November 2003 Federal Election Commission Volume 29, Number 11

Table of Contents

Regulations

1 Petition for Rulemaking on Trade

Association Use of Payroll

Deduction

4 Commission Receives Comments

on Proposed Changes to

Regulations

1 Advisory Opinions

Reports

5 Reporting Reminder: FEC State

Filing Waiver Program

Outreach

5 Campaign Finance Law Training

Conference in Tampa, FL

Administrative Fines

6 Committees Fined for Late and

Nonfiled Reports

Court Cases

7 Judicial Watch and Peter F. Paul

v. FEC

8 Clark A. Wilkinson v. FEC

Public Funding

9 Estimated Presidential Spending

Limitations

10 Commission Certifies LaRouche

for Primary Matching Payments

10 Index

Compliance Regulations Advisory

Opinions

AO 2003-21

Disaffiliation of

Corporations’ PACs

Following a separation in ownership between Lehman Brothers

Holdings, Inc. and its subsidiaries

(Lehman) and Peabody Energy

Corporation (Peabody), Lehman’s

PAC, the Action Fund of Lehman

Brothers Holding Inc. (Lehman

PAC), is no longer affiliated with

Peabody’s PAC, the Peabody

Energy Corporation Political Action

Committee (Peabody PAC). As a

result, the two PACs no longer share

limits on the receipt and making of

contributions, and Peabody and

Lehman may not solicit each other’s

solicitable class.

Background

In May 1998 Lehman purchased

87.5 percent of Peabody’s voting

stock in a leveraged buyout solely

for investment purposes. However,

since that time Lehman has reduced

its holdings of Peabody voting stock

to approximately 19 percent. The

remaining Peabody shares of voting

stock are publicly held. With its

current holdings, Lehman may not

Petition for Rulemaking on

Trade Association Use of

Payroll Deduction

On September 3, 2003, the

Commission received a Petition for

Rulemaking asking it to amend its

rules to allow corporate members of

trade associations to use payroll

deduction to facilitate voluntary

contributions to the association’s

separate segregated fund (SSF). See

11 CFR 114.8(e)(3). The Commission published a Notice of Availability in the October 24, 2003,

Federal Register seeking comments

on whether to initiate a rulemaking

in response to this petition. The

deadline for comments is November

24.

Under the current rules, a trade

association may use any method to

solicit voluntary contributions or

facilitate the making of voluntary

contributions to its SSF, except that

a member corporation may not use a

payroll deduction or check-off

system for executive and administrative personnel contributing to the

association’s SSF. 11 CFR

114.8(e)(3). Thus, corporate members may manually facilitate contributions to the trade association’s

(continued on page 4) (continued on page 2)
Federal Election Commission RECORD November 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

act unilaterally with regard to

Peabody’s corporate activities.

Under the Federal Election

Campaign Act (the Act) and Commission regulations, committees are

affiliated when they are established

financed, maintained or controlled

by the same corporation, person or

group of persons, including any

parent, subsidiary, branch, division,

department, or local unit. 2 U.S.C.

§441a(a)(5) and 11 CFR 100.5(g)(2)

and 110.3(a)(1). Contributions

made to or by affiliated committees

are considered to have been made to

or by a single committee. 11 CFR

110.3(a)(1).

Committees established, financed, maintained or controlled by

a corporation and/or its subsidiaries

are affiliated per se. 11 CFR

110.3(a)(2)(i). Lehman’s current 19

percent voting stock interest does

not create a parent/subsidiary

relationship for the purposes of the

Act, and Lehman PAC and Peabody

PAC are, therefore, not per se

affiliated.

When companies do not have a

relationship that makes them

automatically affiliated, Commission regulations provide for an

examination of certain circumstantial factors in the context of the

overall relationship to determine

whether one company is an affiliate

of another and, thus, whether their

respective PACs are affiliated. A

non-exhaustive list of 10 such

factors is set out at 11 CFR

110.3(a)(3)(ii).

Affiliation Factors

Controlling interest in voting

stocks or securities. One factor to be

examined in determining whether

committees are affiliated addresses

whether one PAC’s sponsoring

organization owns a controlling

interest in the voting stock or

securities of another PAC’s sponsoring organization. 11 CFR

110.3(a)(3)(ii)(A). At present,

Lehman’s ownership of Peabody

voting shares has dropped to

approximately 19 percent, and

Lehman does not have any agreement with other Peabody shareholders that affects its voting or

governance powers in Peabody’s

affairs. Under Peabody’s bylaws,

nearly all proposed actions submitted to stockholders are decided by a

majority of a quorum, except that

elections for candidates for the

board of directors are won by the

candidate who receives the most

shareholder votes, even if he or she

does not win the majority of votes.

Thus, Lehman is unlikely to be able

to control most shareholder decisions. Further, cumulative voting

cannot be used to enhance Lehman’s

voting power. However, several

important Peabody decisions are

made on the basis of a 75 percent

supermajority vote, which Lehman

could in some circumstances block

with its 19 percent voting stock

ownership.

