committees may not take

advantage of this provision. Th is is

because it is anticipated that his

Pre sidential committee will receive

public funding.

Contribution Limits

Under the proposed arrangement,

where the operations of the two

campaigns are entirely separate,

both committees may raise funds

concurrently for their respective

campaigns. Contributors have

separate limits for each campaign.

For instance, an individual may give

up to $1,000 to Senator Gramm's

Senate committee per election and

another $ 1,000 to the Presidential

committee for the primary election

process. Contributors must designate in writing which candidacy

each contribution is meant for.

Additionally, neither committee is

permitted to make transfers, loans or

contributions to, or make expenditures on behalf of, the other committee . 11 CFR 110.1(f)(3 ).

Public Funding

None of the funds received via

the public funding program may be

used to influence the Senate campaign.

It is also important to note that

even if Senator Gramm ceases to

actively campaign for one or the

other office, funds may not be transferred between the campaigns, since

the Presidential committee will have

cho sen to receive federal matching

fund s. 11 CFR lI0.3(c)(5)(iii).

Date Issued: February 16, 1995;

Length: 3 pages...
April/995

AO 1995-5

Use of Contributor Lists

Derived from FEC Reports

The Tax Reform Immediately

Committee (TRIM) for New York's

14th District may not use mailing

lists derived from FEC reports to

distribute a packet of materials that

include solicitations for financial

support of its operations.

The 14th district TRIM committee is part of a network of TRIM

committees that advocate "lower

taxes through less government." The

TRIM committee planned to compile a mailing list by copying the

names and addresses of individual

contributors from reports filed with

the FEC by Representative Carolyn

B. Maloney. Ms. Maloney represents New York's 14th district.

TRIM proposed using the list to

send individuals an "educational

packet," consisting of a cover letter,

a TRIM bulletin and a copy of

Article I, Section 8, of the U.S.

Constitution, listing the areas of

jurisdiction of the U.S. Congress.

This packet would not contain an

endorsement of any candidate or

party. The TRIM bulletin would

contain articles critical of government spending and a chart listing

and characterizing Ms. Maloney's

votes on specific tax and spending

bills. The bulletin would also

contain an order form for 100 copies

of the TRlM bulletin for $10.

Additionally, the order form would

contain a request for donations to

help TRIM distribute its bulletin.

Under the Federal Election

Campaign Act (the Act), it is illegal

to sell or use information on individual contributors copied from

FEC reports for solicitation or

commercial purposes. 2 U.S.c.

§438(a)(4) and I I CFR 104.1 5(a).

The offer to sell copies and the

request for donations preclude

TRIM's proposed activity under the

Act.

The advisory opinion noted that

TRIM had not asked whether the

cost of distributing its proposed

packet would be reportable or, if

TRIM were incorporated, whether it

would constitute a prohibited

expenditure under the Act. The

Commission, therefore, did not

address these issues.

Date: March 2, 1995; Length: 4

pages. •

Advisory Opinion Requests

Advisory opinion requests

(AORs) are available for review and

comment in the Public Records

Office.

AOR 1995-7

Personal liability of former Congressional candidate for bank loan

used for 1992 campaign. (Key Bank

of Alaska; March 7, 1995; 3 pages

plus 13 page-attachment)

AOR 1995-8

Campaign lease of office owned by

candidate and of equipment owned

by candidate's professional corporation. (Bart Stupak; March 10, 1995;

I page)

AOR 1995-9

Use of Internet by nonconnected

committee to solicit contributions.

(NewtWatch; March 10, 1995; 5

pages plus 16-page attachment)

AOR 1995-10

Application of the Federal Election

Campaign Act to dispute between

current and former treasurer of

candidate committee over custody

of committee records. (Helms for

Senate; March 16, 1995; 3 pages

plus 28-page attachment)

AOR 1995-11

Classification of limited liability

company as a person for purposes of

making lawful contributions under

the Federal Election Campaign Act.

(Hawthorn Group, L.c.; March 17,

1995; 5 pages plus 4-page attachment) •

Federal Election Commission RECORD

Alternative Disposition of

Advisory Opinion Requests

AOR 1994-38

The Commission could not reach

agreement by the required four-vote

majority on whether federal disclosure requirements preempt those of

California with regard to the reporting of an expenditure made by the

Lucille Roybal-Allard for Congress

committee in connection with a state

ballot issue-California's Proposition 187. See Agenda Document

#95-16. •

Information

Flashfax Menu

To order any of these documents,

24 hours a day, 7 days a week, call 2021

501-3413 on a touch tone phone. You

will be asked for the numbers of the

documents you want, your fax number

and your regular number. The documents will be faxed shortly thereafter.

