September 2002 Federal Election Commission Volume 28, Number 9

Table of Contents

Regulations

1 Final Rules on Nonfederal Funds

or “Soft Money”

9 Final Rules on Contribution and

Expenditure Definitions

10 Notice of Proposed Rulemaking

on Electioneering

Communications

11 Notice of Proposed Rulemaking

on Contribution Limitations and

Prohibitions

4 Federal Register

6 Public Appearances

13 Advisory Opinions

Court Cases

15 Friends for Houghton v. FEC

16 New Litigation

Alternative Dispute Resolution

16 ADR Update

Compliance

17 Nonfilers

Publications

17 New Campaign Guide

www.fec.gov

17 BCRA on FEC Web Site

Administrative Fines

18 Committees Fined for Late and

Nonfiled Reports

Outreach

18 FEC Roundtables

19 Index

Compliance Regulations

Final Rules on Nonfederal

Funds or “Soft Money”

On June 22, 2002, the Commission promulgated new and revised

rules based on provisions of the

Bipartisan Campaign Reform Act of

2002 (BCRA) that restrict and, in

some cases, ban the receipt, solicitation and use of nonfederal funds

(sometimes called “soft money”).

These rules:

• Prohibit national parties from

raising or spending nonfederal

funds;

• Require state, district and local

party committees to fund certain

“federal election activities” with

federal funds and, in some cases,

with money raised according to

new limitations, prohibitions and

reporting requirements (i.e.,

“Levin funds”1 ), or with a combination of such funds; and

• Address fundraising by federal and

nonfederal candidates and officeholders on behalf of party committees, other candidates and

nonprofit organizations.

The new and revised soft money

regulations do not affect the 2002

election cycle, nor do they apply to

runoff elections, recounts or election

contests resulting from the November 5 elections. In fact, while most

of the soft money rules will take

effect on November 6, 2002, some

provisions, such as the increase in

individual contribution limits to

state party committees to $10,000

per year, will not become effective

until January 1, 2003. 11 CFR

110.1(c)(5) and 300.1(b).

The final rules and their Explanation and Justification were published

in the July 29 Federal Register (67

FR 49064) and are available on the

FEC web site at http://www.fec.gov/

pdf/nprm/soft_money_nprm/

fr67n145p49063.pdf.

Part I: General Information and

Terminology

Organization. In order to implement the BCRA, the Commission

has revised its existing regulations

and added new 11 CFR part 300,

which contains most of the rules

governing party committees’ use of

nonfederal funds and the so-called

“Levin funds.” New part 300

contains five subparts, which

address the use of nonfederal funds

by each of the following entities:

1 See p. 4 for a full description of

“Levin funds.”

(continued on page 2)
Federal Election Commission RECORD September 2002

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/694-1100

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

David M. Mason, Chairman

Karl J. Sandstrom, Vice Chairman

Danny L. McDonald,

 Commissioner

Bradley A. Smith, Commissioner

Scott E. Thomas, Commissioner

Michael E. Toner, Commissioner

James A. Pehrkon, Staff Director

Lawrence H. Norton, General

 Counsel

Published by the Information

 Division

Greg J. Scott, Assistant Staff

 Director

Amy Kort, Editor

http://www.fec.gov

• National party committees;

• State, district and local party

committees;

• Federal candidates and officeholders;

• State and local candidates; and

• Tax-exempt organizations.

The rules applicable to each of

these entities are addressed in detail

below, in Part II: Application.

Federal election activity. Many

provisions of the BCRA are framed

in terms of “federal election activities.” As used in 11 CFR part 300,

“federal election activity” means

any of the following activities:

1. Voter registration activity during

the 120 days before a regularlyscheduled federal election and

ending on the day of that election;

2. Voter identification, generic

campaign activities2 and get-outthe-vote activities that are

conducted in connection with an

election in which one or more

candidates for federal office

appear on the ballot (regardless

of whether state or local candidates also appear on the ballot);

3. A public communication3 that

refers to a clearly-identified

federal candidate and that

promotes, supports, attacks or

opposes any federal candidate

(This definition applies regardless of whether a nonfederal

candidate is also mentioned or

identified in the communication

and regardless of whether the

communication expressly

advocates a vote for or against a

federal candidate.); and

4. Services provided by an employee of a state, district or local

party committee who spends

more than 25 percent of his or

her compensated time during that

month on activities in connection

with a federal election. 11 CFR

100.24(b).

The Commission has also

adopted regulations at 11 CFR

100.24(a) that define certain terms

used in the above definition of

“federal election activity”:

1. “In connection with an election

in which a candidate for federal

office appears on the ballot”

means:

• In an even-numbered year, the

period beginning on the day of the

earliest filing deadline for primary

election ballot access under state

law—or on January 1 in states that

do not hold primaries—and ending

on the day of the general election

or the general election runoff if a

runoff is held; or

• In an odd-numbered year, the

period beginning on the day that

the date is set for a special election

in which a federal candidate

appears on the ballot, and ending

on the day of that election.

2. “Voter registration activity”

means contacting individuals by

telephone, in person or by other

individualized means to assist

them in registering to vote. This

activity includes, but is not

limited to, printing and distributing registration and voting

information, providing individuals with voter registration forms

and assisting individuals with

completing and filing these

forms.

3. “Get-out-the-vote activity”

means contacting registered

voters by telephone, in person or

by other individualized means in

order to assist them in voting

(unless the activity is undertaken

by state or local candidates and/

or officeholders, or an organization of such candidates or

officeholders, and refers only to

one or more state or local

candidates). This activity includes, but is not limited to:

• Providing individual voters, within

72 hours of an election, with

information about when and where

polling places are open; and

• Transporting, or offering to

transport, voters to polling places.

4. “Voter Identification” means

creating or enhancing voter lists

by adding information about

voters’ likelihood of voting in a

2 “Generic campaign activity” means a

public communication that promotes or

opposes a political party and does not

promote or oppose a clearly-identified

federal or nonfederal candidate. 11

CFR 100.25.

3 A “public communication” means any

communication by means of television

(including cable and satellite), radio,

newspaper, magazine, billboard, mass

mailing, telephone bank or any other

form of general public political

advertising. Communications over the

Internet are not included in the

definition of public communication. 11

CFR 100.26.

Regulations

(continued from page 1)
September 2002 Federal Election Commission RECORD

3

particular election or voting for a

particular candidate (unless the

activity is undertaken by state or

local candidates and/or officeholders, or an organization of

such candidates or officeholders,

and refers only to one or more

state or local candidates).

The regulations also identify

activities that are not included in

the definition of “federal election

activity.” These are:

1. A public communication that

refers solely to one or more

clearly-identified candidate(s)

for state or local office and does

not promote, support, attack or

oppose a clearly-identified

candidate for federal office. A

public communication would,

however, be considered a federal

election activity if it constituted

voter registration, generic

campaign activity, get-out-thevote activity or voter identification;

2. A contribution to a candidate for

state or local office, unless the

contribution is designated for

voter registration, voter identification activity, generic campaign

activity, get-out-the vote activity,

employee services for these

activities or a public communication;

3. The costs of state, district or

local political conventions,

meetings or conferences; and

4. The costs of grassroots campaign materials that name or

depict only a candidate for state

or local office. 11 CFR

100.24(c).

Agent. In most cases, regulations

that apply to a party committee, a

federal candidate or officeholder or

a state or local candidate also apply

to any “agent” acting on behalf of

that individual or organization. For

the purposes of 11 CFR part 300,

the term “agent” is defined as any

person who has “actual authority,

either express or implied” to engage

in specifically-listed activities on

behalf of another person or organization. 11 CFR 300.2(b).

Directly or indirectly established,

maintained, financed or controlled.

Most of the new regulations that

apply to a party committee or a

federal candidate or officeholder

also apply to any entity “directly or

indirectly established, maintained,

financed or controlled” by the

committee, candidate or officeholder. The new regulation at 11

CFR 300.2(c), which is based on the

existing “affiliation” regulation at 11

CFR 100.5(g)(4), includes a series of

factors that must be considered, in

the context of an overall relationship, to determine whether the

presence of one or more of these

factors indicates that the individual

or committee established, finances,

maintains or controls the organization. An entity will not be considered

to be directly or indirectly established, financed, maintained or

controlled based solely upon activities undertaken before November 6,

2002.

Part II: Application

National Party Committees,

Including National Congressional

Campaign Committees

General prohibitions. Beginning

on November 6, 2002, national party

committees may not solicit,4 receive,

direct to another person or spend

nonfederal funds, that is, funds that

are not subject to the limits, prohibitions and reporting requirements of

the Act.5 Moreover, such committees must use only federal funds to

raise funds that are used, in whole or

in part, for expenditures and disbursements for federal election

activity. 11 CFR 300.10.

Tax-exempt organizations.

