FEDERAL ELECTION COMMISSION
 

September 1990 999 E Street NW Washington DC 20463 Volume 16,Number

REPORTS DUE IN OC'roBER, NJVEmlER 

lIND DECEMBER 

To find out what reports your corrmittee 

must file during fall 1990, check the Fall 

Reporting Schedule chart (page 2). Then 

check the Reporting Dates chart (page 3) to 

determine the coverage period and due date 

for each report. 

(ColMllittees supporting candidates in 

the Hawaii special elections should consult 

pages 4 and 5 of the August Record for 

reporting dates.) 

The FEC will mail forms to all registered committees for their fall reports. 

For additional forms or information on 

reporting requirements, call the FEC at 

800/424-9530 or 202/376-3120. 

Last-Minute Independent Expenditures 

Any person making independent expenditures aggregating $1,000 or more in connection with the November 6 general election 

must report the expenditures within 24 

hours if the expenditures are made between 

October 18 and November 4. The report must 

be filed with the Clerk of the House or the 

Secretary of the Senate, as appropriate, 

within 24 hours after the expenditures are 

made. A copy of the report must also be 

filed with the filing office of the state 

in which the candidate supported or opposed 

seeks election. 11 CFR 104.4(b) and (c) 

and 104.5(g). 

For more information on 24-hour reports 

of last-minute independent expenditures, 

see the July 1990 Record. 

Last-Minute Contributions 

Authorized committees of candidates 

running in the November 6 general election 

must file special notices on contributions 

of $1,000 or more received between october 

18 and November 3. The notice is due 

within 48 hours of the cOlMllittee's receipt 

of such a contribution and must be filed 

with the Secretary of the Senate or the 

Clerk of the House, as appropriate, and 

with the filing office of the state in 

which the candidate seeks election. 11 CF

104.5(f) . For more information on 48-hour notice

of last-minute contributions, see the July 

1990 Record. See also this issue's articl

on faxing reports, page 4. 

Late Filing 

The Federal Election Campaign Act does 

not permit the Commission to grant extensions of filing deadlines under any circum

stances. Failure to file on time could 

result in enforcement action by the FEC. 

Where to File Reports 

COlMllittees must file original reports 

with the appropriate federal office and 

simultaneously file copies of reports with 

the appropriate state filing offices. 11 

CFR Parts 105 and 108. See the instructions to FEC Forms 3 and 3X. A list of 

state filing offices is available from the 

FEC. 

(continued

TABLE OF CCNl'ENTS 

1 REPORTI~: Reports Due This Fall
 

4 800 LINE: Faxing Repo~ts
 

\ 4 PUBLIC FUND~: FEC Le\ter to Treasury 

5 ADVISORY OPINIOOS: AORs 

C<XlRT CASES
 

5 Faucher and Maine Right to Life
 

COlMllittee, Inc. v. FEC
 

7 New Litigation
 

COMPLIANCE
 

8 MURs Released to the Public
 

9 Nonfilers
 

REGUIATIOOS 

9 Revised Allocation Rules: Summary 

13 New Debt Settlement Rules: Summary 

17 PUBLICATIOOS: FEC Brochure Series 

18 INDEX 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number

Fall Reporting Schedule 

Report 

Type of Filer1 Quarterly 

Oct. 15 

Monthly 

Oct. 20 

PreGeneral 

Oct. 25 

Monthly 

Nov. 20 

PostGeneral 

Dec. 6 

Monthly 

Dec. 20 

1990 Congressional 2 

Candidate Committees .[ .[3 .[3 

PACs and Party committees: 4 

Quarterly Filers .[ ,r5 .[ 

PACs and Party committees: 4 

Monthly Filers .[ .[ .[ 

presidentiasCandidate 

Committees: 

Quarterly Filers .[ 

presidentiasCandidate 

Committees: 

Monthly Filers .[ .[ .[ 

CorporationS/Labor Organizations: Reports7of Partisan 

Communicat.Lons .[ .[ 

lCommmittees supporting candidates in the Hawaii special elections should consult the Augu

Record, pages 4-5.
 

2committees of congressional candidates not active in 1990 do not have to file any reports
 

until January 31, 1991, when the 1990 year-end report is due.
 

3Required only if the candidate runs in the general election. 

4pACS and party committees must file on either a monthly or a quarterly schedule. Commit­


tees wishing to change their schedule should consult 11 CFR 104.5(c).
 

5Required only if the committee makes contributions or expenditures in connection with the
 

general election between October 1 and October 17. All PACS and party committees must,
 

however, file a post-general election report.
 

6presidential committees must file on either a monthly or a quarterly schedule in 1990.
 

7Required if an organization's aggregate costs exceed $2,000 for internal communications
 

expressly advocating the election or defeat of a candidate in the 1990 general election. 

Reports are required beginning with the first reporting period during which such costs 

aggregate over $2,000 per election and for each period thereafter in which the organization 

makes any additional disbursements for advocacy communications in connection with the same 

election. See 11 CFR 104.6 and page 24 of the Campaign Guide for Corporations and Labor 

Organizations. 

2
 
e _R_epo_r_t 

September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

Reporting Datei 

Period COvered2 Reg./Cert. Mail Date3 Filing Da

October Quarterly July I--September 30 October 15 October 1

October Monthly September I--September 30 October 20 October 2

Pre-general October 1--0ctober 17 OCtober 22 October 2

November Monthly October 1--0ctober 31 November 20 November 

Post-general 

Pre-general filers October 18--November 26 December 6 December 

Other filers October I-November 26 same same 

December Monthly November I-November 30 December 20 December 

lcommittees supporting candidates in the Hawaii special elections should consult the Augus

Record, pages 4-5. 

2r f report is first report filed, then coverage period starts with date of committee's fir

activity, including activity that occurred before the committee registered or before the 

individual became a candidate. 

3Reports sent by registered or certified mail must be postmarked by the mailing date. 

Otherwise they must be received by the filing date. 

Federal Election COIIIlIission, 999 E Street, N'ii', Washington, DC 20463 

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

Lee Ann Elliott, Chairman Walter J. stewart, Secretary of the Senate, 

John Warren McGarry, Vice chairman Ex Officio Commissioner 

Joan D. Aikens oonnald K. Anderson, Clerk of the House of 

ihomas J. Josefiak Representatives, Ex Officio Commissioner 

Danny L. McDonald 

Scott E. ihomas 

3 
September 1990 FEDERAL ELECTIOI\J COMMISSION Volume 16, Number 

FAXING REPORTS: CLIIRIFICATIOO 

Financial disclosure reports and 

statements filed with the federal filing 

offices (the FEC, the Clerk of the House 

and the Secretary of the Senate) must 

include the original signature of the 

committee treasurer (or, in the case of 

communication cost reports filed by corporations and labor organizations, the signature of the person designated to sign the 

report). Because of the signature require­

!\lent, the telefacsimile machine (fax 

machine) may not be used to transmit 

reports and statements to the federal 

filing offices. 

There is one exception to this rule. 

In AO 1988-32, the Commission said that an 

authorized candidate committee could use a 

fax machine to submit 48-hour notices on 

last-minute contributions, since these 

notices do not require the treasurer's 

signature. (For the same reason, 48-hour 

notices may also be sent via mailgram or 

telegram. ) 

The Senate Office of Public Records 

recently installed a fax machine that 

Senate committees may use to file their 48­

hour notices. The fax number is 202/224­

1851. At the present time, however, the 

Clerk of the House does not have the 

facilities to accept faxed notices. Since 

this situation could change, House committees that wish to fax their 48-hour notices 

should check with the House Office of 

Records and Registration, 202/225-1300. 

