August 1994

Table of Contents

Commission

Commissioners Reappointed

In formation

1 Flashfax

10 Flashfax Menu of Documents

Publications

2 Update Your Candidate Guide

with New Supplement

11 Order Form for Supplement

Stalistics

2 PAC and Party Activity at 15-

Month Point in Cycle

Compl iance

4 MUR 3360: ' 88 Kemp Campaign

to Pay $120,000 Penalty

4 MUR 3467: Bush Campaign Pays

$40,000 Penalty

Audits

4 Report Released on Brown's '92

Presidential Campaign

Regulations

5 Rule on Use of Candidate's Name

in Opposition Project Now

Effective

5 FEC Approves Final Rules

Governing National Voter

Registration Form

5 Final Revisions to Convention

Rules Approved

6 Advisory Opini ons

7 Federal Register Notices

Court Cases

8 FEC v. America's PAC

9 Froelich v. FEC

9 Jordan v. FEC

11 New Litigation

II Index

Federal Election Commission

Commission

Commissioners McDonald

and Elliott Reappointed

On July 1, the U.S. Senate

confirmed the reappointment of

Vice Chairman Danny L. McDonald

and Commissioner Lee Ann Elliott

as Commission members. Both were

first named to the Commission in

1981 by President Reagan, who

reappointed them in 1987. President

Clinton recently appointed the two

Commissioners to serve another sixyear term ending April 30, 1999.

Before his original appointment,

Mr. McDonald managed 10 regulatory divisions as the general administrator of the Oklahoma Corporation

Commission. He had previously

served as secretary of the Tulsa

County Election Board and as chief

clerk of the board. He was also a

member of the advisory panel to the

FEC's National Clearinghouse on

Election Administration.

A native of Sand Springs, Oklahoma, Vice Chairman McDonald

graduated from Oklahoma State

University and attended the John F.

Kennedy School of Government at

Harvard University. He served as

FEC Chairman in 1983 and 1989.

Mrs. Elliott was vice president of

a political consulting firm, Bishop,

Bryant & Associates, Inc., when she

was first named to the Commission.

(continued on page 2)

Volume 20, Number 8

Information

Flashfax - FEC Documents

Available at Your Fingertips

All you need is a touch tone

phone to order an FEC document

and have it immediately faxed to

you. The new Flashfax service

makes over 130 documents and

publications available for fax

transmission 24 hours a day, 7 days

a week. You can order FEC reporting forms, 1993 and 1994 advisory

opinions, brochures, statistical

releases, topical handouts and more.

Just call 202/501-3413 from a

touch tone phone. The system will

guide you through the simple

instructions. A voice will ask you to

enter the number of the desired

document on your phone pad. Or, if

you need to obtain the menu of

documents, enter 411 . (The current

menu appears on page 10; keep it

handy for future use.)

You will also be asked to enter

your fax number and your regular

phone number or extension (to identify you as the person who should

receive the fax when it arrives).

From time to time new documents will be added to the menu.

The system was designed to make it

easy to identify and remember certain document numbers. For

instance, number 106 is Part 106 of

FEC regulations. Advisory opinions

(continued on page 2)
Federal Election Commission RECORD

Commission

(continued from page 1)

Before that, from 1961 to 1979, she

was an executive of the American

Medical Political Action Committee. Commissioner Elliott was on

the board of directors of the American Association of Political Consultants and on the board of the Chicago

Area Public Affairs Group, of which

she is a past president. She was also

a member of the Public Affairs

Committee of the U.S. Chamber of

Commerce. In 1979, she received

the Award for Excellence in Serving

Corporate Public Affairs from the

National Association of Manufacturers.

A native of St. Louis, Commissioner Elliott graduated from the

University of Illinois. She also

completed Northwestern University's Medical Association Management Executive Program and is a

Certified Association Executive.

She was FEC Chairman in 1984 and

1990. +

Federal Election Commission

999 E Street, NW

Washington, DC20463

800/424-9530

2021219-3420

202/501-3413 (Flashfax Service)

2021219-3336 (TDD)

Trevor Potter, Chairman

Danny L. McDonald,

ViceChairman

Joan D. Aikens,Commissioner

Lee Ann Elliott, Commissioner

John Warren McGarry,

Commissioner

Scott E. Thomas, Commissioner

John C. Surina, StaffDirector

Lawrence M. Noble, General

Counsel

Published by the Information

Division

Louise D. Wides, Director

Stephanie Fitzgerald, Editor

2

Information

(continued from page 1)

also have easy-to-remember numbers. Menu numbers for 1994

advisory opinions, for example, all

begin with 8 followed by the number of the opinion.

