Volume 13, Number 2

12 INDEX

STATISTICS

10 1986 PAC Count

3 ADVISORY OPINIONS

COURT CASES

4 FEC v. MCFL

6 Common Cause v. FEC (Suit Four)

7 FEC v. Congressman Charles E. Rose

8 PEC v. Citizens Party

8 New Litigation

AUDITS

II Audits Released to Public

COMMISSIONERS

New Officers Elected

TABLE OF CONTENTS

REGULATIONS

1 Contribution Limits Rules Sent

to Congress

2 Public Hearing on Bank Loan Rules

CONTRIBUTION LIMITS: FINAL RULES

TRANSMITTED TO CONGRESS

On January 6, 1987, the Commission trans

mitted to Congress amended regulations govern

ing the election law's contribution limits for per

sons and multicandidate political committees. 1

CFR 110.1 and 110.2 Once these regulations have

been before Congress for 30 legislative days, the

Commission will announce their effective date

(For a sum mary of the revised rules, see pages 3-6

of the ]}eee"mbel 198tRecord.) _1WY\. ~7

The amended regulations, togelher with the

Commission's explanation and justification, were

published in the Federal Register on January 9

1987. 52 Fed. Reg. 760. A copy of this materia

may be obtained by calling 376-3120 or toll-free

800/424-9530. continued

999 E Street NW Washington DC 20463

FEDERAL ELECTION COMMISSION

FEC ELECTS NEW OFFICERS

On December 16, 1986, the Federal Election

Commission unanimously elected Scott E. Thomas

as Chairman and Thomas J. Josefiak as Vice

Chairman. They will serve one-year terms commencing January 1, 1987. Mr. Thomas succeeded

Commissioner Joan D. Aikens in the Chairmanship. Mr. Josefiak succeeded Commissioner John

Warren McGarry as Vice Chairman.

Mr. Thomas, a Democrat, was appointed to

the Commission by President Reagan in October

1986. From 1983 until his appointment as Commissioner, Mr. Thomas served as Executive Assistant to Tom Harris, a former FEC Commissioner.

Before accepting this staff position, Commissioner Thomas served the agency as an Assistant

General Counsel for Enforcement in the Office of

General Counsel. He first joined the Commission

as a legal intern in 1975. His term as FEC

Commissioner is scheduled to expire on April 30,

1991.

A native of Wyoming, Mr. Thomas holds a

Bachelor of Arts degree from Stanford University

and a Juris Doctor degree from Georgetown University Law Center.

Commissioner Josefiak, a Republican, has

been serving on the Com mission since August

1985. From 1981 until his appointment as Commissioner, Mr. Josefiak served as Special Deputy

to the Secretary of the Senate, who, by law, is an

ex officio member of the Commission. Prior to

his appointment as Special Deputy, Commissioner

Josefiak served as legal counsel to the National

Republican Congressional Committee. He also

served as minority special counsel on federal

election law for the Committee on House Administration, U.S. House of Representatives. Prior to

that, he was legislative assistant to Congressman

Silvio O. Conte (R-Mass.) His term as Commissioner is also scheduled to expire on April 30,

1991.

A native of Massachusetts, Mr. Josefiak holds

a Bachelor of Arts degree from Fairfield University, Fairfield, Connecticut, and a Juris Doctor

degree from Georgetown University Law Center.

February 1987
2

The Record is published by the Federal Election Commission, 999 E Street, N.W., Washington,

D.C. 20463. Commissioners are: Scott E. Thomas, Chairman; Thomas J. Josefiak, Vice Chairman;

Joan Aikens· Lee Ann Elliott· Danny Lee McDonald; John Warren McGarry; Walter J. Stewart,

Secretary or'the Senate, Ex O'rficio; Benjamin J. Guthrie, Clerk of the House of Representatives,

Ex Officio. For more information, call 202/376-3120 or toll-free 800/424-9530.

Volume 13, Numte

George Washington

University

Captiva Island, Florida

Penelope Bonsall, Director

National Clearinghouse on

Elee tion Administration

2/18-21

2/12

PUBLIC APPEARANCES

2/5 Title Industry PAC

Washington, D.C.

Commissioner Lee Ann

Elliott

American Society of Travel

Agents, Inc.

Portland, Oregon

Commissioner Lee Ann

Elliott

"'This alternative would constitute a revisi

of current Commission policy.

must be: 1) made in writing and 2) subject to 

due date or amortization schedule.* (The lo

would also have to comply with other requi

ments of the Act and Regulations, such as be

offered at the customary interest rate.)

The agency welcom es other alternative interp

tations of the bank loan requirement.

In the recent Federal Register notice a

nouncing the public hearing, the FEC also pos

questions concerning the general experience 

lending institutions with candidates and politi

committees and similar debtors. For example:

o What factors do lending institutions consid

when making loans to candidates and politi

committees?

o Do lending institutions have standard practic

concerning extensions of credit to politi

debtors?

o Are there any special problems in seeking 

payment from political debtors? Does the tim

frame for instituting collection proceedin

vary between political and nonpolitical debtor

o Do banks treat differently loan requests fro

candidates (who may use personal assets 

collateral) and Loan requests from the can

da te's authorized com mittee(s)?