National party committees may not

solicit funds for, or make or direct

donations to, tax-exempt 501(c)

organizations, or an organization

that has applied for this tax status, if

the organization makes expenditures

or disbursements in connection with

federal elections, including federal

election activity.6 11 CFR

300.11(a). The committee may

establish whether or not the organization makes expenditures or

disbursements in connection with

federal elections by obtaining a

signed certification from an authorized representative of the organization. The certification should state

that within the current election cycle

the organization has not made, and

does not intend to make, such

expenditures and disbursements,

including payments for debts

incurred in an earlier cycle. 11 CFR

300.11(c).

National party committees may

solicit funds for, or make or direct

donations to, so-called “527 organizations” only if these organizations

are:

• Political committees under Commission regulations; or

• State, district or local party committees or authorized campaign 4 For the purposes of 11 CFR part 300,

to “solicit” means to “ask that another

person make a contribution, donation,

transfer of funds, or otherwise provide

anything of value, whether the contribution, donation, transfer of funds, or

thing of value, is to be made or provided

directly, or through a conduit or

intermediary.” Merely providing

information or guidance as to the

requirement of a particular law does not

constitute a solicitation. 11 CFR

300.2(m).

5 Commission regulations at 11 CFR

300.13(c) address interim reporting

requirements between November 6 and

December 31, 2002.

6 In no case is a committee prohibited

from responding to a request for

information about a tax-exempt group

that shares the party’s political or

philosophical goals. 11 CFR 300.11(f).

(continued on page 4)
Federal Election Commission RECORD September 2002

4

committees of state or local

candidates. 11 CFR 300.11(a)(3).

Office Building Funds. After

November 5, 2002, national party

committees may no longer accept

funds into party office building

accounts and may not use such

funds for the purchase or construction of any office facility. Any funds

remaining in an office building

account on November 6 must be

disgorged to the U.S. Treasury or

returned to donors no later than

December 31, 2002. Any refund

check not cashed by February 28,

2003, must be disgorged to the

Treasury by March 31. 11 CFR

300.12.

Transition rules. If a national

party committee has nonfederal

funds in its possession on November

6, 2002, it may use these funds to

retire outstanding debts or other

obligations relating to the 2002

elections, including runoff elections

and recounts, until January 1, 2003.

Any remaining nonfederal funds

must be disgorged to the Treasury or

returned to donors no later than

December 31, 2002. Any refund

checks not cashed by February 28,

2003, must be disgorged to the

Treasury by March 31. The

nonfederal accounts of national

party committees must file termination reports with the Commission

disclosing the disposition of all

funds deposited in nonfederal

accounts and building fund accounts. 11 CFR 300.12 and 300.13.

State, District and Local Party

Committees and Organizations

Under the new regulations, state,

district and local party committees

that have receipts or make disbursements for federal election activity

may maintain, as appropriate, up to

four different types of accounts:

• Federal accounts, for deposit of

funds that comply with the limitations, prohibitions and reporting

requirements of the Act;

• Nonfederal accounts, for deposit of

funds that are governed by state

law;

• Allocation accounts, which may be

established to make allocable

expenditures and disbursements;

and

• Levin accounts, for deposit of a

new category of funds, called

“Levin funds,” that comply with

some of the limits and prohibitions

of the Act and are also governed

by state law.7

Levin funds. A state, district or

local party committee may spend

only those Levin funds that it raises

for itself, and these funds can be

used only for certain types of voter

registration, voter identification,

get-out-the-vote and generic campaign activity. Note that certain

types of federal election activities

may not be financed with Levin

funds:

• Public communications that refer

to a clearly-identified candidate;

and

• The services of employees who

devote more than 25 percent of

their compensated time to activities in connection with a federal

election.

National party committees may

not raise or spend Levin funds.

When a party committee receives

a donation of Levin funds, this

donation:

• Must be permissible under the

laws of the state in which the party

committee raising and spending

the funds is organized;

• May be solicited from some

sources that cannot contribute

under the Act (e.g., corporations,

unions and federal government

contractors) so long as the donation is not from foreign nationals

or from sources that are impermissible under state law;

• Is limited to $10,000 in a calendar

year from any person, including

any entity established, maintained,

financed or controlled by that

person (if state law limits donations to an amount less than

Regulations

(continued from page 3)

7 An organization may also deposit

Levin funds in a nonfederal account

that must function as a nonfederal and

Levin account. In order to make a

disbursement of Levin funds from such

an account, the organization must be

able to show through a reasonable

accounting method approved by the

Commission that the organization had

received into this account sufficient

federal contributions or Levin donations to make the disbursement. 11 CFR

300.30(c)(3)(ii).

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office, on the FEC web

site at http://www.fec.gov/

register.htm and from the FEC

faxline, 202/501-3413.

Notice 2002-11

Final Rules on Prohibited and

Excessive Contributions:

Nonfederal Funds or Soft Money

(67 FR 49064, July 29, 2002).

Notice 2002-12

Final Rules on Reorganization of

Regulations on “Contribution”

and “Expenditure” (67 FR 50582,

August 5, 2002).

Notice 2002-13

Notice of Proposed Rulemaking

on Electioneering

Communications (67 FR 51131,

August 7, 2002).

Notice 2002-14

Notice of Proposed Rulemaking

on Contribution Limitations and

Prohibitions (67 FR 54366,

August 22, 2002).
September 2002 Federal Election Commission RECORD

5

$10,000, then the lower limit

applies); and

• Must be raised using only federal

funds or Levin funds to pay the

direct costs of the fundraising

(including expenses for the solicitation of funds and for the planning

and administration of actual

fundraising activities and programs) if any portion of the funds

will be used for federal election

activity. 11 CFR 300.31 and

300.32(a)(4).

Each state, district and local party

committee has a separate Levin fund

donation limit, and such committees

are not considered to be affiliated

for the purposes of determining

Levin fund donation limits. Levin

funds expended or disbursed by a

given state, district or local party

committee must be raised solely by

that particular committee, and these

committees cannot raise Levin funds

through joint fundraising efforts or

accept transfers of Levin funds from

other committees. Additionally,

these committees cannot accept or

use as Levin funds any funds that

come from, or in the name of, a

national party committee, federal

candidate or federal officeholder. 11

CFR 300.31 and 300.34(b).

Levin fund expenditures and

disbursements. As a general rule,

state, district and local party committees must use federal funds to

make expenditures and disbursements for federal election activity.8

11 CFR 300.32(a)(2). However, as

long as certain conditions are met,

a state, district, or local party

committee may use Levin funds to

pay for all or part of the following

types of federal election activity:9

• Voter registration activity during

the period that begins 120 days

before the date of a regularlyscheduled federal election and

ends on the day of that election;

and

• Voter identification, get-out-the

vote activities or generic campaign

activity conducted in connection

with an election in which a federal

candidate appears on the ballot

(regardless of whether a state or

local candidate also appears on the

ballot). 11 CFR 300.32(b).

Levin funds may not be used,

however, to pay for any part of a

federal election activity if:

• The activity refers to a clearlyidentified federal candidate; or

• Any portion of the funds will be

used to pay for a television or

radio communication, other than a

communication that refers solely to

a clearly-identified state or local

candidate. 11 CFR 300.32(c).

Levin funds may be used to pay

for the entirety of permissible

federal election activity disbursements only if the party committee’s

disbursements do not exceed $5,000

in the aggregate in a calendar year.

Disbursements and expenditures

that aggregate in excess of $5,000

per year must be paid entirely with

federal funds or allocated between

federal funds and Levin funds,

according to the minimum allocation percentages described below.

11 CFR 300.33(a).

Allocating expenses. State,

district and local party committees

that allocate federal election activity

expenses between federal and Levin

funds must allocate to their federal

account one of following minimum

percentages, depending on the

composition of the ballot for that

year:

1. If a Presidential candidate, but no

Senate candidate, appears on the

ballot, then at least 28 percent of

the expenses must be allocated to

the federal account.

2. If both a Presidential candidate

and a Senate candidate appear on

the ballot, then at least 36

percent of the expenses must be

allocated to the federal account.

3. If a Senate candidate, but no

Presidential candidate, appears

on the ballot, then at least 21

percent of the expenses must be

allocated to the federal account.

4. If neither a Presidential nor a

Senate candidate appear on the

ballot, at least 15 percent of the

expenses must be allocated to the

federal account.

An organization must make

payments for allocable expenses

either from a federal account or

from an allocation account. If

payments are made from a federal

account, Levin funds may be

transferred to this account, during

the 70-day window for such transfers, in order to cover the Levinfund portion of the expense. 11 CFR

300.33(d).

Expenses that may not be allocated. Certain costs of federal

election activity are not allocable:

• Expenditures for public communications that refer to a clearlyidentified federal candidate and

that promote, support, attack or

oppose any federal candidate must

be paid entirely with federal funds.

• Salaries and wages for employees

who spend more than 25 percent of

their compensated time per month

on federal election activities, or on

activities in connection with

federal elections, must be paid

entirely with federal funds. Salaries and wages for employees who

8 Additionally, an association or

similar group of state or local candidates or officeholders must use only

federal funds to make expenditures or

disbursements for federal election

activity. 11 CFR 300.32(a)(1).

9 Levin funds may also be used for any

purpose that is not federal election

activity as long as this use is lawful in

the state in which the committee is

organized. 11 CFR 300.32(b)(2).