For information on the use of fax machines 

located in Members' offices, consult House 

and Senate rules. 

In the case of 48-hour notices filed by 

authorized committees of Presidential 

candidates, the FEC will accept notices by 

fax machine. 

FEe ASKS TRFASURY TO WRITE RlJLES 

TO IIl\NDLE SHORTFALL IN PRESIDENTIAL FUND 

on July 11, 1990, FEC Chairman Lee Ann 

Elliott sent a letter to the Secretary of 

the Treasury Nicholas F. Brady pointing ou

the projected shortfall in the Presidentia

Election Campaign Fund for the 1992 elections and suggesting that Treasury wri te 

new rules on how to allocate funding in th

event of a shortfall. 

A report accompanying the letter 

explained that, under the public funding 

statutes, the Commission and the Secretary 

of the Treasury have separate responsibili

ties with regard to public funding entitle

ments. The Commission processes the 

requests and certifies the amount of each 

entitlement, and the Treasury Department 

makes payments from the Fund to the three 

types of public funding recipients (primar

candidates, national nominating convention 

committees and general election candidates). In funding these recipients, the 

Secretary of the Treasury must give priori

ty first to the nominating conventions, 

second to general election candidates and 

last to primary candidates receiving match

ing funds. In the event that funds are 

insufficient to pay the full amount of an 

entitlement, the Secretary must determine 

the pro rata share and make the payment 

accordingly. 

The FEC projects that, as of January 1

1992, if the Treasury sets aside moneys fo

the funding of the Presidential nominating 

conventions and general election, the 

remaining funds on hand will be $12.2 

million short of the estimated $26.6 

million needed for January matching fund 

payments. Accordingly, primary candidates 

may receive only a pro-rata share of their 

full entitlements. 

The FEC projections are based on 

several assumptions. First, the number of 

taxpayers participating in the dollar 

checkoff program will continue to decline. 

Second, payouts from the Fund to conventio

committees and general election candidates 

will increase, reflecting inflationary 

trends. Third, the payments to 1992 

primary candidates will approximate 

payments made in 1984, as adjusted for 

inflation. 

projections for 1996 suggest that the 

deficit will continue to grow: The Fund 

may be $169 million short of the amount 

needed to finance the 1996 elections. 

4 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number

The report noted the courses of action 

the Commission has taken to prepare for the 

impending shortfall. The agency has notified Congress of the expected shortfall 

and, in its 1990 legislative recommendations, the FEC suggested several statutory 

changes that could prevent a shortfall in 

1992. (See the April and May 1990 Record 

issues.) The Commission is conducting a 

research program, in consultation with the 

Internal Revenue Service, on taxpayer 

understanding of the tax checkoff. In its 

most recent action--the letter to Secretary 

Brady--the Commission suggested that the 

Treasury Department begin a rulemaking in 

consultation with the FEC on how to allocate the Fund's limited resources for the 

1992 elections. 

PUBLIC APPEARANCES 

9/12-15 Council on Governmental 

Ethics Laws (COGEL) 

Anchorage, Alaska 

Chairman Lee Ann Elliott 

Vice Chairman John Warren 

McGarry 

John C. Surina, 

Staff Director 

Lawrence M. Noble, 

General Counsel 

Kim Bright-Coleman, 

special Assistant General 

Counsel, Title 26 and Ethics 

Kent C. Cooper, 

Assistant Staff Director, 

Public Disclosure 

10/27-28 Center for the study of the 

presidency 

Austin, Texas 

Chairman Lee Ann Elliott 

ADV'ISORY OPINIOO RlQlESTS 

The following chart lists recent 

requests for advisory opinions (AORs). Th

full text of each AOR is available for 

public review and comment in the FEC's 

Public Records Office. 

AOR 1990--16 

Transfer from candidate's state committee 

to nonconnected committee established by 

same candidate. (Date Made Public: Augu

7, 1990; Length: 3 pages) 

1\DR 1990-17 

New fundraising by terminated 1988 campaig

committee to cover attorney fees related t

FEC enforcement case from 1988 campaign. 

(Date Made Public: August 14, 1990; 

Length: 2 pages) 

FAlJClIER lIND MAINE RIGHT TO LIFE calMITl'EE, 

INC. v , FEe (90--0112-B) 

on June 29, 1990, the U.s. District 

Court for the District of Maine ruled that 

11 CFR 114.4(b)(5), which concerns the 

publication and public distribution of 

voter guides by corporations, was invalid 

to the extent that the regulation makes th

permissibility of corporate voter guides 

hinge upon the absence of "issue advocacy" 

in the guide'S content, rather than on the 

nar["ower test of "express advocacy.1I The 

court denied, however, plaintiffs' request for injunctive relief to prevent the FEC 

and the U.S. Attorney General from taking 

enforcement action against plaintiffs' 

proposed 1990 publications. (Civil Action 

No. 90-0112-B.) 

Background 

previous SUit. The Maine Right to Lif

Committee, Inc. (MRLC), a nonprofit membe

ship corporation, and Sandra Faucher, an 

MRLC board member, filed a similar suit in 

the same court in 1985. (Civil Action No

85-0244-B.) In that suit, MRLC and Ms. 

Faucher also challenged 11 eFR 1l4.4(b)(5)

which permits corporations to prepare and 

distribute to the public nonpartisan voter 

(continued

5
 
September 1990 FEDERAL ELECTIOI\J COMMISSIOI\J Volume 16, Number 

guides consisting of questions posed to Court Decision 

candidates on campaign issues and the In its June 29 decision, the court 

candidates' responses. Fearing that the 

proposed MRLC voter guide would not comply 

with the FEC's standards for nonpartisanship, plaintiffs asked the court to invalidate the regulation and issue an injunction 

preventing the FEC from enforcing the rule. 

On February 24, 1989, the court dismissed 

the suit on the ground that plaintiffs 

first needed to obtain an FEC advisory 

opinion on the legality of the proposed 

publication. (For a summary of this suit, 

see the April 1989 Record.) 

Plaintiffs then sought an advisory 

opinion, which was issued on February 14, ~990 (AD 1989-28). 

AD 1989-28. In AO 1989-28, the 

Commission concluded that MRLC could not 

use general treasury funds to distribute to 

the general public a newsletter containing 

a proposed voter guide. 

First, because MRLC had a policy of 

accepting corporate contributions and had, 

in fact, accepted such contributions, it 

failed to qualify for the exemption granted 

to certain nonprofit corporations as a 

result of the Supreme court's decision in 

Massachusetts Citizens for Life, Inc. 

(MCFL) v. FEC, 479 U.S. 238 (1986). In 

that decision, the Supreme Court ruled that 

the prohibition against corporate spending 

was unconstitutional as applied to nonprofit corporations that satisfied certain 

criteria. 

Second, MRLC's proposed publication did 

hot comply with the criteria for nonpartisan communications set forth at 11 CFR 

114.5(b)(5). Specifically, the publication 

favored a pro-life position, although the 

rule states that a nonpartisan voter guide 

may not suggest or favor any position on 

the issues. 11 CFR 114.5(b)(5)(i)(C) and 

(D). (For a more detailed summary of this 

opinion, see the March 1990 Record.) 