The best way to learn Flashfax is

to try it. The Commission hopes you

find it easy to use and convenient. +

Publications

Update Your Candidate

Guide with New Supplement

A new Supplement to the Campaign Guide for Congressional

Candidates and Committees updates

material that has changed since the

Guide was last published in April

I 1993.

To update your Guide, you

simply replace specified pages with

the updated pages in the Suppler ment. The new pages reflect the

following changes to FEC rules

adopted since April 1993:

• Multicandidate PACs and party

committees are now required to

notify campaigns of their multicandidate status when they make

contributions.

• Candidate committees must take

certain steps in order to demonstrate that they have made "best

efforts" to obtain and report

required information about contributors.

• A new optional form, FEC Form 6,

is now available for disclosing

last-minute contributions of $1,000

or more received shortly before an

election (48-hour notices).

The Supplement also contains

minor revisions to the April 1993

material.

Use the form on page II to order

the Supplement or both the Guide

and the Supplement. +

AlIgllstl994

Statistics

PAC and Party Activity

at IS-Month Point in Cycle

PAC Activity

By the end of March 1994---15

months into the 1993-94 election

cycle-PACs had contributed $69.8

million to 1994 candidates. This was

a drop of $3.6 million from the $73.4

million given to 1992 candidates the

first IS months of the 1991-92 cycle.

(See graphs.)

Comparing IS-month totals, PACs

raised $226.5 million in the current

cycle, just a little over the $225.9

million raised in the previous cycle.

Spending, however, dropped more

than $7 million: PACs spent $187.9

million in the last cycle and $181

million in this cycle.

National Party Activity

Republican national committees

continued to outraise and outspend

the Democratic national committees

by a two-to-one margin with respect ,

to their federal campaign finance

activity. However, Republican committee activity dropped 3 percent

compared with 15-month totals for

the 1992 cycle, while funds raised

and spent by the Democratic committees increased by more than 50

percent.

By March 31, 1994, Republican

national committees had raised

$98.1 million to the Democrats' $45

million and spent $84.7 million to

the Democrats' $43.4 million.

In the area of nonfederal or "soft

money" activity, the Democratic

national committees overshadowed

the Republicans, collecting $27

million to the Republicans' $19.3

million, and spending $24.1 million

to the Republicans' $20.6 million.

This was a reversal of the Republicans' substantial lead in nonfederal

activity in March 1992.

Soft money-funds raised outside

the restrictions of the federal

campaign finance law-is banned
August /994 Federal Election Commission RECORD

PAC Contributions to House Candidates

Milli ons of Dollars

60,- - - - - - - - - - - - - - - - - - - - - - - -

PAC Contributions to Senate Candidates

Milli ons of Dollars (Note difference in scale from above grap h.)

25 r-- - - - - - - - - - - - - - - - - - - - - -

1993-94

1993-94

1991-92

1991-92

___I Open Seat Candidates?

Challengers

_ Incumbents

1989-90

1989-90

1987-88

1987-88

o

20 I;======:::::; I--

5

10

PAC Contributions to Candidates 1

IS Months into Election Cycle

(through March 3 1 of election year)

I The graphs show PAC contributions given to candidates actively seeking election

in the cycle . They do not show contributions fo r debt retirement orfuture elections.

2Open seat candidates are those running in races with no incumbent opponents.

for use in federal elections and must

be deposited in separate accounts.

The FEC began requiring national

party committees to disclose nonfederal activity in January 1991, the

start of the 1992 election cycle .

Number of Candidates

ReceivingPACContributions 1

IS-Months into Cycle

(as of March 31 of election year)

Number of House Candidates

Election Cycle

88 90 92 94

Open Seat 97 102 172 164

Challengers 133 101 IS7 186

Incumbents 412 406 368 388

Total 642 609 697 738

Number of Senate Candidates

Election Cycle

88 90 92 94

Open Seat 19 7 27 38

Challengers 27 30 38 43

Incumbents 27 32 30 27

Total 73 69 95 108

For More Information

FEC press releases providing

extensive campaign finance data on

IS-month PAC and party activity

are available free of charge. To

order, call 202/219-4140 or 800/

424-9530 (ask for Public Records).

The press release on IS-month

Hou se and Senate campaign activity

is also available. •

I The tables are not included in the June

15 press release on PAC activity. They

reflect only those candidates who

received PAC contributions while

acti vely seeking election during the

cycle . See graphs.

