TABLEOF~

20463 Volume 16, Numbe

RmJIATIQiIS

1 Allocation Training

1 Allocation Mailing

2 Foreign National Hearing

ALLOCATICIf MATERIALS SENT '00 PACS,

PARTY al'lMITTEES

The FEC recently mailed the followiq

materials on the new allocation rules to

the t~easurers of PACs and party commit

tees:

o The Record Supplement on Allocation, a

special November issue that explains t

revised rules;

a The regulations and their explanation 

justification, as printed in the Fede

Register (55 Fed. Reg. 26058, June 26,

1990); and

o New reporting Schedules HI through H4

(part of FEC Form 3X), which must be u

to report allocable expenses after

December 31, 1990.

Anyone interested in obtaining any o

the above materials may order them from 

Information Services Division, 800/424-9

or 202/376-3120.

FEDERAL ELECTION COMMISSION

December 1990 999 E Street NW Washington DC

FEe STAFF TO aHXJC'l' ALLOCATICI'I 'l'RAINlm

FOR PAR'lY anuTTEES

In the next few months, Cormnission

representatives will travel to several

cities to conduct training Isessions on the

new allocation regulations. The training

program is designed to help state and local

party co~ittees comply with the new regulations, which will have the most significant impact on party groups. The new rules

specify methods for allocating disbursements for activities that jointly benefit

federal and nonfederal candidates and

elections. Under the new rules, which

become effective January 1, 1991, committees that maintain federal and nonfederal

accounts will be required to file new

reporting schedules disclosing information

on allocated activity.

Listed below are the cities where

Commission staff will conduct the allocation training. Party cormnittee staff

wishing to attend a training session should

call the Information Services Division,

800/424-9530 or 202/376-3120, and ask for

the contact person.

•

Location

Columbus, OH

New York, NY

Boston, MA

Denver, CO

Des Moines, IA

Austin, TX

Date

1/7-8

1/22-23

1/24-25

2/7

2/20-21

3/5-6

Contact Person

Janet Hess

Kathene Martin

patricia Klein

Dorothy Hutcheon

Ian Stirton

Greg Scott

AUDITS

3 Repayment Determination Contested

4 Final Audit Reports Released

4 COURT CASES: Kripke v. FEC

4 ADVISORY OPINIQIlS

1In late Nove~r,and early December, the

Cormnission held allocation workshops in

Miand, Seattle and Los Angeles. These were

scheduled on short notice, too late for

advance announcement in the November

Record.

2For a summary of the regulations, see the

September 1990 Record, page 9. See the

article that follows for other materials on

the new allocation rules.

COMPLIANCE

7 Summary, MUR 2764

8 MURs Released to the Public

9 Nonfilers Published

10 CLF.ARIN3HClJSE: Contested Elections

10 lNEOBJlm.TICN: Soviet Delegation at FE

11 FEDERAL REX;ISTER t«:ITICES

11 INDEX
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numb

PUBLIC IIFARI~ 00 PROPOSED

FOREIGN NATICIllIL RmlLATIlJIS

On October 30 and 31, 1990, the Commission held a public hearing on a proposed

change to the foreign national regulations

at 11 CFR 110.4(a). The revision under

consideration would treat a domestic

corporation as a foreign national if the

corporation's foreign ownership exceeded 50

percent. Under the proposal, a U.S. corporation that was majority-owned by a foreign

national corporation or by foreign investors would be prohibited from establishing,

and paying the administrative and solicitation costs of, a separate segregated fund

(PAC) • The proposal was outlined in a

Notice of Proposed Rulemaking published on

August 22, 1990 (55 Fed. Reg. 34280). The

Commission also sought suggestions that

would promote compliance with the law's ban

on foreign national contributions (2 U.S.C.

§441e) •

The advance written comments submitted

by the witnesses are available from the

FEC's Public Records Office.

Proposed Change

Commission regulations at 11 CFR

110.4(a)(1), which implement 2 U.S.C.

§44Ie, prohibit foreign nationals from

making contributions or expenditures,

either directly or through another person,

in connection with any local, state or

federal election. In a series of advisory

opinions, the Commission has permitted

domestic subsidiaries, either partially or

totally owned by foreign nationals, to

establish a PAC and pay for the PAC's

administrative and solicitation expenses,

as long as two basic conditions are met.

First, the individuals who exercise

decision-making authority for these

activities must be U.S. citizens or

individuals lawfully admitted for permanent

residence (i.e., "green-card holders," who

are not considered foreign nationals).

Second, the funds used for election-related

activities must not come from the foreignnational parent or from a foreign citizen.