Second Suit. on APril 18, 1990, MRLC 

and Faucher filed a second suit, again 

challenging 11 CFR 114.5(b)(5) on the 

grounds that the regulation was beyond the 

authority of the FEC and was unconstitutionally vague. Plaintiffs also sought a 

declaratory judgment that MRLC's proposed 

1990 publications were permissible under 

the Federal Election Campaign Act. They 

further sought an injunction prohibiting 

the FEC and the U.S. Attorney General from 

enforcing the voter guide regulations with 

regard to MRLC's proposed activity. 

found that 11 CFR 114.5(b)(5) was invalid 

because it focused on "issue advocacy" 

rather than "express advocacy." The court 

found that plaintiffs did not have standing 

to challenge other aspects of the rule and 

denied plaintiffs' request for declaratory 

and injunctive relief. 

Invalidity of 11 CFR 114.5(b)(5). The 

court first cited 2 U.S.C. §441b as the 

statutory basis for the regulation in 

question. Section 441b prohibits "any 

corporation whatever ll from making "a 

contribution or expenditure in connection 

with any [federal] election.... " The 

court, however, found that the Supreme 

Court, in its MCFL decision, limited the 

scope of the prohibition to expenditures 

that "expressly advocate" the election or 

defeat of a clearly identified candidate. 

Under the regulation in question, 

11 CFR 114.4(b)(5), a corporation may use 

its treasury funds to distribute a voter 

guide to the general public only if the 

guide is "nonpartisan." Included among the 

factors defining "nonpartisan" is that the 

wording does not favor any position, or 

express an editorial opinion, on the issues 

presented. 11 CFR 114.4(b)(5)(i)(C) and 

(D). The court found that "[t]his approach 

ignores the clear language of FEC v.
 

Massachusetts Citizens for Life that issue
 

advocacy by a corporation cannot constitutionally be prohibited and that only
 

express advocacy ..•is constitutionally
 

within the statute's prohibition."
 

The court therefore concluded that .the 

regulation, "with its focus on issue advocacy, is contrary to the statute as the 

United States Supreme Court has interpreted 

it and, therefore, beyond the power of the 

FEe." 

Other Challenges. The court ruled that 

MRLC did not have standing to challenge 

another aspect of the regulation: its 

failure to incorporate in explicit language 

the MCFL holding that the statute cannot 

constitutionally limit even express advocacy by a certain type of nonprofit membership corporation. MRLC lacked standing 

because it did not qualify as the type of 

corporation covered under the MCFL exemption. One of the essential factors for the 

exemption is that the nonprofit corporation 

must not receive contributions from business corporations and must have a policy 

against accepting such contributions. 

Although MRLC received "comparatively 

modest" amounts from corporate businesses, 

6
 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

without an explicit policy against accepting such contributions, organizations like 

MRLC could serve as a conduit for corporate 

contributions. 

The court also did not address plaintiffs' challenge that 11 CFR l14.5(b)(5) 

does not explicitly incorporate the statutory "news story" exemption at 2 U.S.C. 

§431(9)(B)(i), which exempts news media 

costs from the definition of "expenditure. 1I 

The court said it was "satisfied that the 

MRLC does not fit within this media exemption" and that therefore plaintiffs did not 

have standing to challenge the regulation 

on this score. (Another FEC regulation, 

11 CFR 100.8(b) (2), parallels the statutory exemption.) 

Finally, the court found that plaintiffs did not have standing to challenge 

11 CFR l14.4(b)(5)(ii). Plaintiffs had 

asserted that the regulation was unconstitutionally vague in directing that certain 

publications "not, favor one candidate or 

political party over another." Since that 

portion of the regulation affects only 

nonprofit, tax-exempt corporations that do 

not "support, endorse or oppose candidates 

or political parties," it does not apply 

to MRLC, which has established a separate 

segregated fund to engage in such activity. 

(In AD 1984-17, the Commission held that a 

tax-exempt corporation becomes an organization that supports, endorses or opposes 

candidates if it establishes a separate 

segregated fund that does so.) 

Denial of Declaratory and Injunctive 

Relief. Finding that the issue was not 

ripe for consideration, the court denied 

plaintiffs' request for a declaratory 

judgment that their proposed 1990 voter 

guide was permissible under the Act and 

also denied their request for injunctive 

relief to prevent any enforcement action 

against their proposed 1990 publications. 

Plaintiffs said that the 1990 publications 

would be substantially similar to the 1988 

publication, but the court was "not prepared to base declaratory and injunctive 

relief upon a 1988 publication, when minor 

changes could make that ruling wholly 

inapplicable to the actual 1990 publications. 1I 

The court stated: "In a context where 

words and nuances may be critical, I do not 

have the actual language and format of the 

publications. Given the FEC's enforcement 

role, .••such [declaratory and injunctive] 

relief would unduly interfere with the 

overall ability of that agency to conduct 

investigations of alleged violations, might 

well delay it in gathering important 

information and would interfere with the 

congressional goal of resolving specific 

election disputes through conciliation •••.An injunction may in fact be wholl

unnecessary. Finally, any hardship to the 

parties in finding this issue not ripe is 

minimal, given the plaintiffs' historical 

practice of publishing despite any 

uncertainty. " 

_ LITIGl\TI(l\i 

Kripke v , FEe 

Dr. Daniel F. Kripke asks the court to 

declare that the Commission's failure to 

act on his administrative complaint is 

contrary to law and to order the agency to 

act on his complaint within 30 days. 

Dr. Kripke, a 1990 Democratic House 

candidate for the 41st district of Califor

nia, alleged that he had filed an administrative complaint in December 1987 in whic

he claimed that Congressman William D. 

Lowery, the Republican incumbent for the 

41st district, violated the Federal Election Campaign Act by accepting prohibited 

corporate contributions. Alleging that he 

has failed to hear from the Commission con

cerning action on his complaint, Dr. Kripk

filed suit under 2 U.S.C. §437g(a) (8), 

which permits a complainant to petition th

court if the Commission fails to act on an 

administrative complaint within 120 days 

from the date the complaint was filed. 

U.S. District Court for the District o

Columbia, Civil Action No. 90-1597, July 

11, 1990. 

FEe v ; International Funding Institute, 

Inc., l\IIlerican Citizens for Political 

Action, Inc., and Dolan 

The FEC asks the district court to 

declare that the International Funding 

Institute, Inc. (IFI), a political consult

ing firm, American Citizens for political 

Action, Inc. (ACPA), a political committee

and Robert E. Dolan, an officer of IFI and 

the treasurer of ACPA, knowingly and willfully violated 2 U.S.C. §438(a)(4). That 

provision prohibits information on individ

ual contributors copied from reports on 

file with the FEC from being sold or used 

for solicitation or commercial purposes. 

The FEC claims that IFI subscribed to 

an on-line computer data base containing 

individual contributor information compiled 

from FEC disclosure reports. IFI then 

developed the information into two mailing 

lists, "Active Republican Donors" and 

(continued) 

7
 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

"Active Democrat Donors," and contracted 

with a list brokerage company to rent the 

lists. IFI realized approximately $9,513 

in income from rentals of the Active 

Republican Donors list. ACPA rented the 

list from the brokerage company and used it 

to solicit contributions. The Commission 

therefore alleges that defendants illegally 

sold and used, for commercial and solicitation purposes, individual contributor 

information copied from reports. 

The Commission asks the court to impose 

the penalties for knowing and willful 

violations (the greater of $10,000 or 200 

percent of the amount involved in the 

violation; see 2 U.S.C. §437g(a)(C)(6». 

