eFEDERAL ELECTION COMMISSION

December 1992 999 E Street NW Washington DC 20463 Volume 18, Number 12

•

DEBT RE'l'IRE:Mmn' BY CANDIDM'E CCJIIMITTEES

At the end of an election cycle, the

CO~ssion receives questions from

candidate co~ttees on how to deal with

campaign debts. This article responds to

those questions. For additional information, call the FEC's Information Services

Division at 800/424-9530 or 202/219-3420.

Continuous Deporting of Debts

Does an authorized ccmni ttee have to

keep reporting even if its only activity is

debt retirement? Yes. Corrnnittees I1lUSt

continue reporting until all debts and

obligations have been extinguished and the

conunittee has terminated. 11 CFR 102.3 and

l04.11(a). (Termination is discussed later

in this article.)

Accepting Post-Election

Contributions

Mayan authorized comri.ttee accept

contributions after an election to retire

debts for that election? Yes, campaigns

may receive contributions after the

election to retire debts, but they should

remember three general rules:

o First, such contributions are still

subject to the limits and the

prohibitions of the Federal Election

Campaign Act (the Act), even if the

candidate lost the election and does not

plan to run for a future federal office.

This means that the contributions must

came from permissible sources and, when

added to other contributions from the

same donor for that election, the

contributions may not exceed the donor's

contribution limit. 11 CFR 110.1(b)(1),

110.2(b)(l), 110.4(a), 110.9(a), 114.2(bl

and 115.2.

a Second, contributions made after an

election to retire debts must be

specifically designated for that election

by the contributor, who may note the

(continued on page B)

~MY BEARIR; W MCFL

On OCtober 14 and 15, the Commission

held a public hearing on proposed regulations governing communications by

corporations and labor organizations.

The proposed amendments to 11 eFR Part

114 would implement the supreme Court's

interpretation of 2 U.S.C. S441b in FEe v.

Massachusetts Citizens for Life. Inc.

(MCFL) as well as subsequent court decisions (Faucher v. FEe and FEC v. National

Organization for women).

(continued)

TABLE OF CCN1'ENI'S

1 800 LINE: Debt Retirement

1 RrolJLM'IWS: Hearing on MCFL Rulemaking

PUBLIC EUIDnG2 FEC Denies Extension of Time for

Gephardt Repayment

3 Hearing on Jackson campaign Repayment

3 November Matching Fund Payments

4 STATISTICS: National Party Activity

6 ADVISORY OPINIOOS

COORT CASES

7 Republican Party of Kentucky v , FEe

7 Trinsey v. FEC, et al.

7 FEC v. Mid-America Conservative PAC

11 REPORTS: November 24 Georgia Runoff

CCIotPLIANCE

12 MURS Released to Public

12 Nonfilers

13 INDEX

15 PUBLlCATIOOS: Brochure Order Form
December 1992 FEDERAL ELEC-1l0N COMMISSION Volume 18, Number 

section 441b prohibits corporations and

labor organizations from making contributions or expenditures in connection with

federal elections. In MCFL, the Court

limited the prohibition on expenditures to

expenditures for public communications that

contain "express- advocacy" (i.e., expressly

advocate the election or defeat of a

clearly identified candidate). The

rulemaking WOuld accordingly revise the

regulations on communications by business

and nonprofit corporations and by labor

unions.

In addition, the Commdssion sought

comments on alternative definitions of

express advocacy under 11 crn Part 109.1/

The proposed defioitions were a major focus

of numerous written comments and remarks

made at the hearing.

Many nonprofit groups also commented on

proposed regulations that would implement

the MCFL ruling permitting certain kinds of

nonprofft corporations to make independent

expendi tures.2/ The comments addressed the

proposed criteria for detennining which

organizations would qualify for this

exemption.

The Cammdssion received 31 written

comments on the proposed rules and heard

testimony from representatives of 25

organizations, including the American

Council on Education, American University,

the Anti-Defamation League of B'Nai B'Rith,

1These definitions incorporated aspects of

two other court decisions, Buckley v. valeo

and FEC v. Furgat.ch,

2Independent expenditures are expenditures

for express advocacy communications made

without consultation or coordination with

any candidate s campai9Jl. The proposed

regulations also considered another supreme

Court decision on MCFL-type corporations,

Austin v. Michigan""""Olamber of Commerce.

the National Association of Realtors, the

National Right to Life Commdttee, Inc.,

the National Right to Work Committee, Inc •

the National Organization for Wornen and

Planned Parenthood Federation of .America.

Representatives of third-party Presidentia

campaigns testified on proposed rules

concerning nonpartisan candidate debates.

In drafting the final regulations, the

commission will review all written commen

and testimony.

A transcript of the hearing is

available from the FEe' 5 Public Records

Office; the cost is $26.00. The wri t ten

comments are also available at a cost of 5

cents per page. For further ordering

information, call 800/424-9530 (ask for

Public Records) or 202/219-4140.

<XJIIlIISSI(N DE:NIES EX"I'ENSlOO OF TDIE FOR

REPAmENr BY GEPBARI7r CQUUT'l'EE

On October 22, the Commission denied a

request by the Gephardt for President

Committee, Inc., for a second extension o

time to repay 1988 matching funds to the

u,S. Treasury.

Most of the repayment--$118,944--was

due in June 1992. (An additional repayme

of $2,628 was included as an addendum to

the final audit report on August 4, 1992.)

The Commission granted the C~ttee's

first request for a 90-day extension, whic

moved the repayment date to Septembec 28.

'!he second request asked the Commission to

establish a repayment schedule beginning

December 1. Although the Commission has,

in the past, granted some requests to mak

repayments in monthly installments, the

agency denied the Gephardt request for

several reasons that distinguished it from

earlier situations.

