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THE FEDERAL E.-· LECTION .. ·· . _. -- -

COMMISSION 

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

v·olume 3, Number 12 

ALLOCATION OF 

·ADMINISTRATIVE EXPENSES 

The Commission recently offered guidance to political 

committees obligated to allocate their administrative costs 

between activity to support Federal candidates and activity 

related to non-Federal candidates .. 

BACKGRO.UND 

Section 102.6 of the Commission's Regulations provides 

that a political. committee supporting both Federal and 

rion-Federal candidates may fund its activities in one of two 

ways:· 

1. Establish two committees. The committee may establish 

one committee for non-Federal pqlitical activity which 

would be subject to applicable State or local election 

laWs, and a separate Federal campaign committee with 

an a'lFount in a natioilal or State bank. Only the Federal 

committee would have to register as a political commit· 

tee under the Federal Election Campaign Act. (FECAl. 

2. Establish a single committee. Alternatively, the political 

c-Ommittee · inay establish a single __ -cOmmittee with _a 

single account which will make contributions to both 

Federal a~d non-Federal . .candidates. All· contributions 

received by this committee. would bR subject to the 

limitations of the FECA, and. all contribtttors would 

have to. be informed that their contributions count 

against the FECA limitations. 

·Committees' which·establish· Federai·campaign··committees 

·pursuant to -Alternative One _above mu_st allocate their 

~administrative- expenses -between -their: Federal and nonFederal committees (11 CFR ll106.1(e)): The Regulation 

.requires that the fallocation . be ''in proportion to the 

amount of funds expended on Federal or non-Federal 

electio_ns,.or-_on another reasona~le basis."_ 

December .1

NEW GUIDELINE 

The Commission recently approved a staff guideline 

help clarify what may be an example of "another reas

able basis." The staff guideline states: 

The allocable Federal ponion of the administrative expenses is determined by the ratio of 

( 1) the total amount which the Federal cam- · 

• paign committee received into its. Federal. 

account to (2) the total of all receipts [of both 

the Federal and non-Federal committees]. 

The ratio should be based on cumulative figures, from 

beginning of the year to the closing date of the rep

Receipts such as refunds or loan repaymentS would not 

included in the figure for total receipts. 

Take, for example, a State-wide political party organ

tion, whose total receipts for both· its Federal and n

Federal committees is $10,000; the amount received 

. the l'ederal committee is $1,500. In this case, the admi

trative expenses which must be paid by the Federal co

mittee would be 15 percent of the total administrat

expenses· of the State party organization. 

Note: Certain· categories of expenses, s_uch as voter -reQis

tion and get-out-the-vote drives, must· be. funded entir

from the Federal campaign committee and may not 

regarded as part of the allocable administrative- expen

payable under the formula outlined ·above if the ri

Federal committee accepts funds from sources which 

· prohibited by the Act from making contributions in c

nection with a Federal election. Prohibited sources inclu

national banks, corpOrations, .labor ·organizatii::ms, gove

ment contra'ctors and forei_gn nationals. 

· Further information and detailed reporting instructions w

be sent to committees who indicate that they -have e_

blished separate. Federal/non-Federal committees ··un

11102.6 of the Regulations. Fo.r fu.rther informatjQn,. c

tact the Commission by telephone at 202/523-4068 or t

.free 800/424·9530. 
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'" ~1~,-~~);ds~~i~a~ ;a~:o~d~·,'~~a~'·i~tic~, iati9n of-the ·ana:,:~r-h~~~it~- law, ·.·~ ~]~•~*~~~~~~

_permanent. in]unCti~in .agairlS-t 

· sions of the Act.· · 

. ·. BHEAD P,OLITICAL ACT(ON COMMI.,TTEE, . --

- etaLv. FEC, et_l!l~ ·, Part 11 r ' - · -

On s~~tember 9, 1977, th;· u,s, Dihrici: Court for the 

District Of Colum6ia denied the:FederaiEiaction· Cortimis'-

· siol)'s motion to c,tismiss the suitJHed b{the Bread ~olitical 

Actl<ln CCirimiitte&;(Br~ai:fP-AC)~q chalienge· the provisions . 

ohht Aci goye-o'iiioigtiacte. ass0ci.ations;iOn ~ptember 25; _ 

19i7, .therefore, the FEC.flled its 'answer to the original 

complaint. For ··a synopsis of the complaint and the F EC's 

· motion . to ·dismiss, see tlie Record, June 1977, p. 4 and 

· July1977, p: 4, respectively. 

On October 6,-1977, the Court denied Bread PAC's motion 

·fOr a preliminary injunction against· enforcement of provi-

. sfons of the Act prohibiting certain solicitations by Bread 

· PAC-at :the--trade -aSsociation's irrimiherit ~onVentiOil. 