The Commission also asks that the court 

permanently enjoin the defendants from 

further violations of the sale and use 

prohibition. 

U.S. District Court for the District of 

Columbia, Civil Action No. 90-1623, July 

13, 1990. 

I1lJRS RELElISED TO TIlE PUBLIC 

Listed below are MURs (FEC enforcement 

cases) recently released for public review. 

The list is based on the FEC press release 

of July 20, 1990. 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. 

MllR 2377
 

Respondents: (a) Texas Republican Congres­


sional Committee, Martha Weisend, treasurer
 

(aka Republican Party of Texas); (b) Na­


tional Republican Congressional Committee,
 

Jack McDonald, treasurer (DC); (c) Tom
 

Carter (TX); (d) Tom Carter for Congress,
 

Glenn H. Gage, treasurer (TX)
 

COmplainant: Robert F. Bauer, Counsel,
 

Democratic Congressional Campaign Commit1ee
 

(DC)
 

Subject: (1) Prohibited expenditures from
 

nonfederal account; (2) excessive coordin­


ated party expenditures
 

Disposition: (a) (I) $1,625 civil penalty;
 

(a) (2) reason to believe but took no further action; (b), (c) and (d) no reason to 

believe 

MUR 2962 

Respondents: Mechanical Contractors Political Action Committee (MC-PAC), Patricia 

M. Fink, treasurer (MO) 

COmplainant: FEC initiated 

Subject: Failure to report on time 

Disposition: $500 civil Penalty 

MllR 2968 

Respondents: Oral and Maxillofacial Surgery Political Action Committee (OMSPAC), 

Dr. Edward R. Noble, treasurer (IL) 

Complainant: FEC initiated 

Subject: Failure to report on time 

Disposition: $900 civil penalty 

MllR 3018 

Respondents: Riverside County Republican 

Central Committee, Ronald Sullivan, 

treasurer (CA) 

COmplainant: FEC initiated 

Subject: Failure to report on time; 

failure to report change of address and 

treasurer within ten days 

Disposition: $1,000 civil penalty 

MUR 3039 

Respondents: (a) Steve Tatone (OH); (b) 

Citizens for Steve Tatone, Maribeth 

Sheehan, treasurer (OH) 

Complainant: oeMis Geehan (OH) 

Subject: Failure to file statements of 

candidacy and organization on time 

Disposition: (a) and (b) No reason to 

believe 

MUR 3059 

Respondents: (a) Carl C. Perkins Election 

Committee, Randy A. Campbell, treasurer 

(KY); (b) PLUS, Inc. (Eastern Kentucky 

Veteran's Referral), Ira E. Branham, 

attorney (KY); (c) John B. Wells (KY) 

Complainant: Jerry Cecil (KY) 

Subject: Corporate contributions 

Disposition: (a), (b) and (c) No reason to 

believe 

8 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

FEe PUBLISHES NrM'ILERS 

The Commission recently published the 

names of authorized committees that failed 

to file required financial disclosure 

reports. See chart below. 

Nonfilers are published pursuant to 

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

against nonfilers are pursued on a case-bycase basis. 

Office Report 

Nonfiler Sought NOt Filed 

Myers, Mark S. House-GA/lO Pre-primary 

Schlesinger, A. House-CTj5 Pre-convention 

Vincent, C.C. House-Mlj13 pre-primary 

stallings, H.E. House-MI/13 Pre-primary 

BElTISED ALLOCATI<Jil RULES: SIJI'IMARY 

In June 1990, the Commission sent to 

Congress revised regulations on the 

allocation of expenses for activities that 

jointly benefit federal and nonfederal 

candidates and elections (11 CFR Parts 102, 

104 and 106). The Commission also sent new 

reporting forms to Congress. The forms-­

revised FEC Form 3X and new Schedules Hand 

I--are designed to conform with additional 

disclosure requirements under the revised 

rules. The final rules and their explanation and justification were published in 

the Federal Register on June 26, 1990 (55 

Fed. Reg. 26058). 

The Record will announce the effective 

date of the new rules when the Commission 

prescribes them, following the expiration 

of 30 legislative days in each House of 

Congress. 2 U.S.C. §438(d). The revised 

rules are summarized below. 

Who JlIust Allocate 

New Sections l06.5(a)(1) and 106.6(a) 

explain that the allocation rules apply 

both to: 

o	 political committees that maintain 

separate accounts for federal and nonfederal activity (as opposed to political 

committees that conduct mixed activity 

from one federal account); and 

o Committees	 that are not "political 

committees" as defined under the Federal 

Election campaign Act but that make 

disbursements for both federal and nonfederal activity. 

The rules specify that the following 

types of committees must allocate federalj 

nonfederal expenses, whether or not they 

are "political committees" under the Act: 

o National party committees; 

o The House and Senate campaign committees 

of national parties; 

o	 State and local party committees;
 

o Separate segregated funds; and
 

o Nonconnected committees.
 

(The revised rules at 11 CFR 106.6(a)
 

define a nonconnected committee as a
 

committee that is not a party committee, a
 

separate segregated fund or an authorized
 

committee of a candidate.)
 

What Costs JlIust Be Allocated 

The revisions provide committees with 

significantly more guidance than current 

rules on how to allocate expenses. The 

revised rules at 11 CFR 106.1(a), 

106.5(a)(2) and 106.6(b) describe several 

categories of joint federaljnonfederal 

activity subject to allocation: 

o	 Administrative expenses (e.g., rent, 

utilities, office supplies, salaries);

o Generic voter drive activities (e.g., 

voter-identification, voter-registration 

and get-out-the-vote drives that do not 

mention specific candidates); 

o Fundraising programs or	 events through 

which one committee collects both federa

and nonfederal funds; 

o	 "Exempt party activities" conducted by 

state and local party committees in 

conjuncti£n with nonfederal election 

activity; and 

o	 Direct support of specific federal and 

nonfederal candidates, and fundraising o

behalf of specific federal and nonfedera

candidates. (Direct support and fundraising on behalf of specific federal 

candidates result in in-kind contributions, independent expenditures or 

coordinated party expenditures (2 U.S.C. 

§44la(d)). 11 CFR 106.1(a)(1).) 

(continued

lExempt party activities are certain 

election-related activities conducted by 

state and local party committees that are 

not considered contributions or 

expenditures on behalf of the federal 

candidates benefiting from the activity. 

The three types of exempt activities are: 

slate cards, campaign materials and 

Presidential voter drives. 11 CFR 

100.7(b)(9), (15) and (17) and 

100.8(b)(lO), (16) and (18). 

9
 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number

Allocation Methods In states that do not hold federal and 

The revised rules contain several nonfederal elections in the sarne year, 

allocation methods: 

o Fixed or minimum percentage; 

o Funds expended ratio; 

o Funds received ratio; 

o Time or space (communication) ratio; and 

o Ballot composition ratio. 

As explained in the paragraphs below, 

the specific method used to allocate an 

expense depends on the category of activity 

and the type of committee conducting the 

activity. See chart on next page. 

Administrativa ExpensesjGeneric 

voter Drives 

National Party Committees. The revised 

rules provide that, in Presidential election years, national party committees must 

allocate to their federal accounts at least 

65 percent of administrative expenses and 

costs for generic voter drives. In other 

years, they must allocate at least 60 percent of such costs to their federal 

accounts. These are fixed percentages. 