Federal Election CoIImi.ssion, 999 E street, rM, Washington, DC 20463

800/424-9530 202/219-3420 202;219-3336 (TOD)

Joan D. Aikens, Chairman

Scott E. 'Ibomas, Vice Chairman

Lee Ann Elliott

Danny L. KcDona1d

John Warren McGarry

Trevor Potter

walter J. stewart, Secretary of the Senate,

Ex Officio Commissioner

ocmnald K. Anderson, Clerk of the House of

Representatives, Ex Officio Commissioner

2
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 12

•

First, the request was submitted late,

three days-rather than the required seven

days-before the repayment was due. See

11 CPR 9038.4 (c) • Moreover, the Committee

failed to explain why the request was late.

second, the CO!ll'Clittee did not make any

repayments to the u.s, Treasury even though

it was notified of the $118,944 repayment

on May 21, 1992, and had been aware of a

potential repayment obligation since

OCtober 19B9, when the Commission approved

the interim audit report. (That report

included a preliminary repayment calculation of $166,362.)

Finally, COngressman Gephardt had the

option of transferring funds from his

Congressional committee to the Gephardt for

President Committee to make the repayment.

(As of September 30, 1992, the Congressional committee had $621,000 in cash on

hand and no debts.) Rejecting the

committee's contention that the transfer

would be prohibited because congressman

Gephardt was a candidate for two different

federal offices during overlapping election

cycles, the Conunission pointed out that the

two committees were involved in different

election cycles (1988 and 1992) and that

the transfer would therefore have been

permissible. See 11 CPR 110.3(c)(4);

compare 11 CFR 110.3{c)(S).

The COJIttDission notified the Committee

that the repayment was due within 10 days

after notification of the agency's

decision. However, because $2,628 of the

repayment was added at a later date, the

Commission allowed the committee until

December 8 to repay that amount.

The c~ttee repaid the entire

repayment amount ($121,572) on November 9.

00 BEPAYMENl' BY JACKSail CAMPAIGN

At an October 28 open hearing, counsel

for Jesse Jackson's 1988 Presidential

campaign urged the Commission to reduce the

amount of primary matching funds the

campaign must repay to the u.s. Treasury.

The Jackson campaign received over $B

million in primary matching funds.

(In the final audit report, the

Commission made an initial determdnation

that the campaign repay $310,906. However,

it now appears that the repayment may be

reduced to $150,694, based on additional

documentation submitted by the campaign on

June 30, 1992, in response to the initial

repayment determination.)

The campaign's counsel, Robert Bauer,

discussed several repayment issues but

focused mainly on the repayment required

for undocumented disbursements.

3

(Disbursements lacking sufficient

documentation of how public funds were

spent are considered nonqualified campaign

expenses. A ratio formula is applied to

such expenses to determine what portion was

paid with public funds, as opposed to

private contributions, and must therefore

be repaid to the U. S. Treasury. After

reviewing the additional records submitted

on JWle 30, FEC audit staff found that the

campaign still failed to provide sufficient

documentation for $381,723 in disbursements, resulting in a pro rata repayment of

$118,356. )

Mr. Bauer argued that the campaign had

met the documentation requi rements for many

of the disbursements in question. He also

stated that the Jackson campaign relied

heavily on volunteers rather than professional consultants and that the commission,

in evaluating the documentation, should

consider the grassroots nature of the

campaign.

The agency will consider Mr. Bauer's

remarks when making a final determination.

November CUiIUlative

candidate Payment TOtal

Republicans

Patrick Buchanan $ 273,793 $ 4,635,287

George Bush 440,884 10,118,252

Democrats

Larry Agran 0 269,692

Jerry Brown a 4,239,405

Bill Clinton 0 12,536,135

Tom Harkin 17 ,B18 1,996,723

Bob Keney 61,977 2,071,863

Paul Tsongas 58,632 2,909,205

Douglas Wilder 0 289,027

New Alliance party

Lenora Fulani 56,438 1,936,472

Natural Law Party

John Hagelin~1 100,000 100,000

~tal $1,009,541 $41,102,060

lCandidates have requested $843,908 for the

December payment.

2The Commission approved Dr. Hagelin's

eligibility to receive matching funds on

October 15. The $100,000 payment

represents his threshold submission to

qualify for matching funds ($5,000 raised

in each of 20 states).
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 1

MII>-CX:".lOOEEl NM'ICNU. PARTY ACTIVITY

Republicans lead Democrats in federal

account fundraising by $95 million at the

end of June. By October 14, 20 days before

the general election, that lead dropped to

$79 million. Even so, as of October 14,

1992, the Republican national committees

had raised $164.4 in total federal receipts

for the 1992 cycle compared with the $85

million raised by the Democratic

cOIllIflit tees.

An October 27 press release provides

further data on the federal account

activi ty of national party coromittees

through rnid-October and comparable

statistics for previous election cycles.

The release also includes infonmation

on the nonfederal accounts of the national

party committees for the current cycle, th

first cycle when these comndttees were

required to report their nonfederal

activity. Nonfederal accounts contain

"soft money"-money raised outside the

limits and prohibitions of the federal

campaign law. Soft money is used to

influence state and local elections and to

pay for the nonfederal portion of activity

that influences both federal and nonfedera

elections, such as voter drives, party

administration and fundraising, and

activities that support both federal and

nonfederal candidates.

To order the release, call 800/424-953

(ask for Public Records) or 202/219-4140.

The accompanying graphs show both

federal and nonfederal activity of the

national parties.