Copies of the August 5, 1986, and January 

1987 Federal Register notices on bank loan ru

may 'be obtained by calling 376-3120 or toll-fr

800/424-9530.

February 1987 FEDERAL ELECTION COMMISSION

continued from page 1

PUBLIC }iEARING ON BANK LOAN RULES

On March 11, 1987, the Commission will hold

a public hearing on FEC rules which govern loans

made by banks to federal candidates and politi~al

committees. 11 CFR Part 100. Persons who wish

to testify at the public hearing shou~d SU?I?it

their requests to appear and comments m wntmg

to Ms. Susan Propper, Assistant General Counsel,

Federal Election Commission, 999 E Street, N. W.,

Washington, D.C. 20463. Questions may be

addressed to Ms. Propper by calling 376-5690 or

toll free 800/424-9530.

On August 5, 1986, the FEe published a

notice concerning these issues in the Federal

Register. 51 Fed. Reg. 28154. In response to the

notice the Com mission received 14 com ments on

bank ioan issues. After reviewing these comments and testimony from the upcoming hearing,

the Commission will decide whether to publish a

notice of proposed rulemaking on bank loans.

In the August Federal Register notice, the

Commission indicated that problems had arisen

when it tried to determine whether a bank loan

was made "In the ordinary course of business," as

required under the Act. See 2 U.S.C. §431(8)(B)

(vii); 11 CFR 100.7(b)(lI) and 100.8(b)(l2~.

Specifically, what does the statute mean when ~t

states that a bank loan must be "made on a basis

Which assures repayment"? While the August

notice raised this issue within the context of the

Presidential public financing program, the

Commission seeks comments on the impact of the

loan requirement on all federal election

particlpants-i-both publicly financed campaigns

and other federal political committees and

candidates. Should the requirement that a bank

loan be "made on a basis which assures

repayment" be interpreted to mean that:

1. A candidate or political committee must secure

a bank loan with some form of traditional

collateral; or

2. A candidate or political committee may use a

candidate's expectation of receiving contributions or public funds as loan collateral, provided

the funds are deposited in a separate "collateral

account": or

3. A bank ioan made to a candidate or political

committee does not have to be secured, but it
AOR Subject

FEDERAL ELECTION COMMISSION Volume 13, Number 2

The Commission distinguished its conclusion

in this opinion from previous opinions concerninz . l:>

excess campaign funds. In those opinions, the

Com mission concluded that the spending of excess

funds would directly or indirectly benefit the

former candidate financially.

The Commission noted that the Act did not

supersede any Connecticut law that might govern

the proposed establishment of the trust fund.

(Date made public: December 5, 1986; Length: 3

pages)

AO 1986-40: Corporate Donations to

State Party Committee's

BUilding Fund

The West Virginia Republican State Executive

Committee (the Party), which maintains both a

Federal and state account to support candidates

plans to raise funds for the construction or purchase of a building that will house the Party's

offices. The Party may solicit and accept corporate donations to a separate account established

for the party's building fund provided:

o The Party does not acquire its new office

building for the purpose of influencing the election of any candidate to any federal office; and

o No corporate donations for the building fund

are deposited in the Party's federal account.

Since the building fund is not considered a "political com rnittee" subject to the Act, donations

deposited in the building fund account do not have

to be reported. 11 CFR lOO.7(b)(2).

Under the Act and PEC Regulations, donations designated for the construction or purchase

of an office facility by a state or national party

com mittee are not considered "contributions" or

"expenditures" subject to the Act, provided the

facility is not acquired to serve a specific election-influencing purpose. See above and 2 U.S.C.

§43l(8)(B)(viii)j 11 CFR lOO.7(b)02) and lOO.8(b)

(3). These donations may not be deposited in the

party's federal account because, under FEe Regulations, a federal committee may only solicit and

accept contributions from donors who are informed that their contributions: 1) will be used for

federal elections and 2) are subject to the limits

and prohibitions of the Act. 11 CFR 102.5(a)(2).

Since the Act specifically addresses party

building funds and clearly permits donations to

them, it supersedes any West Virginia law prohibiting or limiting the Party's acceptance of corporate donations to the building fund. 2 U.S.C.

§453; 11 CPR 108.7. Commissioner Thomas J.

Josefiak filed a dissent. (Date issued: December

18, 1986; Length: 5 pages, including dissent)

continued

3

Corporation's plan to match employee contributions to PAC with corporate donations to charity. (Date

made public: December 9, 1986;

Length: 1 page)

Interest payments by principal campaign committee to candidate (lender). (Date made public: December

24, 1986; Length: 6 pages, plus 4-

page supplement)

February 1987

1986-44

1986-45

AO 1986-39; Excess Campaign Funds Used

to Establish Trust For Minor

Mr. Vincent Carrafiello, a 1986 Congressional

candidate from Connecticut, may use excess campaign funds of his principal campaign committee

to establish a trust fund for a minor. The child

will be the sole beneficiary of the trust fund, and

his grandparents will act as trustees. (The child,

who lost his parents and is being cared for by his

grandparents, is not related to Mr. Carrafiello.)