Disclosure

301. Guide to Researching Public

Records

302. Accessibility of Public Records

Office

303. Federal/State Records Offices

304. Using FEC Campaign Finance

Information

305. State Computer Access to FEC

Data

306. Direct Access Program (DAP)

307. Sale and Use of Campaign

Information

Limitations

315. Contributions

316. Coordinated Party Expenditure

Limits

317. Advances: Contribution Limits

and Reporting

318. Volunteer Activity

319. Independent Expenditures

320. Local Party Activity

321. Corporate/Labor Facilities

322. Corporate/Labor Communications

323. Trade Associations

(continued on page 10)

9
441. Section 441

442 . Section 442

451. Section 451

452. Section 452

453. Section 453

454. Section 454

455. Section 455

Federal Election Commission RECORD

Information

(continued from page 9)

324. Foreign Nationals

325. The $25,000 Annual Contribution

Limit

Public Funding

330. Public Funding of Presidential

Elections

331. The $3 Tax Checkoff

332. 1993 Changes to Checkoff

333. Recipients of Public Funding

334. Presidential Fund Tax Checkoff

Status

335. Presidential Spending Limits

Compliance

340. Candidate Registration

341. Committee Treasurers

342. Political Ads and Solicitations

343 . 10 Questions from Candidates

344. Reports Due in 1995

345. Primary Dates and Deadlines for

Bal10t Access

346 . Filing A Complaint

Federal Election Commission

40 I. The FEC and the Federal Campaign Finance Law

402. La Ley Federal relativa al Financiamiento de las Campafias

403. State and Local Elections and the

Federal Campaign Law

404. Compliance with Laws Outside

the FEC's Jurisdiction

405 . Biographies of Commissioners

and Officers

406 . Telephone Directory

407. Table of Organization

408. Index for 1994 Record Newsletter

409. Free Publications

410 . Personnel Vacancy Announcements

411 . Complete Menu of Al1 Material

Available

Clearinghouse on Election

Administration

425. List of Reports Available

426 . Voting Accessibility for the

Elderly and Handicapped Act

427. National Voter Registration Act

of 1993 (see also document 226)

Money in Politics Statistics

625. 1991-92 Political Money

626 . 1994 Year-End PAC Count

627 . 1993-94 Congressional

628. 1993-94 National Party

629. 1993-94 PAC Finances

1996 Presidential Election

651. Statements of Candidacy/

Organization

10

Regulations (11 CFR Parts 100-201)

100. Part 100, Scope and Definitions

101. Part 101, Candidate Status and

Designations

102. Part 102, Registration, Organization and Recordkeeping by

Political Committees

103. Part 103, Campaign Depositories

104. Part 104, Reports by Political

Committees

105. Part 105, Document Filing

106. Part 106, Al1ocations of Candidate

and Committee Activities

107. Part 107, Presidential Nominating

Convention, Registration and

Reports

108. Part 108, Filing Copies of Reports

and Statements with State Offices

109. Part 109, Independent Expenditures

110. Part 110, Contribution and

Expenditure Limitations and

Prohibitions

Ill . Part Ill, Compliance Procedure

112. Part 112, Advisory Opinions

113. Part 113, Excess Campaign Funds

and Funds Donated to Support

Federal Officeholder Activities

114. Part 114, Corporate and Labor

Organization Activity

115. Part 115, Federal Contractors

116. Part 116, Debts Owed by Candidates and Political Committees

200. Part 200, Petitions for Rulemaking

20 I. Part 201, Ex Parte Communications

Recent Actions on Regulations,

Including Explanations

and Justifications

225 . Use of Candidate Names

226. Rules to Implement National

Voter Registration Act of 1993

227 . Presidential Nominating Conventions

228. Personal Use of Campaign Funds

Forms

361. Form I, Statement of Organization

362. Form 2, Statement of Candidacy

363. Form 3 and 3Z, Report for an

Authorized Committee

364. Form 3X, Report for Other Than

an Authorized Committee

365 . Form 5, Report of Independent

Expenditures

366. Form 6, 48-Hour Notice of

ContributionslLoans Received

367. Form 7, Report of Communication

Costs

April 1995

368 . Form 8, Debt Settlement Plan

369 . Form IM, Notification of Multicandidate Status

Schedules

370 . Schedule A, Itemized Receipts

371 . Schedule B, Itemized Disbursements

372 . Schedules C and C-I, Loans

373. Schedule 0, Debts and Obligations

374 . Schedule E, Itemized Independent

Expenditures

375 . Schedule F, Itemized Coordinated

Expenditures

376 . Schedules HI-H4, Allocation

377. Schedule I, Aggregate Page

Nonfederal Accounts

U.S. Code (Title 2)