3
Federal Election Commission RECORD August / 994

Report Released on Brown's

'92 Presidential Campaign

The Brown for President committee must pay the U.S. Treasury

$ 142,560, based on the Commission's initial determinations included in the final audit report.' The

report is available in the FEC's

Public Records Office.

Governor Jerry Brown's Presidential campaign had received $4.2

million in primary matching funds.

The required payment to the U.S.

Treasury consisted of:

• $125, 252 in matching funds

received in excess of the candidate's entitlement;

• $1,334 in stale-dated campaign

checks that were never cashed; and

Audits

I The campa ign paid the Treasury

$97,674 in Augusti992 based on a

prelim inary calculation made early in

the audit process.

tions remained excessive. See

II CFR 110.1(1)(5 ).

Additionally, the Bush campaign

made untimely refunds of $11.000

in excessive contributions from

political committees. Two of those

committees paid respective penalties

of $1,000 and $500 for exceeding

I the contribution limit by $4,000

apiece. (They could only contribute

up to $ 1,000 to the primary election

because they had not achieved

multicandidate committee status.)

Excessive Expenditures

The Bush primary campaign

exceeded the Iowa and New Hampshire limits by a total of $260,460.

The state expenditure limits, which

are based on the state's voting age

population, apply only to Presidential campaigns that accept primary

matching funds.•

• Disclosing inaccurate information

on the receipt and transfer of joint

fundraising proceeds;

I • Inaccurately distributing joint

fundraising proceeds to participants;

• Failing to include the proper

notification for joint fundraising

solicitations;

• Failing to keep records on, report

and itemize information on contributions; and

• Failing to retain and furnish

documents requested by the

FEe. •

MUR3467

Bush Campaign Pays

$40,000 Penalty

The 1988 campaign committee of

George Bush paid a $40 ,000 civil

penalty for violating contribution

I and expenditure limits. The violations were discovered in FEC audits

of the Bush campaign. The penalty

was included in a conciliation

agreement signed by the committee

treasurer.

Compliance

MUR3360

'88 Kemp Campaign to Pay

$120,000 Penalty

The 1988 Jack Kemp for President Committee and two Kemp joint

fundraising committees agreed to

pay a total of $120,000 in penalties

and to refund $111 ,000 in excessive

and prohibited contributions.

The Commission opened MUR

3360 to pursue violations uncovered

in an audit of the Kemp committee,I

which received federal matching

funds. The Kemp committee and the

two other committees-Victory 88

and the Kemp/Dannemeyer Committee-were cited for numerous

violations of the federal campaign

finance law:

• Accepting more than $750,000 in

excessive contributions and over

$13 ,000 in direct corporate contributions;

• Accepting excessive in-kind

contributions from a staff member;

• Accepting corporate in-kind

contributions by failing to pay in

advance for campaign use of

corporate aircraft;

• Accepting corporate in-kind

contributions resulting from the

reduction of a hotel bill;

• Exceeding the Iowa spending limit

by almost $104,000 and the New

Hampshire spending limit by over

$66 ,000;

• Failing to follow the prescribed

methods for calculating and billing

the costs of travel services provided to the media;

Excessive Contributions

The committee accepted a total of

$188,195 in excessive contributions

from individuals. Of this amount,

$163,725 were refunded too late to

cure the excessive amounts. Although the regulations on the

timeliness of refunds were changed

during the 1988 campaign cycle, the

refunds were late under both the old

standard (within a reasonable time)

and the current standard (within 60

days from deposit). On average it

took the committee 112 days to

refund excessive contributions.

The remaining $24,470 in

I The interim audit report was com- excessive contributions were

pleted August 22, i989. Aft er granting primary contributions redesignated

the campaign numerous extensions of by contributors for the general

time throughout the audit and repay- election compliance fund. However,

ment process, as well as granting an I because the committee failed to

oral hearing after the fin al audit report I retain any records of when it

had been issued. the Commission made a final repayment determination on received the redesignations, they

June l l , i 992. when it ordered the were ineffective, and the contribucampaign to repay $i03,555.

4
August /

---- 994 ---- Federal Election Commission RECORD -----!!.~~~

• $15.974 in apparently excessive

travel reimbursements received

from the press.

Additionally, the campaign was

required to reimburse the press

$5 1,233 for travel overcharges.