(continued on page 6)
Federal Election Commission RECORD September 2002

6

spend 25 percent or less of their

compensated time in this manner

must be paid with funds that

comply with state law.

• The direct costs of raising funds to

be used for federal election

activities must be paid with federal

funds or, if Levin funds are being

raised, with Levin funds.

Fundraising costs may not be

allocated and no nonfederal funds

may be used. 11 CFR 300.33(c).

Office buildings. Under the

amended Act and regulations, a

state, district or local party committee may spend federal funds or

nonfederal funds (including Levin

funds) to purchase or construct a

party office facility, so long as the

funds are not contributed or donated

by a foreign national. If a committee

chooses to use nonfederal funds or

Levin funds, the funds are subject to

state law, and the Act will not

preempt state law except to prohibit

donations by foreign nationals.

Moreover, if nonfederal or Levin

funds are used, the office facility

must not be purchased or constructed for the purpose of influencing the election of any federal

candidate in any particular election.

If federal funds are used to purchase

or construct the facility, the Act will

preempt the limits and prohibitions

of state law. 11 CFR 300.35(a) and

(b).

Additionally, a state, district or

local party committee may generate

income by leasing out a portion of

its office building at the usual and

normal charge. If the building is

purchased in whole or in part with

nonfederal funds, then all rental

income must be deposited in the

committee’s nonfederal account and

used only for nonfederal purposes.

The rental income and its use must

also comply with state law. If the

building is purchased entirely with

federal funds, then the rental income

may be deposited in the committee’s

federal account. Any such income

must be disclosed in the

committee’s reports to the Commission. 11 CFR 300.35(c).

Reporting and recordkeeping for

organizations that are not political

committees. A state, district or local

party committee (or an association

of state or local candidates or

officeholders) that is not a political

committee under the Act is not

required to file reports, but must be

able to demonstrate through a

reasonable accounting method that it

has enough funds on hand that

comply with the limits and prohibitions of the Act to cover any payment of federal funds (or Levin

funds) that it makes for federal

election activity. The organization

must keep records to this effect and

make these records available to the

Commission upon request. Payments by such organizations for

federal election activity are not

“expenditures” for the purpose of

determining whether an organization qualifies as a political committee with registration and reporting

requirements, unless the payment

otherwise qualifies as an expenditure under 2 U.S.C. §431(9).10 11

CFR 300.36(a).

Reporting and recordkeeping for

political committees.

11 A state,

district or local party committee (or

an association of state or local

candidates or officeholders) that is

a political committee under the Act

must file on a monthly schedule and

Regulations

(continued from page 5)

10 Certain organizations that make

“expenditures,” as defined at 11 CFR

100.8(a), in excess of $1,000 in a

calendar year become political committees under the Act and must register

and report with the Commission. 11

CFR 100.5. In a separate rulemaking,

the Commission has reorganized 11

CFR 100.7 and 100.8. See related

article on page 9.

11 These requirements added by the

BCRA are in addition to the Act’s

existing requirements to report expenditures of federal funds. 2 U.S.C. §434

and 11 CFR part 104.

Public Appearances

September 4, 2002

American University

Washington, D.C.

George Smaragdis

September 4-6, 2002

Tribunal Superior de Justicia

Electoral

Republica del Paraguay

Asuncion, Paraguay

Commissioner Toner

September 13, 2002

American University

Washington, D.C.

Commissioner Toner

September 19, 2002

The Campaign Disclosure Project

San Francisco, CA

Robert Biersack

September 21-22, 2002

California Political Attorneys

Association

Marina del Rey, CA

Commissioner Sandstrom

September 25, 2002

American University

Washington, D.C.

George Smaragdis

September 30, 2002

American University

Washington, D.C.

Gary Mullen

report all receipts and disbursements

of federal funds for federal election

activity, including the federal

portion of allocated expenses. 11

CFR 300.36(b)(1) and (b)(2). See

also 11 CFR 100.5.

A state, district or local party

committee that is a political committee but that has less that $5,000
September 2002 Federal Election Commission RECORD

7

of aggregate receipts and disbursements for federal election activity

per calendar year—and any

association of state or local candidates or officeholders that is a

political committee—must report all

receipts and disbursements of

federal funds. (The party committee need not report receipts and

disbursements of Levin funds.)

Such a committee or association of

candidates and officeholders

should not report federal funds or

Levin funds disbursed for federal

election activity as “expenditures”

on their reports, unless the disbursement otherwise qualifies as

an expenditure.12 11 CFR

300.36(b)(1) and 300.36(c)(1). See

also 2 U.S.C. §421(9) and 11 CFR

100.8.

A state, district or local party

committee that has $5,000 or more

of aggregate receipts and disbursements for federal election activity

per calendar year must disclose its

activity in greater detail, including

receipts and disbursements of

federal funds and of Levin funds

used for federal election activity. 11

CFR 300.36(b)(2) and 300.36(c)(1).

Such a committee must also report

the allocation percentages used.

Contributions and expenditures of

federal funds for federal election

activity apply toward the $50,000

threshold for determining whether a

committee must file its reports

electronically under the

Commission’s mandatory electronic filing program. Receipts and

disbursements for federal election

activity that do not qualify as

contributions and expenditures

(including Levin fund receipts and

disbursements) do not, however,

count toward this threshold. 11

CFR 104.18 and 300.36(c)(2). See

also 11 CFR 100.7 and 100.8.

Tax exempt organizations. Like

national party committees, state,

district and local party committees

may not solicit funds for, or make

or direct donations to, tax-exempt

501(c) organizations, or to organizations that have applied for taxexempt status, if the organization

makes expenditures or disbursements in connection with federal

elections, including federal election

activity.13 Committees may solicit

funds for, or make or direct donations to, so-called “527 organizations” only if these organizations

are:

• Political committees under Commission regulations;

• State, district or local party committees;

• Authorized campaign committees

of state or local candidates; or

• A political committee under state

law that supports only state or

local candidates and that does not

make expenditures or disbursements in connection with federal

elections, including expenditures

or disbursements for federal

election activity.

In order to establish whether or

not an organization makes expenditures or disbursements in connection

with federal elections, party committees may obtain a signed certification from an authorized

representative of the organization.

The certification should state that

within the current election cycle the

organization has not made, and does

not intend to make, such expenditures and disbursements, including

payments for debts incurred from

making such expenditures and

disbursements in an earlier cycle.

11 CFR 300.37.

Fundraising by Federal

Candidates and Officeholders

The new regulations restrict

and, in some cases, prohibit the

solicitation and use of nonfederal

funds by federal candidates and

federal officeholders,14 including

agents acting on their behalf and

entities that are directly or indirectly

established, maintained, financed or

controlled by one or more federal

candidate or officeholder. 11 CFR

300.60 and 300.61.

Federal elections. Under the Act

and regulations, federal candidates

and officeholders can only solicit,

receive, direct, transfer, spend or

disburse federal funds in connection

with a federal election or for federal

election activity. 11 CFR 300.61.

Nonfederal elections. Federal

candidates and officeholders can

only solicit, receive, direct, transfer,

spend or disburse funds in connection with a nonfederal election in

amounts and from sources that are

both consistent with state law and

not in excess of the Act’s limits and

prohibitions. However, if a federal

candidate or officeholder is also a

candidate for state or local office,

then he or she may raise and spend

nonfederal funds that only comply

with state law, so long as the

solicitation, receipt and spending of

funds refers only to the state or local

candidate and/or another state or

local candidate. Individuals simultaneously running for federal and

nonfederal office may only raise

and spend federal funds for the

federal election. 11 CFR 300.62

and 300.63.

Attending, speaking or appearing

as a featured guest at a fundraising

event. A federal candidate or

12 Associations, or other similar

organizations, of state or local candidates may spend federally-permissible

funds for federal election activity, but

they cannot raise or spend Levin funds.

13 In no case is a committee prohibited

from responding to a request for

information about a tax-exempt group

that shares the party’s political or

philosophical goals. 11 CFR 300.37(f).

14 The new regulations at 11 CFR

300.2(o) define an “Individual holding

Federal office” as an individual elected

to or serving in the office of the U.S.

President or Vice President, or in the

U.S. Congress.

(continued on page 8)
Federal Election Commission RECORD September 2002

8

officeholder may attend, speak or be

a featured guest at a fundraising

event for a state, district or local

committee of a political party,

including a fundraising event at

which nonfederal funds or Levin

funds are raised. The committees

may advertise, announce or otherwise publicize that a federal candidate or officeholder will attend,

speak or be a featured guest at the

fundraising event. Candidates and

federal officeholders may speak at

such an event without restriction or

regulation. 11 CFR 300.64.

Tax-exempt organizations. A

federal candidate or officeholder

may make a general solicitation on

behalf of a tax-exempt organization,

without limits on the source or

amount of funds, if the organization

does not make expenditures or

disbursements in connection with

federal elections, including the

federal election activities listed

below. Moreover, a candidate or

office holder may make a general

solicitation on behalf of an organization that conducts activities in

connection with an election if:

• The organization’s principal

purpose is not to conduct election

activities, including the federal

election activities listed below; and

• The solicitation is not to obtain

funds for election activities in

connection with a federal election,

including federal election activities. 11 CFR 300.65(a) and (c).