By treating as foreign nationals th

domestic corporations whose foreign ow

ship exceeds 50 percent, the proposed r

would supersede advisory opinions that 

allow a foreign-owned or controlled U.S

corporation to establish and operate a 

TestilOOl1Y

All but one of the 13 witnesses who

testified at the hearing were opposed t

the proposed change. Nine of the witne

represented domestic corporations owned 

foreign nationals, while three others

testified on behalf of the Association 

International Investment, the National

Association of Business Political Actio

Committees and the National Association 

Manufacturers. The only witness testi

ing in support of the proposed rule wa

representative of Senator Lloyd Bentsen

Witnesses opposed to the change arg

that:

o The proposal is unnecessary because t

current regulation adequately protect

against foreign-national influence in

u.s. elections; moreover, there is no

evidence that foreign-national parent

control the separate segregated funds

(PACs) established by their U.S. sub

aries.

o The proposal exceeds the FEC's rulema

authority; such a change to the defin

tion of foreign national would requir

statutory amendment by Congress.

o The proposal would violate the First

Amendment free speech and association

rights of U;S. citizens employed by

domestic corporations whose foreign

ownership exceeded 50 percent; the

executive and administrative employee

such corporations would no longer hav

the right to pool .their money togethe

make contributions through a company 

o For similar reasons, the proposal wo

also unconstitutionally discriminate

against such employees.

o The proposal would upset the balance

between separate segregated funds

sponsored by labor organizations and

Federal Election CoIImission, 999 E Street, Mi, washington, DC 20463

800/424-9530 202/376-3120 202/376-3136 (TOD)

Lee Ann Elliott, Chairman

John Warren McGarry, Vice Chairman

Joan D. Aikens

'lbomas J. Josefiak

Danny L. McDonald

Scott E. 'lbomas

Walter J. stewart, Secretary of the Senat

Ex Officio Commissioner

oonnald K. Anderson, Clerk of the House o

Representatives, Ex Officio Commissione

2
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

those sponsored by corporations, since

union-member employees of affected

corporations would still be pe~tted to

participate in a union PAC, while nonunion employees would be prohibited from

participating in a corporate PAC.

o The proposed rule would violate the

spirit, if not the letter, of international treaties under which the U.S. has

guaranteed "national treatment" to

foreign nationals. "National treatment"

means that foreign-owned corporations are

treated the same as domestic corporations.

a The proposed rule is arbitrary and

unworkable because foreign ownership of a

U.S. corporation in excess of 50 percent

does not necessarily mean that the

corporation is controlled by foreign

nationals.

Senator Bentsen's legislative assistant, in supporting the proposed change,

argued that:

o The U.S. Senate favors a change in the

current law; in a recent vote on a legislative proposal" similar to the FEC's

proposed rulemaking, 73 Senators voted in

favor of the legislation.

o Opposition to the proposed rule arises

from those who are protecting their

special interests rather than the

American public's interest in keeping

questionable money out of U.S. elections.

o The proposal is consistent with the

intent of the original legislation--to

reduce foreign influence in U.S. elections.

o Other nations place similar restrictions

on American-owned companies operating in

their countries.

PUBLIC APPEARANCES, 1991

1;20-23 National Association of

Manufacturers

Marco Island, Florida

Commissioner Lee Ann Elliott

1/27-30 South Carolina Association of

Registration and Election

Officials

Charleston, South Carolina

Commissioner Thomas J. Josefiak

1/29 Public Affairs Council

Washington, DC

Commissioner Lee Ann Elliott

Dorothy Hutcheon, Public

Affairs Specialist

3

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IARClJCHE CAMPAIGN CCNI'ESTS REPAYMFNl'

DETEBMINATIal

On October 3, 1990, the Commission

heard a presentation by the LaRouche Dem

cratic Campaign contesting an FEe determ

ation that the commdttee repay public

funds. The campaign had received federal

matching funds during Lyndon LaRouche's

1988 Presidential primary campaign.

The presentation was given in respons

to a final audit report in which the

Commission determined that the campaign h

received $109,149 in matching fund payme~

to which the candidate was not entitled.

on May 26, 1928--Mr. LaRouche's date of

ineligibility -the campaign was in a

deficit position. The final audit repor

concluded that, by July 14, 1988, the

campaign had received enough contribution

and matching funds to eliminate the defi

cit. The campaign, however, continued to

receive matching funds after July 14. Th

Commission determined that the campaign h

to repay these matching funds, which

totalled $109,149, since they were receiv

after the campaign had sufficieQt funds t

eliminate its deficit.

In its oral presentation, the LaRouch

campaign contended that only public fundi

payments, and not private funds, should b

applied to eliminate a campaign's defici

if the candidate choses to continue campaigning after the date of ineligibility

(Mr. LaRouche continued his campatgn unt

the Democratic convention in late JUly

1988. ) The campaign argued that a candi

date who must divert all private funds to

debt reduction cannot realistically

continue his campaign and must therefore

either terminate the campaign or abandon

his claim to matching funds for purposes 

retiring the deficit.

(continue

1see the July 1990 Record for for a summ

of other repayment determinations contain

in the final audit report.

2The date of ineligibility is the date o

which the candidate becomes ineligible to

receive matching funds for the purpose o

continuing the campaign. See 2 U.S.C.

§9033(c) and 11 CFR 9033.5. After that

date, the candidate may receive matching

funds only to the extent he or she has n

outstanding campaign obligations.
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numb

Before making its final determination

on this repayment issue, the COImnission

will consider the LaRouche campaign's oral

presentation as well as any additional

written materials the campaign submits.

FINAL AlIDIT REPORTS

Listed below are the final audit

reports that have been released since April

1990. See the June 1990 Record for a list

of audit reports released between January

1989 and March 1990. Copies of reports are

available from the FEC's Public Records

Office.

'Ibe Atlanta '88 COlIIDi.ttee, Inc.

Date Released: September 28, 1990

Length: 2 pages

Louisiana Host eauittee 1988, Inc.