The report found that the campaign may have received $76,261 in

excessive contributions in the form

of.staff advances . Campaig n staff,

USIn g personal funds or credit cards

had spent in excess of their contri- '

bution limits for campaign expe.nses. Although the campaign later

reimbursed the individuals, the

advances nevertheless constituted

excessive contributions. The report

stated that the campaign failed to

address the excessive nature of the

advances.

Additionally, the report found

that the campaig n may have received prohibited and excessive

contributions in the form of credit

extend.ed outside the ordinary course

of business. A computer firm and a

labor union waited several months

after providing goods and services

to the campaign before submitting

their bills ($50.000 and $57,196).

The campaign failed to document

that the extensions of credit were in

the ordinary course of business.

As recommended in the initial

audit report, the campaign submitted

missing records to show that

disbursements totaling $32,839 were

qualified campaign expenses and

thus not subject to repayment.

Additionally, the campaign corrected reporting deficiencies in

amended reports. •

Regulations

Rule on Use of Candidate's

Name in Opposition Project

Now Effective

Unauthorized political committees I may now use a candida te's

name in the title of a special fundraising project or other communication, if the title clearly indicates

~p~~sition to t.he candida te (e.g.,

Citizens Against Doe" or "Citizens

Fed Up with Doe"). The revised

rule, 11 CFR 102.14(b)(3), became

effective June 30.

The rule is a narrow exception to

the ban on the use of a candidate's

name in any special project title of

an unauthorized committee. That

prohibition was imposed in 1992

and appears at 11 CFR 102.1 4(a).

Please note that the new rule does

not affect the complete ban on the

use of a candidate's name in the

registered name of an unauthorized

committee. 11 CFR 102.14(a).

.T.he Commission adopted the

original rule in response to the

growing use and abuse of candidate

na~es in titles of fundraising

projects sponsored by unauthorized

co~ tte.es Acting on a rulemaking

petIt.lOn filed by Citizens Against

David Duke (CADD), a potential

special project of an unauthorized

committee, the Commission decided

to vi the rule to allow opposition

I projects to use a candidate's name.

The Commission reasoned that

fraud n d abuse were less likely to

occur In cases where the title of a

project opposed a candida te, thus

making it clear that the project was

not authorized by the candidate.

The final rule and explanation

and justification were published in

the Federal Register on April 12 (59

FR 17267).•

IAn I~auth or ed committee is any

committee not authorized b y a candidate, such as a PAC or party committee.

FEC Approves Final Rules

Governing National Voter

Registration Form

On June 23, the Commission

published final rules describing the

content and format of a national

form for voter registration by mail.

(See the Federal Register at 59 FR

323 11.) The new rules at 11 CFR

Part 8 will take effect July 25.

The development of the form is

o~~?f the Commission 's responsibilities under the National Voter

Registration Act (NVRA), which

will become effective in most states

at the start of 1995.

As an additional duty, the Commission must submit to Congress,

every two years, a report assessing

the impact of the NVRA and

suggesting improvements in voter

registration forms and procedures

affected by the NVRA. The final

regulations list the voter data that

states will have to submit to the

FEC in order for the agency to

evaluate registration activity for the

Congressio nal report. The first

report is due June 30, 1995.

In drafting the regulation s, the

Commission considered responses

to two rulemaking notices and

information on state laws and

procedures compiled by the FEC's

National Clearinghouse on Election

Administration ,

To increase voter registration, the

NVR.A,requires states to implement

a mail-in voter registration system

and to offer registration to individuals applying for driver's licenses

and to those visiting designated

governme nt agencies. •

Final Revisions to Convention

Rules Approved

The Commission adopted final

r~ gul ation governing publicly

Inance~ Presidential nominating

conventions. The revised rules

which will become effective after 30

legislative days, will apply to the

1996 conventions.

(continued on page 6)

5
Federal Election Commission RECORD

Regulations

(continued fr om page 5)

The Commission reorganized and

updated the convention regulations

at 11 CFR Part 9008 to make them

consistent with the other public

funding rules. Major changes were

made in several areas. Listed below

are some of those changes.

• The regulations permit convention

committees to raise contributions

to defray legal and accounting

compliance costs. The contributions will count against the annual

$20,000 limit ($15,000 for

multicandidate committees) on

contributions to one of the national

party committees established by

the national party.

• The rules simplify terminology by

using one term, "commercial

vendor," to replace the previous

terms ("local," "retail," "local

retail" ) used to describe businesses that offer reductions,

discounts or free items to a convention committee.

• The final rules recognize that host

committees and convention cities

may accept goods and services

from commercial vendors under

the same terms and conditions as

convention committees.