431 . Section 431

432 . Section 432

433. Section 433

434 . Section 434

437. Section 437

438. Section 438

439 . Section 439

Advisory Opinions

701. AO 1995-1

703 . AO 1995-3

705. AO 1995-5

801. AO 1994-1

802 . AO 1994-2

803. AO 1994-3

804 . AO 1994-4

805 . AO 1994-5

806 . AO 1994-6

807 . AO 1994-7

808. AO 1994-8

809 . AO 1994-9

810. AO 1994-10

811. AO 1994-11

812 . AO 1994-12

813 . A0 I994-13

814. AO 1994-14

8 15. A0 1994-15

816. AO 1994-16

817 . AO 1994-17

818. AO 1994-18

819. AO 1994-19

820 . AO 1994-20

821. AO 1994-21

822 . AO 1994-22

823 . AO 1994-23

824 . AO 1994-24

825. AO 1994-25

826. AO 1994-26

827 . AO 1994-27

828 . AO 1994-28

829. AO 1994-29
830. AO 1994-30

83 1. AO 1994-31

832. AO 1994-32

833. AO 1994-33

834. AO 1994-34

837. AO 1994-37

838. AO 1994-38

839. AO 1994-39

840. AO 1994-40

900. Brochure

90 1. AO 1993-1

902. AO 1993-2

903. AO 1993-3

904. AO 1993-4

905. AO 1993-5

906. AO 1993-6

907. AO 1993-7

908. AO 1993-8

909. AO 1993-9

910. AO 1993-10

911. AO 1993-11

9 12. AO 1993-12

9 13. AO 1993-13

914. AO 1993-14

915. AO 1993-15

9 16. AO 1993-16

917. AO 1993-17

9 18. AO 1993-18

919. AO 1993-19

920. AO 1993-20

92 1. AO 1993-21

922. AO 1993-22

923. AO 1993-23

924. AO 1993-24

925. AO 1993-25

Index

The first number in eac h cita tion

refers to the "number" (month) of

the 1995 Record issue in which the

article appea red. The seco nd

number, following the co lon,

indica tes the page number in that

issue. For exa mple, " I:4" means

that the artic le is in the Janu ary

issue on page 4.

Advisory Opinions

1994-33 : Callin g card solicitations,

3:5

1994-34: Consolidatin g membership

association PACs followi ng a

merger, 3:7

1994-37: Allocating between federal

and nonfederal campaigns, 3:7

1994-39: Solicitation of affi liates by

a membership organization, 3:8

1994-40: Storing records on microfilm, 3:9

1995-1 : Respondents and the

confidentiality provisions, 4:8

1995-3: Running simultaneous

Senate and Presidential Ca mpaigns, 4:8

1995-5: Use of contributor lists

derived from FEC repo rts, 4:9

Federal Election Commission RECORD

Compliance

$25,000 Ann ual Contribution Limit,

4:1

MUR 3540: Corporate Facilitation,

1:2

MUR 3650: Loan Guarantors, 1:2

Court Cases

FECv.

- Montoya, 2:7

- NRA Political Victory Fund, 2:I

- National Republ ican Senate

Committee (93- 16 12), 4:4

- Williams, 4:5

v. FEC

- Condon, 3:5

- Democratic Senatorial Camp aign

Committee (93- 132 1), 1:10

- Democratic Senatori al Campaig n

Comm ittee (95-0349), 4:8

- Freedom Republicans, 2:6

- Fulani (94- 1593), 4:6

- Lytle, 1:10, 2:7

- Robertson, 4:6

- Whitmore, 2:7

- Wilson , 2:7

Rove v. Thornburgh, 4:7

Reports

Schedule for 1995, 1:4

800 Line Articles

Administrative Term ination, 2:9

lJ