Lehman’s voting stock interest in

Peabody will likely represent a

diminishing percentage of

Peabody’s outstanding voting shares

over time as Peabody employees

exercise stock options. Also, there

appears to be no overlap of shareholders owning more than five

percent of both Peabody and

Lehman, or any other shareholder

overlap. Thus, a significant separation has taken place between the two

companies, which appears to be

widening as stock options are

exercised, diluting Lehman’s stake.

As a result, Lehman no longer has a

controlling interest in Peabody,

although in some limited circumstances where a supermajority

affirmative vote is required Lehman

could defeat such a vote. In past

advisory opinions, the Commission

determined that a separation in

ownership, control and personnel

can lead to a finding of disaffiliation. See AO 2002-12.

Participation in governance of

another sponsoring organization.

Another affiliation factor addresses

whether one PAC’s sponsoring

organization has the authority or

ability to direct or participate in the

governance of another sponsoring

organization or PAC through

provisions of constitutions, bylaws,

contracts or other rules, or through

formal or informal practices or

procedures. 11 CFR

110.3(a)(3)(ii)(B). Although

Lehman’s voting stock interest in

Peabody gives it the ability to

participate in Peabody’s governance, that interest is not sufficient

under Peabody’s articles of incorporation and bylaws to give Lehman

either direction over or control of

Peabody’s governance. Instead,

Lehman has the ability of a 19

percent minority shareholder to

participate in Peabody’s governance. Furthermore, neither Lehman

nor Lehman PAC participate in the

governance of Peabody PAC.

Advisory Opinions

(continued from page 1)
November 2003 Federal Election Commission RECORD

3

Authority to control officers and

employees; overlapping personnel;

creation of successor entity. Three

affiliation factors are interrelated in

the circumstances addressed here.

These three factors address whether

a sponsoring organization or committee has:

• The authority or ability to hire,

appoint, demote or otherwise

control the officers or other

decision-making employees or

members of another sponsoring

organization or committee;

• Common or overlapping officers

or employees with another sponsoring organization or committee

that indicates a formal or ongoing

relationship between the sponsoring organizations or committees;

and

• Any members, officers or employees who were members, officers or

employees of another sponsoring

organization or committee which

indicates a formal or ongoing

relationship or the creation of a

successor entity.

11 CFR 110.3(a)(3)(ii)(C), (E) and

(F).

Lehman PAC and Peabody PAC

have no overlapping officers,

directors or personnel, and Lehman

does not have any authority or

control over Peabody PAC’s

officers or directors. Lehman does

not have the authority to hire,

appoint, demote or otherwise

control Peabody’s officers or other

decision-making employees.

Moreover, the number of common

or overlapping officers between the

two companies is not sufficient to

indicate a formal or ongoing relationship. Although one individual is

currently a director of both Lehman

and Peabody and three other

Peabody directors have ties to

Lehman, these individuals constitute

a minority of Peabody’s elevenperson board of directors.1

Provision of goods or funds. Two

additional affiliation factors address

whether a sponsoring organization

or committee directly or indirectly

provides funds or goods in a significant amount or on an ongoing basis

to another sponsoring organization

or committee, or arranges for funds

to be provided. 11 CFR

110.3(a)(3)(ii)(G) and (H).

In this case, Lehman does not

provide funds or goods to Peabody

in a significant amount or on an

ongoing basis. However, Lehman

and its affiliates do provide financial

advisory and investment banking

services to Peabody. While these

transactions appear to be commercially reasonable transactions made

on terms similar to those Lehman

offers to other parties, they nonetheless suggest significant ongoing

business activities between Lehman

and Peabody where Lehman arranges financing for Peabody.2

Lehman’s investment banking

relationship with Peabody is qualitatively different from an ordinary

customer-supplier relationship

because it, combined with Lehman’s

status as the majority owner of

Peabody voting stock from May

1998 to April 2002, provides

Lehman with nonpublic knowledge

regarding Peabody that far exceeds

that available to any other investor.

Nevertheless, as part of the overall

1 In AO 1996-23, three previously

affiliated PACs were deemed no longer

affiliated after a corporate reorganization, despite the fact that there was an

overlap of three members on one

company’s eight-person board of

directors, and an overlap of four

members on another company’s elevenperson board.

2 Past advisory opinions have found that

disaffiliated companies may maintain

some customer-supplier relationships.

See AO 1996-42.

BCRA on the FEC’s

Web Site

 The Commission has added a

section to its web site

(www.fec.gov) devoted to the

Bipartisan Campaign Reform Act

of 2002 (BCRA).

The 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;

• BCRA-related advisory

 opinions; and

• Information on educational

 outreach offered by the

Commission, including

upcoming Roundtable sessions

 and the Commission’s

2004 conference schedule.

 The section also allows

individuals to view the

Commission’s calendar for

rulemakings, including 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.

(continued on page 4)
Federal Election Commission RECORD November 2003

4

Advisory Opinion Requests

AOR 2003-25

Permissibility of television ads

featuring endorsement of local

candidate by federal candidate/

officeholder (Jonathan Weinzapfel

and the Weinzapfel for Mayor

Committee, August 8, 2003)

AOR 2003-26

Federal candidate’s use of

campaign funds to refund impermissible donations received by his now

defunct former state campaign

committee (Voinovich for Senate,

September 17, 2003)

AOR 2003-27

Qualification as state committee

of political party (Missouri Green

Party, Inc., September 15, 2003)✦

SSF by collecting and forwarding

checks from their restricted classes,

but cannot use the corporation’s

payroll deduction system.