11 CFR 106.5(b)(2). 

House and Senate campaign Committees of 

National Parties. Under the revised rules, 

these committees allocate administrative 

expenses and costs for generic voter drives 

according to the funds expended method, but 

at least 65 percent of such costs must be 

allocated to the federal account. (This is 

a minimum percentage.) Under the funds 

expended method, expenses are allocated 

based on the ratio of federal expenditures 

to total federal and nonfederal disbursements made during a two-year federal 

election cycle. In calculating the ratio, 

the committee uses only amounts spent on 

behalf of specific federal and nonfederal 

candidates, excluding overhead and other 

generic costs. 

State and Local Party Committees. The 

revised rules provide that state and local 

party committees must allocate their administrative and generic voter drive expenses 

using the ballot composition method: the 

ratio of federal offices to total federal 

and nonfederal offices expected to be on 

the ballot in the next general election to 

be held in the committee's state or geographic area. The ratio is determined by 

the number of categories of offices on the 

ballot. The revised rules specify the 

categories to be included and the number of 

offices that may be counted in each 

category. 

state and' local party committees allocate 

the costs of generic voter drives using the 

ballot composi tion method (described above) 

calculated for the current calendar year. 

These committees allocate their administra

tive expenses using the ballot composition 

method calculated for the two-year federal 

election cycle. 11 CFR 106.5(d). 

Separate segregated Funds and Nonconnected Coomittees. Under the revised 

rules, these committees allocate their 

administrative and generic voter drive 

expenses using the funds expended method. 

(A separate segregated fund must allocate 

administrative expenses only if they are 

not paid by the connected organization.) 

Under this method, expenses are allocated 

based on the ratio of federal expenditures 

to total federal and nonfederal disbursements made during the two-year federal 

election cycle. In calculating the ratio, 

the committee uses only amounts spent on 

behalf of specific federal and nonfederal 

candidates, excluding overhead and other 

generic costs. (This is the same method 

used by party House and Senate campaign 

committees; however, separate segregated 

funds and nonconnected committees are not 

required to allocate a minimum federal 

percentage.) 11 CFR 106.6(c). 

Exempt Activities: state and Local 

Party Coomittees 

The revised rules provide that expense

for exempt party activities must be alloca

ted according to the proportion of a 

communication's time or space that is 

devoted to federal elections as compared 

with the entire communication. In the case 

of a publication, committees apply the 

ratio to the space. In the case of a phon

bank, committees apply the ratio to the 

number of questions or statements. 11 CFR 

106.5(e). 

Fundraising Expenses: All Committees 

A committee must allocate the direct 

costs of each fundraising program or event 

in which the committee collects federal and 

nonfederal funds. (In the case of a separate segregated fund, fundraising costs 

must be allocated only if they are not paid 

by the connected organization.) Fundraising costs must be allocated according to 

the funds received method: the ratio of 

federal funds received to total receipts 

for the program or event. 11 CFR 106.5(f) 

and 106.6(d). See also "Party Committee 

Solicitations," page 12. 

10
 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

Expenses for Direct SUpport of tion, the costs must be allocated in 

Specific candidates: All COIImittees proportion to the time or space devoted to 

under the revised rules, committees federal candidates compared with the total 

must allocate payments involving both time or space devoted to all candidates. 

expenditures on behalf of one or more In the case of a fundraising program in 

specific federal candidates and disburse­ which funds are collected by the committee 

ments on behalf of one or more specific for specific federal and nonfederal candi

nonfederal candidates according to the dates, the allocation is based on the 

benefit reasonably expected to be derived. proportion of funds received by federal 

For example, in the case of a communica- - (continued) 

Methods for Allocating Federal and Nonfederal Expenses 

Allocation Methods 

11 

Time or 

·Space Ballot 

Type of COIIIIIittee Fixed or Minimum Funds Funds (COIIIIIIIlIl-- Compos

Type of Activity Percentage Expended Received ication) tion 

Iqational Party Ccmn1ttee 

Administrative Expenses/ 65% federal/presiGeneric voter Drives dential years; 60% 

federal/other years 

Fundraising ,r 

Direct Candidate support ,r -or-- ,r 

party House or senate 

campaign COIIIIIittee 

Administrative Expenses/ 65% federal ----or---- ,r 

Generic voter Drives (whichever is greater) 

Fundraising ,r 

Direct Candidate Support ,r -or--- ,r 

StatejLocal Party 

COlIIIIittee 

Administrative Expenses/ ,r 

Generic voter Drives 

Fundraising ,r 

Exempt Party Activities ,r 

Direct Candidate Support ,r- or--- ,r 

Separate segregated FundI 

IqQnconnected Ccmnittee 

Administrative Expenses/ ,r 

Generic Voter Drives 

Fundraising ,r 

Direct Candidate Support ,r ---or-- ,r 
September 1990 FEDERAL ELECTION COMMISSIOl\J Volume 16, Number 

candidates compare2 with the total receipts In any event, transfers must be made 

of all candidates. 11 CFR 106.l(a). within a 40-day time period: no more than 

Note that expenditures on behalf of 

federal candidates result in in-kind 

contributions, independent expenditures or 

coordinated party expenditures (2 U.S.C. 

§441a(d». 11 CFR 106.1(a) (1). 

Payment of Allocated Expenses' 

Payment Options. Under the revised 

rules, committees that have established 

separate federal and nonfederal accounts 

(whether or not they are "political committees" under federal law) may choose one 

of two methods to pay for joint federal and 

nonfederal activities. Under the first 

method, a committee pays the entire amount 

from its federal account, transferring 

funds from the nonfederal account to cover 

the nonfederal share of an allocable 

expense. The second method allows a 

committee to establish a separate allocation account solely for the purpose of 

paying allocable expenses. In this case, 

the committee transfers funds from the 

federal and nonfederal accounts to the 

allocation account in amounts proportionate 

to the federal and nonfederal share of each 

allocable expense. The allocation account 

is considered a federal account, subject to 

federal reporting requirements. 11 CFR 

106.5(g)(1) and 106.6(e)(I)). 

The revised rules amend 11 CFR 102.5(a) 

(1) (i), which currently prohibits committees from transferring funds from a nonfederal account to a federal account. The 

revision permits committees to make such 

transfers for the limited purpose of paying 

the nonfederal share of allocated expenses. 

Timing of Transfers. As a general ~le, transfers to pay for allocable 

expenses (either from a nonfederal account 

to a federal account or from both the 

federal and nonfederal accounts to the 

allocation account) must be made after the 

final cost of the activity is determined. 

Transfers may be made in advance of this 

determination only if advance payment is 

required by the vendor and if the payment 

is a reasonable estimate of the activity's 

final cost, as determined by the committee 

and the vendor. 

2These allocation methods (used to allocate 

disbursements between federal and nonfederal candidates) are also used to 

allocate expenditures made on behalf of 

federal candidates only. 

12 

10 days before or 30 days after the paymen

for which the funds are designated is made

11 CFR 106.5(g)(2) and 106.6(e)(2). 

Reporting Federal and Nonfederal Activity 

The new reporting requirements for 

allocable expenses apply only to committees 

that qualify as federal "political committees" and that have established separate 

federal and nonfederal accounts. The 

revised rules at section 104.10 set out 

procedures for reporting allocation ratios 

and for reporting transfers and disbursements made to pay for allocable expenses. 

Committees will report this information 

on the revised Form 3X and new Schedule H. 

J\ddi.tional Reporting Rules for National 

Party Conmittees 

under the revised rules, national party 

committees must disclose information on 

their nonfederal accounts and building fund 

accounts, as well as their federal 

accounts, applying the same itemization 

thresholds to all three types of accounts. 