The Act and FEC Regulations permit candidates to use their excess campaign funds for a

variety of lawful purposes, provided they do not

convert the excess funds to personal use. 2

U.S.C. §439a and 11 CFR 113.2. Since the proposed trust fund will not provide any financial

benefits to Mr. Carrafi ello, the establishment of

the fund does not constitute a "personal use" of

excess campaign funds.

ADVISORY OPINION REQUESTS

The following chart lists recent requests for

advisory opinions. The full text of each AOR is

available to the public in the Com mission's Office

of Public Records.

ADVISORY OPINIONS: SUMMARIES

An Advisory Opinion (AO) issued by the Commission provides guidance with regard to the

specific situation described in the AOR. Any

qualified person who has requested an AO and

acts in accordance with the opinion will not be

SUbject to any sanctions under the Act. Other

persons may rely on the opinion if they are

involved in a specific activity which is indistinguishable in all material aspects from the activity

discussed in the AO. Those seeking guidance for

their own activity, however, should consult the

full text of an AO and not rely only on the

sum mary given here.
February 1987 FEDERAL ELECTION COMrvllSSION

AO 1986-41: Trade Association's Plan to

Compensate Employees Who

Make Contributions

The Air Transport Association of America (ATA),

an unincorporated trade association, may not

provide additional compensation to some of its

employees for the purpose of enabling them to

contribute to ATA PAC, a nonconnected political

committee" sponsored by ATA, or to other

federal political committees and candidates.

ATA's proposed compensation plan would result in

the making of contributions prohibited under the

Act, that is, contributions by one person (ATA) in

the name of another person (an ATA employee). 2

U.S.C. §441f. As explained in FEC Regulations,

this kind of prohibited contribution includes:

"[gliving money or anything of value, all or part of

which was provided to the contributor by another

person (the true contributor] without disclosing

the source of money or the thing 9f value to the

recipient candidate or committee at the time the

contribution is made," 11 CFR 110.4(b)(2)(i).

(Date issued: December 5, 1986; Length: 4 pages)

FEe v, MCFL:

SUPREME COURT DECISION

In FEC v. Massachusetts Citizens for Life,

Inc. (MCFL) the Supreme Court of the United

States decided, by a 5 to 4 vote, that the law's

prohibition on corporate expenditures is unconstitutional as applied to independent expenditures" * made by a narrowly defined type of nonprofit

corporation. The Court's December 15, 1986,

decision affirmed an appeals court ruling.

*A political committee which supports or

opposes candidates for federal office but which is

not established or administered by any candidate,

political party, corporation or labor organization.

For more information, see the FEC's Campaign

Guide for Nonconnected Committees.

* *An independent expenditure is an expenditure

for a communication that expressly advocates the

election or defeat of a clearly identified candidate but that is not made at the request of, or

with the prior consent or suggestion of, a candidate or authorized candidate committee. Furthermore, an independent expenditure must be

made without any consultation or coordination

with a candidate or authorized committee. 2

U.S.C. Section 431(17).

4

Volume 13, Numt

Scope of Ruling

Acknowledging that "the class of organi

tions affected by our holding today will be sma

the Court delineated the type of corporat

which would be permitted to make independ

expenditures under this ruling. "MCFL has th

features essential to our holding that it may 

constitutionally be bound by §441b's restriction 

independent spending." These three criteria 

as follows:

1. The organization must be formed "for the 

press purpose of promoting political ideas, 

cannot engage in business activities. If pol

cal fundraising events are expressly deno

nated as requests for contributions that will 

used for political purposes, including direct 

penditures, these events cannot be conside

business activities."

2. The organization must have "no shareholders 

other persons affiliated so as to have a claim 

its assets or earnings."

3. The organization must not have been es

blished by a business corporation or a la

union, and must adopt a policy "not to acc

contributions from such entities."

Background

The suit concerned material published 

distributed to the general public by 

Massachusetts Citizens for Life (MCFL), a n

profit, nonstock corporation. The September 19

publication, called the "Special Election Editio

urged readers to "vote pro-life" and, in list

Massachusetts Federal and non-Federal can

dates, identified each as either supporting 

opposing MCFL's position on three pro-life issu

The "Special Edition" also featured photographs 

candidates who agreed with MCFL on all th

issues (and one candidate who was publicly kno

to. hold a pro-life position).

The Commission had argued that the publi

tion constituted a partisan com municatlon a

that MCFL, by distributing the material to 

general public, had made corporate expenditu

in violation of 2 U.S.C. §441b. In a June 19

decision, the district court held that MCF

spending did not constitute prohibited expen

tures under §441b. Alternatively, the co

stated that the provision was unconstitutional, 

applied. On July 31, 1985, the appeals co

overturned the lower court's decision that MCF

publication costs were exempt from the prohi

tion on corporate spending but agreed with 

district court on the constitutionality issue, rul

that the provision violated MCFL's First Ame

ment rights. The appeals court concluded th

"application of section 441b to indirect, uncoor

nated expenditures by a nonprofit ideological c

poration expressing its view of political can

dates violates the organization's First Amendm

rights."
February 1987 FEDERAL ELECTION COMMISSION Volume 13, Numb:Jr 2

•

MCFL in Violation of S441b

The Supreme Court unanimously affirmed the

appeals court ruling that, as the FEC had argued,

MCFL's expenditures were in violation of §441b.