The rulemaking petition was

submitted by America’s Community

Bankers (ACB), a trade association

representing community banks, and

its SSF, COMPAC. ACB and

COMPAC assert that their proposed

change to the regulations would

“more accurately reflect the FECA’s

intent for permissible corporate

activities, make it easier and more

efficient for trade associations to

raise fully-regulated federal funds”

and also reflect changes in employee payment systems that have

occurred since the rules were

originally promulgated in 1976.

The full text of the notice is

available on the FEC web site at

http://www.fec.gov/register.htm and

from the FEC faxline, 202/501-3413

(request document number 255).

The Commission requests comments

on whether the proposal represents a

permissible interpretation of the

Federal Election Campaign Act and

what policy and factual considerations support or oppose the proposal. Public comments must be

submitted, in either written or

electronic form, to John Vergelli,

Acting Assistant General Counsel.

Comments may be sent by:

• E-mail to payrollded03@fec.gov

(e-mailed comments must include

the commenter’s full name, e-mail

address and postal address);

• Fax to 202/219-3923 (send a

printed copy follow-up to ensure

legibility); or

• Overnight mail to the Federal

Election Commission, 999 E Street

NW, Washington, DC 20436.✦

—Amy Kort

Regulations

(continued from page 1)

circumstances here, this consideration is not decisive in determining

whether the two companies are

affiliated.

Other considerations. The final

two affiliation factors address

whether:

• A sponsoring organization, a

committee or an agent of either

had an active or significant role in

the formation of another sponsoring organization or committee; and

• Two PACs have similar patterns of

contributions or contributors,

indicating a formal or ongoing

relationship between the two PACs

or their sponsoring organizations.

11 CFR 110.3(a)(3)(ii)(I) and (J).

Lehman had no role in the

formation of Peabody or Peabody

PAC, and the two PACs do not have

a formal or ongoing relationship.

Beyond the fact that the two PACs

do not conduct joint fundraising or

transfer funds to one another, the

two companies are in different

businesses and make contributions

to a wide variety of candidates who

support issues of concern to each

company. Each SSF only solicits

contributions from its own respective executive and administrative

personnel, and the two PACs only

coordinate their contributions in as

much as they track contributions for

the purpose of complying with the

Act’s contribution limits.

Conclusion

Based on this analysis, Peabody

PAC and Lehman PAC are no

longer affiliated for the purposes of

the Act. Thus, the two PACs no

longer share limits on the receipt

and making of contributions, and

neither Lehman nor Peabody may

solicit the other’s solicitable class

for contributions.

Date Issued: September 26, 2003;

Length: 7 pages.✦

—Amy Kort

Advisory Opinions

(continued from page 3)

Commission Receives

Comments on Proposed

Changes to Regulations

On October 1, 2003, the Commission held a public hearing to receive

comments on recent Notices of

Proposed Rulemaking (NRPMs)

concerning:

• Multicandidate committees and

biennial contribution limits;

• Candidate travel; and

• Political committees’ mailing lists.

Sixteen individuals and organizations submitted written comments

on these proposed rulemakings, and

seven individuals testified at the

hearing.1 Much of the testimony

addressed the proposed rules for

when and how political committees

may sell, rent or exchange their

mailing lists without a contribution

resulting from the transaction, with

several commenters suggesting that

there is currently no need for a

rulemaking on this matter.

Commenters also considered how a

party committee that sells or leases a

mailing list developed using both

federal and nonfederal funds may

1 The Commission also received a

written comment on proposed rules

concerning party committee phone

banks.
November 2003 Federal Election Commission RECORD

5

allocate the proceeds from the

transaction between the committee’s

federal and nonfederal accounts. A

number of commenters further

addressed whether a candidate’s

leadership PAC could ever engage

in an “arm’s length transaction”

with the candidate’s principal

campaign committee and whether an

arm’s length transaction should be a

necessary condition for the sale,

rental or exchange of a mailing list

under the new rules.

The Commission also received

comments on the proposed rules

concerning the rate candidates

should be required to pay for air

travel on non-commercial flights.

All those who testified agreed that a

simple, comprehensive rule was

needed, and several suggested that

the Commission should allow

candidates more opportunities to

pay the first class rate, or in some

cases the commercial coach rate,

rather than the charter rate.

The Commission also received

comments on the possible effective

date for any changes in the way

individuals’ contributions to candidates are attributed to their biennial

contribution limits and whether

multicandidate status should be

optional or mandatory.

All written comments and a full

transcript of the hearing are available on the FEC web site at http://

www.fec.gov/register.htm, along

with the full texts of the NPRMs.✦

—Amy Kort

Reports

Reporting Reminder: FEC

State Filing Waiver Program

Presidential, U.S. Senate and

U.S. House of Representatives

campaign committees, PACs and

party committees are exempt, under

the Commission’s State Filing

Waiver Program, from filing paper

copies of their federal campaign

Campaign Finance Law

Training Conference in

Tampa, Florida

The FEC will hold a conference

February 11-12, 2004, for House

and Senate campaigns, political

party committees and corporations,

labor organizations, trade associations, membership organizations and

their respective PACs. The conference will consist of a series of

workshops conducted by Commissioners and experienced FEC staff

who will explain how the federal

campaign finance law, as amended

by the Bipartisan Campaign Reform

Act of 2002 (BCRA), applies to

each of these groups. Workshops

will specifically address rules for

fundraising and reporting, and will

explain the new provisions of the

BCRA. A representative from the

IRS will also be available to answer

election-related tax questions.