Transfers from a national party committee'

nonfederal account to the nonfederal 

accounts of state and local party commit- 

tees are also reportable. The revised 

reporting rules for national party committees are located at 11 CFR 104.8(e) and (f) 

and 104.9(c)-(d). 

National party committees will use new 

Schedule I to summarize the information 

that they have reported on each of their 

nonfederal accounts and building fund 

accounts 4 

Party Conmittee SOlicitations 

Revised section 102.5(a)(3) creates the 

presumption that funds resulting from party 

committee solicitations that refer to a 

federal candidate or a federal election are 

raised for the purpose of influencing a 

federal election and are thus subject to 

the limits and prohibitions of the Federal 

Election Campaign Act. This presumption 

may be rebutted by demonstrating that the 

funds were solicited with express notice 

that they would not be used for federal 

election purposes. 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

DEBT SE'I'1'LEMENl' RULES: SUMMARY 

In June 1990, the Commission sent to 

Congress revised regulations concerning 

debts awed by candidates and political 

committees. The new rules at 11 CFR Part 

116 replace current section 114.10; 

sections 100.7, 104.3 and 104.11 have also 

been revised to reflect the new provisions. 

The final text and the explanation and 

justification were published in the Federal 

Register on June 27, 1990 (55 Fed. Reg. 

26378). The Commission also sent to Congress new FEe Form 8, designed to implement 

the new requirements on the disclosure of 

debt settlements. 

The Record will announce the effective 

date of the new rules when the Commission 

prescribes them, following the expiration 

of 30 legislative days in each House of 

Congress. The new rules are summarized 

below. 

Eligibility for settling Debts 

Under the new rules, only "terminating 

committees" are permitted to settle their 

debts for less than the amount owed. A 

terminating committee is a political committee which has debts and which receives 

contributions and makes expenditures only 

for the purpose of retiring its debts and 

paying winding down costs. 11 CFR 116.1(a) 

and 116.2(a). 

An "ongoing committee"-a political 

committee that does not qualify as a 

terminating committee-is not permitted to 

settle debts for less than the amount owed. 

11 CFR 116.1(b) and 116.2(b). However, 

under sections 116.9 and 116.10, an ongoing 

committee may request a Commission determination that a debt is not payable and may 

resolve disputed debts. Further, a creditor may forgive the outstanding balance of 

a debt owed to an ongoing committee if the 

committee is essentially defunct and unable 

to pay its bills or if the committee cannot 

be located. 

Authorized COIIIIIittees: Special Rules 

Settlement of Debts. The new rules
 

include provisions that address debts owed
 

by authorized committees of candidates.
 

The rules prohibit an authorized committee
 

from:
 

o	 settling debts, if an affiliated
 

authorized committee for a previous or
 

future election has funds available to
 

pay part or all of the debts;
 

o Terminating,	 if the committee can help 

pay the debts of an affiliated authorized 

committee that is unable 'to pay its 

debts; or 

o	 Transferring funds to an affiliated 

authorized committee, if the transferrin

committee has net debts outstanding. 

(See 11 CFR 110.1(b)(3)(ii).) 11 CFR 

116.2(c)(1) and (2). 

Assigning Debts to Another cOIIIIIittee. 

under the new rules, a terminating author

ized committee may assign its debts to an 

authorized committee of the same candidate 

only if the assigning committee: 

o Has no cash on hand or assets to pay any 

part of the debts; and 

o Was not organized to further the candidate's campaign in a future election. 

The new rules provide an additional 

requirement for Presidential candidate 

committees receiving public funds: a 

publicly funded committee may neither 

assign debts nor receive assigned debts 

until after the committee has made all 

repayments of public funds and has paid a

civil penalties. 

An authorized committee that has 

assigned its debts to another committee m

terminate provided: 

o	 It notifies each creditor in writing o

the name and address of the committee 

that will receive the debts no later 

than 30 days before the assignment tak

effect; and 

o	 The committee that receives the assigne

debts notifies the Commission in writin

that it has assumed the obligation to 

pay the debts and to report both the 

debts and contributions received to 

retire them. 11 CFR 116.2(c)(3). 

Extensions of eredit by 

Commercial Vendors 

New section 116.3 generally follows 

previous section 114.10, which listed 

factors for determining the permissible 

extension of credit by corporations to 

political committees. The new section ad

corresponding standards for unincorporate

commercial vendors. Failure to meet thes

standards results in a contribution--prohibited in the case of a corporation and 

possibly excessive in the case of a 

noncorporate vendor. 

Under the new rules, an extension of 

credit by either a corporate or noncorporate vendor is not considered a contribution to a candidate or political committe

if: 

o The credit is extended in the ordinary 

course of business; and 

o The terms are substantially the same as 

extensions	 of credit of similar amounts 

(continued

13 
September 1990 FEDERAL ELECTION COMIVIISSIOI\J Volume 16, Number 

to nonpolitical debtors of similar risk. 

11 CFR 116.3(a) and (b). 

The new rules at 116.3(c) list factors 

the Commission will consider in determining 

whether credit.was extended in the ordinary 

course of business: 

o Whether	 the commercial vendor followed 

established procedures and past practice 

in approving the credit; 

o Whether,	 in the past, the commercial 

vendor received prompt payment from the 

same candidate or political committee; 

and 

o Whether	 the extension of credit conformed 

to the usual and normal practice in the 

vendor'S trade or industry. 

The Commission may also consider 

regulations prescribed by other federal 

agencies in determining whether extensions 

of credit are made in the ordinary course 

of business. 11 CFR l16.3(d). 

Settlement of Debts Owed to 

Commercial vendors 

New section 116.4 addresses the 

forgiveness or settlement of committee 

debts owed to incorporated and unincorporated vendors. (CUrrent section 114.10 

covers only debts owed to corporations.) 

The forgiveness or settlement of such debts 

will not result in a contribution provided 

that: 

o The debt settlement is "commercially 

reasonable" and the parties have complied 

with the rules governing debt settlement 

plans (116.7) or debt forgiveness 

requests (116.8), as appropriate; or 

o The amount forgiven is exempted from the 

definition of contribution (e.g., a legal 

or accounting service under 11 CFR 

100.7(b)(13) or (14}). 11 CFR 116.4(a) 

and (b). 

commercially Reasonable Debt settlement. A debt settlement is commercially 

reasonable if it satisfies three criteria: 

o	 Initial Extension of Credit. Credit was 

initially extended in accordance with the 

standards of 11 CFR 116.3 (see above).

11 CFR 116.4(d)(1). 

o Committee's	 Efforts to Repay. The candidate or political committee undertook all 

reasonable efforts to satisfy the outstanding debt, such as fundraising, 

reducing overhead costs or liquidating 

assets. 11 CFR 116.4(c)(2) and (d)(2) 

o	 Creditor'S Efforts to Collect. The 

commercial vendor made the same efforts 

to collect the debt as those made to 

collect from a nonpolitical debtor in 

similar circumstances. Remedies might 

include, for example, late fee charges, 

14 

referral to a debt collection agency or 

litigation. 11 CFR 116.4 (d)(3). 

Vendor's Rights. Commercial vendors, 

however, are not required to forgive or 

settle debts owed by candidates and 

committees. Moreover, the explanation and 

justification to the new rules states that 

a creditor is not required to pursue activities that are unlikely to result in the 

reduction of the debt. 