In making this determination, the Court rejected

lV1CFL's arguments to the contrary.

MCFL had contended that, in making its

expenditures, it had not provided anything to a

candidate. Because of this, its spending was not

within the reach of §44Ib{b)(2), which defines

"expenditure" to include anything of value provided to a candidate or political committee. The

Court, in holding that §44Ib's scope is broader

than MCFL's interpretation, stated that the legislative history "clearly confirms that §441b was

meant to proscribe expenditures in connection

with an election."

The Court also rejected MCFL's argument

that its publication costs did not constitute prohibited expenditures because the material did not

"expressly advocate" the election of candidates.

Citing its opinion in Buckley v. Valeo, the Court

noted it had previously concluded "that a finding

of 'express advocacy' depended upon the use of

language such as 'vote for,' 'elect,' 'support,' etc,"

Buckley, 424 U.S. 44, n, 52 (1976). Applying this

test to the MCFVs publication, the court stated:

"Just such an exhortation appears in the 'Special

Edition.' The publication not only urges voters to

vote for 'pro-life' candidates, but also indentifies

and provides photographs of specific candidates

fitting that description. The Edition cannot be

regarded as a mere discussion of public issues that

by their nature raise the names of certain politicians. Rather, it provides in effect an explicit

directive: vote for these (named) candidates.

The fact that its message is marginally less direct

than 'Vote for Smith' does not change its essential

nature."

MCFL had also argued that its publication

was a "Special Edition" of its regular newsletter

and therefore payments for issuing the material

were exempt from the definition of expenditure

under the statute's exception for news stories,

com mentaries and editorials distributed through

periodical publications and other news media. 2

U.S.C. §431(9)(B)(i). The Court did not need to

rule on whether MCFVs newsletter qualified for

the press exemption because it considered the

"Special Edition" a campaign flyer rather than an

issue of the newsletter. "No characteristic of the

Edition associated in any way with the normal

MCFL publicatlon." The Court emphasized that it

was essential to make a distinction between regular publications and campaign flyers "since we

cannot accept the notion that the distribution of

such flyers by entities that happen to publish

newsletters automatically entitles such organizations to the press exemption."

5

Section 44lb's Infringement on Free Speech

In determining whether §441b was unconsti

tutional as applied to MCFL's independent expen

ditures, the Court first examined the provision'

effect on political speech protected by the Firs

Amendment.

The FEe had argued that, although §441b

prohibited MCFL from making expenditures from

its corporate treasury funds, the law provide

another avenue for MCFL to exercise politica

speech: It could establish a separate segregate

fund (also called a political action com mittee o

PAC) and make contributions and expenditure

using money specifically solicited for the fund

The Court maintained that "even to speak throug

a segregated fund, MCL must make very signifi

cant efforts," and mentioned in par ticular th

recordkeeping and solicitation requirements th

law imposes on such funds. In conclusion, th

Court stated: "These additional regulations may

create a disincentive for such organizations to

engage in political speech....The fact that th

statute's practical effect may be to discourag

protected speech is sufficient to characteriz

§441b as an infringement on First Amendmen

activities."

Section 44lb Unconstitutional as Applied

In ruling that §441b is unconstitutional a

applied to MCFUs activities in this case, a de

cision from which four Justices dissented, th

Court first explained that "[w]hen a statutor

provision burdens First Amendment rights, it mus

be justified by a compelling state interest." Th

Court disagreed with the Commission's argument

that §441b's prohibition on MCFUs expenditure

was justified.

The FEC had noted the long legislative his

tory supporting §441b's prohibition on corporat

activity and argued that the courts have consis

tently ruled that those restrictions are justifie

by the governmental interest in protecting th

election process from the effects of the accumu

lation of wealth. After examining the legislativ

history and past Supreme Court decisions, th

Court concluded that this governmental interes

is valid with respect to expenditure restriction

applied primarily to profit-making corporation

but not to corporations such as MCFLt "formed t

disseminate political ideas." The Court, there

fore, found no compelling justification for treat

ing business corporations and MCFL alike "in th

regulation of independent spending."

The Court also rejected the FEC's argumen

that §441b serves to prevent a corporation such a

MCFL from spending individuals' money for polit

cal purposes that they might not support. Th

Court pointed out that individuals who contribut

to MCFL do so because they support its politica

aims and expect that the organization will spen

the funds "in a manner that best serves the share

continue
February 1987 FEDERAL ELECTION COrvlMISSION Volume 13, Numoo

political purposes of the organization and the

contributor,"

In responding to the Commission's argument

that a contributor, while supporting the political

views of MCFL, may not wish donations to be

used to support or oppose particular candidates,

the Court said that this problem could be resolved

by "simply requiring that contributors be informed

that their money may be used for such a purpose."

Finally, the FEC had maintained that, if the

§44lb prohibition were not applied to expenditures by corporations such as MCFL, then the

political process would be in danger of corruption,

since business corporations and labor unions could

funnel undisclosed treasury funds into a nonprofit

organization to be converted to political spending.