NATIONAL RiGHT TO WORK COMMITTEE, 

etal. v •. FEC,etal. -.Part.! 

- On October -26, 1977; the National Right to Work Committee (th.e ·committee) arid its political action committee 

(Employees Rights. Campaign .Committee) et al. Ailed in 

U.S. District Court for the District-of Columbia a suit for 

dechir~tory and injunctive relief against the Federal Election Commission. The Committee argues that the Commis-

. sion' ".·.'.refuses--to-prOvide-Plaintiffs,- through cin.advisory 

opi0ion or. otherwise, with the definition of the term 

~menlbet~,; .-." and -therefore,·· in the Plaintiffs' view~ tile 

· Committee does not know:whom. it may lawfully solicit. : 

TheC()mmittee alleges that, in addition to this refusal, the· 

_Commission bas:: · 

L Not rendered an advisory .opinion requested by the Com-

- mittee on _the subject. within ·a_ ••reasonable. _.time," as 

_ required by tbe Act;. 

2. " ... Unreasonably found. a viol-ation of the Act where 

no standards have been established for compliance with 

the_ -.Act ..•.. '.' and"_r9f.u_sed toc"enter..·:into a conciliation 

. agreement:to correct the._violation; . . . 

3-:.lnhibited. political-comOJunic~tions and solicitations by 

·:••.-the •. ~laintiffs to their members;. and ·· · -

4, Applied :a ·~unique and .secret standard to the Plaintiffs 

. ·-.<alone·regarding,mernbersbip.lirn!tations,":.- ·cc '· 

Contending .that the,Gommission's, application· of-.·the· Act 

has,abridg~d :the· fllaintiffs: •constitutionaLrigbts .. of freedom . 

. 

_ADV!SOR'(()Pj~I<JNS>$UMMARIE~ 

Designated a; AO'si All~iso,Y Opini,ofi~ discuss the app

catidn of tile Act to spei:ific.facto~l 'situations;·' Anyqua

fi_e9 person requesting ·an_ advisory OpiniOri who in. go

faith acts-in acco:rdance with ~he opinion wilt'~ot be pen

. ized under the Act. The qpinion may also be relied On 

any other pers_on involved in a specific transaction which 

indistinguishable in ·all material aspects from the activ

discussed in the advisory opinion. 

AO 1977-41; Retirement of Prior 

Campaign -Debt 

Samuel. H. Young, Congressional' candidate in 1976, in

use excess campaign funds received (}efore the date of t

1976 general election to ·retire all or ·a portion of a ca

paign debt from a 1969 Congressional _campaign. The A

permits the use of exc_ess campaign funds for supporti

activities of a Federal officeholder, charitable purposes, a

"any other lawful purpose.~· 2 U.S.C. §4S9a. The use 

excess 1976 canfpaign funds by Mr. Young to repay a lo

incurred during the course of a 1969 camp~ign would b

"lawful purpose" provided no State or, Federal law outsi

the FEC's jurisdiction prohibits such Ose. Payments fort

purpose must be disclosed by the Young for Cong'r

Committee --1976. The appliCation of IRS Regulations 

such payments falls outside the jurisdiction .of the Fede

Election Commission. (len!Jth: 2 pages) · 

FECTESTIFIES BEFORE 

HOUSE· ADM il\i ISTRATION 

On October '13,' 1977; Cliairinan Thomas E.' Hiirris a

Commissioner- Vernon W. ·Thomson testified before th

H6-Use·:-~AdnliniStr~tion --com~it:tee · :_t)n -,~evisiOns_-':··to ~t

Federal Election Campaign Act' of .1971, as ame\iifed. T

revisions Included proposals drafted :by the Committ

staff·and·tho;e.-cohtairied in the·bil'l (S. 926) passed:o-/t

Simate on August 3-, 1977. {For a surriinaoy of S. 926, s

the October Record, p. 2.) · · - · · .. " · 

. ·. . .. ,,._.,.,, ., .... ·"·' ... ·-. . ,

·'•The•·RECORD-Js-publisheiJ,by the: Federnr Election•Commission, 1325•K Street, N.W;; Washington,D.,C. ,:'20463;· 

· ·• •Commiiisioneni,are:•:rhomali E;c Hartii;•Chairman;·Joan•D. Aikens, Vice-Chairmim,· .William L.- Springer; Neil Staebler,'· 

/:Vernon· W.: Thomson;Robert·O:•Tieman;•J.S;·.Kimmitt,Secretary-ofth'ii Si!nate;· Ex' (f)ffitiio';'Edmiihd:t.oHenshaw,-Jr., 