Date Released: September 4, 1990

Length: 4 pages

LaRouche Democratic campaign

Date Released: May 23, 1990

Length: 20 pages

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KR!PKE v ; FEe

on October 26, 1990, the u.S. District

Court for the District of Columbia granted

the FEC's motion for summary jUdgment,

thereby dismissing Dr. Daniel F. Kripke's

suit against the agency. Dr. Kripke

alleged that the FEC had acted contrary to

law by failing to act on his administrative

complaint within 120 days. See 2 U.S.C.

§437g(a) (8) (A). The court stated that

It[t]here is no statutory requirement that

the Conunission act within 120 days. II The

court went on to say that, in ruling on an

action such as Dr. Kripke's, the court

"must presume valid action, act deferentially and withhold its hand unless it

appears that the CoImnission has been

arbitrary and capricious. [citations

deleted. ]"

In this case, the court found that

there had been no unreasonable delay and

that the agency had not acted arbitrarily

or capriciously in its handling of the

matter. Accordingly, the court granted

summary jUdgment to the FEC.

4

ADVISORY OPINICfi RlUJESTS

Recent requests for advisory opinio

(AORs) are listed below. The full text 

each AOR is available for public review 

comment in the FEC's Public Records Of

NJR 1990-25

Availability of corporation's twice-yea

solicitation method to labor union

representing employees of subsidiary.

(Date Made Public: November 7, 1990;

Length: 2 pages)

ALTERNATE DISPOSITIOO" OF

ADVISORY OPINIW RlQJEST

AOR 1990-24: candidate CODDi.ttee's Rei

bursement of European Tra

Expenses of Candidate's W

AOR 1990-24 was withdrawn by the reques

on October 19, 1990.

ADVISORY OPINICfi SUPlMARIES

NJ 1990-16: Transfer from State PAC to

Affiliated Federal PAC;

Multicandidate Status

Citizens for Thompson (CFT), formerly t

campaign committee of Illinois Governor

James R. Thompson but now organized to

support other nonfederal candidates, ma

transfer funds to an affiliated federal

committee, America 2000, subject to cer

conditions set forth in the opinion. A

ica 2000 may apply contributions contai

in such transfers to the 51-contributor

requirement for multicandidate committe

status.

Transfers Between Affiliated COIIIIlittees

Because CFT and America 2000 are bo

controlled by Governor Thompson, they a

affiliated committees. 2 U.S.C. §441(a

(5): 11 CFR 100.5(g)(2), 100.5(g)(3)(v

110.3(a)(1)(ii) and 110.3(a)(2)(v). C

transfers to America 2000 are therefore 

subject to the contribution limits. 11 

102.6(a)(1) and 110.3(c)(1).

CF!" s Federal Commi.ttee status

CFT will trigger political coImnitte

status if it transfers over $1,000 duri

calendar year to America 2000. CFT may

however, qualify as a political coImnit

even earlier if it: (1) spends over $1
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

per year to solicit funds that it intends

to transfer to ~rica 2000 or (2) receives

over $1,000 per year in response to a solicitation informing donors that contributions may be transferred to America 2000 or

otherwise used for federal purposes.

U.S.C. §431(4); 11 CFR 100.S(a).

Upon achieving political committee

status, CFT must register and report as a

political committee, disclosing on its

first report the source of its cash on hand

and itemizing contributions to the extent

required under 2 U.S.C. §434(b) and 11 CFR

104.3(a). The cash on hand is preswned to

be composed of those contributions most

recently received by CFT. 11 CFR 104.12.

CFT must exclude from its cash on hand (and

from any transfers to America 2000):

o Contributions not permissible under the

Federal Election Campaign Act, Le.,

funds from corporations, labor organizations and federal contractors;

o Contributions exceeding the aggregate $5,000 per year limit on contributions to

a PAC; and

o Contributions from donors who have not

been notified by CFR that their contributions will be subject to the limitations

and prohibitions of the Act.

With regard to contributions included

in the transfer, CFT must notify the

contributors that their contributions will

now be subject to the Act's limits and

prohibitions. See 11 CFR 102.5(a)(2). To

ensure that donors do not exceed the $5,000

per year limit on contributions to a PAC,

CFT must aggregate contributions regardless

of whether they were made in the year of

the transfer or in previous years. Additionally, because CFT and America 2000 are

affiliated, contributions transferred to

America 2000 count against each contributor's $5,000 limit for America 2000.

Because CFT apparently intends to

continue as a political committee, it must

transfer out the impermissible funds within

10 days of becoming a political committee.

See 11 CFR 103.3(b). (This requirement

would not apply if CFT were transferring

funds on a one-time basis and then terminating its political committee status.)

Further, if CFT wishes to continue as a

federal political committee and also raise

nonfederal funds outside the restrictions

of the Act, CFT must segregate its federal

and nonfederal funds using separate

accounts. All federal election activity,

including transfers to America 2000, must

be conducted from the federal account;

funds from nonfederal accounts may not be

transferred into the federal account.

5

Moreover, the federal account may accept

only contributions that:

o Are designated for the federal account

o Result from a solicitation expressly

stating that contributions will be use

in connection with federal elections; 

o Are made by donors who are informed th

contributions are subject to the Act's

limits and prohibitions. l1CFR

102.5(a)(1)(i) and (2).