In rejecting this argument, the Court cited 2

U.S.C. §434(c), which requires groups that are not

political committees to report information on

their independent expenditures once they exceed

$250 in one year. In reporting under this provision, a group must include the identification of

persons funding independent expenditures if they

contribute an aggregate of over $200 during a

year. "These reporting obligations provide precisely the information necessary to monitor

MCFL's independent spending activity and its receipt of contributions," the Court stated. Furthermore, the Court pointed out that "should

MCFVs independent spending become so extensive that the organization's major purpose may be

regarded as campaign activity, the corporation

would be classified as a political committee,"

subject to the restrictions and extensive reporting

requirements the law applies to such entities.

In conclusion, the Court ruled that n§44Ib's

restriction of independent spending is unconstitutional as applied to MCFL, for it infringes protected speech without a compelling justification for

such infrfngem ent." However, the Court did not

directly rule on the constitutionality of §441b's

restrictions on "corn mercial enterprises," since

that was not at issue in this suit.

Justice William J. Brennan, Jr., who wrote

the majority opinion, was joined by Justices

Thurgood Marshall, Lewis F. Powell, Jr. and

Antonin Scalia and, in part, by Justice Sandra Day

O'Connor.

Dissents

Chief Justice William H. Rehnquist, joined by

Justices Byron R. White, Harry A. Blackmun and

John Paul Stevens, dissented from "the conclusion

that the statutory provisions are unconstitutional

as applied to [MCFL].1t Chief Justice Rehnquist

observed that the differences between business

corporations and corporations like MCFL "are

'distinctions in degree' that do not amount to

'differences in kind.'....As such, they are more

properly drawn by the legislature than the judiciary....Congress expressed its judgment in §441b

that the threat posed by corporate political acti6

vity warrants a prophylactic measure applicab

to all groups that organize in the corporate form

Our previous cases have expressed a reluctance 

fine-tune such judgments; I would adhere to th

counsel here."

In his judgment, "Itlhe three part test gratu

tously announced in today's dicta...adds to a we

defined prohibition a vague and barely adum

brated exception certain to result in confusi

and costly litigation."

COMMON CAUSE v, FEC (Suit Four)

On December 30, 1986, the United Stat

District Court for the District of Columbia d

clared that the F EC's dismissal of an administr

tive complaint filed in 1980 by Common Caus

was, in part, contrary to law. The case w

remanded to the FEC for action consistent wi

the court's opinion.

Background

The original complaint alleged that five u

authorized political com mittees, which support

Ronald Reagan's 1980 campaign committee, h

violated the Act by using Reagan's name in the

respective nam es. Furthermore, it was alleg

that the committees involved in the complai

had impermissibly coordinated their "independe

expenditures" with the official Reagan committ

and, by doing so, had made contributions whi

exceeded the committees' limits. The five com

mittees named in the complaint were: America

for an Effective Presidency (AEP), Americans f

Change (AFC), North Carolina Congressional Cl

(NCCC),** Fund for a Conservative Major

(FCM) and National Conservative Politieal Acti

Com mittee (NCPAC). After investigating t

majority of the claims, the FEC voted to clo

the file regarding the administrative complai

and take no further action.

In its suit, Common Cause alleged that t

FEC had wrongfully dismissed the complaint.

Court Ruling

FEC Determination to Dismiss Complaint 

Committees' Use of Candidate's Name. The fir

legal issue addressed by the court was Comm

Cause's allegation that AFC, FCM and NCPA

violated the Act (2 U.S.C. §432(e)(4» by using t

name of a candidate, Ronald Reagan, in the

respective committee names. Under the A

*This complaint was merged with a similar o

filed several months earlier by the Carter-Mo

dale Reelection Committee and the Democra

National Committee.

**NCCC has subsequently become the Nation

Congressional Club.
February 1987 FEDERAL ELECTION COrvlrvllSSION

only an authorized committee may use a candidate's name in its name. In this case, the

committees involved were not authorized by any

candidate. Evidence revealed that each committee had used the word "Reagan" in its respective

fundraising project when soliciting funds and

otherwise communicating with the public, The

FEC argued that, because the official registered

names of the committees did not contain Reagan's

name and that the use of "Reagan" was merely for

the purpose of identifying a particular fundraising

project, the Act had not been violated.

In its opinion, the court noted that the name

of the co mmittee which is presented to the public

for identification constitutes a "name" within the

meaning of the Act and, therefore, the decision

by the FEC to dismiss the complaint was contrary

to law. Further, the court ordered the Commission to conform with its opinion within 30 days,

pursuant to 2 U.S.C. §437g(a)(8)(c).

FEe Determination Not to Investigate Coordination. In the original administrative complaint, by a vote of 3-3, the FEC reached no

conclusion as to whether there was reason to

believe AEP and NCCC had coordinated their

expenditures with the official Reagan campaign.

(With regard to the other three committees, the

Commission did find "reason to believe" and did

conduct an investigation. See below.) This decision, which resulted in an automatic dismissal of

this portion of the complaint, was contrary to the

recommendation made by the FEe's General

Counsel. Moreover, the Commission submitted no

explanation for its decision.

The court stated that some explanation of

the FEC's reasons for dismissing the complaint

was warranted to enable the court to review the

original determination on the issue. As a result,

the court ruled that the FEC's action was arbitrary and capricious and required the agency to

provide an explanation for its action within 30

days.