The conference will be held at the

Wyndham Harbour Island Hotel in

Tampa, Florida. Complete conference registration information for this

conference will available online in

November. Conference registrations

will be accepted on a first-come,

first-served basis. FEC conferences

are selling out quickly, so please

register early. For registration

information concerning any FEC

conference:

• Call Sylvester Management

Corporation at 800/246-7277;

• Visit the FEC web site at http://

www.fec.gov/pages/

infosvc.htm#Conferences; or

• Send an e-mail to

lauren@sylvestermanagement.com.✦

—Amy Kort

Outreach

1 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, Virginia,

U.S. Virgin Islands, Washington, West

Virginia, Wisconsin and Wyoming.

finance reports with the state

election offices of 49 states and 2

territories.1

 Paper copies of the

federal reports are still required to

be filed with the appropriate offices

in Guam, Montana and Puerto Rico.

This exemption applies only to

the filing of federal campaign

finance disclosure reports required

under the Federal Election Campaign Act. It does not apply to state

filing requirements for the disclosure of state or local campaign

finances. Contact state officials for

further information on specific state

campaign finance laws and reporting obligations. Telephone numbers

and addresses are found in the

Combined Federal/State Disclosure

and Election Directory, available

from the Commission’s Public

Records Office and online at

www.fec.gov.

The 51 offices participating in the

State Filing Waiver Program

provide the public with electronic

access to federal campaign finance

reports via an Internet connection to

the Commission’s web site. For

more information, call the Public

Disclosure Division at 800/424-

9530 (press 3) or 202/694-1120.✦

—FEC Public

Disclosure Division
Federal Election Commission RECORD November 2003

6

Committees Fined and Penalties Assessed

1

This penalty has not been collected.

2

The Commission waived the $900 civil money penalty because the respondents have demonstrated the existence of extraordinary circumstances that

were beyond their control and that were for a duration of at least 48 hours.

3

The Commission took no further action in this case.

4

This penalty was reduced due to the level of activity on the report.

Committees Fined for

Nonfiled and Late Reports

The Commission recently

publicized its final action on 61 new

Administrative Fine cases, bringing

the total number of cases released to

the public to 701, with $936,754 in

fines collected.

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

at right, 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 1. Akram for Congress, Inc. $3,5001

2. American Financial Services Ass’n PAC

(Formerly National Consumer Finance Ass’n PAC) $1,000

3. American Forest & Paper Association PAC

August Monthly 2002 _____ 2

4. American Forest & Paper Association PAC

September Monthly 2002 _____ 2

 5. Appraisal Institute PAC $1,000

 6. Briggs for Congress $9001

7. BUSPAC—PAC of the American Bus Association $1,000

8. Calfee Halter/Green Fund for Good Government $1,000

9. Committee to Elect Cathy Rinehart July Quarterly 2002 _____ 3

10. Committee to Elect Cathy Rinehart 12 Day Pre-Primary 2002 _____ 3

11. Committee to Elect Madeleine Z. Bordallo 2002 $2,000

12. District Council 37 AFSCME

Public Employees Organized for Pol & Leg Equality $3,000

13. Donna 2002 Congressional Campaign Committee $1,250

14. Dub Maines for Congress $2,7001

15. EDS PAC $1,000

16. Energy PAC of the TXU Corp. $1,000

17. E*Trade Group, Inc. PAC $750

18. First National of Nebraska PAC $1,000

19. Friends of Joe Scarborough $1,0311

20. Friends of Margaret Workman $9,0001

21. Friends of Sam Martinez _____ 3

22. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel

P. A. PAC $1,000

23. Hornberger for Senate $1,000

24. Independent Insurance Agents of America PAC (INSURPAC) $3,000

25. IUPAT Member and Family Fundraising PC Account $650

26. Jim Sullivan for Congress $2,7001

27. Joe Finley for Congress $975

28. Kendrick Meek for Congress $900

29. Larry King for Congress $1,4001

30. Lawrence R. Wiesner for Congress Committee $300

31. Leadership in the New Century (LINC PAC) $1,000

32. Level 3 Communications, Inc. PAC $375

33. Local 401 Ironworkers Political Action Fund $1,000

34. Mark Baisley for Congress July Quarterly $5,5001

35. Mark Baisley for Congress October Quarterly $9001,4
November 2003 Federal Election Commission RECORD

7

Committees Fined and Penalties Assessed, cont.

1

This penalty has not been collected.

4

This penalty was reduced due to the level of activity on the report.