Multicandidate status

A multicandidate committee is a poli

cal committee that has been registered f

at least six months, has received contrib

tions from more than 50 persons and (exc

for a state party committee) has made co

tributions to at least five federal cand

dates. 2 U.S.C. §441a(a)(4)~ 11 CFR

100.5(e)(3). Multicandidate committees 

subject to a $5,000 limit, per candidate

per election, rather than the $1,000 lim

that applies to non-multicandidate comm

tees. For purposes of achieving multicandidate status, two affiliated politic

committees may combine their contributio

made and received. AD 1980-40. Persons

who have been notified that their CFT

contributions are subject to federal lim

and prohibitions can be viewed as haVing

made federal contributions. Accordingly

such persons may be counted toward the

51-contributor requirement for multicand

date committee status.

(Date issued: october 5, 1990; Leng

7 pages)

M 1990-18: Federal Credit Union'S

Establishment of Separate

Segregated Fund

The Oahu Educational Employees' Federal

Credit Union, a federally chartered cred

union incorporated within the united~~

states, may establish a separate segrega

fund and solicit contributions from its

noncorporate members.

An incorporated membership organizat

may solicit contributions to its separat

segregated fund from individual members 

their families. 2 U.S.C. §441b(b)(4)(C)

11 CFR 114. 7(a). Commission regulations

define members to mean all persons who a

currently satisfying the requirements fo

membership. 11 CFR 114.1(e). In settin

out a standard for membership, the Suprem

court held that members of an incorporat

membership organization, similar to stoc

holders in a business corporation, must

have "some relatively enduring and independently significant financial or organ

(continu
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

zational at.techment;" in order to be

eligible for solicitation. FEC v. National

Right to Work Comndttee, 459 u.s. 197, 204

(1982) • The Commission has determined that

members possess the requisite attachment if

they have: (1) some right to participate

in the governance of the organization and

(2) an obligation to make regular payments

to help sustain the organization. See, for

example, AD 1984-63.

In this case, the credit union's noncorporate members may be solicited because

they fulfill both requirements. First,

they have the right to vote for the board

of directors and the right to sit on the

board and other governing bodies. Second,

they must buy at least one share of the

credit union; a member who withdraws all

shares thereby ceases to be a member.

The credit union may not, however,

solicit any members who are prohibited from

making contributions under the Federal

Election Campaign Act (the Act), such as

corporations or labor organizations.

11 CFR 114. 7(b). In addition, although the

Act and regulations penni t trade associations to solicit contributions from

corporate members' executive and administrative personnel and stockholders, these

provisions do not generally extend to other

types of membership organizations. See ADs

1981-23 and 1980-48.

Finally, although a membership organization may solicit the lTimmediate familiest.

of members, the credit union must use the

narrow definition of immediate family contained in AD 1980-102 rather than the

broader definition contained in the credit

union's bylaws. AD 1980-102 defines

lTimmediate family" to include only the

member's mother, father and children living

in the same household.

(Date issued: october 5, 1990; Length:

5 pages)

NJ 1990-20: Federal contractor Status

of Law Finn

The federal contractor status of Bradbury,

Bliss & Riordan, a law partnership representing the Federal oeposit Insurance

Corporation (roIC) and the Resolution Trust

Corporation (RTC), depends on whether these

federal agencies compensate the firm from

funds containing Congressional appropriations. If so, the firm would be considered

a federal government contractor and would .

therefore be prohibited from making contributions to its PAC from general partnership

funds.

A federal contractor is prohibited from

making, directly or indirectly, any contri6

but.Ion or expenditure on behalf of a

federal candidate or political committe

2 U.S.c. §441c(a)(I); 11 CFR 115.2 A 

federal contractor is any person who ha

entered into a contract with the United

States government (or any department or

agency thereof) for the rendition of

services and who is compensated, in who

or in part, from funds appropriated by

Congress. 2 u.s.C. §441c(a)(1)i 11 CFR

11S.1(a)(1)(i)and (2).

The FDIC--which normally receives f

from such sources as insured banks and

savings institutions--may receive appro

ated funds under the Financial Instituti

Reform, Recovery, and Enforcement Act o

1989 (FIRRE Act). The RTC partially op

ates on appropriated funds. The source

funds used by these agencies to pay for

services may depend upon the type of le

or financial action involved and the ro

the law fi rm assumes in the action.

If the FDIC and the RTC pay the firm

exclusively from funds that are not app

priated by Congress, the firm would not 

a federal contractor. Otherwise, the f

would fall under the definition of fede

contractor and would be prohibited from

making contributions to its PAC from ge

al partnership funds. 11 CFR 115.4(a).

(Individual partners. may, however, make 

contributions in their own names, from 

their personal assets. 11 CFR 11S.4(b)

This prohibition would also apply to th

use of partnership funds for the PAC's

establishment, administration and solic

tation costs since the law does not ext

to partnerships the right granted to co

rations to set up a separate segregated

fund. AQs 1982-63, 1981-56 and 1981-54

see also California Medical ASsociation 

FEC, 453 u.s. 182 (19B1).

- (Date Issued: october 18, 1990;

Length: 3 pages.)

NJ 1990-23: Reapportionment AcCOlUlt

Established by Principal

campaign CoIImittee Prohib

Representative Martin Frost's principal

campaign conunittee may not set up a

"separate segregated" account to receiv

funds prohibited under the Federal Elec

campaign Act (the Act) to cover expense

related to redistricting and reapportio

ment matters. However, Mr. Frost may

himself set up a reapportionment fund t

is independent of his authorized conuni

such a fund would not be subject to the 

requirements of the Act. 