National Party Committees: Transfers to

State Party Committees

January 1991 Through October 14, 1992

_ Transfers from Nonfederal Accounts

_ Transfers from Federal Accounts

National Party commlttees.' Nonfedera

Account Receipts and Disbursements

January 1991 Through October 14, 1992

_ Nonfederal Receipts

_ Nonfederal Disbursements

Democratic Republican

o

1 Graph shows the aggregate activity of each party's thr

national-level committees (the national committee, and 

House and Senate campaign committees),

10

30

20

Millions of Dollars

50 ,-----------------

4

Millions of Dollars

12 .-----------

2

o

a

DNC 1 RNC DCCC NRCC oscc NRSC

10

6

1Abbreviations are as follows:

ONe-Democratic National Committee

RNC-Republican National Gommillee

aGCC-Democratic Congressional Campaign Committee

NRCe-Natlonai Republican Congressional Committee

OSCC-Democratic Senatorial Campaign Gommittee

NRSe-National Republican Senatorial Committee

4
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 12

Federal Account Receipts of DNC and

RNC:1 Comparison of Presidential

Election Cycles

_ ONe Federal Receipts

_ RNC Federal Receipts

1. Year Before Election Year 2. January Through March of Election Year

1984 1988 1992

o

20'1,-------

51-----

30 \----------------

25e----

15

10r---

35

Millions of Dollars

40,-----------------

1983 1987 1991

o

5

20

25 f--------

30 f--------

35 f--------

10

15

Millions of Dollars

40 ;-----==~.---------

1984 1988 1992

o

30---

5

10

20--

25,-------

15 r----

4. July Through 20 Days Before Election Day

Millions 01 Dollars

4°1 -

35 ~._--------

1984 1988 1992

51-----

o

25'----

10 r------

30

15 f--------

20 f---------------

35 f----------------

5

1ONe is the Democratic National Committee; RNC is the Republican National Committee.

3. April Through June of Election Year

Millions of Dollars

40 ,--------
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 1

ADIlISORY OPINICN BEQJESTS

Recent requests for adviso~ opinions

(AORs) are listed below. The full text of

each AOR is available for review and

comment in the FEC's Public Records Office.

AOR 1992-38

Loan from Presidential c~ign's

compliance fund to public funding account

to cover cash shortfall until secret

Service reimbursements are received.

(Requested by the Clinton/GOre Campaign;

Date Made Public: October 28, 1992;

Length: 2 pages)

AOR 1992-39

Coordinated party expenditure limit for

Georgia runoff election. (Requested by the

National Republican Senatorial Conmittee;

Date Made Public: November 9, 1992) (See

alternative disposition, below.)

1lOR 1992-40

Company's payment of cormnissions to party

committees for recruiting customers for

discounted long-distance phone services.

(Requested by Leading Edge Communications;

Date Made Public: November 13, 1992)

1\OR 1992-41

Membership organization's plan for seeking

new members and soliciting them.

(Requested by the Insurance Coalition of

America; Date Made Public: November 19,

1992)

.ALTERNM'E DISPOSITIrn OF AOR

NJR 1992-39

(see AORS, above.) On November 19, 1992,

the commission failed to approve an

advisory opinion by the required four

votes.

N:J 1992-33: In-Kind. Donations fram

Prohibited Sou("ces for

Allocated Activities

The Democratic and Republican National

Party Committees may accept in-kind

donations of goods and services from

corporations and other prohibited sources

in connection with two categories of

allocable expenses: (1) adrodnistrative

activities and (2) fundraising programs

that collect both federal and nonfederal

funds. (Expenses for these activities are

6

allocable under 11 CFR 106.5(a)(2)(i) and

(ii). J However, to ensure that the

prohibited funds represented in such a

donation are not used to pay for the

federal share of the expense-even for a

short time--the federal account must

transfer the federal share of the value of

the goods or services to the nonfederal

account in advance or on the day the

donation is received. Alternatively, to

avoid the practical difficulties of

handling same-day transfers and mu1 tiple

in-kind donations, the committee may prepayor escrow the federal portion of

anticipated in-kind donations by making an

advance bulk transfer from the federal

account to the nonfederal account.

under the escrow or pre-payment

alternative, the oommdttee must first make

good faith estimates of the amount of

in-kind donations it expects to receive and

then transfer sufficient funds from the

federal account to cover the federal share

of the donations. The corrunittee may make

bulk transfers rather than separate

transfers for each anticipated in-kind

donation. The committee may later transfer

fWlds from the nonfederal account to the

federal account to adjust for any

overpayments of the federal share.

Under either payment method, the

committee must report the receipt of

in-kind contributions and the transfers

frOll\ the federal account on Schedules H3

and H4. The opinion provides detailed

reporting instructions and sample forms.

This opinion is specifically limited

to administrative and fundraising expenses

It does not apply to the receipt of in-kind

donations from prohibited sources for othe

categories of allocable expenses (i.e.,

generic voter drives, or candidate support

or exempt party activities that benefit

both federal and nonfederal candidates).

Date Issuf!d: October 14, 1992; Length

10 pages, including sample forms.

NJ 1992-37: Radio Talk Show Bost as

candidate

Randall A. Terry may continue to host a

daily radio talk show while running as a

Bouse candidate for the 23rd congressional

District in New York. His radio employmen

will not result in prohibited corporate

contributions from the production company

or from the radio stations or network

carrying the show, based on the following

representations made by Hr. Terry: That

the show does not air in the 23rd District

that he will not use the show to promote o

raise funds for his candidacy and that his

campaign ads will not be run during the
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 12

show. The Commission interpreted these

representations to include a commitment by

Mr. Terry to refrain from attacking his

opponent or soliciting contributions or

airing ads for those purposes during his

show.

Noting that this advisory opinion was

based on the facts and representations

specific to this case, the agency stated

that the opinion was not meant to modify or

reverse previous opinions in this area.

See AD 1992-5 and opinions cited therein.

The Commission expressed no opinion as

to any ramifications of cOJlllIlW1ications law,

which is outside its jurisdiction.

Commissioner Lee Ann Elliott wrote a

concurring opinion. Date Issued: October

30, 1992; Length: 8 pages, including

concurring opinion.

REPUBLICAN PAR'lY OF .KfNl'UCKY v : FEe

on October 26, 1992, the u.s. District

Court for the District of Columbia

dismissed this suit without prejudice, as

stipulated by both parties. (Civil Action

No. 91-1064 (SSH).) The Republican party

of Kentucky had filed suit alleging that

the FEe had failed to act on the administrative complaint the Party had filed in

october 1990. The complaint alleged that

the Democratic party of Kentucky had

exceeded the limits on contributions and

party expenditures.