36. Massachusetts Green Party Federal Election Fund $550

37. Medtronic, Inc. Medical Technology Fund $1,000

38. Meeks for Congress $1,500

39. Mike Greene for Congress Committee $4,5001

40. National Italian American PAC $3,5001

41. National Pest Control Association PAC $1,250

42. National Propane Gas Association PAC—PROPANEPAC $2,0001

43. Nationwide Political Participation Committee $1,000

44. NCR Corporation Citizenship Fund $1,000

45. Northwest Airlines PAC $2,000

46. Oldcastle Materials, Inc. PAC $1,000

47. Operating Engineers Local #649 PAC $2,000

48. Philadelphia Suburban Corporation H20 PAC $1,000

49. Republicans for Phil Bradley $2,7001

50. Rhode Island Republican State Central Committee $1,2504

51. Rogers Group, Inc. PAC $1,050

52. Ross for Congress $6,8751

53. Skorski for Congress $1,8001

54. Syed Mahmood for Congress $3251

55. TECO Energy, Inc. Employees’ PAC $1,100

56. Tenet Healthcare Corporation PAC $3,000

57. T- Mobile PAC $1,000

58. VENTUREPAC $6,000

59. The Williams Companies, Inc. PAC $1,250

60. XCEL Energy Employee PAC $1,000

61. 3M Company $1,000

Court Cases

Judicial Watch and Peter F.

Paul v. FEC

On August 30, 2003, the U.S.

Court for the District of Columbia

granted the Commission’s motion

for summary judgment in this case.1

The court found that the plaintiff,

1 The court may grant summary

judgment when there is “no genuine

dispute of material fact” and “the

moving party is entitled to judgment as

a matter of law.” Fed. R. Civ. P. 56(c).

Peter F. Paul, lacked standing to

seek judicial relief in this instance

because he had suffered no injury

and that Judicial Watch, Inc., was

precluded from bringing suit against

the Commission because it was not

a party to the administrative complaint underlying the court complaint.

Background

On December 7, 2001, Judicial

Watch, a non-profit, public interest

organization, and Mr. Paul, an

alleged donor to Hillary Rodham

Clinton’s Senatorial campaign

committee (the Committee), asked

the court to find that the Commission acted contrary to law when it

failed to respond to an administrative complaint filed by Mr. Paul,

who was represented by Judicial

Watch. The administrative complaint, filed July 16, 2001, alleged

that the Committee violated the

Federal Election Campaign Act’s

(the Act) contribution limits by

accepting cash and in-kind contributions from Mr. Paul totaling nearly

$2 million. 2 U.S.C. 441a and 11

CFR 110.1 and 110.9. The administrative complaint further alleged that

the Committee failed to report the

contributions. 2 U.S.C. §434(b) and

11 CFR 104.3. Before the court, Mr.

Paul and Judicial Watch claimed

that the Commission failed to act on

the complaint within 120 days, as

required by the Act, and that this

failure caused them “informational

injury” because they were deprived

of information they sought when the

administrative complaint was filed.

See 2 U.S.C. §437g(a)(8)(A). See

the March 2002 Record, page 3.

Court Decision

Parties to the complaint. Under

the Act, a party that files an administrative complaint with the Commission may file a petition with the

court if the Commission dismisses

or fails to act on an administrative

complaint. 2 U.S.C. §437g(a)(8)(A).

Thus, while the Act provides for

some judicial review of Commission

administrative actions, the plain

language of the statute also makes

clear that this relief is only available

to parties to the administrative

complaint.

In this case, Mr. Paul was the

only person listed as a party to the

administrative complaint filed with

the Commission. The complaint was

printed on Judicial Watch letterhead, but Judicial Watch identified

Mr. Paul as its “client” and did not

mention that it was also a party to

the complaint. Mr. Paul was the

(continued on page 8)
Federal Election Commission RECORD November 2003

8

2 Having found that Mr. Paul lacked

standing because he did not suffer an

injury in fact, the court did not address

the Commission’s argument that Mr.

Paul was precluded from bringing suit

under the fugitive disentitlement

doctrine because he is a fugitive from

justice from charges pending in federal

court in New York.

New Litigation

Clark A. Wilkinson v. FEC

On August 25, 2003, Clark A.

Wilkinson petitioned the U.S.

District Court for the Central

Division in the District of Utah to

set aside the Commission’s final

determination that, as treasurer of

Court Cases

(continued from page 7)

only party who signed the complaint. The court determined that

Judicial Watch only acted as

counsel to Mr. Paul and not as a

party to the administrative complaint. As a result, Judicial Watch is

barred from seeking judicial relief in

this case.

Standing. In order to have

standing to bring a case in federal

court, the plaintiff must satisfy a

three-part test. The plaintiff must:

1. Suffer an “injury in fact”—that

is, an invasion of an interest that

is concrete and particularized and

also actual or imminent rather

than just hypothetical;

2. Show that the injury is fairly

traceable to the defendant’s

allegedly unlawful conduct; and

3. Show that the injury is likely to

be redressed by the relief that the

plaintiff requests.

Mr. Paul argued that he suffered

injury in fact because:

• He was deprived of information

regarding Senator Clinton’s

alleged campaign finance reporting

violations as they pertained to his

contributions;

• He may be a future defendant in

any possible FEC investigation of

these alleged violations and has

been deprived of information that

might help him in his defense; and

• The Commission’s delay in acting

on his administrative complaint is

in itself an injury.