In order to protect his interests i

the Congressional redistricting in Texa
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

following the 1990 census, Mr. Frost retained an attorney and proposed paying for

legal services and other redistrictingrelated expenses through a separate account

established by his authorized commit.tee.,

Under the proposal, funds received in the

redistricting account would not be subject

to the limits or prohibitions of the Act.

Although past advisory opinions have

stated that activity conducted solely for

the purpose of influencing reapportionment

decisions is not subject to the Act, Mr.

Frost's proposal differs from those

opinions. In ADs 1982-37 and 1981,35, the

Commission permitted a candidate or office- . holder to establish a separate entity

exclusively for activity related to redistricting. In this case, however, Mr. Frost

proposed that his authorized committee

establish a separate reapportionment

account.

The situation presented also differs

from that of a committee (such as a state

party committee) that establishes separate

accounts for federal and nonfederal activities under 11 CFR 102.5(a)(1}. That

provision does not apply to an authorized

committee, which by definition is established and operated only to receive funds

for the purpose of influencing the election

of the authorizing federal candidate. See

2 U.S.C. §432(e)(1) and (3). See also AQ

1982-57 and 11 CFR 113.3.

Although the Frost committee may not

set up a "segregated" reapportionment

account to receive funds that are impermissible under the Act, the committee may use

the contributions it lawfully receives for

reapportionment expenses. It would report

payments for such expenses as committee

disbursements. Alternatively, nothing

would prevent Mr. Frost himself from setting up a reapportionment fund independent

of the Frost committee and therefore not

subject to the Act's restrictions. The

Commission cautioned, however, that references by such an independent entity to

Congressman Frost's candidacy would be

viewed as something of value to his federal

campaign. Depending on the facts, other

references to the Congressman could also

result in a contribution to his campaign.

See AD 1985-38.

The Commission expressed no opinion on

the application of state law or House

rules to the proposed activity, or on

possible tax ramifications, since those

issues are not within its purview. (Date

issued: November 5, 1990; Length: 5

pages)

7

MUR 2764: Eat:marking Unreported by Sen

campaign and EKcessive Contributions by

senate Candidate

This enforcement action, resolved

through pre-probable cause conciliation

concerned the failure of a 1988 Senate

candidate's campaign to report the cond

of several thousand dollars in earmarke

contributions.

A separate matter arising from the 

concerned an excessive contribution by 

same 1988 candidate (Candidate A) to th

general election campaign of a 1986 can

date (Candidate B).

Background

MUR 2764 arose from a complaint file

by a national party committee against

Candidate A and his principal campaign

committee. The party committee based i

allegations on investigative newspaper

accounts.

The complainant alleged that Candid

A's campaign had violated FEC rules by

failing to identify in its reports a no

connected committee (PAC A) that had ac

as a conduit for several thousand dolla

in earmarked contributions to the campa

PAC A had disclosed the earmarked contr

tions and its role as the conduit in it

own reports, but the Senate campaign ha

reported the earmarked receipts as dire

contributions from individuals.

The complainant also asked the FEC 

investigate whether any coordination ha

occurred between Candidate A's campaign 

another nonconnected committee (PAC B) 

had made independent expenditures on ca

date A's behalf.

Finally, the complainant alleged th

in 1986 Candidate A had made excessive 

tributions td the general election camp

of Candidate a, another Senate candidat

After receiving responses to the co

plaint, the Commission found reason to

believe that Candidate A's campaign had

violated 11 CFR 110.6(c)(3} by failing 

report the conduit of $7,248 in earmark

contributions. The Commission also fou

reason to believe that Candidate A had 

excessive contributions to Candidate a, 

violation of 2 U.S.C. §441a, and that C

didate B's campaign had violated sectio

441a and 434, respectively, by knowingl

accepting the excessive contribution an

misreporting the source of the money.

(contin
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

With regard to the independent expenditures, the Commission found no reason to

believe that PAC B had violated the law.

General Counsel's Report

Reporting of Earmarked Contributions.

The Commission's investigation verified

that Candidate A's campaign had received

$7,248 in earmarked contributions that he1

been raised by PAC A in a direct mail

effort coordinated with the campaign (another committee also received contributions

as a result of the same mailing). PAC A

had solicited checks written out to the

candidate's campaign, bundled them together

and forwarded them to the campaign without

depositing them in its own account. The

campaign's disclosure reports failed to

report those receipts as earmarked contributions and thus did not identify PAC A as

a conduit.

Candidate A's campaign argued that it

was not required to disclose the conduit of

those contributions because the campaign

had paid its share of PAC A's costs for

soliciting and collecting them. The

General Counsel pointed out, however, that

under FEC rules the conduit of an earmarked

contribution must be identified regardless

of who pays for the solicitation. 11 CFR

1l0.6(c)(3) •

candidate A's EXcessive Contribution.

Under the election law, an individual may

contribute up to $1,000 each to a candidate's primary and general election campaigns. 2 U.S.C. §441a(a)(1)(A). In

addition, a candidate's campaign may not

knowingly accept a contribution from an

individual that exceeds $1,000. 2 U.S.C.

