THE FEDERAL ELECTION 

COMMISSION 

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

Volume 4, Number 5 

REGULATIONS 

REQUEST FOR PUBLIC COMMENT 

As part of the process of formu lating new regulations, 

the F EC requested comments in several areas of Federal 

campaign law. In a notice, published in the Federal Register 

on April 7, 1978, the FEC asked specifically for comment 

in the following six areas: 

1. Reporting communication costs defrayed by corpora· 

tions and membership organizations (including labor 

organizations), 11 CFR 100.7(b)(5); 

2. Reporting loans made by national or State banks to candidates, 11 CFR 104.8; 

3. Definition of "ordinary course of business," 11 CFR 

100.4(b)(13); 

4. Standards for the size of printed disclaimer statements, 

11 CFR 110.11; 

5. Use by Federal candidates of aircraft which are owned 

or leased by a corporation or labor organization when 

that corporation or labor organization is not licensed to 

offer commercial services for travel, 11 CF R 114.9(e); 

6. Solicitations for contributions to party committees for 

the purpose of making party expenditures on behalf of 

candidates, 11 CFR 110.7. 

The Commission is seeking comments on specific questions 

posed in the notice concerning each of the six areas. Written comments should be submitted no later than May 5, 

1978, to the Regulations Section, Office of General Counsel, Federal Election Commission, 1325 K Street, N.W., 

Washington, D.C. 20463. Questions should be addressed 

to Carolyn Reed or Paul Lovejoy at 202/523-4175. Copies 

of the full text of the notice are available from the Office 

of Public Communications at the Commission - telephone 

800/424-9530. Copies of comments received will be made 

available to the public in the Office of Public Records. 

PUBLIC 

FINANCING 

REPAYMENT HEARING 

May 19

On April 3, 1978, the Federal Election Commission 

a public hearing to allow 1976 Presidential candi

George C. Wallace to appeal a Commission determina

that he must repay $47,795.55 in Federal matching fu

to the U.S. Treasury. 

The Commission is required by the Federal Election C

paign Act to audit all candidates who receive public fu

to determine whether, among other things, funds rece

were used for "qualified campaign expenses" as define

the Act (26 U.S.C. § 9032(9)). Public funds used to de

expenses which are not qualified campaign ex penses m

be repaid to the U.S. Treasury. · 

In the course of its audit of the Wallace Presidential c

paign, the Commission determined that $96,669.60 

been used for unqualified campaign expenses, prim

expenditures for which the Wallace campaign comm

could not properly account. The $47,795.55 repres

the difference between the $96,669.60 to be repaid 

additional matching payments of $48,874.05 owed to 

Wallace campaign. These funds were held in abey

pending completion of the audit. 

Governor Wallace requested the hearing in accordance w

11 CFR 134.2(b) which provides for a hearing if a ca

date disputes a Commission repayment determination

the hearing " ... the candidate may make a showing 

where the Commission e rred in its determination requi

repayment." Wallace, appearing with his campaign tr

urer, stated that the purposes of many of the expendit

were noted on checks used by the campaign commi

and not in receipts or other documentation. Mr. Wa

asked for additional time to acquire the necessary d

mentation in order to prove the expenses were campa

re lated. 

The Commission granted an extension of time for the 

mission of documentation until April 18, after which t

it will make a final determination in the matter. 
) 

I 

LEGISLATION 

BUDGET TESTIMONY 

l On Fe bruary 9, 1978, the H?use Appropriations SubCtJmmittee on Treasury, Postal Service and General Govern-

~lent heard FEC testimony on the Commission's budget 

r>equest for Fiscal Year 1979. Commissioners Vernon W. 

Thomson and Robert 0. Tiernan presented data and 

a nswered questions to support the Commission's request 

o f $8.624 million. This is an inc rease of only $500,000, or 

six percent {approximat ely the rate of inflation ), from the 

Commission's Fiscal Year 1978 request. 

Similar testimony was also delivered to the Senate Committee on Rules and Admi nistration on March 15, 1978, 

to the Senate Appropriations Subcommittee on U.S. 