The court found that Mr. Paul did

not, as a result of being denied this

information, suffer an injury that

granted him standing to bring suit

against the Commission. The court

determined that because Mr. Paul

was already aware of the facts

underlying his own alleged contributions to the campaign, he was

really seeking a legal determination

by the Commission that Senator

Clinton violated the Act. In a

previous court case, the D.C. Circuit

Court determined that a plaintiff

does not satisfy the standing requirement if the information withheld is only the fact that a violation

of the Act has occurred. See Common Cause v. FEC, 108 F.3d 418.

Moreover, the court disagreed

with Mr. Paul’s claim that he

suffered an informational injury

because he is unable to use information from an FEC investigation to

amass his defense against a possible

future enforcement action. The court

found that this purported injury was

merely speculative, and Mr. Paul

had “not suffered an injury in fact

by being deprived of information

that may assist his defense in a

possible FEC investigation.”

Finally, the court found that Mr.

Paul had suffered only a procedural

injury as a result of the

Commission’s failure to meet the

120-day deadline.2

Order. Having concluded that

Judicial Watch was not a party to

this case and that Mr. Paul did not

have standing to bring suit in this

matter, the court granted the

Commission’s motion for summary

judgment and dismissed the

plaintiff’s case with prejudice.

U.S. Court for the District of

Columbia, 1:01-cv-02527.✦

—Amy Kort

the Friends of Bob Gross Committee (the Committee), he failed to file

the Committee’s July and October

2002 quarterly reports. Mr.

Wilkinson also asked the court to set

aside the Commission’s assessment

of $5,400 in civil money penalties

under its administrative fines

regulations. 11 CFR 111.30-111.45.

Background. On October 29,

2002, the Commission found reason

to believe (RTB) that the Committee

and Mr. Wilkinson failed to file the

July quarterly report, and on December 23 the Commission found

RTB that they failed to file the

October quarterly report. The

Commission calculated a $2,700

penalty for each report based on the

FEC’s schedule of administrative

fine penalties. Mr. Wilkinson

challenged the RTB findings under

the administrative process provided

for in Commission regulations. 11

CFR 111.35-111.37. After reviewing the RTB findings and Mr.

Wilkinson’s written responses, the

FEC Reviewing Officer recommended that the Commission make

a final determination that the

Committee and Mr. Wilkinson

violated 2 U.S.C. §434(a) and assess

$5,400 in civil penalties, based on

the two reports. On July 8, 2003, the

Commission adopted the Reviewing

Officer’s recommendations and

made final determinations.

Court Complaint. In his court

complaint, Mr. Wilkinson asserts

that he resigned as treasurer of the

Committee on May 11, 2002, and

sent the Committee written notice to

that effect on May 13, 2002. Mr.

Wilkinson argues that, because he

resigned as treasurer prior to the two

reporting dates, it was not his

responsibility to file the July and

October 2002 quarterly reports, and,

therefore, the Commission’s final

determination and assessment of a

civil money penalty against him is

in error.

Mr. Wilkinson asks that the court

set aside the Commission’s final
November 2003 Federal Election Commission RECORD

9

Public Funding

Estimated State-By-State Expenditure Limits for 2004

Presidential Primary Candidates

Voting Age Population Expenditure

State (in thousands) Limit

Alabama 3,379 $1,972,255

Alaska* 451 $729,600

Arizona 3,980 $2,323,046

Arkansas 2,033 $1,186,621

California 25,664 $14,979,564

Colorado 3,355 $1,958,246

Connecticut 2,588 $1,510,564

Delaware* 618 $729,600

DC* 459 729,600

Florida 12,831 $7,489,198

Georgia 6,292 $3,672,515

Hawaii* 949 $729,600

Idaho* 971 $729,600

Illinois 9,346 $5,455,073

Indiana 4,564 $2,663,916

Iowa 2,239 $1,306,860

Kansas 2,019 $1,178,450

Kentucky 3,161 $1,845,012

Louisiana 3,297 $1,924,393

Maine* 1,015 $729,600

Maryland 4,078 $2,380,247

Massachusetts 4,964 $2,897,388

Michigan 7,480 $4,365,926

Minnesota 3,768 $2,199,306

Mississippi 2,111 $1,232,148

Missouri 4,275 $2,495,232

Montana* 693 $729,600

Nebraska 1,290 $752,947

Nevada 1,601 $934,472

New Hampshire* 967 $729,600

New Jersey 6,463 $3,772,324

New Mexico 1,355 $790,886

New York 14,544 $8,489,042

North Carolina 6,251 $3,648,584

North Dakota* 487 $729,600

Ohio 8,541 $4,985,211

Oklahoma 2,620 $1,529,242

Oregon 2,666 $1,556,091

Pennsylvania 9,472 $5,528,617

Rhode Island* 830 $729,600

South Carolina 3,128 $1,825,751

South Dakota* 565 $729,600

Tennessee 4,393 $2,564,106

Texas 15,678 $9,150,935

Utah 1,603 $935,639

Vermont* 477 $729,600

Virginia 5,514 $3,218,412

Washington 4,556 $2,659,246

West Virginia 1,413 $824,740

Wisconsin 4,103 $2,394,839

Wyoming* 376 $729,600

* In these states, the limit is the minimum $200,000 plus the COLA, resulting in a

$729,600 spending limit. This limit also applies to the U.S. Territories.