Under certain circumstances, a

federal candidate or officeholder

may also make a specific solicitation explicitly to obtain funds to pay

for federal election activities

conducted by a tax-exempt organization whose principal purpose is to

undertake such activities. The

federal election activities for which

such a specific solicitation may be

made are:

• Voter registration activity during

the period that begins 120 days

before the date of a regularlyscheduled federal election and

ends on the day of that election;

and

• Voter identification, get-out-the

vote activity or generic campaign

activity conducted in connection

with an election in which a federal

candidate appears on the ballot

(regardless of whether a state or

local candidate also appears on the

ballot). 11 CFR 300.65(c).

Such solicitations are permissible, however, only if they are

made solely to individuals and the

amount solicited does not exceed

$20,000 during any calendar year.

11 CFR 300.65(b) and (c).

Because the BCRA permits

limited solicitations by federal

candidates and officeholders only

for the specific federal election

activities listed above, these individuals must not make any solicitations on behalf of a 501(c)

organization, or an organization that

has applied for this tax status, for

other types of election activities,

such as public communications

promoting or supporting federal

candidates.

Determining “principal purpose.” A federal candidate or

officeholder may determine a taxexempt organization’s “principal

purpose” by obtaining a signed

certification from an authorized

representative of the organization

stating that:

• The organization’s principal

purpose is not to conduct election

activities, including the federal

election activities listed above; and

• The organization does not intend

to pay debts incurred from

making federal election disbursements and expenditures (including debts for federal election

activity) in a prior election cycle.

11 CFR 300.65(e).

Regulations

(continued from page 7)

15 For example, this prohibition would

apply to an individual who is both a

federal office holder and a state

candidate. The regulations at 11 CFR

300 subpart E do not apply to an

association of state or local candidates

or officeholders.

State and Local Candidates

The new regulations prohibit a

state or local candidate or officeholder, or any agents acting on his

or her behalf,15 from spending

nonfederal funds on a public

communication that refers to a

clearly-identified federal candidate

(regardless of whether a state or

local candidate is also identified)

and that promotes, supports, attacks

or opposes a federal candidate. This

prohibition applies whether or not

the communication expressly

advocates a vote for or against a

federal candidate.

Tax-Exempt Organizations

The Commission has also added a

subpart to 11 CFR 300, subpart C,

which addresses the BCRA’s limits

and prohibitions on the use of soft

money from the perspective of

certain tax-exempt organizations.

The regulations under this subpart

contain the restrictions on

fundraising and donations by

national party committees and state,

district and local party committees

and fundraising by federal candidates and officeholders that are also

addressed in the subparts devoted to

each of these types of entity. 11

CFR 300.50, 300.51 and 300.52.

Advisory Opinions Superseded

These new and revised rules

partially supersede the following

advisory opinions relating to party

office building funds: AOs 2001-

12, 2001-1, 1998-8, 1998-7, 1997-

14, 1993-9, 1991-5 and 1986-40.

Other advisory opinions may no

longer be relied upon to the extent

that they conflict with the BCRA.✦

—George Smaragdis

and Amy Kort
September 2002 Federal Election Commission RECORD

9

PACronyms, Other

PAC Publications

Available

 The Commission annually

publishes PACronyms, an

alphabetical listing of acronyms,

abbreviations and common names

of political action committees

(PACs).

 For each PAC listed, the index

provides the full name of the

PAC, its city, state, FEC

identification number and, if not

identifiable from the full name,

its connected, sponsoring or

affiliated organization.

 The index is helpful in identifying PACs that are not readily

identified in their reports and

statements on file with the FEC.

 To order a free copy of

PACronyms, call the FEC’s

Disclosure Division at 800/424-

9530 (press 3) or 202/694-1120.

PACronyms also is available on

diskette for $1 and can be

accessed free under the “Using

FEC Services” icon at the FEC’s

web site—http://www.fec.gov.

Other PAC indexes, described

below, may be ordered from the

Disclosure Division. Prepayment

is required.

• An alphabetical list of all

 registered PACs showing each

 PAC’s identification number,

 address, treasurer and

 connected organization ($13.25).

• A list of registered PACs

 arranged by state providing the

 same information as above

 ($13.25).

• An alphabetical list of

 organizations sponsoring PACs

 showing the PAC’s name and

 identification number ($7.50).

 The Disclosure Division can

also conduct database research to

locate federal political committees

when only part of the committee

name is known. Call the telephone

numbers above for assistance or

visit the Public Records Office in

Washington at 999 E St., NW.

1 In a separate rulemaking the Commission has added new 11 CFR part 300 to

address the BCRA’s restrictions,

prohibitions and reporting requirements for the use of nonfederal funds.

See related article on page 1.

2 These revisions reflect the language

in the “Brokerage Loans and Lines of

Credit” final rules published in the

June 4, 2002, Federal Register (67 FR

38353). See the July 2002 Record, page

2.

Final Rules on Contribution

and Expenditure Definitions

On August 5, 2002, the Commission published in the Federal

Register the final rules, and Explanation and Justification, revising

Commission regulations that define

“contribution” and “expenditure”

(67 FR 50582). The revised regulations:

• Reorganize former 11 CFR 100.7

and 100.8, which define “contribution” and “expenditure,” in order

to make the definitions easier to

locate and read;

• Remove the office facility exception for national party committees,

in order to reflect a statutory

change made by the Bipartisan

Campaign Reform Act of 2002

(BCRA); and

• Incorporate another recent statutory change that exempts from the

definition of “contribution” a loan

derived from an advance on a

candidate’s brokerage account,

credit card, home equity line of

credit or other line of credit

available to a candidate.

Reorganization of Definitions

In the revised rules, the Commission removed and reserved 11 CFR

100.7 and 100.8 and replaced them

with four new subparts within 11

CFR part 100 that separately

describe:

• Items that are contributions

(subpart B);

• Items that are not contributions

(subpart C);

• Items that are expenditures (subpart D); and

• Items that are not expenditures

(subpart E).

Except as noted below, the

revised rules do not make substantive changes to the definitions.

Office Building Exemption

The new rules state that contributions to and expenditures by a

national party committee for the

purpose of constructing or pur-

(continued on page 10)

chasing an office facility are

“contributions” and “expenditures” under the Federal Election

Campaign Act. 11 CFR 100.56 and

100.114. The rules further clarify

that anything of value given to a

nonfederal account of a state, local

or district party committee to

purchase or construct an office

building or facility is not a contribution or expenditure, subject to

the provisions of 11 CFR 300.34.1

11 CFR 100.84 and 100.144.

Brokerage Loans and Lines of

Credit

The new rules include as exceptions to the definitions of “contribution” and “expenditure” a loan of

money derived from an advance on

a candidate’s brokerage account,

credit card, home equity line of

credit or other available line of

credit.2

 11 CFR 100.83 and 100.144.

Additional Information

The full text of the of the final

rules and Explanation and Justification, which include a distribution

table showing where each section of

the old regulations is located in the

revised regulations, is available on

the FEC web site at http://

www.fec.gov/register.htm and from

the FEC faxline, 202/501-3413.

The rules will become effective on

November 6, 2002.✦

—Amy Kort
Federal Election Commission RECORD September 2002

10

1 Even if the facilities are owned or

controlled by a committee or candidate,

they may fall under the news exemption

at 11 CFR 100.132(a) and (b).

2 The restricted class comprises those

individuals within a corporation or

labor organization who may be

solicited for contributions to the

organization’s separate segregated

fund at any time and who may receive

communications containing express

advocacy from the organization. In the

case of corporations, the restricted

class is their executive and administrative personnel, stockholders and the

families of each. For labor unions, the

restricted class is their executive and

administrative personnel, union

members and the families of each.

Notice of Proposed

Rulemaking on Electioneering

Communications

On August 1, 2002, the Commission approved a Notice of Proposed

Rulemaking (NPRM) seeking

comments on proposed regulations

concerning electioneering communications. These regulations implement provisions of the Bipartisan

Campaign Reform Act of 2002

(BCRA) that prohibit corporations

and labor organizations from

financing certain communications in

close proximity to an election, and

require those who do finance such

communications to file special

disclosure reports. The proposed

rules:

• Define “electioneering communication”;

• Establish reporting requirements;

and

• Clarify who may fund electioneering communications.

The NPRM was published in the

August 7, 2002, Federal Register

(67 FR 51131). The Commission

held a public hearing on the proposed rules August 28-29, 2002.

Definition of “Electioneering

Communication”

Under the proposed rules, an

electioneering communication is

any broadcast, cable or satellite

communication that:

• Refers to a clearly identified

federal candidate;

• Is publicly distributed 30 days

before a primary or 60 days before

a general election; and

• Reaches 50,000 or more people in

the state or district in which the

election is held (except for communications made within 60 days

of the general election for the

offices of President and VicePresident).