§441a(f). The committee must also accurately report the identity of each person

who gives more than $200. 2 U.S.C. §434(b)

(3)(A).

The FEC's investigation revealed that

Candidate A had made two contributions

totaling $1,900 to Candidate B's 1986

campaign. The contributions were both made

before the general election but after

Candidate B's primary. In its disclosure

reports, Candidate B's campaign attributed

$1,000 of the contributions to Candidate

A's spouse. Candidate A, however, had

never been married and had not instructed

Candidate B's campaign to make such an

attribution.

Candidate B's disclosure reports also

showed both contributions as designated for

the general election. Under FEC rules, a

post-primary contribution automatically

counts toward the general election limit,

8

unless the recipient campaign has a prim

election debt and the contributor has

designated the gift in writing for the

retirement of that debt. 11 CFR 110.1(a

(2)(i) and (ii) (1986); 11 CFR 110.1(b)

(ii) and (3)(i) (1990). In his response 

the FEC's inquiry, Candidate A claimed t

he had assumed one of his contributions

would count toward the primary limit and

the other toward the general limit. Ho

ever, he had not made that designation 

wri ting. Furthermore, Candidate B had n

outstanding debts from his primary campaign, so he could not have accepted po

election contributions for the primary

election.

During the Commission's investigatio

of this matter, Candidate B's campaign

refunded to Candidate A the $900 excess

portion of his contribution and amended 

1986 reports.

CODmission Determination

The Commission entered into concili

tion agreements with the two Senate cam

paigns prior to finding probable cause.

In a joint agreement, Candidate A an

his campaign admitted their violations 

the earmarking disclosure rules and the

candidate's violation of the contributio

limits. The respondents agreed to pay 

civil penalty of $1,500 and to amend th

committee's reports.

In a separate agreement, Candidate 

campaign agreed to pay a civil penalty 

$500 for knowingly accepting an excessiv

contribution and for the reporting

violation.

MUBS RELEASED TO TIlE PUBLIC

Listed below are MURs (FEC enforcem

cases) recently released for public revi

The list is based on the FEC press relea

of October 19, 1990. Files on closed MU

are available for review in the Public

Records Office.

Unless otherwise noted, civil penal

resulted from conciliation agreements

reached between the respondents and the

Commission.

PIlJR 1840

Respondents:' (a) Ted Haley Congression

Committee, Ted Haley, treasurer (VIA); e

al. , (b)-(g) - O"(~ainant: FEe initiated

SUbject: EXcessive contributions in the

form of post-election loan guaranteet

Disposition: U.S. court of appeals

affirmed violation as alleged by FEC
FEDERAL ELECTION COMMISSION Volume 16, Numbe

SUbject: (1) Erroneous disclosure; (2) 

proper campaign expenditures

Disposition: (1) Reason to believe but

take no further action; (2) no reason to

believe

MUR 3130

Respondents: Democratic State Central

Committee of California Federal Account

Cathy Calfo, treasurer

Complainant: FEC initiated

SUbject: Failure to transfer out imper

missible funds on time

Disposition: Reason to believe but too

further action

Report

~t Filed

Third Quar

Pre-electio

pre-electio

pre-electio

Pre-electio

Pre-electio

pre-electio

Pre-electio

pre-electio

Third Quar

Pre-electio

Pre-electio

Pre-electio

Pre-electi

Pre-electio

pre-electio

pre-electio

Pre-electi

Office

Sought

House-FL/19

House-MN/06

.House-N'l/20

House-ClV06

House-TXj22

House-OH/IS

House-GHjl2

House-LAlO?

House-LA,l08

House-IN/lO

House-IN/10

House-LA,lOS

House-NYj28

House-LA,104

House-TX/12

House-NC/01

House-IL/OI

House-NJ/09

Allen, B.

Anderson, B.

Bellitto, G.

Boerum, B.

Delay, T.

Erney, T.

Gelpi, M.

Hayes, J.

Holloway, C.

Horvath, J.

Horvath, J.

Huckaby, J.

Krieger, S.

McCrery, J.

McGinn, M.

Moye, H.

Peyton, B.

Russo, P.

Nonfiler

FEe PUBLISHES R:m'ILERS

The Commission recently published th

names of authorized committees that fail

to file required financial disclosure

reports. See chart below.

Nonfilers are published pursuant to

2 U.S.C. §438(a}(7). Enforcement action

against nonfilers are pursued on a case

case basis.

MUR 3066

Respondents: (a) Bruce Vorhauer for u.s

Senate Committee, James Cowan, treasure

(MT); (b) First Valley Bank, James Cowa

President (MT)

CDIPLlUNANT: Alice Tully (MT)

subject: (1) Corporate contributions an

expenditures; (2) contributions by gove

ment contractors; (3} disclaimer

Disposition: (1) Failed to find reason 

believe; (2) no reason to believe; (3) 

son to believe but took no further actio

December 1990

MUR 3061

Respondents: Congressman Murphy Campaign

committee, Karen V. Mollenauer, treasurer

(PA)

Complainant: William A. Nicolella (PA)

IIlUR 3058

Respondents: Gene Taylor for Congress

Committee, Charles B. Benvenutti, treasurer

(MS)

Complainant: FEC initiated

SUbject: Failure to file 48-hour contribution notices; erroneous disclosure

Disposition: $1,500 civil penalty

MUR 2816

Respondents: (a) Cryts for Congress

corondttee, Carol-Gay Eikermann, treasurer

(1'10); (b) Missouri Democratic State Committee (Federal AccountjNon-Federal Account),