In stipulating to the dismissal of the

suit, both parties agreed to the following

terms:

a During the next 18 months, the Republican

party of Kentucky will not file a new

action alleging that the FEe failed to

act on the administrative complaint.

o Every six months, the party will have

access to a chronology of actions the FEC

has taken on the complaint.

o The court's September 1991 protective

order will remain in effect until the.FEe

has taken final action on the complaint.

under the protective order, any'information on the complaint that is released to

the Party must remain confidential, and

all court filings related to the

complaint must be retained under seal.

7

TRINSEY v : FEe, E'l' AI..

On October 27, 1992, the U.S. District

Court for the Eastern District of pennsylvania dismissed a suit filed by John H.

Trinsey, Jr., a 1992 Presidential candidate. (Civil Action No. 91-8041.) He had

brought suit against 49 of the SO states

(all except New Hampshire) as well as the

District of Columbia and Guam, seeking a

declaration that the ballot access laws in

South Dakota (where allegedly he was denied

access to the primary ballot) and the other

jurisdictions were unconstitutional. He

also asked the court to bar the payment of

matching funds to 1992 candidates until he

was permittee'! to gain ballot access.

The court granted defendants' motions

to dismiss the suit, noting that the u.s.

District Court in SOuth Dakota dismissed,

with prejudice, a virtually identical suit

filed by Mr. Trinsey. The court; further

noted that the Eighth Circuit Court of

Appeals upheld the South Dakota court's

dismissal after carefully considering Mr.

Trinsey's claim (Trinsey v. Hazeltine,

Civil Action No. 92-1394, September 2,

1992). on this basis, the Pennsylvania

district court dismissed the suit even

though some of the defendants had not yet

filed their motions.

v. JllID-MERICA CCfiSERVATlVE POLITICAL

ACTIW CCtVU'ITEE

on OCtober 30, 1992, the u.s. District

Court for the Northern District of Iowa

ordered the Mid-America Conservative PAC

and its treasurer to pay a $10,000 civil

penalty for failing to file several reports

on time. (Civil Action No. C90-2093.l The

court also peonanently enjoined defendants

from late filing of future reports.

The decision was based on a settlement

agreement between both parties. Under the

settlement procedures, defendants agreed to

submit an offer of settlement to the

comrndssion but also agreed to accept the

FEC's final determination. The Commissioners unanimously voted to reject the

defendants' proposal and to accept an

alternative agreement submitted by the

FEC's General Counsel. Defendants then

objected to the agreement because the

Commissioners had not considered the matter

in a public session.

In granting the FEe's motion to enforce

the settlement agreement, the court pointed

out that the Commission had followed its

usual procedures in considering and voting

on the agreement. The court also noted

that defendants could have specified that

the agency follow special procedures but

did not do so.
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 1

(continued from page 1)

election (e.g., "1992 general") right on

the check O~ in a signed statement

accompanying the contribution. 11 crn

110.I(b)(2)(i) and (b)(4); 110.2(b){2)(i)

and (b)( 4).

o Finally, contributions designated for

debt retirement may not exceed the

campaign's net debts outstanding for that

election. 11 crn 110.1(b)(3); 110.2(b)

(3). If a contribution exceeds the

amount of net debts, the co~ttee must

either refund it or ask the contributor

to redesignate it for another election.

How do we calculate the campaign's net

debts outstanding? Net debts outstanding

consist of unpaid debts incurred with

respect to the election minus cash on hand,

o Total unpaid debts include the estimated

cost of raising funds to liquidate

outstanding debts and, in the case of a

terminating commdttee, estimated

winding-down costs.

o Cash on hand consists of currency,

deposited funds, traveler's checks,

certificates of deposit, treasury bills

and amounts owed to the conwittee in the

form of credits, refunds, returns and

receivables (or a reasonable estiffi3te of

the collectible amount). 11 CPR

110.1(b)(3) (iil.

A campaign must keep adjusting its net

debts outstanding as additional funds are

received and spent.11 11 CFR 110.1(b)

(3)(iii). -

selling Assets

May a corrmi.ttee sell off its asseta in

order to raise money to pay its debts?

Yes. However, the entire amount paid is

usually considered a contribution, subject

to the prohibitions and limits of the Act.

11 CFR 100.?{a)(2); AOS 1991-34 and 1990-3.

The commdssion has, however, recognized

narrow exceptions to this general rule.

What are these exceptions? under the

circumstances described below, the sale of

a committee asset does not result in a

contribution, and the proceeds are not

subject to the Act's limits and

lSee illustration in the Explanation and

Justification to the cited regulations, 52

FR 762, January 9, 19B7.

8

prohibitions, as long as the item is sold

at the "usual and normal chal:ge":

o The isolated sale of a committee asset i

the asset was purchased or developed for

the comndttee's own particular use,

rather than as a fundraising item, and

the asset has an ascertainable market

value. ADs 1989-4 and 1986-14. A

mailing list developed by the committee

might be considered such an asset.

o The sale of campaign equipment or

leftover campaign supplies by candidate

ccmmdttees that wish to terminate and

plan to use the proceeds for debt

retirement. See ADs 1992-24 and 1990-26

Remember that, under either of these

exceptions, a contribution is avoided only

if the purchaser pays no more than the

"usual and nonnal charge, II as defined unde

11 eFR lOO.7(a)(I)(iii}.