Postal Service and General Government on March 21, 1978, 

and to the House Administration Committee on April 11, 

1978. Congress has not yet voted o n the FY 1979 authorization and appropriations. 

OPINIONS 

PENDING ADVISORY 

OPINION REQUESTS 

The following chart lists pending Advisory Opinion 

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

matter, the date the requests we re made public and the 

number of pages of each request. The ful l text of each 

AOR is available to the public in the Commission's Office 

of Publ ic Records. 

Number 

Date Made of 

AOR Subject Public Pages 

1978-19 Application of contri- 3/20/78 

bution limits to two 

Senate campaign committees for the same 

candidate. 

1978-20 Use of aircraft owned 3/24/78 

by non-profit corporations. 

1978-21 Status of separate 3/ 24/78 

segregated fund of 

corporation involved 

in merger. 

1978-22 Hospitality suite main- 3/29/78 

tained by Federal 

officeholder/candidate 

at State party convention. 

1978-23 Payroll deduction of 4/6/78 

contributions. 

ADVISORY OPIN IONS: SUMMARIES 

Designated as AO's, Advisory Opinions discuss the 

cation of the Act or Commission's regulations to sp

factual situations. Any qualified person requesti

Advisory Opinion who in good faith acts in accor

with the opinion will not be subject to any sanction 

the Act. The opinion may also be relied on by any 

person involved in a specific transaction which is in

guishable in all material aspects from the activity dis

in the Advisory Opinion. Anyone seeking guidance fo

own activity should consult the full text of an Ad

Opinion and not rely on the summary given here. 

AO 1977-2: Connected Organization 

The National Association of Electric Companies (N

a trade association, is the connected organization 

Constructive Congress Committee (CCC), a political 

mittee. The connection between NAEC and CCC 

determined to exist because the following circums

indicated that NAEC "directly or indirectly estab

administers, or financially supports" CCC: 

-- A continuing pattern of CCC solicitations was di

to personnel of NAEC members; 

-- CCC enjoyed ready access to NAEC member perso

-- CCC invited NAEC members to make suggestio

CCC contribution recipients; and 

-· CCC fundraising activity coincided with NAEC me

CCC must amend its Statement of Organization to 

the fact that NAEC is its connected organization. All 

tations by CCC must be conducted in accordance w

U.S.C. §441 b{b){4)(D) and Part 114 of the Commi

regulations. (Length: 4 pages) 

The RECORD is published by the Federal Election Commission, 1325 K Street, N.W., Washington, D.C. 20463

Commissioners are: Thomas E. Harris, Chairman; Joan D. Aikens, Vice-Chairman; William L. Springer; Neil Staebler

Vernon W. Thomson; Robert 0 . Tiernan; J.S. Kimmitt, Secretary of the Senate, Ex Officio; Edmund L. Henshaw, Jr.

Cler k of the House of Representatives, Ex Officio. 

For more information, call 523-4068 or toll free 800-424-9530. 

2 
AO 1977-40: Contribution Limitations 

Since the Commission is still in the process of securing 

facts as to whether the Maryland Medical Political Action 

Committee (MMPAC) and the American Medical Political 

Action Committee (AMPAC) are affiliated, the Commission 

cannot issue an advisory opinion which concludes that 

Congressman Newton Steers' 1976 campaign may lawfully 

accept contributions totaling $11,100 from these two committees. If the Commission determines at a future date that 

MMPAC and AMPAC are affiliated, Congressman Steers' 

principal campaign committee " ... will have to return the 

excess 1976 contributions ($1,1 00) and may be determined 

to be in violation of the Act." The $1,100 may be regarded 

by Congressman Steers as contributions to his 1978 campaign, provided the contributors give the Congressman 

written designations to that effect. If such designations 

are received, the Congressman's principal campaign committee would have to amend its past reports to disclose 

that the contributions are made with respect to a 1978 

election. (Length: 3 pages) 

AO 1977-49: Solicitations by Corporate 

Political Action Committee 

Kerr-McGee Corporation (Kerr-McGee) or its political 

action committee (K-MPAC) may use a bank as custodian 

in connection with a twice-yearly solicitation of its employees, even though the bank holds Kerr-McGee stock as 

a fiduciary, provided the bank preserves the anonymity of 

contributors (and those not contributing) in accordance 

with 11 CFR 114.6(d). Such a bank may also be used as 

an independent mailing service for purposes of the twiceyearly solicitations. 