1 These limits apply only to those

campaigns choosing to accept federal

matching funds. Campaigns which opt

to forego federal funding may spend

unlimited amounts of money.

Estimated Presidential

Spending Limitations

Under the Presidential Election

Campaign Fund Act (the Fund Act)

and the Presidential Primary Matching Payment Account Act (the

Matching Act), Presidential candidates who accept public funding

agree, among other things, to abide

by overall spending limits as well as

by state-by-state spending limits.1

These limits are calculated using the

cost of living adjustment (COLA)

since 1974 and the voting age

populations (VAPs) of each state for

the year in which the election is

held. However, in order to help

Presidential, campaigns estimate

their spending limits for the upcoming elections, the Commission

releases spending limit figures for

the year preceding the Presidential

election year.

If the Presidential election were

held in 2003, the Commission

calculates that each primary contender would be able to spend nearly

$50 million seeking his or her

party’s nomination. Party nominees

would be able to spend more than

$74 million in the general election.

These figures merely provide an

estimate of what the actual spending

limits will be. Official spending

limits for the 2004 Presidential

elections, which must be updated for

determination and assessment of the

civil penalties against him.

U.S. District Court for the

District of Utah, Central Division,

2:03-CV-00734.✦

—Gary Mullen

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

10

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.

Advisory Opinions

2002-12: Disaffiliation of corporations and their PACs, 2:8

2002-14: National party

committee’s lease of mailing list

and sale of ad space and trademark license, 3:5

2002-15: Affiliation of trade associations, 4:8

2 Direct mail expenses for mailings

occurring more than 28 days before the

primary election may be considered

100 percent exempt fundraising. Direct

mailings sent within 28 days before the

election may only be considered 50

percent exempt fundraising.

Public Funding

(continued from page 9)

changes in state VAPs and the

COLA, will not be available until

early 2004.

The overall “base” spending limit

for Presidential primary campaigns

is $10 million, adjusted for the cost

of living. For 2003, the inflationadjusted overall spending limit is

$36,480,000. The state-by-state

limits are keyed to the VAP of each

state, with a minimum of at least

$200,000, plus a COLA for those

states with a low VAP. The formula

for setting state limits is 16¢ multiplied by the VAP + COLA. A less

populated state, such as New

Hampshire, would have a limit of

$200,000, plus COLA, or $729,600.

A larger state, such as California,

would have a limit of 16¢ x

4,106,240 (VAP), plus COLA, or

$14,979,564.

Commission regulations exempt

certain expenses from the overall

spending limits. For example, an

exemption for 20 percent of a

campaign’s fundraising expenses

effectively raises the total amount

primary contenders may spend in

the pre-convention period to

$43,776,000. Campaigns may also

spend up to an additional 15 percent

of the overall spending limit on

legal and accounting expenses.

Thus, the maximum amount that a

primary committee could spend—

taking both of these exemptions into

account—is $49,248,000.

While these exemptions are

derived from the overall spending

limit, they also affect state spending

limits. The Commission provides

guidance on how campaigns must

allocate expenses to particular state

primaries. A campaign may consider

50 percent of all expenses that are

allocable to a given state to be

“exempt fundraising” and need not

count these expenses toward the

spending limit for that state.2

 Thus, a

campaign may use its available

fundraising exemption selectively to

assure that the 20 percent overall

exemption is not exhausted before

particular primaries where the state

spending limitation is of greatest

concern. A campaign availing itself

of the maximum fundraising exemption in New Hampshire, for example, might permissibly spend as

much as $1.46 million on the New

Hampshire primary, even though the

calculated spending limit is

$729,600.

In the general election, major

party nominees who choose to

accept public funding will receive at

least $74.4 million each to finance

their campaigns ($20 million, plus

COLA over 1974). The nominees

must spend only those funds and not

supplement the public funds with

any private contributions for the

campaign. The nominees may,

however, raise private funds to

cover certain legal and accounting

costs, which are not subject to the

spending limit. Additionally, the

two major parties will be able to

spend at least $15,720,980 million

on their respective Presidential

nominees in coordinated

expenditures.✦

—Amy Kort

Commission Certifies

LaRouche for Primary

Matching Payments

On October 8, 2003, the Commission certified that Lyndon

LaRouche’s Presidential primary

committee, LaRouche in 2004, is

eligible to receive Presidential

primary matching payments. 26

U.S.C. §9033(a) and (b); 11 CFR

9033.1 and 9033.3.

Under the Presidential Primary

Matching Payment Account Act, the

federal government will match up to

$250 of an individual’s total contributions to an eligible Presidential

primary candidate. A candidate

must establish eligibility to receive

matching payments by raising in

excess of $5,000 in each of at least

20 states (i.e., over $100,000).

Although an individual may contribute up to $2,000 to a primary

candidate, only a maximum of $250

per individual applies toward the

$5,000 threshold in each state.

Candidates who receive matching

payments must agree to limit their

spending and submit to an audit by

the Commission.