Receiving Outside SUpport

May a party cCllllllittee help pay a

cOllDi.ttee's campaign debts? Yes, a party

committee may contribute directly to the

campaign (subject to the contribution

limits, of course). If the contributions

are made after the election, they must be

properly designated. 11 eFR 110.1{b)(4)

and. 1l0.2(b) (4). Alternatively, the party

committee may pay the candidate's

creditors. payments to creditors may be

considered in-kind contributions to the

candidate (subject to the contribution

lindts) or, in the case of general electio

candidates, the payments may be regarded a

coordinated party expenditures on behalf o

the candidate (subject to the special

limits of 2 U.S.C. §441a(dj.)21 11 eFR

110.7. -

May a cCllDllittee join with other

coaudttees in an effort to retire debts?

Yes. committees that want to retire their

debts may form a joint fundraising

commdttee. Committees should follow the

joint fundraising regulations at 11 eFR

102.17 or, in the case of Presidential

primary campaigns receiving matching funds

11 eFR 9034.8.

Maya corporation pay for a fundraisin

event desi9flE!d to retire a debt from a pas

campaign? No. Payments to sponsor a

fundraising event for a candidate are

2Local party committees may not make

coordinated pa~ty expenditures without the

prior written authorization of the nationa

or state committee. 11 CFR 110.7(a)(4) an

(c) •
FEDERALELECTION COllt1i111ISSIOl\J

•

•

•

December 1992

considered contributions to the candidate.

contributions and expenditures by

corporations are prohibited, even 'if made

to help retire campaign debts.

using the Candidate's Personal Funds

May candidates use their personal fwlds

to help payoff debts? Yes. House and

Senate candidates are not limited in the

amount of personal funds they may spend on

their own campaigns. 11 eFR 110,10(a). A

Presidential candidate receiving public

fundsI however, may contribute no more than

SSO.OOO to his or her own campaign. 11 CFR

9003.2(c) and 9035.2.

May the campaign repay the candidate

for personal funds loaned to the ca:mpai.gn?

Yes, but only if the funds were originally

reported as loans from the candidate. As a

general rule. personal funds that are

donated by the candidate (as distinct from

loaned) may not later be converted to a

loan. A refund of such a donation would

represent the conversion of excess campaign

funds to the candidate's personal use,

which is prohibited. 2 U.S.C. §439ai 11

CPR 113.2(d); ADs 1991-9, 1987-1 and

1977-58 .

Using Funds from MOther CODIDittee

Established by the candidate

May a candidate transfer funds from his

or her nonfederal callpaign coumittee to his

or her federal canpaign coumi.ttee to retire

debts? Yes, provided that none of the

funds transferred violate the limits or

prohibitions of the Act. Moreover, such

transfers may trigger registration and

reporting obligations for the nonfederal

campaign committee. See 11 crn 110.3(c)(5)

for further information.

Note that the Commiss.ion has approved

regulations that would prohibit transfers

from nonfederal campaign committees,

although these regulations are not yet

effective.3/ See the September 1992

Record, page 1. Further developments will

be announced in future issues.

3Before a regulation becomes effective, it

must be before Congress fOI:"" 30 legislative

days. 2 U.S.C. §438(d). In the case of

the nonfederal transfer rulemaking, the

10200 Congress adjourned before 30

legislative days had elapsed; therefo~e,

the regulations must be resubmitted to the

103rd Congress for a new leqislative review

period.

9

Volume 18, Number 1

May a candidate cCUDi.ttee retire debts

by using fwlds transferred from another

federal COIIIlli.ttee authorized by the same

candidate for a different election cycle?

Yes, as long as:

o The candidate is not actively seeking

election to more than one federal office;

and

o The cammdttee making the transfer has no

net debts outstanding. 11 erR 116.2(cl

(2) •

For further information, including the

application of contribution limits to funds

contained in such transfers, see 11 CFR

110.3(c)!4) and (5). Note that publicly

funded presidential campaigns are subject

to further I:""estrictions. see ADs 1990-11

and 1988-5.

Note also that the Commission has

proposed regulations that would amend the

current regulations on transfers between

federal campaign committees. See the

September 1992 Record, page 2. Future

issues will provide further information on

this rulemaking.

Assigning Debts

May one authorized COIIIlI1ttee assign its

debts to another authorized COIIWttee of

the sane candidate in order to terminate?

Yes, under certain conditions.

o First, the committee assigninq the debts

must qualify as a "terminating

committee," that is, a committee that

receives contributions and makes

expenditures only for the purpose of

paying debts and winding-down costs.

o Second, the assigning conmittee must not

have any cash on hand or assets to pay

any part of its debts and must have been

organized for an election already held.y

11 CFR 116.1(a) and 116.2(c)(3).

Moreover, both the assigning committee

and the committee receiving the debts must

follow special notification ~les.

What are these special rules? The

assigning committee must notify each

creditor in writing of the name and address

of the commdttee that will receive the

debts. This notification must be made at

least 30 days before the assignment takes

place. Once the debts are assigned, the

committee may terminate.

The comndttee that receives the

assigned debts must notify the Commission

(continued)

4special rules apply to Presidential

candidate committees receiving public

funds. See 11 eFR 116.2(c)(3).
December 1992 FEDERAL ELECTION COMMISSION

in writing that it has assumed the

obligation to pay the debts and to report

both the debts and the'contributions

received to retire them. 11 eFR

116.2(c)(3)(i) and (ii).

Terminating the CouDittee; Settling Debts

When may a CCIIIDittee teminate and stop

filing I:eports? A comm.ittee aay file a

termination report if:

a It has paid. settled or otherwise

extinguished all its debts (11 CFR 102.3

and 116.2(c)(i));

o Has ceased raising or spending funds

(11 eFR 102.3);

o Does not have any funds or assets

available to pay debts owed by a

cammdttee authorized by the same candidate if that committee is unable to pay

its debts (11 CFR 116.2(c)(ii»j and

o Is not involved in an ongoing enforcement

matter.

Note that if a candidate has authorized

more than one committee for the same

election, the principal campaign camRcittee

may not terminate unt.i.I the other

authorized committees have also met the

qualifications for termination. 11 eFR

102.3(b) .

Upon filing an acceptable termination

report, the committee may stop reporting.