Under the proposed rules,

“electioneering communication”

does not include any communication

that:

• Is publicly distributed through a

means other than broadcast, cable

or satellite;

• Appears in a news story, commentary or editorial distributed through

broadcast, cable or satellite

systems, unless the facilities are

owned or controlled by a political

party, political committee or

candidate;1

• Is otherwise reported as an expenditure, coordinated party expenditure or independent expenditure;

• Is made by a federal officeholder’s

authorized campaign committee;

• Constitutes a candidate debate or

forum or promotes said debate or

forum; or

• Refers to a bill or law by its

popular name where that name

includes the name of a federal

candidate, provided that it is the

sole reference to the federal

candidate.

The Commission also offered a

series of possible exemptions for

communications regarding legislative or executive matters which do

not also constitute communications

about federal candidates.

Who may make Electioneering

Communications

Electioneering communications

may be made by individuals,

political committees, unincorporated

527 organizations, unincorporated

501(c)(3) organizations and unincorporated entities such as partnerships, LLCs and some trade

associations and membership

organizations, provided that they do

not use corporate or labor funds to

pay for the communications.

Corporations and labor organizations are prohibited from making

electioneering communications to

individuals beyond their restricted

class.2

 Corporations and labor

organizations cannot provide funds

for another person to make an

electioneering communication.

FEC Expands Acceptance of Credit Cards

 The Federal Election

Commission now accepts

American Express, Diners Club

and Discover Cards in addition to

Visa and MasterCard. While most

FEC materials are available free

of charge, some campaign finance

reports and statements, statistical

compilations, indexes and

directories require payment.

Walk-in visitors and those

placing requests by telephone

may use any of the above-listed

credit cards, cash or checks.

Individuals and organizations

may also place funds on deposit

with the office to purchase these

items. Since pre-payment is

required, using credit cards or

funds placed on deposit can speed

the processing and delivery of

orders. For further information,

contact the Public Records Office

at 800/424-9530 (press 3) or 202/

694-1120.

Regulations

(continued from page 9)
September 2002 Federal Election Commission RECORD

11

Notice of Proposed

Rulemaking on Contribution

Limitations and Prohibitions

On August 15, 2002, the Commission approved a Notice of

Proposed Rulemaking (NPRM)

seeking comments on proposed

changes to its regulations regarding

contribution limitations and prohibitions. The proposed rules would

implement provisions of the Bipartisan Campaign Reform Act of 2002

(BCRA) that:

• Increase the contribution limits for

individuals and political committees;

• Prohibit certain contributions and

donations by minors; and

• Strengthen the current statutory

prohibitions on contributions and

donations by foreign nationals.

The NPRM also includes proposed changes to Commission

regulations regarding the

redesignation and reattribution of

excessive contributions, as well as

committees’ recordkeeping requirements.

The NPRM was published in the

August 22, 2002, Federal Register

(67 FR 54366) and is open to public

comments until September 13, 2002.

Increases in Contribution Limits

Under the BCRA, the contribution limits for individuals and nonmulticandidate committees will

increase, as of January 1, 2003, to

$2,000 per election to federal

candidates and to $25,000 per year

to national party committees. 2

U.S.C. §§441a(a)(1)(A) and

441a(a)(1)(B). Moreover, the BCRA

replaces the $25,000 annual individual contribution limit with a new

bi-annual limit of $95,000. This

amount includes up to $37,500 in

contributions to candidate committees and up to $57,500 in contributions to any other committees. The

$57,500 portion of the bi-annual

limit contains a further restriction, in

that no more than $37,500 of this

amount may be given to committees

that are not national party committees. 2 U.S.C. §§441a(a)(3)(A) and

(B). For each two-year election

cycle, these limits will be indexed

for inflation, as described below.

The BCRA also raises the limits

for contributions to Senate candidates by the Republican and Democratic Senatorial campaign

committees or the national committees of a political party, or any

combination of these committees, to

$35,000 per six-year cycle as of

January 1, 2003. This limit will also

be indexed. The proposed rules

reflect these increases in the contribution limits. 2 U.S.C. §441a(h).

Indexing. The NPRM seeks

comments on proposed methods of

indexing these limits for inflation.

Under the proposed rules, the base

contribution limit—for instance,

$2,000 per candidate, per election—

would be adjusted for each election

cycle according to the Consumer

Price Index (CPI). The Commission

proposes that the limits would be

adjusted only in odd-numbered

years, and would be increased by

the percentage difference between

the CPI during the 12 months

preceding the beginning of that

calendar year and the CPI during the

base period, which is 2001. The

NPRM also includes a rounding

formula governing the indexing of

contribution limits, so that, for

instance, the limits would be

rounded to the nearest $100.

The adjusted limit would be in

effect from the day after the general

election to the day of the next

general election. Thus, for example,

an increase in the limit made in

January 2005 would be effective

from November 3, 2004, to November 7, 2006.1 The Commission also

seeks comments on whether to

1

 Under the proposed rules, in every

odd-numbered year the Commission

would publish the contribution limits in

the Federal Register and on its web site.

Persons who receive funds from a

corporation or labor organization

must be able to establish that no

such funds have been used to pay

for their electioneering communications.

However, 501(c)(4) organizations

may make electioneering communications if they are qualified nonprofit corporations. 11 CFR

114.10(c). If one of these corporations makes electioneering communications that aggregate over

$10,000 in a calendar year, it must

certify in its report that it qualifies

for the nonprofit exemption from

the prohibitions against corporate

expenditures.

The Wellstone amendment to the

BCRA removes the exemption for

527 and 501(c)(4) corporations in

the case of targeted communications. Because the Wellstone

amendment defines targeted communications to include all electioneering communications, this would

imply that all incorporated entities

are prohibited from making electioneering communications, even

qualified nonprofit corporations.

The Commission sought comment

on this point.

Reporting Requirements

Any person who makes a disbursement or contracts to make a

disbursement for the direct costs of

an electioneering communication

that aggregate to over $10,000 in a

calendar year must file a report with

the Commission within 24 hours.

Direct costs include production

studio time, staff salaries, the cost of

recording media and talent and the

cost of airtime to broadcast the

communication.

The full text of the NPRM is

available on the FEC web site at

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

from the FEC faxline, 202/501-

3413. The Commission expects to

adopt final rules in late

September.✦

—Phillip Deen

(continued on page 12)
Federal Election Commission RECORD September 2002

12

adjust the limits in January 2003, or

to wait until January 2005.

Additionally, the NPRM seeks

comments on whether the time

period for aggregating contributions

for the bi-annual contribution limit

should be determined on a calendar

year basis or on an election cycle

basis.2

Prohibition on Contributions by

Minors

The BCRA prohibits individuals

under 18 years old from making a

contribution to a federal candidate

or a contribution or donation to a

political party committee. See 2

U.S.C. §441k. The NPRM proposes

regulations to implement these

prohibitions. The proposed regulations prohibit minors from making

contributions to a federal

candidate’s authorized committees

and to any entity directly or indirectly established, maintained,

financed or controlled by one or

more federal candidates. The

proposed regulations also prohibit

minors from making contributions

or donations to national, state,

district and local political party

committees and to any entities

directly or indirectly established,

maintained, financed or controlled

by such committees. The Commission seeks comments on whether to

prohibit minors from:

• Making donations to the

nonfederal account of a political

party committee;

• Making contributions to political

action committees if those funds

are earmarked for a particular

candidate, political committee or

organization to which the individual is otherwise barred from

contributing; and/or

• Making contributions to federal

political action committees at all.

The proposed rules also clarify

that individuals under 18 may

participate in volunteer work for

campaigns and committees.

Prohibition on Contributions and

Donations from Foreign Nationals

The BCRA extends the Federal

Election Campaign Act’s ban on

contributions by foreign nationals to

contributions and donations solicited or made directly or indirectly to

candidates for state, local and

federal office.3 2 U.S.C.

§441e(a)(2). Furthermore, it extends

the prohibition to disbursements for

electioneering communications4 and

to expenditures and independent

expenditures. The NPRM seeks

comments on proposed regulations

to implement this ban, including

such issues as:

• How, or whether, to interpret or

define “indirectly”;

• How, or whether, to define

“donation”; and

• Whether foreign-controlled U.S.

corporations, including a domestic

subsidiary of a foreign corporation,

should be prohibited from making

corporate donations and/or from

making federal contributions from

their political action committees.

Additionally, the Commission

seeks comments on regulations

addressing the degree of knowledge,

if any, that a person soliciting,

accepting or receiving a contribution

or donation must have had about the

status of a contributor or donor

before that person can be considered

to have violated the foreign national

ban. The NPRM proposes a knowledge requirement with three alternative standards of knowledge, any

one of which would establish

knowledge:

• Actual knowledge;

• Awareness of certain facts that

would lead a reasonable person to

conclude that there is a substantial

possibility that the contribution

came from a foreign source; or

• Failure to inquire into the status of

a contributor or donor in a situation where an individual becomes

aware of facts that should have led

any reasonable person to make

such an inquiry.