FEC Determination to Dismiss Complaint on

Coordination. The final issue addressed by the

court concerned Common Cause's allegation that

the FEC, after investigating expenditures '::Jy

AFC, FCM and NCPAC, acted contrary to law by

dismissing the complaint. In the original

complaint, it was alleged that all of the

committees had "coordinated" their expenditures

with those of the official Reagan campaign and

had, thereby, made contributions -- rather than

independent expenditures. These contributions,

according to Common Cause, exceeded the

limitations contained in the Act, under 2 U.S.C.

§44Ia(a). (There are no limits on independent

expenditures.)

In its suit, Common Cause contended that a

determination of coordination should be based on

the "totality of circumstances," According to

7

Volume 13, Number 2

Common Cause, the FEC should have considered

circumstances such as interlocking membership of

persons at the policy-making level, prior alliances

with the official committees and the use of

common vendors by the committees. The FEC

argued, however, that evidence of "direct coordination" was a necessary prerequisite to a determination of "impermissible coordinatlon," and it

found no evidence of direct coordination.

The court concluded that the FEC's interpretation of what constitutes "impermissible coordination" was not contrary to the law. Moreover,

the court noted that, absent evidence of express

intent or communication, "it is difficult to state

exactly what combination of circumstances would

prove that coordination occurr-ed," Therefore, in

this issue, the court ruled that the FEC's action

was proper.

FEC v. CONGRESSMAN CHARLES E. ROSE

On December 2, 1986, the U.S. Court of

Appeals for the District of Columbia Circuit

issued an opinion in FEC v. Congressman Chal'1es

E. Rose (Clvil Action No. 85-1455), which reversed an earlier decision by the U.S. District

Court for the District of Columbia. The appeals

court determined that the FEC was not liable for

litigation costs and attorney's fees which Conzressman Rose incurred in a suit he had brought

;gainst the FEG. The appeals court concluded

that, under the statute governing such fee awards,

the Equal Access to Justice Act, "the district

court [had] erred in holding that the FECls position in the case was not 'substantially justified.' II

The appeals court therefore remanded the case to

the district court, with orders to dismiss

Congressman Rose's application to have the FEC

bear his court costs.

Background

In June 1983, pursuant to the election law's

procedures for obtaining adm inistrative relief,

Congressman Rose petitioned the U.S. District

Court for the District of Columbia, (Rose v.

FEC, First Suit; Civil Action No. 83-1687) Mr.

Rose asked the court to issue an order directing

the FEC to take final action, within 30 days, on

an administrative complaint he had filed with the

FEC in October 1982. See 2U.S.C. §§437g(a)(8)(A)

and (C), However, after the Commission petitioned the District Court for the Eastern District

of North Carolina to enforce subpoenas issued as

part of its investigation into Mr. Rose's complaint, Mr. Rose requested that his suit be dismissed. (For a summary of the suit, see page 10

of the August 1983 Record.)

Claiming that the FEC had taken no subsequent action on his complaint. Mr. Rose filed a

second suit with the district court in July 1984.

(Rose v. FEC, Second Suit; Civil Action No. 84-

continued
February 1987 FEDERAL ELECTION COMMISSION \bIume 13, Numb

2278) On October 4, the district court found that

the FEC had acted contrary to law by failing to

resolve the complaint. However, after reviewing

the case on appeal, on October 24, 1984, the

appeals court summarily reversed the district

court's original decision and remanded the case to

the district court for reconsideration.

Upon reconsidering the case, the district

court granted Mr. Rose's motion for summary

judgment in the suit on October 31, 1984. The

court later granted his petition, asking that the

FEC be held liable for Mr. Rose's litigation costs

and attorney's fees.

On July 24, 1984, the FEC appealed the

district court's determination that the agency was

liable for these litigation expenses.

Appeals Court's Ruling

Initially, the appeals court noted that its

determination concerning the FEC's liability for

Mr. Rose's litigation costs and attorney's fees

should be based on the Equal Access to Justice

Act (EAJA), as amended in 1985. Under the 1985

amendments to this statute, a government agency

is not liable for litigation costs and attorney's

fees if the agency can show "that both its position

in the litigation and its conduct that led to the

litigation were substantially justified." To determine whether a government agency's actions were

i'isubstantially justified," the court may not use

the standard used to challenge an agency's action

on an administrative complaint (i.e., whether the

action was "arbitrary and capricious"). Rather, in

applying the EAJA standard, the court "is obliged

to reexamine the facts under a different legal

standard to determine whether that conduct is

slightly more than reasonable."

While the appeals court found that the district court had used the "correct legal standards"

in making its determination with regard to the

FEC's liability, the appeals court nevertheless

concluded that the district court "fell into error

in applying those standards." The court concluded

that lithe FEC's handling of Congressman Bose's

administrative complaint was 'SUbstantially justified.' Far from suggesting unjustifiable delay, the

record demonstrates prompt and sustained agency

attention to Representative Rose's complaint and

thorough consideration of the issues it raised."

The court also found that the FEG's litigation

position was SUbstantially justified. "The Commission, in truth, had no practical alternative to

defending against Mr. Rose's action. It cannot be

forgotten that the Congressman was advancing

interpretations of the Campaign Act that would

8

have drastically altered the agency~s operati

And the arguments are dead wrong." 