Kerr-McGee is required to make the names of its stockholders available to a labor organization (or an independent 

mailing service) in accordance with 2 U.S.C. §441 band 11 

CFR 114.6(a), only if it or K-MPAC solicits employees or 

stockholders under the twice-yearly solicitation provisions 

of the Act. 

Kerr-McGee must bear the cost of preparing a list of stockholders or employees (and their addresses) for an independent mailing service, if it does not wish to disclose these 

names to a labor organization requesting them under 11 

CFR 114.6(e). However, the cost of producing labels for 

the labor organization's mailing, or other similar expenses 

(such as the preparation and actual mailing of the labor 

organization's solicitation) must be borne by the labor 

organization itself. 

Under the twice-yearly solicitation provisions, Kerr-McGee 

must make available to a labor organization the names and 

addresses of all stockholders and employees, " ... regardless 

of the corporat ion 's decision to refrain from soliciting those 

persons on the list who may be foreign nationals .... " 

Kerr-McGee may not use its twice-yearly solicitation 

materials for any purpose other than soliciting contributions. It may, however, quote pertinent excerpts from the 

Act and regulations or from advisory opinions issued by 

the Commission. 

3 

Two other questions contained in the advisory opi

request were " ... not posed in a specific factual con

and therefore an advisory opinion responding to 

[was] not appropriate." The opinion did, however, 

several relevant sections of the Commission's regulat

The Commission was unable to answer by the req

four-vote majority one of the questions posed by 

McGee concerning the solicitation, as stockholder

employees participating in the corporation's Emp

Stock Ownership Plan (ESOP). A separate stateme

opinion concerning this issue was released jointly by 

Chairman Joan D. Aikens, Commissioner Vernon 

Thomson and Commissioner William L. Springer. (Le

including the separate opinion, 19 pages) 

AO 1977-54: Candidate Participation in 

Petition Drive 

Newt Gingrich, candidate for the U.S. House of Repr

tatives, may participate as Chairman of a petition dri

Georgia (to stop ratification of the Panama Canal Tre

without expenses incurred in connection with this 

being considered contributions to or expenditures on b

of his campaign for Federal office provided certain c

tions are met. Expenses for newsletters, mass mai

newspaper, radio and television advertising and p

appearances where Mr. Gingrich is identified as chairm

the drive will not be contributions provided: 

- Such activities do not involve the solicitation, a

tance or making of contributions to Mr. Gingrich's 

paign; and 

·· Such activities do not involve any communication w

advocates Mr. Gingrich's nomination or electio

Federal office or the defeat of any other candidat

Federal office. (Length: 2 pages) conti

FEC PUBLIC APPEARANCES 

In keeping with its objective of making inform

tion available to the public, the Federal Electio

Commission regularly accepts invitations for its repr

sentatives to address pub I ic gatherings on the subje

of campaign finance laws and the Commission itse

This regular column lists scheduled Commissi

appearances, detailing the name of the sponsori

organization, the location of the event and the Com

mission's representative. 

5/3 Association of the Bar of the City of New Yo

Committee on Corporate Law Departments 

New York, New York 

William C. Oldaker, General Counsel 

5/26 Hope College 

Washington, D.C. 

(Speaker not yet determined.) 
AO 1977-70: Corporate Solicitation 

of Licensees 

The McDonald's Corporation (the Corporation) or its political action committee may solicit contributions from the 

executive and administrative personnel of McDonald's 

incorporated licensees. Because of the Corporation's 

" ... continuing control and direction over the business 

policies, practices and procedures of its licensees, as well as 

the nature and extent of the licensees' contractual obligation to the Corporation ... " the licensees are considered to 

be affiliates of the Corporation. All separate segregated 

funds established by licensees are subject to the antiprol iferation provisions of the Act and the Commission's 

regulations (11 CF R 11 0.3) and would share contribution 

limits with McDonald's PAC. 