The Commission requests

comments on whether these standards of knowledge are appropriate

or should be expanded. The NPRM

also seeks comments on when

political committees and their

treasurers should have an affirmative duty to investigate contributions

and donations to confirm that they

do not come from foreign sources.

Redesignations and

Reattributions

The Commission is considering

streamlining its rules for designating

contributions for a particular

election and attributing contributions to particular donors. 11 CFR

110.1, 110.2 and 102.9. Given the

amount of resources that the

Commission and the regulated

community have devoted to complying with the Commission’s current

reattribution and redesignation

procedures, the Commission is

proposing the following possible

changes as a matter of administrative convenience and to better

reflect donor intent.

3 The BCRA also prohibits Presidential

inaugural committees from accepting

donations from foreign nationals. The

proposed rules reflect this prohibition.

36 U.S.C. §510.

4 Commission regulations governing

electioneering communications are

under consideration in a separate

rulemaking. See related article, page

10.

2 The BCRA also contains a so-called

“millionaires’ amendment,” which

raises the contribution limits for

candidates whose opponents finance

their campaigns with large amounts of

personal funds. Individual contributions made under this provision will not

be subject to the overall bi-annual limit.

The Commission will address the

millionaires’ amendment in a future

rulemaking.

Regulations

(continued from page 11)
September 2002 Federal Election Commission RECORD

13

One possible change would allow

a candidate committee to presume

that when a contributor makes an

undesignated excessive contribution

before the primary election, he or

she intends to contribute the excessive amount to the general election,

provided that the total amount

contributed does not exceed the

limitations on contributions for both

elections. Alternatively, or in

conjunction with this approach, the

committee could be required to

inform the contributor about how

the contribution had been designated

and allow the contributor to request

a refund. The Commission also

seeks comments on whether to allow

either of these approaches to apply

for other types of redesignations, or

for reattributions.

Another alternative would be to

maintain the Commission’s current

regulations concerning reattributions

and redesignations, but to eliminate

the signature requirement. In this

case, contributors could redesignate

or reattribute their contributions via

email, or by an oral communication

with the committee when there is a

signed record of the conversation.

Additional compliance issues.

The NPRM also addresses the

Commission’s concerns about some

AO 2002-8

Return of Federal Funds

from Nonfederal Account to

Federal Account

The David Vitter for Congress

committee (the Committee) may redeposit into its federal campaign

account $700,500 it had transferred

to the candidate’s state campaign

account. The re-deposit does not

violate Commission regulations that

ban the transfer of funds from a

candidate’s state or local campaign

to his or her federal campaign

because the funds effectively

remained federal funds at all times.

11 CFR 110.3(d).

Background

In March and April 2002, the

Committee deposited $700,500 from

its account into an account for the

Congressman’s state exploratory

committee. The funds were placed

in a separate account and not

commingled with any contributions

raised under state law or made

directly to the state exploratory

committee. Moreover, the state

campaign did not apply for a loan or

line of credit, so the funds were not

used as security or collateral. In

May, the Congressman decided not

to seek state office, and the

$700,500 remained in the separate

account.

Under Commission regulations, a

candidate may not transfer funds or

assets from his or her nonfederal

campaign accounts to his or her

federal campaign accounts. 11 CFR

110.3(d). However, the nonfederal

committees’ illegal use of contributions received for the general

election during the primary election.

Currently, candidate committees

may segregate primary and general

funds either by maintaining separate

accounts or by maintaining separate

books for primary and general funds

held within a single account. 11

CFR 102.9(e). The Commission

seeks comments on whether committees should be required to

segregate such funds by maintaining separate accounts. Moreover,

the Commission seeks comments

on whether to explicitly require

committees to retain certain records

of contributions over $50, including copies of contribution checks

and records of contributions made

by credit or debit card. The NPRM

also requests comments on proposed rules to require committees

to maintain copies of all written

solicitations.

Comments

The Commission invites comments on any of these proposals.

The full text of the NPRM is

available on the FEC web site at

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

from the FEC faxline, 202/501-

3413.

All comments should be addressed to Mai T. Dinh, Acting

Assistant General Counsel, and

must be submitted in either written

or electronic form by September 13,

2002. If the Commission receives

sufficient requests to testify, a

public hearing will be held on

October 3. Written comments

should be sent to the Federal

Election Commission, 999 E Street,

NW., Washington, DC 20463.

Faxed comments should be sent to

202/219-3923, with a printed copy

follow-up to insure legibility.

Electronic mail comments should be

sent to BCRAPart110@fec.gov and

must include the full name and

postal service address of the

commenter. Comments that do not

contain this information will not be

Advisory

Opinions

considered. No oral comments can

be accepted.✦

—Elizabeth Kurland

and Amy Kort

(continued on page 14)

Need FEC Material

in a Hurry?

Use FEC Faxline to obtain FEC

material fast. It operates 24 hours

a day, 7 days a week. Hundreds

of FEC documents—reporting

forms, brochures, FEC regulations—can be faxed almost immediately.

Use a touch tone phone to dial

202/501-3413 and follow the instructions. To order a complete

menu of Faxline documents, enter

document number 411 at the

prompt.
Federal Election Commission RECORD September 2002

14

2 In previous advisory opinions determining state committee status, the

Commission considered either the

bylaws or other governing documents

of a state party organization. AOs

2000-39 and 2000-35. In reviewing

state party affiliates of qualified

national party committees, the Commission considered a state affiliate

agreement or correspondence from the

national party that attested to the role

the state affiliate played “commensurate with the day-to-day operation of [a

political party] on a State level.” See

AOs 1999-26 and 1992-30.

1 The Green Party of Michigan is

affiliated with the Green Party of the

United States, which is a national

committee of a political party. See AO

2001-13.

Web Access to

Senate Candidates’

Campaign Finance

Reports

 Senate campaign finance reports

are available to the public on the

FEC web site. All Senate reports

received after May 15, 2000, are

currently accessible on the site,

and the FEC will make future

reports available within 48 hours

of receiving them.

To view these reports, go to

www.fec.gov, click on

“Campaign Finance Reports and

Data,” and then select “View

Financial Reports.”

committee may choose to refund

contributions and may coordinate

arrangements with the candidate’s

federal campaign committee to have

that committee solicit the contributors.

Re-deposit of Funds

According to the Explanation and

Justification for the regulations

prohibiting such transfers, the

regulations are intended to prohibit

a candidate from transferring funds

raised under state law to a federal

campaign account and from indirectly using funds that are not

permissible under federal law to

influence a federal election.1

 In this

case, the funds in question were:

• Raised by a federal committee

under the limits and prohibitions of

the Federal Election Campaign

Act;

• Never commingled with

nonfederal funds; and

Advisory Opinions

(continued from page 13)

AO 2002-10

Status of State Party as State

Committee of Political Party

The Green Party of Michigan (the

Party) satisfies the requirements for

state committee status.1

The Federal Election Campaign

Act (the Act) defines a state committee as “the organization which,

by virtue of the bylaws of a political

party, is responsible for the day-today operation of such political party

at the State level, as determined by

the Commission.” 2 U.S.C.

§431(15). In order to achieve state

committee status under Commission

regulations, an organization must

meet two requirements. It must

have:

• Bylaws or a similar document that

“delineates activities commensurate with the day-to-day operation”

of a party at a state level; and

• Ballot access for at least one

federal candidate who has quali3 An individual becomes a candidate for

the purposes of the Act once he or she

receives contributions aggregating in

excess of $5,000 or makes expenditures

aggregating in excess of $5,000. 2

U.S.C. §432(e)(1) and 11 CFR 101.1.

1 See the Explanation and Justification

for “Transfer of Funds From State to

Federal Campaigns,” published in the

January 8, 1993, Federal Register (58

FR 3474).

• Placed in an account that was

never used for the state campaign.

Thus, in this situation, the

concerns articulated in the Explanation and Justification are wholly

absent.

Viewing these factors together,

the Commission concluded that the

funds may be re-deposited into the

Committee’s account. The Committee should re-deposit the funds

within 10 days of its receipt of the

opinion, and disclose the transaction

on its next report, along with a

memo entry explaining the circumstances of the re-deposit.

Length: 3 pages; Date Issued:

August 1, 2002.✦

—Amy Kort

fied as a candidate under Commission regulations.

The Green Party of Michigan

meets both requirements. It satisfies

the first requirement because its

bylaws set out an identifiable

organizational structure with

varying responsibilities. The bylaws

delineate activity commensurate

with the day-to-day functions of a

political party on the state level and

are consistent with the state party

rules of other political organizations

that the Commission has found to

satisfy this requirement for state

committee status.2

The Party satisfies the second

requirement—ballot access for at

least one federal candidate. Ralph

Nader, Matthew Abel, Alan Gamble

and Thomas Ness each gained ballot

access as one of the Party’s federal

candidates on the Michigan ballot in

2000, and each met the requirements

for becoming a federal candidate

under 2 U.S.C. §441a(d).3

Date Issued: August 1, 2002;

Length: 4 pages.✦

—Amy Kort
September 2002 Federal Election Commission RECORD

15

Court Cases

1 Election sensitive reports are those

filed immediately before an election

and include pre-primary, pre-special,

pre-general, October Quarterly and

October monthly reports.