· -.i:terkofthe House·of•Represeirtativ~; Ex Officio.- · · ,. ·- ··-. ·- 

· , FormofeViiforrira·tlon ,"calt523406B or toll freeB00-424-9530. • -- ···' . . .• · 

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Endorsing many. of the propo5ed chariges, the Commission's . 

testirriony- focused,on· -_four major areas in·,the -HOUse proposals: 

1 .. Disclosure 

2. Political party activity 

3. Enforcement 

4. Discretionary authority of the FEC 

IQ addition, the Commission offered several suggestions for 

needed changes which were not addressed by the staff pro· 

posals or S. 926·, ·including legislative· recommendations 

previously submitted by the F EC (see the Record, March 

1977, p. 1) and solutions to·other problem areas that have 

come to the Commission's attention. Detailed Commission 

comments on ihe specific Hou~e proposals were contained 

in an appendix ~o its written testimony. 

FEC FILES SUIT AGAINST 

THREE CANDIDATES 

On October 27, 1977, the Federal Election Commission 

announced it- had filed ,civil suits in District Courts against 

·two candidates for· the U.S. Senate and one candidate for 

the U.S. House of Representatives. The suits ask the Courts 

to compel the candidates and/or their principal campaign 

committees to comply with the rePorting requirements of 

the Federal Election Campaign Act. · 

The FEC asked that Joseph Mcinerney, Independent Senate 

candidate from Delaware,_ and his principal campaign committee be ordered to file three reports for the 1976 election 

(pre· imd post-general election and year-end). In the case of 

Lenore Etchison, Democratic Senate write-in candidate 

from Nebraska, the Commission asked th.at the candidate's 

prinCipal campaign cOmmittee be requiTed to file two 

reports (year-end and April 10 quarterly). Finally, the FEC 

cited the principal campaign committee of James Sheehan, 

Republican candidate for the House from New Jersey's 7th 

District, for -failure to file a II complete" pre-general election 

report for 1976. His committee's report did not contain the 

following required inform-ation: 

·· The .full name, mailing address and principal place of 

busin~ss. of each person who contributed in the aggregate 

more'than $100; . 

~~ In t_h~- :.case of each person making several contribl!tions 

totaling. more than $100, the total sum of the contribu· 

ticlns·; 

·· The name and full address of each contributing political 

committee; and 

- The amount and nature of debts owed by or to the cam· 

paign .com_mittee. 

The Commission, prior to filing suit, had sent at least two 

notices 1:o ·each candidate or committe_e concerning report~ 

ing obligations and at least three notices to the committee 

concerning its failure to file a "complete" report. The FEC 

asked the Courts to ·assess a penalty of not more than 

$5,000 against the candidates and committees for "failing 

and refusing to comply with the requirements of the Act." 

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FEC v. COMMITTEE FORA"CONS"Tl'fUTIONAt

PRESIDENCY --McCARTHY '76' · Part II -

. On October 5; 197'7, the Committee for a Constitutiona

Presidency ·· McCarthy '76 (CCP) filed 'a :motion 'in·U.S

District Court for the District of Columbia asking that 

suit filed by the Federal Election Commission· tie dismisse

The suit charges CCP with failure to amend its reports .. Fo

a complete sum !nary- of the": ·oriQina_f·- corilplaint~ -see-- th

Record, November 1977, p. 2. CCP's motion· to dismi

argues that: · 

1: The_ Court lacks personal jurisdictiOn over the Case sinc

the defendent (CCP) was not properly served with th

summons .and complaint by the plaintiff. 

2.· The complaint fails to allege a finding of "probab

cause" which is a statutory prerequisite ·for bringin

. action (2 U.S.C. §437g(a)(5)(B)). 

3. The FEC's statement of claim does hot state ~clai

upon which relief can be granted. 

The Public .Communications Office of the Feder~ I Ele

tion Commission receives n~merous_ inquiries frOm th

public on the toll-free lin~ (800/424-9530). The followin

explanation of the reporting requiremel_1ts for earmarke

contributions iS presented in r~sponse to One of the mos

fre9.uently asked questions. 

EARMARKED CONTRIBUTIONS: . R.EPORTING 

DEFINITION 

"Earmarking" is defined in the FEC:s Regulations (1

'CFR §110.6) as: . , 

. : . a designation; instruction ·or encurribrai1ce 

(including ·those which are direct or indirect, 

express or implied, oral or written) which . 

results in all' or· any Part of li contribiltiori'o~ 

expenditure being ·made to; or exp(mded on 

behalf of, a clearly identified candidate or a 

candidate's authorized colrimittee. 