Mvances to Conmittees by staff and 

Other Individuals 

New section 116.5 clarifies that 

payments by individuals using personal 

funds or personal credit cards to obtain 

goods or services for a political committee 

generally result in in-kind contributions 

to that committee unless the payment is a 

travel or subsistence expense covered by 

one of the exceptions explained below. For 

example, an in-kind contribution results if 

an individual pays for the transportation 

or subsistence expenses of others or pays 

for nontravel expenses. If the committee 

intends to reimburse the individual for 

such payments, the obligation must be 

treated and reported as a debt. 11 CFR 

ll6.5(c) and (e). Reimbursements are 

treated as refunds of contributions. 

Note that, in all cases, the exceptions 

described below do not apply to individuals 

who are acting as commercial vendors since 

they are covered by the commercial vendor 

rules previously discussed. 

Exception: Exempt Travel and Subsistence payments. Under 11 CFR lOO.7(b)(8), 

payments made from an individual's personal 

funds for his or her transportation 

expenses incurred while traveling on behalf 

of a candidate or political party committee 

are not contributions if they do not exceed 

$1,000 per candidate, per election, or 

$2,000 per year for travel on behalf of a 

party committee. Section 100.7(b)(8) also 

exempts all payments by volunteers for 

subsistence expenses incidental to volunteer activity. 

Exception: Reimbursed Travel and 

Subsistence Payments. Under the new rule 

at 11 CFR 116.5(b), transportation and 

subsistence expenses which are incurred and 

paid for by an individual while traveling 

on behalf of a candidate or party committee 

and which are not covered under the 

100.7(b)(8) exemption are not considered 

contributions as long as the committee 

reimburses the individual within certain 
September 1990 FEDERAL ELECTIOI\J COIVIMISSIOl\J Volume 16, Number 

time periods. 1 In the case of a credit 

card payment, the committee must reimburse 

the individual within 60 days after the 

closing date of the billing statement on 

which the charges first appear. In all 

other cases, the committee must reimburse 

the individual within 30 days after the 

expenses were incurred. 

salary Payments Owed to Employees 

New section 116.6 clarifies that unpaid 

salaries owed to committee staff are not 

contributions. If a political committee 

does not pay an employee in accordance with 

an agreement, the unpaid amount may be 

treated either as volunteer services, which 

are exempt from the definition of contribution under 11 CFR 100.7(b)(3), or as a 

debt. The services may be converted to 

volunteer activity only if the employee 

signs a statement agreeing to be considered 

a volunteer. If the unpaid amount is 

treated as a debt, the amount owed must be 

reported as such and may be settled. 

Debt settlement Plans Filed by 

Terminating Committees 

New section 116.7 contains guidelines 

concerning debt settlement plans submitted 

by terminating committees on new FEC Form 

8. (Unlike current section 114.10, the new 

rules do not provide for the filing of debt 

settlements by creditors.) Terminating 

committees may file debt settlement plans 

once they have reached agreement with their 

creditors, although not all creditors need 

be included in one plan. The committee 

must postpone payment until the Commission 

has reviewed the debt settlement plan. 

Debts Subject to Settlement. The types 

of debts that are subject to debt settlement requirements include: 

o	 Amounts owed to commercial vendors; 

o Debts	 arising from advances by 

individuals; 

o	 Salary owed to committee employees; and 

o Loans	 owed to political committees or 

individuals, including candidates. 

11 crn 116. 7(b). 

Debts Not Subject to Settlement. The 

debt settlement rules do not apply to 

public funding repayments, which may not be 

settled, or to disputed debts, which are 

covered by other rules. 11 CFR 116.7(c). 

1Thi s exception applies to the. subsd.st.ence 

expenses of paid campaign staff since a 

volunteer's subsistence expense:; are 

covered under the 100.7(b)(8) exemption. 

Moreover, the explanation and justificatio

to the rules indicates that the debt 

settlement rules would not apply to bank 

loans. Guidance on the treatment of bank 

loans may be provided in a separate rulemaking. 

Content of Debt Settlement Plan. For 

each debt covered by' a debt settlement 

plan, the committee must include the 

information listed below on FEe Form 8. 

11 era 116.7(e). 

o The terms of	 the initial extension of 

credit and the terms of similar amounts 

of credit extended to nonpolitical 

debtors of similar risk; 

o The committee's efforts to pay the debt

o The remedies pursued	 by the creditor to 

obtain payment compared with the remedi

customarily pursued in similar circumstances involving nonpolitical debtors; 

o A comparison between the terms of the 

settlement and debt settlement terms 

involving nonpolitical debtors; 

o A signed statement from the creditor 

agreeing with the terms of the settlement; 

o A statement as to whether the terminatin

committee has sufficient cash to pay th

amcunt indicated in the plan or, if not

the steps the committee will take to 

obtain the funds; and 

o A demonstration that the committee 

qualifies as a terminating committee an

the date the committee expects to file 

termination report. 

If the plan does not include settlements for all of the committee's outstand

ing debts, the plan must additionally 

provide the following information: 

o A list of the committee's remaining 

debts; 

o Whether	 the committee intends to pay th

entire amcunt of the remaining debts or 

to settle them, and, if settlement is 

contemplated, the terms offered to the 

creditors; and 

o Whether	 the terminating committee has 

sufficient cash to pay the remaining 

debts, and, if not, what steps the 

committee will take to obtain the funds

Commission Review of Plan. The new 

rules list factors the Commission will 

examine in reviewing debt settlement plan

11 crn 116. 7( f). 

Reporting Debts Undergoing Settlement

A	 ter.minating committee must continue to 

report each debt or obligation included i

a debt settlement plan until the Commissi

(continue

15
 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

has completed a review of the plan. 11 CFR Reporting Disputed Debts 

116,.4(f); 116.5(e); 116.6(c); and 116.7(d). The new rules at 11 CFR 116.1(d) defin

a	 disputed debt as a bona fide disagreemen

Debts Discharged in Bankruptcy. If a 

committee is released from debts through a 

bankruptcy court decree pursuant to 

11 U.S.C. Chapter 7, the committee must 

include the court order in its debt settlement plan as well as a list of the obligations from which the committee is released. 

11 CFR 116.7(g). The Commission 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. 

Creditor's Forgiveness of Debts owed 

by Ongoing COIIIIlittees 

Under section 116.8, creditors may 

completely forgive the outstanding balance 

of debts owed by ongoing committees that 

cannot be located or that are clearly 

unable to pay their bills, provided that: 

o	 The debt has been outstanding for at 

least two years; 

o	 The committee has insufficient cash to 

pay the debt; 

o The committee's	 receipts and disbursements over the past two years each total 

less than $1,000; and 

o	 The committee's debts are so large that 

the creditor could reasonably conclude 

that the debt will not be paid. 

Under these circumstances, a creditor 

must submit for the Commission's review a 

letter of intent that provides the 

following information: 

o The terms	 of the initial extension of 

credit; 

o The committee's	 efforts to satisfy the 

debt; 

o The remedies pursued	 by the creditor to 

collect on the debt; and 

o A description of how the creditor has 

putsued and forgiven similar debts 

involving nonpolitical debtors. 

Unpayable Debts 

Section 116.9 sets forth procedures 

that allow a terminating committee or an 

ongoing committee to obtain a Commission 

determination that a debt is unpayable for 

purposes of the Act because the creditor 

cannot be located or has gone out of 

business. The committee must demonstrate 

that it made the necessary efforts to 

locate the creditor and must continue to 

report the debt until the Commission 

determines that the debt is unpayable. 