Friends for Houghton v. FEC

On July 23, 2002, the U. S.

District Court for the Western

District of New York denied

Plaintiff’s motion for summary

judgment, granted the

Commission’s motion for summary

judgment and dismissed the case.

Background

On September 13, 2001, Friends

for Houghton (the Committee) filed

a complaint in the U.S. District

Court for the Western District of

New York, appealing a civil money

penalty for failure to timely file the

Committee’s 2000 Pre-Primary

Report.

Section 437g(b) of the Federal

Election Campaign Act (the Act)

requires the Commission to notify

any principal campaign committee

of a House or Senate candidate that

may have failed to file a required

pre-election report or a quarterly

report before an election of its

failure to file such report, prior to

taking action against that committee. If the committee does not file

the report within four business days

of the notification, the Commission

must publish, before the election,

the name of that committee as

having failed to file the report. If the

committee demonstrates that the

report had been timely filed or files

the report within the four business

days, the Commission will not

publish its name before the relevant

election.

Additionally, under the

Commission’s Administrative Fine

program, election-sensitive reports1

are subject to the schedule of

penalties for “late” reports if they

are filed after their due date, but

more than four days before an

election. Committees filing later

than that, or failing to file at all, are

subject to the schedule of penalties

for reports that are “not filed.”

According to the allegations in

the complaint, Congressman Amo

Houghton was a candidate in the

New York primary held September

12, 2000. As a result, his campaign

committee was required to file a

pre-primary report on August 31.

On September 1, the Commission

sent a notice to the Committee

indicating that it may have failed to

file its pre-primary report, and that it

would have four business days from

the date of the notice to file the

report. Because of the Labor Day

holiday, the fourth business day

after the Commission’s September

1, 2000, notice was September 8.

The Committee filed the report on

that day.

On October 17, 2000, the Commission found reason to believe that

the Committee and its treasurer had

violated 2 U.S.C. §434(a), which

requires the timely filing of reports

by political committees. Having

filed its pre-primary report less than

five days before the election, the

committee was subject to the

schedule of penalties for reports that

are “not filed.” The Commission

assessed a civil money penalty in

the amount of $9,000 in accordance

with 11 CFR 111.43. In its complaint, the Committee asked the

court to order the Commission to

modify both its determination that

the Committee was a nonfiler and its

assessment of the civil money

penalty.

Decision

The court observed that while the

Commission’s notice informed the

Committee that the Commission

was considering taking action

against it and provided the Committee with a four business-day window

to file its report and avoid the

publication of its name, “Section

437g(b) does not . . . attach any

Campaign Guides

Available

 For each type of committee, a

Campaign Guide explains, in

clear English, the complex

regulations regarding the activity

of political committees. It shows

readers, for example, how to fill

out FEC reports and illustrates

how the law applies to practical

situations.

 The FEC publishes four

Campaign Guides, each for a

different type of committee, and

we are happy to mail your

committee as many copies as you

need, free of charge. We

encourage you to view them on

our web site (go to www.fec.gov,

then click on “Campaign Finance

Law Resources” and then scroll

down to “Publications”).

 If you would like to place an

order for paper copies of the

Campaign Guides, please call

800-424-9530, press 1, then 3.

additional significance to the four

business-day rule. More specifically, 437g(b) does not indicate that,

by filing within four business days,

the late filing is excused [and] that

the person avoids a monetary

penalty.”

Thus, while a committee has four

additional business days to file a

report in order to avoid the publication of its name before the election,

neither the Act nor Commission

regulations provide a grace period

for calculating a penalty under the

Administrative Fine program.

The court dismissed the case. See

the December 2001 Record, page 2.

U.S. District Court for the

Western District of New York, 01-

6444.✦

—Jim Wilson

(continued on page 16)
Federal Election Commission RECORD September 2002

16

ADR Program Update

The Commission recently

resolved three additional cases

under the Alternative Dispute

Resolution (ADR) program. The

respondents, the alleged violations

of the Federal Election Campaign

Act (the Act) and the penalties

assessed are listed below.

1. The Commission reached

agreement with Charles J.

Swindells concerning contributions that exceeded the $25,000

annual contribution limit. The

respondent obtained a refund of

$13,000 from the primary

recipient of the contributions and

also agreed to pay a $6,000 civil

penalty. (ADR 058)

2. The Commission reached

agreement with the Massachusetts Republican State CongresAlternative

Dispute

Resolution

Court Cases

(continued from page 15)

sional Committee concerning

excessive nonfederal transfers

made to a federal account. The

respondent acknowledged that a

violation of the Act occurred as a

result of a variety of reporting

errors. The respondent agreed to

appoint an FEC compliance

officer, who will attend a Commission-sponsored conference,

and to develop an FEC compliance manual. The respondent

also agreed to pay a $10,000 civil

penalty. (ADR 065)

3. The Commission reached

agreement with the Friends of

John Sharpless concerning

excessive contributions. The

respondent agreed to pay a

$1,000 civil penalty and to

terminate the committee. (ADR

066)✦

—Amy Kort

New Litigation

Schaefer v. FEC

On July 8, 2002, Michael

Schaefer, a 2002 Congressional

primary candidate in Arizona, asked

the U.S. District Court for the

District of Arizona to find unconstitutional the Federal Election Campaign Act’s (the Act):

• Definition of “contribution;”

• Limits on individual contributions;

and

• Prohibition on corporate contributions.

Mr. Schaefer alleges that these

provisions of the Act favor incumbent candidates and violate Article I

of the Constitution and the First and

Tenth amendments.

Background. Under the Act, a

contribution includes “any gift,

subscription, loan, advance, or

deposit of money or anything of

value made by any person for the

purpose of influencing any election

for Federal office.” 2 U.S.C.

§431(8)(A)(i). A bank loan made in

the ordinary course of business is

not a contribution. However, the

endorsement or guarantee of a loan

is considered a contribution in the

amount that each endorser or

guarantor is liable. 2 U.S.C.

§§431(8)(B)(vii) and

431(8)(B)(vii)(I). The Act limits

contributions from individuals to

candidates to $1,000 per election

and prohibits corporations from

making any contribution or expenditure to influence a federal election. 2

U.S.C. §§441a(a)(1) and 441b.

Court Complaint. Mr. Schaefer

claims that he is unable to obtain a

sufficient loan for his campaign

because the endorsement or guarantee of the loan would be considered

a contribution from each individual

endorser or guarantor and thus

subject to the Act’s contribution

limits. Moreover, his family’s

corporation cannot endorse or

guarantee the loan because of the

ban on corporate contributions. In

his complaint, Mr. Schaefer alleges

that these provisions of the Act

“appear to be protection of the

incumbents, by the incumbents and

for the incumbents,” because, he

asserts, incumbent candidates have

greater access to funds from other

sources, such as political action

committees and party committees.

Mr. Schaefer asks the court for a

declaratory judgment that:

• He has the right to finance his

campaign with personal or borrowed funds from any source; and

• A guarantor of a loan is not a

contributor in a case where there is

no evidence that the loan is

intended to be forgiven rather than

repaid.

U.S. Court for the District of

Arizona, 02-1255-PHX-SMM.✦

—Amy Kort

Back Issues of the

Record Available on

the Internet

This issue of the Record and all

other issues of the Record starting

with January 1996 are available

through the Internet as PDF files.

Visit the FEC’s World Wide Web

site at http://www.fec.gov and

click on “What’s New” for this

issue. Click “Campaign Finance

Law Resources” to see back issues. Future Record issues will be

posted on the web as well. You

will need Adobe® Acrobat®

Reader software to view the publication. The FEC’s web site has

a link that will take you to Adobe’s

web site, where you can download

the latest version of the software

for free.
September 2002 Federal Election Commission RECORD

17

Publications

Nonfilers

The campaign committees of the

candidates listed at right failed to

file required campaign finance

reports. The Federal Election

Campaign Act requires the Commission to publish the names of principal campaign committees if they fail

to file 12 day pre-election reports

and the quarterly report due before

the candidate’s election. 2 U.S.C. §§

437g(b) and 438 (a)(7). The agency

may also pursue enforcement

actions against nonfilers and late

filers under the Administrative Fine

program on a case-by-case basis.✦

—Amy Kort

Compliance Candidate Office Sought Report Not Filed

Allen, Benjamin House GA/12 Pre-Primary

Cornett, Carlton W. House TN/05 Pre-Primary

Davis, Jim House FL/11 July Quarterly

Dayan, Sigfried House GA/03 July Quarterly

Fisher, Ada M. Senate NC July Quarterly

Lawrence, Robert I. House WA/06 July Quarterly

Raczkowski, Andrew Senate MI Pre-Primary

Reichow, David P. House MN/06 July Quarterly

Sharpless, John House WI/02 July Quarterly

New Campaign Guide

Available

A revised Campaign Guide for

Congressional Candidates and

Committees is now available on the

Commission’s web site at http://

www.fec.gov/pdf/candgui.pdf. The

new guide provides candidates and

their authorized committees with

clear explanations of the Federal

Election Campaign Act and Commission regulations as of July 2002.