An earmarked Cont_ribution _i~ one, which _the. Conir_ib!.J.t_

directs to a candidate through an intermediary. or condui

Th~ contribution is considered ina~e by th.eoriginal.contr

butor for pUrposes ·of _the Contributi'on liffiitaiiOrls. Th

contribution limitations of-the conduit or intermediary a

not affected· unless the c~mctu!t exercises-dire_ction o:r co

trol over the ·choice of the iiltended recipient of the contr

bution. In that case, the contribution is considered to hav

been made by both the original contributor and the inte

mediary or conduit. ' 

The earmarking regulation does not apply to "occasiona

isolated _or incidental" delivery of checks or other writte

instruments made payable to a particular candidate. "Occ

- sional, isolated or incidental" is defined as not more tha

$1,000 delivered to ·any one candidate during ~ calend

year:. continue
ti~n- must on -·two se~iara1:e· 

·, repons:dhecnext-regu!a(b,i. .~J>he!!uled;r.eport and a sp,ecial 

-rep_o_rt,t()'ttle iecipi·ent: =: - i. 

1 ;·Next~:;Regular :Repprt; :ihe;.~on~~it's next regularly 

... ,scheduled report•,(filed~witl]:the··Ccimmissio.n;the.Cierk 

·of the House cor th~·· Secre.tary of the Senate, as appro-

· .. priate~'.must. indicate whether the .. ea(marked contribu' 

tion was (a) passed through the conduit's account, in . 

. which.case each contribution regardless of size would be 

: •disclosed ~n·,the :regular-reporting schedules:of itemized 

receipts and·e~penditures; or ·(b) passed on in the form 

of the. contributor's ch,eck, jn which .case ·all earmarked 

. :·contributions·wouid be disclosed on a separate rep.orting 

. . . schedule (Schedule A); · 

· If the. intermediary or ~onduit is. not a reporting entity 

(e.g., an individual) the above reports must be filed by 

letter to the Federal Election Commission. , ___ _ 

2. Report to Recipient: A :report to the intended recipient · 

must also be mad~ •af the· time .the conduit or inter-

. mediary passes the contribution on to the recipient. 

· ·Both the above reports by the intermediary or conduit 

must CQntaih detailed information about the contribUtion 

including. the identlficati!)n \)f tlie contributor (and if the 

contribution is trom an individual. and exceeds $100, the 

contributor's. occupation and principal place of business), 

the amount of the· co1\tribution, the cfate the contribution 

was received by th~ conduit, the intended recipient. as 

designated by .the contributor, .the date the contributi.on 

was passed on to the intended recipient, and whether the 

contribUtion was passed on in cash, by the contributor's 

· c.heck, or by the conduit's check. 

-REPORT BY RECIPIENT 

In addition to. reports by_ the intermediary or conduit, 

the recipient· of an earmarked contrjbution must fully . 

disclose . the contribution .(regardless. of amount) identifying. l)oth the original contributor: an.d each conduit 

through which the contribution passed.· 

.FEDERAL ELECTION COMMISSION 

• 1325KSTREETiNW 

'WASHINGTON, DC20463 . . . - ' - --. . ~ 

. OFFICIAL BlJ~INES? 

. _, ~ .. 

The Commission recently. ad<>ptjl\J 

mont OpportunitY (EEO) Plan tci ini1ple1:nei1t its 

·equal employment opportunity for aU persons wprking 

the .FE C. (For a summary of the EEO guidelines previou

adopted by. the FEC, seetheRecord, May 1977; p. 6.) T

Plan briefly outlines the. EEO policy and organization at 

FEC, includ.ing allocation; functions· and training pf E

staff. 

The Plan assesses action already taken ·by the Commiss

to implement EEO policy and outlines future action . . . . -

A section on "Specific Actions for the Coming ,Year" id

tifies problem areas :and outline.• actions·to be. taken 

correct them. An analysis of the ·composition (as of M

1977) of the Commission's staff in terms of minority gro

and sex, provides a data .base 'on ~hich to make fut

evaluations and policy determinations.-

FEC documents of g~neral applicability are p~blished 

the Federal Register. The follovving list identifies all F

do-cuments appearing in the Federal Register· betw

October 19/1977 and November 15, 1977:· 

Notice . Title 

Federal Register 

Publication Date 

1977·52 ·.·P':,Jblication_Of 11/10/77 

Advisory Opinion 

ReqUe:s_ts Discoritin~e~ 

. 1977-53 Opinio.n and Regula' 11/15/77. 

· tion Index: Aviiil· 

ability 

POSTAGE AND FEES PAID. 

Citatio

42 FR 5

42 FR 59