What if a e<mDittee has debts? A

coamdttee may extinguish its debts by

settling them for less than the amount

owed, but the cornndttee must qualify as a

"terminating committee" (one that reoetves

contributions and makes expenditures only

for the purpoSe of paying debts and

winding-down costs). 11 eFR 116.1(a) and

116.2(a)(11. Furthermore, the committee

must file a debt settlement plan that is

subject to Comndssion review. 11 CFR

116.7(a).

~t is a debt settlement plan? A debt

settlement plan gives pertinent info~tian

on all of the commdttee's debts and its

agreements with creditors to settle some or

all of them for less than the amount owed.

The c::mmti.ttee must postpone paying

creditors the agreed-upon amounts for debts

that are being settled until after the

Commission has reviewed the debt settlement

plan. See 11 CFR 116.7 for procedures on

filing debt settlement plans on FEC Form 8.

once the committee has settled or

otherwise extinguished all of its

outstanding debts and the Commission has

reviewed the debt settlement plan, the

committee may pay the creditors the

10

Volume 18, Number 12

settlement amounts and then file its

termination report.

DOes the unpaid aDKlUIlt of a settled

debt result in a contribution frail the

coumercial vendor?5/ Not under the

following conditions:

a Credit was initially extended by the

vendor in the ordinary course of business

with terms substantially the same as

those extended to nonpolitical debtors of

similar risk and with debts of similar

size;

o The camndttee undertook all reasonable

efforts to satisfy the outstanding debt

(e.g., through fundraising, reducing

overhead costs or liquidation of assets);

o The commercial vendor made the same

efforts to collect on the debt as those

made to collect from a nonpolitical

debtor in sindlar circumstances (e.g.,

late fee charges, referral to a debt

collection agency. litigation); and

o The commdttee submitted a debt settlement

statement on FEe Form 8 for Commission

review in accordance with 11 CFR 116.7.

11 CFR lOO.7(a)(4) and 116.4(a)-(c).

Bankruptcy

Bow should. a coamittee handle debts

discharged through bankruptcy? If a

candidate or cornmittee is released from

debts through a bankruptcy court decree

pursuant to Chapter 7, the committee lWst

include in a debt settlement plan the court

order as well as a list of the obligations

from which the committee is released.

11 crn 116.7(g). A1though a polltical

corranittee may not be eligible for a Chapter

7 discharge, the Co~ssion will treat an

authorized committee's debts as settled for

purposes of the Federal Election Campaign

Act if the candidate received a Chapter 7

discharge that applies to the committee's

debts.

Disputed Debts

What should a cem:nittee do about

disputed debts? Commission regulations

define a disputed debt as a bona fide

disagreement between the creditor and the

committee as to the existence of a debt or

the amount owed. If something of value was

SA commercial venda' is any business or

individual who provides the goods or

services in question to a candidate or

political cammdttee in the usual and normal

course of business. 11 CrR 116.1(c).
Decenber 1992 FEDERAL ELECTION CONINJlSSION Volume 18, Number 12

provided to the commi.ttee, the committee

must continue to report the following

information until th~ dispute is resolved:

a The amount the committee admi.ts it ove s;

o The amount the creditor claims is owed;

and

o My amounts the committee has paid the

creditor.

The committee may note in its report

that disclosure of the disputed debt is not

an admission of liability or a waiver of

the committee's claims against the

creditor.

In the case of a "terminating

committee," the conanittee must describe in

its debt settlement plan any disputed debts

and the committee's efforts to resolve

them. 11 CFR 116.10.

Unpayable Debts

lolhat if a COllIIli.ttee cannot pay a debt

because the creditor can't be located or

has gone out of business? The conini. ttee

must continue to report the debt until it

has been outstanding at least two years.

At that point, the conmittee may request a

COl\lllllssion determination that the debt is

unpayable. The conunittee must submit its

request in writing, following procedures

described in 11 eFR 116.9. (A taminating

committee must include the request in its

debt settlement plan.) Once the committee

ceceives FEC notification that the debt is

unpayable, it may list the debt as

unpayable on its next report and thereafter

cease reporting the debt.

Debt Liability

Jllay the candidate, treasurer or

ccmni.ttee members be held personally liable

for debts owed by the camuttee? The Act

and FEC regulations do not govern personal

liability for payment of cOlllllittee debts.

Debt claims and liabilities are generally

governed by state law. ADs 1989-2, 1979-1

and 1975-102.

GfX>H:nA lU,H)Ff' ELECTIW FOR :mvm: SFAT

Georgia held a senate runoff election

on November 24. The runoff was required

under Georgia law because none of the

candidates in the November 3 general

election received a majority vote. The top

two vote-CJetters in that election (the

major party nominees) were candidates in

the runoff.

A pre-election report for the runoff

was not required due to time constraints.

However, committees of the runoff

candidates were required to file 48-hour

notices on contributions. A post-general

election report, due December 3, was also

required.

The runoff candidates had a separate

contribution limit for the election. 11 CFR

llO.I(j)(l) and 110.2(i)(1)~ see also

11 eFR 100.2 (d)( 2) • However, there was no

additional $17,500 limit for contributions

by the Republican or Democratic national

committees and Senatorial campaign

committees, since that lintit applies to the

entire electton year. See l10.2(e).

The Commission was unable to decide

whether a separate coordinated party

expenditure limit applied to this election

See «AIternate oisposi tion of AOR," page 6

PUBLIC APPFAIVH::ES

•

12;3-6 The Council of state

GOVernments

Des Moines, Iowa

John surina, staff Director

11
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 12

FEe PUBLISHES ~LERS

The ConEdssion re~ently cited the committees of the candidates listed below for

failing to file r.eports. The names of

authorized committees that fail to file

reports are published pursuant to 2 u.S.C.

§43S(a)(7). Enforcement actions against

nonfilers are pursued on a case-by-case

basis.