FEC v. CITIZENS PARTY

On December 30, 1986, the U.S. Dist

Court for the Northern District of New Y

granted the FEC's application for a def

judgment against the Citizens Party.

As part of the judgrnent, the court orde

the defendant to pay a $5,000 civil penalty to 

U.S. Treasurer. The court also enjoined 

defendants from further violations of the elec

law's reporting provisions.

In filing suit against the Citizen's Party 

its treasurer in December 1985, the FEC claim

that the defendants had violated the law 

failing to file the following reports for the 1

election year: two quarterly reports, a p

general election report and a year-end rep

(See 2 U.S.C. §§434(a}(4)(A}(i)-(iji».

NEW LITIGATION

FEe v, John R. Clark, Jr.

The FEC filed an action against John 

Clark, .Jr., for his failure to pay the $250 c

penalty stipulated in conciliation agreem

concluded between Mr. Clark and the Comr

S1On. . **

The FEe asks the court to:

o Declare that Mr. Clark violated the terms 

the agreement;

o Assess a $5,000 penalty against him for 

violation;

o Order Mr. Clark to comply with the agreeme

and

o Permanently enjoin Mr. Clark from further v

lations of the election law.

U.S. District Court Ior the Middle Distric

Florida, Civil Action No. 86-I841-CIV-T-17B.

""The appeals court had rejected Mr. RO

argument that the Act required the FEC to ac

his administrative complaint within a 120-

time frame. Instead, the court confirmed 

FEC's argument that the FEe's handling of 

complaint should be judged wuler the deferen

standard of review prescribed in the Adminis

tive Procedures Act. 

''"*In the conciliation agreement, Mr. Clark 

mitted violating the election law by knowin

permitting his name to be used to make a con

bution in the name of another person.
February 1987 FEDERAL ELECTION COIVIIVlISSIOI\J Volume 13, NumOOr" 2

Common Cause v. FEe (Suit Five*)

On December 17, 1986, Common Cause filed

a second suit challenging the FEC's dismissal of

an administrative complaint which the organization had filed with the agency in September

1984.**

The district court had remanded Common

Cause's first suit to the FEC for a statement of

reasons concerning the agency's dismissal of the

complaint.*** (Common Cause v. FEe; Civil

Action No. 85-0968) In response, on October 27,

1986, the FEC sent Common Cause two statements (one signed by two Commissioners and the

other, by one Commissioner), which explained the

agency's reasons for dismissing the complaint.

Claiming that the FEG's statements did not provide "a reasoned basis for its dismissal of

Common Cause's administrative complaint," the

organization filed a second suit, in which it asked

the court to:

o Declare that the Commission's decision to dismiss Common Cause's administrative complaint

was contrary to law; and o Issue an order directing the Commission to act

on the allegations in the complaint within 30

days of the court's ruling on the case.

U.S. District Court for the District of

Columbia, Civil Action No. 86-3465, December

17, 1986.

FEe v. Americans fo;: :resse Jackson

Pursuant to 2 U.S.C. §437g(a)(5), ~h.; C.J!il··

mission asks the court to declare that Americans

for Jesse Jackson, a political committee,*** violated:

o 2 U.S.C. §433(a) by failing to file a statement

of organization with the Commission;

o 2 U.S.C. §434 by failing to file reports of

receipts and expenditures;

o 2 U.S.C. §432(e)(4) by using the name of Jesse

Jackson in its name; and

o 2 U.S.C. S441d(a)(3) by failing to include a

sufficient statement of identification on its

solicitatlon com munication.

"Number distinguishes this suit from other

actions brought by Common Cause against the

FEe.

*~In its administrative complaint, Common

Cause claimed that President Reagan's 1984 reelection campaign had violated the election law

by failing to report and pay for the expenses of a

campaign-related trip to Illinois to address the

Veterans of Foreign Wars.

'" It"'Americans for Jesse Jackson was not authorized by Presidential Candidate Jesse Jackson

(1984).

9

The FEC further asks the court to:

o Assess a civil penalty against the Committee

for the greater of $5,000 or an amount equal to

100 per cent of the amount involved in each

violation; and

o Permanently enjoin the Committee from further violations of the election law.

U.S. District Court for the District of Maryland, Civil Action No. Y886-3766, December 17,

1986.

FEC v. Jolyn Robichaux, et al,

Pursuant to 2 U.S.C. §437g(a){6)(A), the Commission asks the court to declare that Jolyn

Robichaux and ten other defendants viola ted section 441a(a)(l)(A) of the election law by making

excessive contributions to the Hayes for Congress

Committee (the Committee). (The Committee

served as Charles Hayes' principal campaign committee in a 1983 special election held to fill an

Illinois House seat.)

Specifically, the FEC asks the court to declare that:

o Six of the defendants made excessive contributions to the Committee by endorsing a $25,000

bank loan payable to the Committee* and that

one of these endorsers also made an excessive

direct contribution to the Committee;

o Five of the defendants made excessive contributions by endorsing a $50,000 bank loan payable to the Committee.

The FEC further asks the court to:

o Permanently enjoin the defendants from further

violations of the election law; and

o Assess a civil penalty against each defendant

amounting to the greater of $5,000 or 100

percent of the total amount involved in his/her

violation.