Commissioner Neil Staebler filed a dissenting opm1on. 

Chairman Thomas Harris concurred in the dissent. (Length : 

including the dissenting opinion, 6 pages) 

AO 1977-71: Solicitation by 

Trade Association 

The American Institute for Shippers' Association, Inc. 

(AISA), upon receipt of solicitation permission (11 CFR 

114.8(d)) by member cooperatives, may solicit the executive and administrative personnel of management corporations retained by these member cooperatives. Because the 

management corporations are formed for the specific purpose of fulfilling the executive and administrative functions 

of the member cooperatives of A ISA and because they do 

not engage in any other activity, the executive and administrative personnel of the management corporation may be 

regarded as the executive and administrative personnel of 

the member cooperatives of AISA. (Length: 3 pages) 

AO 1978-5: Payment of Candidate's 

Living Expenses 

Herbert Creech, candidate for the U.S. House of Representatives, may use campaign funds to pay for his ordinary and 

necessary living expenses during his campaign for Federal 

office. The Commission has held in several past advisory 

opinions that candidates and their committees " ... have 

wide discretion under the Act in deciding which expenditures will best serve their candidacies." Expenditures for 

such living expenses paid out of a campaign account would, 

of course, be reportable under the Act. The Commission 

has no jurisdiction over possible tax ramifications of such 

expenditures. (Length: 2 pages) 

AO 1978-6: Payment of Compensation 

to Candidate 

Norman G. Gaar, candidate for the U.S. Senate, may continue to receive compensation from his law firm without 

such compensation being considered a contribution provided: 

-- A bona fide employment relation exists between Mr. 

Gaar and the law firm; 

-- Compensation paid to Mr. Gaar is "exclusively in consideration of employment services performed by him"; 

and 

-- Compensation is paid to Mr. Gaar " ... according to the 

same compensation scheme followed by [Mr. Gaar] and 

the firm prior to the onset of [his] candidate status." 

4 

For instance, the number of law f irm hours worke

apparently a factor in fixing Mr. Gaar's compensatio

contribution by the firm will not occur unless his com

sation is not decreased to reflect any decrease in the n

ber of hours worked for the firm because of his camp

Such a contribution would be subject to limitations 

must be reported in accordance with the Act and re

tions. (Length: 3 pages) 

800 LINE 

The Publ ic Communications Office of the Federal 

tion Commission receives numerous inquiries from 

public on the toll-free line (800/424-9530). The follo

excerpts from the Campaign Guide for Congressional 

didates and Their Committees is presented in respons

several frequently asked questions. 

NOTICES ON ADVERTISING 

OR SOLICITATIONS 

"All tundraising materials must include the follow

solicitation notice: 

A copy of our report is filed with the Federal 

Election Commission and is available for purchase from the Federal Election Commission, 

Washington, D. C. 

The notice must appear on the face or front page of pri

literature or advertisements, or at the beginning or en

any broadcast solicitation." (Page 9) 

"When a candidate or his/ her committee conducts p

political advertising (e.g., billboard, direct mailing, n

paper or T.V. ad), the candidate (or his/her committe

agent) must indicate on the face or front page of wr

matter, or at the beginning or end of a broadcast or 

cast, that the communication has been authorized. 

notice is not required, however, on bumper stickers, 

buttons or similar small items. The words 'paid for' ma

used to denote authorization." (Page 11) contin

FORMS 

Forms for candidates and committees to registe

and report are available at any time by contacting: 

Office of Public Communications 

Federal Election Commission 

1325 K Street, N.W. 

Washington, D.C. 20463 

Telephone: 202/523-4068 

Toll-Free: 800/424-9530 

Candidates and committees are urged to use th

newly revised forms. They are designated in the uppe

left hand corner as: FEC Form 3 REVISED, Januar

1978. Candidates and committees may make and us

photocopies of standard FEC forms. 
When a similar public communication expressly advocating 

the e lection or defeat of a Federal candidate is made, but is 

not authorized by any candidate (or his/her committee or 

agents) it must state: 

1. That it is not authorized by any candidate; and 

2. The name of the person who made or financed the 

communication (including, if applicable, the name of 

the affiliated or connected organization of the political 

committee making the communication). 