Report Not

Filed

Pre-General

Pre-General

Pre-General

3rd Quarter

Pre-General

Pre-General

3rd Quarter

Pre-General

Pre-General

Pre-General

Pre-General

Pre--General

3rd Quarter

Pre--General

Hayes House-ARlO1 Pre-General

Herbert House-~51 Pre-General

Johnson House-TX/30 Pre-General

Lee House-ILj19 Pre-General

Meek HouSe-FL/17 pre-General

Montgomery House-MO/Ol Pre-General

O"Hara House-MS/05 Pre-General

Pierson House-IN/04 Pre-General

seagravesl/ House-GR/OS Pre-Gefieral

Shaver - House-IN/02 Pre-Genreal

Solomon Hou5e-NJ/O1 Pre-General

sturgesl/ House-PAIl? Pre-General

Tylerl/ HOllse-NC/Ol pre--General

valencia House-CA/SO Pre--General

walker HOlise-IL/Ol Pre-General

1Committees of these candidates filed their

reports after the deadline foe publication

as nonfilers.

Office

candidate Sought

Genis senate/CA

Hudson Senate/GA

Jotorrow 8enate;'UT

Sellers Senate/AL

Anthony.!/ House--oK/06

Cain House-TX/30

Conboy House-MA,I09

Davis House-C1V29

Donnelly· House-WA/06

Gaddy House-TX/21

Galar House-NYj06

MURS RELFASED TO THE PUBLIC

Listed below are MURs (FEC enforcement

cases) recently released for public review.

The list is based on the FEC press releases

of October 26 and November 9, 1992. Files

on closed MURs are available for review in

the Public Records Office.

Unless otherwise noted, civil penalties

resulted from conciliation agreements

reached between the respondents and the

Commission.

KUR 3654

Resp::mdents: Laughlin for Congress - 88,

Everet Kennemer III, treasurer (TX)

Complainant: FEC initiated

Subject: Failure to file 4B-hour notices

on time

Disposition: Reason to believe but took no

further action

JlIJR 3488

Respondents: (a) Dembrow for Congress

Committee, Robert E. creager, treasurer

(Me); (b) Emily Gray (Me)

Ccoplainant: Sean Hagan (MD)

Subject: Disclaimer

Disposition: (a) Reason to believe but

took no further action; sent admonishment

letter; (b) no reason to believe

I«JR 3339

:Respoodents: Senator Ben Bagert Committee

to Put Louisiana First, Carroll M.

Chiasson, treasurer

Complainant: FEe initiated

Subject: Excessive contributions

Disp:>sition: $1,650 civil penalty

12
December 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 1

•

The first number in each citation

refers to the "nurober" (month) of the 1992

Record issue in which the article appeared;

the second number, following the colon,

indicates the page number in that issue.

NNISORY OPINICI'iS

1991-29: Contributions received and made by

corporation's employee pledge program,

1:4

1991-32: Charges for consultant's fundraising services, 5:6

1991-33: Allocation of expenses when party

committee administers primary election,

1:6

1991-34: Committee sale of access to voter

data base as ongoing venture, 1:6

1991-35: Application of allocation rules

when SSF's nonfederal account pays its

own administrative expenses, 2:10

1991-36: Corporation's payment of employee's travel expenses to attend party

fundraiser, 3:5

1991-37: Nbnconnected PAC's payment to

incorporated firm for shared facilities

and services contributed to committees,

3:5

1991-38: Repayment of embezzled funds to

candidate committee, 3:6

1991-39: Contributions suspected of being

made in names of others, 4:9

1992-1: Campaign salary paid to candidate;

reimbursements for campaign expenses, 4;9

1992-2: Party reallocation of staff

salaries as fundraising expenses, 4:10.

1992-3: Coq;:oration's payment of benefits

for employee/ candidate on unpaid leave,

5:8

1992-4: campaign's payment of candidate's

living expenses and spouse's salary, 4:10

1992-5: Candidate's appearance in cable

public affairs programs, 5:B

1992-6: Honorarium paid to candidate for

speech on campaign issues, 4:11

1992-7: corporate PAC's solicitation of

franchise personnel, 6:4

1992-8: Tax seminars as fundraising

mechanism, 5:8

1992-9: cooperative's twice-yearly

solicitation through raffle at annual

meeting, 6:5

1992-10: Committee'S disbursement to

nonprofit voter organization, 6:5

1992-11: Computer-generated summary page

and detailed summary page, 6:6

1992-12: Candidate's future ownership of

campaign van, 7: 7

13

19~2-14: eandidate's designation of excess

campaign funds in event of his death,

7:7

1992-15: Extension of time for redesignations of general election contributions

when candidate loses primary, 8:6

1992-16: Nonfederal contributions made by u.S. subsidiary of foreign corporation,

8:7

1992-17: Affiliation of partnership PAC

with SSFs of the corporate partners, 6:8

1992-19: State campaign's lease of computers to candidate's federal campaign,

9:9

1992-20: Funds from members' corporate

practices used to pay expenses of

~embership organization's PAC, 10~5

1992-21~ Excess campaign funds of 1994

candidate donated to 5170(c) charity, 8:9

1992-23: Ads paid for by incorporated

membership organization, 10:6

1992-24: campaign's sale of assets and

other debt retirement activities, 10:6

1992-25: utah convention as separate election, 9:9

1992-27: Retroactive allocation of

fundraising expenses, 10:7

1992-28: Repayment of campaign's loan to

nonprofit corporation, 10:8

AD 1992-29: Late deposit of contributions,

10:8

AD 1992-30: QUalifying as a national party

committee, 11: 7

AD 1992-31: Vice Presidential candidate on

independent ticket, 11:7

AD 1992-32: Donation of excess campaign

funds to public housing council, 11~8

AD 1992-33: In-kind donations from

prohibited sources for allocated

activities, 12:6

AD 1992-34: Use of government car for

campaign travel, 10:8

AD 1992-35: Contribution lindts for

independent candidate, 11:8

AD 1992-37: Radio talk show host as

candidate, 12:6

OXIRT CASES

FEe v.