U.S. District Court for the Northern District

of Illinois, Civil Action No. 86C9659, December

11, 1986.

"Under the election law and FEC Regulations

endorsements and guarantees of loans, inclUding

those made by members of the candidate's famity,

count as contributions to the extent of the out

standing balance of the loan. 2 U.S.C. Section

43l(a)(A)(i) and 11 CFR 100.7(a)(1)(i)(C).
February 1987 FEDERAL ELECTION COMMISSION Vdume 13, Numbe

Year

Corporate

NonCOMec

Trade!

Membershi

Health

refers to any political committee not authori

by a federal candidate or established by a pol

cal party.)

The graph below plots the total number 

PACs in existence from 1973 through 1986. T

graph does not reflect the financial activity 

PACs. More detailed information may be obta

ed from the FEOs January 12, 1987, press 

lease, which is available from the FEC's PU

Records Office. Call: 376-3120 locally or, 

free, 800/424-9530.

___I--_.-~..--II--"~-.---'- Other**

O.......--r--...-~I:::::::::~=~:-..,.....- .....-r-........,-.......-....,..-_......

10

*"'Includes PACs formed by corporations without capital stock and cooperatives. Numbers are n

available for these categories of PACs from 1974 through 1976.

ItFor the years 1974 through 1976, the FEC did not identify SUbcategories of PA ce other th

corporate and labor PACs. Therefore, numbers are not available for Trade/Membership/Health PA

and Nonconnected PACs.

PAC GROWTH

Number of PACs

1000 _~

1986 PAC COUNT

By the end of December 1986, 4,157 PACs

were registered with the FEe. This figure represents a net increase of 165 PACs during 1986.

(The term PAC or political action committee
FEDERAL ELECTION COMMISSION

AUDITS RELEASED TO THE PUBLIC

The following is a chronological listing of

audits released by the Commission between February 11, 1985, and January 9, 1987. The audit

reports are available to the general public in the

Public Records Office.

5/1/86

3/4/86

10/1/86

11/6/86

1/9/87

7/15/86

9/22/86

3/28/86

9/30/86

2/25/86

4/23/86

4/28/86

6/26/86

1/28/86

7/10/86

1/27/86

10/28/86

Date Made Public

Volume 13, Number 2

National Organization for

Women Political Action

Committee

Mondale for President

Committee, Inc. (primary campaign)

New Jersey Education

Political Action

Committee

Pennsylvania Democratic

State Committee

Maine Freeze Voter

Committee on Arrangements for the 1984

Republican National

Convention

Life Amendment Political Action Committee

Americans With Hart, Inc.

Garden State Political

Action Committee

Massachusetts Republican

State Committee

Reagan-Bush '84 (primary

campaign)

Nebraska Democratic

State Central

Committee

Georgia Democratic

Elections CommitteeFederal

Addendum to the Final

Audit Report for the

Hollings for President,

Inc.

Phil Shea for Congress

Committee

Addendum to the Final

Audit Report for the

Friends of George

McGovern

Atkins for Congress Committee

Final Audit Report

11

9/5/85

9/5/85

6/25/85

7/19/85

8/19/85

2/11/85

8/22/85

6/20/85

7/25/85

12/13/85

11/26/85

10/29/85

11/14/85

Date Made Public

February 1987

Friends of George

McGovern

1984 San Francisco Demoeratic Convention Host

Committee, Inc.

Al Swift For Congress

Committee

Final Audit Report

1984 Democratic National Convention Committee, Inc.

Fund For a Conservative

Majority

Draft Augustine for Congress and Augustine for

Congress

John Glenn Presidential

Committee, Inc.

Maine Democratic State

Committee

Dallas Welcoming Committee

Cranston For President

Committee, Inc.

Jesse Jackson For President Committee, New

Yorkers For Jackson

and Jackson For

President CommitteeCalifornia

The La.Rouche Campaign

Sonia Johnson - Citizen

for President

•
Official Business

FEDERAL ELECTION COMMISSION

Volume 13, Numbe

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

CHANGE OF ADDRESS

Registered political committees are

automatically sent the Record. Any change

of address by a registered committee must,

by law, be made in writing as an amendment to FEC Form 1 (Statement of Organization) and filed with the Clerk of the

House, the Secretary of the Senate, or the

FEC, as appropriate.

Record subscribers (who are not political com mittees), when calling or mailing in

a change of address, are asked to provide

the following information:

1. Name of person to whom the Record is

sent.

2. Old address.

3. New address.

4. Subscription number. The subscription

number is located in the upper left

hand corner of the mailing label. It

consists of three letters and five numbers. Without this number, there is no

guarantee that your subscr-iption can

be located on the computer.

FEDERAL ELECTION COMM ISSION

999 E Street,NW

Washington, D.C. 20463

February 1987

This cumulative index lists advisory opinions,

court cases and 800 Line articles published in the

Record during 1987. The first number in the

citation refers to the "number" (month) of the

Record issue; the second number, following the

colon, indicates the page number in that issue.

OPINIONS

1986-37: Presidential candidate appearances at

convention of nonprofit corporation, 1:6

1986-38: Individual's financing of media ads to

promote conservative candidates, 1:7

COURT CASES

FEC v, Citizens Party, 1:8