Douglas Brooks, treasurer

Complainant: Tony Feather, Executive

Director, Missouri Republican party

SUbject: (1) Failure to disclose contribution; (2) excessive contribution; (3) contribution by nonfederal account

Disposition: (1) and (2} necl.ined to find

probable cause to believe; (3) no probable

cause to believe

MUR 2461

Respondents: (a) Michigan Republican state

Committee, Ronald D. Dahlke, treasurer; (b)

Friends of Jim Dunn, Pauline Dunn, treasurer (MI); (c) Jim Dunn (MI); (d) National

Republican Congressional Committee, Jack

McDonald, treasurer (DC)

complainant: Robert F. Bauer, Counsel,

Democratic Congressional Campaign Committee

(DC)

SUbject: Excessive expenditures; disbursements from nonfederal account; failure to

amend disclosure report on time

Disposition: (a) $10,000 civil penalty;

(b) and (c) no reason to believe;

(d) rejected General Counsel's recommendation to find reason to believe

IlUR 2002

Respondents: (a) Committee to Elect Bennie

O. Batts, Evelyn Batts, treasurer (NY); (b)

Mrs. Evelyn Batts (NY); (c) Dr. Arlene

A1ve ranqa (NY)

Complainant: FEC initiated

SUbject: Failure to amend Statement of

Organization; commingling of funds; use of

nondesignated campaign depository; excessive contributions

Disposition: (a) u.s. district court

judgment: $100 civil penalty; (b) u.s.

district court judgment: $1 civil penalty;

(c) no probable cause to believe

•

9
December 1990 , FEDERAL ELECTION COMMISSION Volume 16, Numbe

cun'FSI'ED ELECTI(R) AND RECCXJNTS

The National Clearinghouse on Election

Admdnistration recently published a twovolume report. Contested Elections and

Recounts. which describes methods of processing challenges to federal elections and

addresses the major policy issues involved.

The introduction to the report states

that, while contested elections and recounts are the exception--99 percent of

federal elections are firmly decided on

election day--the remaining one percent

have included three Presidential elections,

over 500 contests for House seats and about

two dozen Senate races since the direct

election of Senators in 1913. The fairly

steady occurrence of contested federal

elections has not, however, led to a

"standard, routine, expeditious method of

resolving them. All too often, contested

election and recount procedures come into

question only when there is a crisis involving the~-with the result that new laws

and procedures are hastily adopted according to the chemistry of the moment. ..•It

The Clearinghouse report, therefore, "is

directed primarily to policy makers at the

state 1evel•••to assist them in conducting

a comprehensive, dispassionate, step-bystep review of their own contested election

and recount procedures."

The first volume of the report, Issues

and Options in Resolving DiSputed Federal

Elections, provides a legal background and

explains procedures for handling contested

elections. Volume 2, A Summary of State

Procedures for Resolving Disputed Federal

Elections, describes the procedures followed by each state in contested elections

and recounts. These volumes are intended

as general reference tools only; candidates

and other parties interested in contesting

an election should refer to the state

authority.

Volumes 1 and 2 may be purchased from

the Government printing office.

o Contested Elections and Recounts, vol. 1

Stock Number: 052-006-00049-0

Price: $4.25

o Contested Elections and Recounts, Vol. 2

Stock Number: 052-006-00050-3

Price: $9.00

When ordering, include the title, stock

number and a check for the correct amount

made payable to the Superintendent of

Documents. Mail to: Superintendent of

10

Documents, Government printing Office,

washington, DC 20402.

Note that the report has been distri

buted throughout the United States to

libraries participating in the Federal

Depository Library Program.

SOVIET DELmM'Im VISITS FEe

A six-member delegation from the

Central Electoral Commission of the Sovi

Unio~ visited the Federal Election Comm

sion on November 2, 1990. The delegatio

headed by Vladimir P. Orlov, Chairman of

the Central Electoral Commission of the

USSR, attended a seminar designed to giv

the Soviets background information on tw

aspects of the United States electoral

system: private sector involvement in

elections and the role of the courts in

campaigns and elections. Guest speakers 

the seminar included William Schweitzer 

Baker & Hostetler, steven Stockmeyer of 

National Association of Business politic

Action Commi ttees and Lawrence Noble, th

FEC's General Counse~.

This visit was the fourth in a serie

of exchanges between the USSR Commission

and the FEe. In June 1989, the six FEC

Commissioners and several senior staff

members visited the Soviet union. Chairm

Orlov and other members of the Central

Electoral Commission returned the visit 

November 1989, when the Soviet delegatio

observed the Virginia gubernatorial and 

York mayoral elections. In March 1990, 

Commissioners and staff again visited th

soviet Union, observing election activit

in the Moscow area and the Republic of

Kazakstan.

All of the Soviet exchange visi ts we

funded by the International Foundation f

Electoral Systems, a nonprofit organizat

designed to promote worldwide understand

of democratic processes and elections. 

federal funds were used for these

exchanges.
December 1990

Q

FEDERAL ELECTION COMNIISSION Volume 16, Numbe

FEDERAL REX;ISTER NJI'ICES

Copies of Federal Register notices are

available from the Public Records Office.