The Guide also contains, in Appendix D, examples of the 

proper wording for these required notices. For further 

information, see the Commission's regulations at 11 CF R 

110.11. 

COMPLIANCE 

FEC PUBLISHES 

NAMES OF NON FILERS 

On March 17, 1978, the Commission released the names 

of 11 Federal candidates who personally, or whose principal campaign committees, failed to file the required 1 0-day 

pre-election report of campaign fi nances for the March 21, 

1978, Illinois primary election. The nonfilers included one 

Senate candidate and 10 candidates for the House of Representatives. 

Under Commission procedures, three notices are sent to 

candidates and/or committees reminding them of their 

reporting obligations and urging compliance. If a candidate or committee does not file the required report(s) 

following receipt of these notices, the name of that "nonfiler" is made public, as required by law. In addition to 

publishing the names of nonfilers, the Commission has the 

authority to take furth er enforcement action under the 

statute, including civil court enforcement and imposition 

of civil fines. 

In another non filer action, on March 27, 1978, the Commission published the names of 203 Federal candidates, 

principal campaign committees or other political committees from 36 States and the District of Columbia, who had 

failed to file the 1977 year-end campaign finance reports, 

due January 31, 1978. 

FEDERAL REGISTER 

NOTICES 

FEC documents of general applicability are published in 

the Federal Register. The following list identifies all FEC 

documents appearing in the Federal Register 'between 

March 21, 1978, and April12, 1978. 

Federal Register 

Notice Title Publication Date Citation 

1978·3 Proposed Regulations : 4/7/78 43 FR 14673 

General Campaign 

Activities 

5 

STATISTICS 

UPDATE OF MULTICANDIDATE 

COMMITTEE INDEX 

The Commission publishes each month an update 

Multicandidate Committee Index. For a summary 

contents of the Index, see the Record, February 197

The update is available on the last day of each m

Copies of the Index, the current update or any past u

are available through the Office of Public Records, F

Election Commission, 1325 K Street, N.W., Wash

D.C. 20463 ·-telephone 202/523-4181 or toll-fre

424-9530. The purchase price is 1 0 cents per page, p

in advance. 

PUBLICATIONS 

ANNUAL REPORT 1977 

On March 31, 1978, the Commission transmitted 

President and to Congress its Annual Report 197

report describes the Commission's activity in accomp

four primary objectives: 

1. To administer public financing of Presidentia

tions; 

2. To obtain compliance with the Federal E

Campaign Act; 

3. To facilitate the public disclosure of inform

and 

4. To serve as a clearinghouse for election adm

t ion information. 

The Report also contains a summary of Commissio

mony before both Houses of Congress concerning 

bills on campaign financing. Numerous appendices c

additional statistical information and summaries of 

information. 

Finally, the Report contains legislative recommend

submitted in accordance with 2 U.S.C. §437e. This 

sion of the Federal Election Campaign Act requi

Commission's Annual Report to contain " .. . recomm

tions for such legislative or other action as the Comm

considers appropriate." The eight recommendation

primarily with public financing of Presidential electio

were based on the Commission's experience with au

Presidential candidates and committees. Issues c

included the status of Vice Presidential candidates, 

ments to the U.S. Treasury, definition of the nom

process and the use of contributions matched by F

dollars. Two recommendations were also included 

would streamline the administration of the Act. 

The Report is available from the Superintendent of 

ments, U.S. Government Printing Office, Wash

D.C. 20401; telephone: 202/275-2091. The order n

is 052-003-00527-1. Purchase price, payable to the 

intendent of Documents, is $2.50. 
FEDERAL ELECTION COMM ISS ION 

1325 K STREET, NW 

WASHINGTON, DC 20463 

OFF ICIAL BUSINESS 

POSTAGE AND FEES PAID