----=. AFsCME=Pa, 1: 7

- America's PAC, 7:10 - Black political Action committee, 8:13 - caulder, 8: 13 --

- CbmmIEtee of 100 Democrats, et al.,

11:9

- Eldredge fa r conqress Cont tee, 9: 11

- Friends 0: Isaiah Fletcher Committee,

10:12

- International Funding Institute, 9:11 - Kopko, 8:11 - Life Amendment Political Action Co~ttee, Inc., 11:9

(continued)
December 1992 FEDERAL ELECTION COMMISSION

- Mid-America Conservative PAC, 12:7 - Miller, 11.1Q

- National Re~ican Senatorial

Coomittee (9 -5176), 8:11

- NRA political victory Fund, 1:7 - Political Contributions Data, Inc.,

10,10

- Populist Party (92-0674), 5:9 - sCfiaefet, Friends of, 6:6 - wright, 7:8

v. FEe - Akins, 1:8, 3:7; 8:11

- AkInS, Ball, et al., 10:12

- Branstool, 3:B - B£Van v. Fee, 8:13 - Common Cause (91-2914), 1:9; 10:11 - Common Cause (92-0249), 3:8 - Freedom Republicans, Inc., 3:7; 6:7 - Khachaturian, 11:9

- LaRouche, 4; 8

- National Rifle Association of America

(NRA) (B9-3011), 4:8

- Republican Party of Kentucky, 12:'" - schaefer, 6:6

- s~aus, 6:6 - Tr~nsey. 3:7i 12:7

- White, 7:9

1lEPORTIl'Ii

pre-primary, pre-runoff reporting dates - At; date changed, 7:16

- FL date changed, 9:8 - GA runoff, 12:11

- House and senate, 1:14

- OH, SC dates changed, S~9

- presidential, 2:10; 3:10

14

Volume 18, Number 12

Schedule for 1992, 1,10, 3:8, 6,2, 9,6

Special elections

- New York, 11:4

- North carolina, 11:4 - North Dakota, 10:1; 11:4

waivers, July 15 quarterly, 7:16

SPI1NDING LDlITS FOR 1992

Coordinated party, 3:1

Presidential, 3:14

SOG-LINE ARTICLES

Advances by staff: contribution limits and

reporting, 9:10

Compliance with laws outside FEe's jurisdiction, 3:12

Contributions: receipt and deposit, 6:10

Debt retirement by candidate cOOIl\ittees,

12:1

Debt settlement plans: postponing payment

to creditors, 8:10

Last-minute contributions: 48-hour notices

required. 1:18

Names of corporate and labor PACs, 8:10

Registration by candidates and their

committees, 2:12
December1992 FEDERAL ELECTION COMMISSION Volume 18, Number 12

CbHPAIGN FINANCE BROCBURB SBIUBS

The FEe's Information Services Division distributes a series of free brochures to

help candidates, political committees and the general public comply with the federal

campaign finance law and get the most out of the agency's services. Each brochure

sunmarizes a different aspect of the law or FEe resources. To order, fill out the form

beloy and mail it to the FEe.

--- -----~------

Name 1

Street

Address:

City/State

&Zip Code:

---------------- --------~---

Check the brochur9S you Yant and mail to: Federal Election Commission, Information

Services Division. 999 E Street, NV, ~asnington, DC 20~63

The $1 Tax Chec~off answers questions taxpayers may have when deciding whether to

check "yes" or "no" to the 1040 tax-form question: Do you "'ant $1 of your federal

tax to go to the Presidential Ele~tion Campagin Fund?

Public Funding of Presidential Elections gives' a brief history of the Presidential

public funding program--including the $1 tax cneckoff for the Presidential Election

campaign Fund--and an explanation of hov the process vorks.

___ Using FBe campaign Finance Info~mation explains how to gather information about the finan~ial activity of candidates and political committees. It describes the FEe's

computer indexes and suggests ~ays to use them.

Sale and Use of Campaign Finance Information discusses the legal and illegal uses

--- of information contained in reports and statements filed with the FEe. The

brochure also explains vhat steps a committee may take to ensure tnat its

individual contributors are not solicited illegally.

10 ~uestion$ fro8 Candidates answers questions on the law most freqUEntly asked by

candidates and candidate committees.

Advisory Opinions explains hov individuals and committees may seek guidance from

the CO$mission by requesting advisory opinions (AOs). An AO i$ all official

Commission response to a question concerning the appli~ation of the la~ to a

specific activity,

Filing a Complaint explains how to register a formal complaint with the Cummission

concerning a possible violation of the law. The brochure also describes how

complaints are processed.

•

Candidate Registration

Committee Treasurers

Con tributions

___ Corporat@/Labor Communications

Corporat@/Labor Pacilities

Independent Expenditures

Political Ads and Solicitations

State/Local Elections and Federal Law

Trad@ Associations

___ Volunteer Activity

- - - --_._----~---------------

lS
December 1992 FEDERAL ELEC-nON COMMISSION Volume 18, Number1

Political CODmittees

Treasurers of re9istered political committees aut~matically receive the Record.

A change of address by a political committee (or any change to information discl06ed - on the Statement of Organization) must, by law, be llIade in writing on FEe Form 1 OJ; by

letter • The trealOure r Imlst sign the amendment and file it with the Secretary of the

senate, the Clerk of the House or the FEe (as appropriate) and with the appropriate

state office.

other SUbscribers

Record subscribers who are not registered political committees should include thl!

followin9 information when requesting a change of address:

o Subscription number (located on the upper left hand comer of the mailing label);

o Name of the subscriber;

o Old address; and

o New address.

Subscribers (other than political committees) may correct their addresses by

phone as well as by maiL

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

OfficialBusiness

Bulk Rale Mail

postage and Fees Paid

Federal Election CommissiOIl

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