No payments may be made from

the Matching Payment Account

before January 1 of the Presidential

election year. In December 2003,

the Secretary of the Treasury will

certify eligible candidates’ full

entitlements based on a review of

the matching payment submissions

through December 1, 2003.✦

—Amy Kort
November 2003 Federal Election Commission RECORD

11

Compliance

ADR program cases, 2:11; 3:3;

5:10; 7:10; 8:11; 9:13; 10:15

Deposition transcripts in nonpublic

investigations, policy statement,

10:3

Letter notification procedures, 3:2

Administrative Fine program cases,

1:25; 2:13; 3:4; 5:7; 7:6; 8:11;

9:12; 11:6

MUR 4931: Corporate contributions

and contributions in the name of

another, 10:1

MUR 5187: Corporate reimbursements of contributions, 1:22

MUR 5208: Facilitation by national

bank, 2:1

MUR 5270: Failure to accurately

report disbursements and cash-onhand, 6:7

Public hearing on enforcement

procedures, 6:7; 7:7

Court Cases

_____ v. FEC

– AFC-CIO and DNC Services

Corp./DNC, 8:1

– Cannon, 10:13

– Cox, 8:3

– Cunningham, 1:19

– Greenwood for Congress, 4:4;

10:13

– Hawaii Right to Life, Inc., 1:20

– Judicial Watch and Peter F. Paul,

11:7

– Lovely, 3:4

– Luis M. Correa, 5:5

– McConnell et al., 6:1

– Stevens, 8:3

– Wilkinson, 11:8

FEC v. _____

– Beaumont, 1:20; 7:1

– California Democratic Party, 5:5

– Dear for Congress, 8:4

– Fulani, 2:8

– Freedom’s Heritage Forum, 2:8;

5:5; 10:13

– Toledano, 1:20

Regulations

Administrative fines, final rules, 4:1

BCRA reporting, final rules, 1:14

BCRA technical amendments, 2:6

Biennial limit, clarification, 2:1

Brokerage loans and credit lines, 2:4

Candidate travel, Notice of Proposed Rulemaking, 9:4; public

comments, 11:4

Contribution limits increase, 1:6

Contribution limits and prohibitions;

delay of effective date, 2:6

Coordinated and independent

expenditures, final rules, 1:10

Disclaimers, fraudulent solicitation,

civil penalties and personal use of

campaign funds, final rules, 1:8

Leadership PACs, NPRM, 2:4

Millionaires’ Amendment, interim

final rules, 2:2

Multicandidate committees and

biennial contribution limits,

Notice of Proposed Rulemaking,

9:3; public comments, 11:4

Party committee phone banks,

Notice of Proposed Rulemaking,

10:4; public comments, 11:4

Political committee mailing lists,

Notice of Proposed Rulemaking,

10:5; public comments, 11:4

Public Presidential funding and

conventions, NPRM, 5:1; postponement of hearing date, 6:9;

public hearing, 7:8; final rules,

9:1

Trade Associations’ use of payroll

deduction, Petition for

Rulemaking, 11:1

Reports

April reporting reminder, 4:1

Draft forms and e-filing formats

available for public comment, 1:2

Filing form 3Z-1, 7:2

July reporting reminder, 7:1

New forms available, 3:1

October reporting reminder, 10:1

Puerto Rico primary election

reporting, 10:18

Reports due in 2003, 1:3

State Filing Waiver Program,

reminder, 11:5

Statements of Candidacy/Organization for authorized committees, 3:2

Texas special election reporting, 4:4

2003-1: Nonconnected committee’s

allocation of administrative

expenses, 4:9

2003-2: Socialist Workers Party

disclosure exemption, 5:1

2003-3: Solicitation of funds for

nonfederal candidates by federal

candidates and officeholders, 6:1

2003-4: Corporation’s matching

charitable contribution plan, 6:3

2003-5: Federal candidate’s or

officeholder’s participation in

membership organization

fundraising events, 8:1

2003-6: Transfer of payroll deduction authority, 7:4

2003-7: State leadership PAC’s

refund of nonfederal funds, 7:5

2003-10: Solicitation of nonfederal

funds by relative of federal

candidate, 8:6

2003-11: State party committee’s

payment of employee benefits,

10:7

2003-12: Federal candidate/

officeholder’s support of ballot

initiative, 9:7

2003-13: Qualification of “Members-in-Training” as members of

membership organization, 8:7

2003-14: Distribution of apron pins

bearing PAC name, 8:8

2003-15: Donations to legal expense

trust fund, 10:8

2003-16: Affinity credit card

program between national bank

and national party committee,

10:16

2003-17: Use of campaign funds to

pay for criminal defense, 9:10

2003-18: Impermissibility of

transfer of general election funds

to charitable organization, 9:10

2003-19: National party

committee’s sale of office equipment, 10:11

2003-20: Officeholder solicitation

for scholarship fund, 10:11

2003-21: Disaffiliation of corporations’ PACs, 11:1

2003-22: Contributions collected

and forwarded to trade association

SSF by executives of member

corporations, 10:12
FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

Penalty for Private Use, $300

Presorted Standard

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

Federal Election Commission RECORD November 2003