16 

between the creditor and the committee as 

to the existence of a debt or the amount 

owed by the committee. Under section 

116.10, until the creditor and committee 

resolve the dispute (and if the creditor 

did provide something of value), the 

committee must disclose the amount the 

committee admits it owes, the amount the 

creditor claims is owed and any amounts th

committee has paid the creditor. 

When filing a debt settlement plan, a 

committee must describe any disputed debts 

and the committee's efforts to resolve 

them. 

Continuous Reporting of Debts 

Several revisions have been made to 

11 CFR 104.11(b), which concerns the 

continuous reporting of debts and obligations. The revised rule clarifies that 

debts exceeding $500 must be reported as o

the date the debts are incurred. (The 

current language says "as of the time of 

the transaction.") The revisions also 

clarify that periodic administrative costs 

(e.g., rent, staff salaries) need not be 

reported as debts if payment is not due 

before the end of the reporting period. 

However, if payment is not made on the due 

date, the amount outstanding must be 

reported as a debt. Finally, new language 

incorporates current policy that if the 

exact amount of a debt is not known, a 

committee must report the estimated amount 

of the debt and then either amend the 

report or include the correct figure in a 

later report when the exact amount is 

known. 
September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 

CAMPAIGN FINlINCE BROCHURE SERIES 

The FEC's Information Services Division 

distributes a series of 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 

summarizes a different aspect of the law or 

FEe resources. 

o Using	 FEe campaign Finance Information 

explains how to gather information about 

the financial activity of candidates and 

political committees. It describes the 

FEC's computer indexes and suggests ways 

to use them. 

o	 Sale and Use of campaign Finance Information discusses the legal and illegal uses 

of information contained in reports and 

statements filed with the FEC. The 

brochure also explains what steps a 

committee may take to ensure that its 

individual contributors are not solicited 

illegally. 

o 10 Questions from candidates answers 

questions on the law most frequently 

asked by candidates and candidate 

committees. 

o	 Public Funding of Presidential Elections 

gives a brief history of the Presidential 

public funding program--including the $1 

tax checkoff for the Presidential Election Campaign Fund--and an explanation of 

how the process works. 

o lldvisory Opinions	 explains how individuals and committees may seek guidance 

from the Commission by requesting 

advisory opinions (AOs). An AO is an 

official Commission response to a question concerning the application of the 

law to a specific activity. 

o	 Filing a Complaint explains how to 

register a formal complaint with the 

Commission concerning a possible 

violation of the law. The brochure also 

describes how complaints are processed. 

Other FEC brochures include: 

o Candidate Registration 

o	 COmmittee Treasurers 

o	 Contributions 

o CorporatejLabor COIIIIIUIlications 

o CorporatejLabor Facilities 

o 'Ibe	 FEe and the Federal campaign Finance 

Law 

o Free FEe Publications 

o Independent Expenditures 

o Local Party Activity 

o	 Political Ads and Solicitations 

o	 State Access to FEe Data 

o	 State and Local Elections and the Federa

campaign Law 

o Trade Associations 

o Volunteer Activity 

To order any of the above free publica

tions, call 800/424-9530 or 202/376-3120. 

CHl\N3E OF 1\DDRESS 

political Ccmmittees 

Treasurers of registered political committees automatically receive the Record. 

A change of address by a political committee (or any change to information disclosed 

on the Statement of Organization) must, by law, be made in writing on FEC Form 1 or by 

letter. The treasurer must sign the amendment and file it with the Secretary of the 

Senate, the Clerk of the House or the FEC (as appropriate) and with the appropriate 

state officEi'. 

Other SUbscribers 

Record subscribers who are not registered political committees should include the 

following information when requesting a change of address: 

o	 Subscription number (located on the upper left hand corner 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. 

17
 
September 1990 FEDERAL ELECTION COMMISSIOl\J Volume 16, Numbe

The first number in each citation 

refers to the "number" (month) of the 1990 

Record issue in which the article appeared; 

the second number, following the colon, 

indicates the page number in that issue. 

1\DVISORY OPINICtiS 

1989-21: FUndraising by sole proprietor in 

cooperation with candidates, 1:9 

1989-25: preemption of state law limiting 

party spending on behalf of candidates, 

1:10 

1989-26: Automatic bank transfers from 

contributor's account to candidate 

committee's account, 1:11 

1989-27: Act's preemption of state law 

governing solicitations by state 

employees, 2:2 

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

1989-29: PAC established by company owned 

by foreign principal, 2:3 

1989-30: Payment to Senator for teaching 

course, 2:4 

1989-32: Foreign national contribution to 

state ballot measure committee "controlled" by candidate, 8:6 

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

fundraising service to candidates, 4:~

1990-2: Candidate's use of excess CampaIgn 

funds to secure loan for party committee, 

4:5 

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

newsletter, 5:3 

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

1990-5: Newsletter published by candidate, 

6:4 

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

contributions, 7:2 

1990-7: Transfer from candidate's former
 

Presidential exploratory committee to
 

1990 House committee, 8:6
 

1990-8: Establishment of PAC by corporation 

majority-owned by foreign bank, 8:7 

1990-9: Newsletter published by candidate 

as sole proprietor, 8:8 

1990-11:	 Publicly funded campaign's dona­


tion of fundraising items to staff and
 

charity, 8:8
 

!DIRT CASES 

Austin v. Michigan state Chamber of 

Commerce, 5:5 

FEC v. - Chipman-C. Bull for Congress, 8:11 - Franklin, 1: 13 - Friends of Isaiah Fletcher Committee, 

7:4 - Furgatch (83-0596-GT(M)), 2:7 - International FUnding Institute, Inc., 

American Citizens for Political Action

Inc., and Dolan, 9:7 - Life Amendment PAC, Inc. (89-1429), 4:

- Mann for Congress Committee, 7:5 - National Right to Work Committee, Inc.

5:7 

-	 NY state Conservative Partyj1984 

Victory FUnd (87 3309), 6:7 

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

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

v. FEC ~ommon Cause (89-0524), 3:11 - Common Cause (89-5231), 8:11 - Democratic Senatorial Campaign 

Committee (90-1504), 8:12 

- Dolan, 5:7 

- FaUcfier and Maine Right to Life 

Committee, Inc. (900112 B), 6:7; 9:5 

- Goland, 8:9 - Kripke, 9:7 - National Rifle Association (89-3011), 

2:7 

MUR SUMMARIES 

MUR 2823: Excessive contribution received 

by candidate committee, 2:4 

MUR 2599: Reporting errors by congressiona

campaign, 4:6 

MUR 3009: Excessive coordinated expenditures by state party committee, 6: 5 

800 LINE	 • 

Basic recordkeeping rules, 4:8 

Combined dues/solicitation statements, 1:1

Coordinated party expenditures, 3:6 

Designating a principal campaign committee

1:19 

Disclaimer notices, 5:8 

Exempt party activities, 5:10 

Faxing reports, 9:4 

Last-minute contributions: 48-hour report

ing, 7:8 

Last-minute independent expenditures: 24­

hour reporting, 7:9 

New treasurer, 2:9 

Transfers from candidate's nonfederal 

committee to federal committee, 6:8 

When reimbursements are required in SSF 

fundraising, 2:8 

18
 
· . September 1990 FEDERAL ELECTION COMMISSION Volume 16, Number9 
· " 

September 1990 FEDERAL ELECTION COMMISSION Volume 16, Numbe

FEDERAL ELECTION COMMISSION
 

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