1990-18

11 CFR Parts 109 and 114: Corporate and

tabor Organization Expenditures (MC~L

issues); Extension of Comment Period to

November 30, 1990 (55 Fed. Reg. 45809,

october 31, 1990)

The first number in each citation

t"efers to the "number" (month) of the 1990

Record issue in which the article appeared~

the second number, following the colon,

indicates the page number in that issue.

AINISORY OPINIOOS

1989-21: Fundraising by sole proprietor in

cooperation with candidates, 1:9

1989-25: preemption of state law lirodting

party spending on behalf of candidates,

1:10

1989-26: Automatic bank transfers from

contributor's account to candidatS

committee's account, 1:11

1989-27: Act's preemption of state law

governing solicitations by state employ~es, 2:2

1989-28: voter guides distributed by nonprofit corporation, 3:9

1989-29: PAC established by company owned

by foreign principal, 2:3

1989-30: Payment to Senator for teaching

course, 2:4

1989-32: Foreign national contribution to

state ballot measure committee "contrcl.-

led" by candidate, 8:6

1990-1: Corporation's sale of 900-line

fundraising service to candidates, 4:3

1990-2: Candidate's use of excess campaign

funds to secure loan for party committee,

4:5

1990-3: PAC'S sale of advertising space in

newsletter, 5:3

1990-4: Use of credit cards to charge combined dues/contribution payments, 7:1

1990-5: Newsletter published by candidate,

6:4

1990-6: Preemption of Oregon law prohibiting charitable matching plan for PAC

contributions, 7:2

11

1990-7: Transfer from candidate's forme

Presidential exploratory committee to

1990 House committee, 8:6

1990-8: Establishment of PAC by corpora

majority-owned by foreign bank, 8:7

1990-9: Newsletter published by candida

as sole proprietor, 8:8

1990-10: Af9-liation between PACs of

corporate parent and bankrupt subsidi

11:4

1990-11: Publicly funded campaign'S don

tion of fundraising items to staff an

charity, 8:8

1990-12: Volunteer services by former

potential candidate who received opin

poll results, 10:5

1990-13: Reporting exemption for minor

party, 10:5

1990-15: Administrative termination of

committee involved in disputed debt, 

1990-16: Transfer from state PAC to aff

ated federal PAC~ multicandidate stat

12:4

1990-17: Contributions to 1988 campaign 

defray FECA-related legal costs, 11:4

1990-18: Federal credit union's establi

ment of separate segregated fund, 12

1990-20: Federal contractor status of l

firm, 12:6

1990-21: campaign funds used to pay for

travel/subsistence expenses of candidate's wife, 11:5

1990-23: Reapportionment account established by principal campaign committe

prohibited, 12:6

CXXJRT CASES

Austin v. Michigan state Chamber of

Commerce, 5:5

FEC v.

- AFsCME=PQ (88-3208), 10:7 - Chipman C. Bull for Congress, 8:11

- Dennis Smith for Congress, 11:10 - Dramesi for Congress Committee, 11

- Franklin, 1:13 - Friends of Isaiah Fletcher Committ

7:4 - Furgatch (83-0596-GT(M»), 2:7 - International Funding Institute, In

American Citizens for Political Ac

Inc., and Dolan, 9:7 -

- Lawson, 11:10

- Life Amendment PAC, Inc. (89-1429)

- Mann for Congress Commdttee, 7:5 - Mann for Congress Committee (90-24

11:10

- National Republican senatorial Com

tee, 10:9 - National Right to Work Committee, I

5:7 - NY State Conservative partyl1984

Victory Fund (87-3309), 6:7

(contin
December 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

- speelman, 10:9 - Weinberg, 10:8

- West Virginia Republican state Executive Committee, 11:10

- Working Names, Inc. (87-2467-GAG), 7:4

- Working Names, Inc. (90-1009-GAG), 7:4

v . FEC

--=-Common Cause (89-0524), 3:11 - Common Cause (89-5231), 8:11 - Democratic Senatorial Campaign

Committee (90-1504), 8:12; 10:8

- Dolan, 5:7; 10:8 - FaUCher and Maine Right to Life

Committee, Inc. (90-0112-B), 6:7; 9:5

- Goland, 8:9 - Kripke, 9:7; -12:4 - Miller, 10:7 - National Rifle Association (89-3011),

2:7

MUR SUMMARIES

MUR 2599: Reporting errors by Congressional

campaign, 4: 6

MUR 2764: Earmarking unreported by Senate

campaign and excessive contributions by

Senate candidate, 12:7

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

MUR 2823: Excessive contribution receive

by candidate committee, 2:4

MUR 3009: Excessive coordinated expendi

tures by state party committee, 6:5

800 LINE

Basic recordkeeping rules, 4:8

Combined dues/solicitation statements, 

Contributions earmarked to candidates, 

Coordinated party expenditures, 3:6

Designating a principal campaign commi

1:19

Disclaimer notices, 5:8

Exempt party activities, 5:10

Faxing reports, 9:4

Last-minute contributions: 48-hour repo

ing, 7:8

Last-minute independent expenditures: 2

hour reporting, 7:9

New treasurer, 2:9

Transfers from candidate's nonfederal

commdttee to federal committee, 6:8

What to do about excessive contribution

redesignations and reattributions, 10

When reimbursements are required in SSF

fundraising t 2:8

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31