This version of the guide does not

address changes to the federal

campaign finance law that will

become effective after November 6,

2002, as part of the Bipartisan

Campaign Reform Act of 2002

(BCRA). The Commission plans to

publish a new version of the Campaign Guide for Congressional

Candidates and Committees once

BCRA-related amendments to the

campaign finance law and Commission regulations are in place.

Given the limited shelf life for

the current edition, the Commission

does not intend to print copies for

mass distribution. Instead, the Guide

will be available for download on

the FEC web site. A limited number

of printed loose-leaf copies will also

be available for those without

Internet access. To request a printed

copy, call the Information Division

at 800/424-9530 (press 1, then 3) or

202/694-1100.✦

—Amy Kort

www.fec.gov

BCRA on the FEC’s Web Site

In September, the Commission

will add a new section to its web site

(www.fec.gov) devoted to the

Bipartisan Campaign Reform Act of

2002 (BCRA).

The new page will provide links

to:

• The Federal Election Campaign

Act, as amended by the BCRA;

• Summaries of major BCRA-related

changes to the federal campaign

finance law;

• Summaries of current litigation

involving challenges to the new

law;

• Federal Register notices announcing new and revised Commission

regulations that implement the

BCRA; and

• Information on educational

outreach offered by the Commission, including upcoming

Roundtable sessions and the

Commission’s tentative 2003

conference schedule.

The new section will also allow

individuals to view the

Commission’s calendar for

rulemakings, including projected

dates for the Notices of Proposed

Rulemaking, public hearings, final

rules and effective dates for regulations concerning

• Soft money;

• Electioneering Communications;

• Contribution Limitations and

Prohibitions;

• Coordinated and Independent

Expenditures;

• The Millionaires’ Amendment;

• Consolidated Reporting rules; and

• Other provisions of the BCRA.

The BCRA section of the web

site will be continuously updated.

Visit www.fec.gov and click on the

BCRA icon.✦

—Amy Kort
Federal Election Commission RECORD September 2002

18

Committees Fined for

Nonfiled and Late Reports

The Commission recently

publicized its final action on fourteen new Administrative Fine cases,

bringing the total number of cases

released to the public to 436.

Civil money penalties for late

reports are determined by the

number of days the report was late,

the amount of financial activity

involved and any prior penalties for

violations under the administrative

fine regulations. Penalties for late

reports—and for reports filed so late

as to be considered nonfiled—are

also determined by the financial

activity for the reporting period and

any prior violations. Election

sensitive reports, which include

reports and notices filed prior to an

election (i.e., 12 Day pre-election,

October quarterly and October

monthly reports), receive higher

penalties. Penalties for 48-hour

notices that are filed late or not at all

are determined by the amount of the

contribution(s) not timely reported

and any prior violations.

The committees and the treasurers are assessed civil money penalties when the Commission makes its

final determination. Unpaid civil

money penalties are referred to the

Department of the Treasury for

collection.

The committees listed in the chart

above, along with their treasurers,

were assessed civil money penalties

under the administrative fine

regulations.

Closed Administrative Fine case

files are available through the FEC

Press Office, at 800/424-9530 (press

2), and the Public Records Office, at

800/424-9530 (press 3).✦

—Amy Kort

Administrative

Fines

Committees Fined and Penalties Assessed

 1. American Success PAC —— 1

 2. AT&T PAC $1,200

 3. Bexar County Democratic Party $900

 4. Bill McCollum for US Senate $4,150

 5. Chris Chocola for Congress, Inc. $13,000

 6. Committee on Letter Carriers Political Education

(Letter Carriers Political Action Fund) $4,500

 7. D.C. Democratic State Committee $800 2

 8. Dickey for Congress Campaign Committee $2,700

 9. Eleanor Jordan for Congress $900 2, 3

10. Friends of Phill $8,100

11. Greens/Green Party USA $900 2

12. Harry Browne for President, Inc. $1,125 2

13. John Fee for Congress $1,125 2, 3

14. VenturePAC $750

1

 The Commission took no further action in this case.

2

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

3

 This civil money penalty has not been collected.

FEC Roundtables

On October 2, 2002, the Commission will host a roundtable session

on the FEC’s new soft money

regulations. This roundtable is

limited to 35 participants, and will

be conducted at the FEC’s headquarters in Washington, DC. The

roundtable will begin at 9:30 a.m.

and last until 11:00. Please arrive no

later than 9:15, in order to allow for

security screening.

Outreach

Date Subject Intended Audience

Roundtable Schedule

October 2 New Soft Money Rules • Political parties

9:30 - 11 a.m. • Soft money ban • House and Senate

• Party office building funds candidates

• Levin funds • Tax-exempt

• Solicitations for organizations

tax-exempt organizations • Lawyers, accountants

• Allocation by state party and consultants to

committees above

Registration is $25 and will be

accepted on a first-come, firstserved basis. Please call the FEC

before registering or sending money

to be sure that openings remain in

the session. Prepayment is required.

The registration form is available at

the FEC’s Web site at http://

www.fec.gov/infosvc.htm and from

Faxline, the FEC’s automated fax

system (202/501-3413, request

document 590). For more information, call 800/424-9530 (press 1,

then 3) or 202/694-1100.✦
September 2002 Federal Election Commission RECORD

19

The first number in each citation

refers to the “number” (month) of

the 2002 Record issue in which the

article appeared. The second

number, following the colon,

indicates the page number in that

issue. For example, “1:4” means

that the article is in the January

issue on page 4.

Advisory Opinions

Alternative Disposition of 2001-15,

3:9; 2001-20, 3:9

2001-13: National committee status

of party committee, 1:11

2001-16: Extension of 70-day

window for transferring funds for

allocable expenses after suspension of party fundraising due to

national emergency, 2:1

2001-17: Reporting contributions

made via single check split

between federal and nonfederal

accounts, 3:5

2001-18: Affiliation between LLC

PAC and PACs of corporate

owners in 60-40 joint venture, 3:7

2001-19: Non-preemption of state

law prohibiting political

committee’s bingo license, 3:8

2002-1: Coalition of minor parties

supporting candidate(s) who

together gain five percent of vote

not eligible for Presidential public

funding, 4:3

2002-2: Preemption of state law

barring lobbyist from fundraising

for Congressional candidate who

is member of Maryland General

Assembly, 4:4

2002-3: State committee status, 6:6

2002-4: Name and Abbreviation of

SSF, 6:7

2002-6: State committee status, 7:4

2002-8: Return of federal funds

from nonfederal account to

federal account, 9:13

2002-10: State committee status,

9:14

Compliance

Administrative Fine program

extended, 1:13

Cases resolved under Alternative

Dispute Resolution program, 7:6;

9:16

Committees fined under Administrative Fine program, 1:13; 2:7;

3:11; 5:5, 6:10; 8:6; 9:18

MUR 5041: Contribution in the

name of another made by corporation, 8:5

Nonfilers, 6:5; 7:7

Court Cases

_____ v. FEC

– AFL-CIO, 2:3; 3:5

– Alliance for Democracy, 5:3

– Baker, 4:3

– Beaumont, 3:4

– Common Cause and Democracy

21, 2:4

– Echols, 5:3; 6:4

– Friends for Houghton, 9:15

– Graham, 7:5

– Judicial Watch, Inc., and Peter F.

Paul, 3:3

– McConnell, 5:3; 6:4

– Miles for Senate, 3:1

– NRA, 5:3

– Schaefer, 9:16

– Wertheimer, 1:12

FEC v. _____

– Democratic Party of New Mexico,

7:5

– Freedom’s Heritage Forum, 8:2

– Specter ’96, 5:3

– Triad Management Services, 8:4

Regulations

Administrative fines, Notice of

Proposed Rulemaking, 6:2

Allocation of candidate travel

expenses, interpretation, 3:2

Brokerage loans and lines of credit,

final rules, 7:2

Candidate debates, petition for

rulemaking, 6:4

Civil penalties, no increase, 3:2

Contribution and expenditure

definitions, Notice of Proposed

Rulemaking, 7:3; final rules, 9:9

Contribution limitations and prohibitions, Notice of Proposed

Rulemaking, 9:11

“Electioneering Communications,”

Notice of Proposed Rulemaking,

9:10

Independent expenditure reporting,

final rules, 5:2; effective date, 7:1

Soft money rules, Notice of Proposed Rulemaking, 6:1; final

rules, 9:1

Use of Internet, public hearing, 3:1

Reports

Alaska and Iowa certified for state

filing waiver, 7:1

April reporting reminder, 4:1

Independent expenditure reporting,

new forms, 6:9; effective date 7:1

Iowa convention reporting, 7:4

IRS filing requirements, 1:11; 6:8

Louisiana primary, 8:1

North Carolina primary, 8:2

Reports due in 2002, 1:2

Virginia convention reporting, 5:6

48-hour notice periods for 2002

primaries, 3:10

Index
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Federal Election Commission RECORD September 2002