• The regulations permit a convention city to pay for conventionrelated expenses from a municipal

fund established to attract conventions and other events to the city.

This provision is based on AOs

1983-29 and 1982-27.

• For the first time, the regulations

require convention cities to file

certain information with the FEe.

After the convention, they must

file a statement disclosing amounts

spent for convention facilities and

services, the total amount defrayed

from general revenues and the total

defrayed from a municipal convention fund.

The final rules and their explanation and justification were published

in the Federal Register on June 29,

1994 (59 FR 33606). •

6

Advisory

Opinions

AO 1994-10

Waiver of Bank Fees

for Political Committee

Borrowers

When making loans to federal

candidates and their committees

who have opened accounts, the

Franklin National Bank may waive

legal fees, deposit fees and similar

service charges as long as the

waivers are consistent with normal

industry practice and the Bank's

ordinary course of business with

commercial customers. Otherwise, a

prohibited corporation contribution

would result I

Past advisory opinions have

similarly concluded that corporations could give political commitI tees discounts or free items made

available to nonpolitical clients on

equal terms or as part of a business

relationship. AOs 1992-24, 1989-14

and 1987-24. On the other hand, if a

political committee were to receive

preferential treatment, a prohibited

contribution would result AOs

1991-23, 1987-22 and 1986-30.

In this case, the Bank indicated

that it customarily negotiated fee

waivers with borrowers establishing

accounts. The Bank explained that

its decisions to grant waivers are

based on its businessjudgment of

the profitability of the customer

relationship and of the account

itself. Date Issued: June 9, 1994;

Length: 4 pages.•

}Although the prohib ition on contributions from nati onal banks applies to

state and local, as well as federal,

elections, this advisory opinion request

was limited to waivers in conn ection

with f ederal candidates.

August 1994

AO 1994-12

Definition of Member

Applied to Association's

Governing and Membership

Structure

The American Medical Association (AMA) is an incorporated

membership association with

approximately 290,000 physician

and medical student members. All

of AMA's "constituent members"

pay regular dues and have the right

to vote directly or indirectly for

delegates to the House of Delegates,

the AMA's highest governing body.

Those individuals qualify as members under FEC regulations and are

therefore eligible to be solicited for

contributions to AMA's PAC

(AMPAC) and to receive partisan

electioneering messages from the

AMA. 2 V.S.e. §441b(b)(2)(A) and

(4)(C); 11 CFR I 14.3(a)(2) and

114.3(c). The Commission was

unable to reach a decision as to

whether upwards of 45,000 direct

members qualified as members

under FEC rules. The Commission

voted three-three on this issue.

To qualify as a solicitable

"member" of a membership association, an individual must pay regular

dues of a fixed amount and have the

right to vote for at least one member

of the "highest governing body" or

for those who choose at least one

member of that body.I

The AMA has two governing

bodies, the House of Delegates and

the Board of Trustees. Because of

its superior powers, the House of

}Individuals also qualify as members if

they have the right to vote dire ctly for

all memb ers ofthe high est gov erning

body or if they have a significant financial atta chment to the association. such

as an investment or own ership stake

(not merely the payment of dues). The

definition includes two overall requirements: the individual must satisfy the

membership association 's own requirements f or membership and must affirmatively accept an invitation to become

a memb er. 11 CFR 114.1( e)(2).
August 1994

Delegates is the AMA's highest

governing body. The House has the

power to make policy, appoint and,

in certain instances, remove Board

members. While the Board enjoys a

veto right over the House in financial matters, the House can amend

the bylaws and thus alter the powers

of the Board.

The AMA has two classes of

members who pay regular dues:

constituent members and direct

members.

Constituent members belong to

AMA state medical associations and

are entitled to vote for delegates to

the state association's house of

delegates. The state bodies, in tum,

elect delegates to the AMA House

of Delegates. (In two states, constituent members vote directly for

delegates to the AMA House.)

Constituent members therefore meet

the definition of "member" under

FEC rules.

Direct members are generally not

entitled to participate in delegate

elections, although they pay dues

and have certain participatory rights.

The Commission could not reach

agreement on their membership

status. Some direct members,

however, also belong to AMA

constituent associations. They

qualify as solicitable members

through that membership.

Date Issued: June 17,1994;

Length: 9 pages. Chairman Trevor

Potter submitted a three-page

statement on AO 1994-12...

AO 1994-15

Cable Series Moderated

by House Member Seeking

Reelection

Representative Leslie L. Byrne

(VA-10th CD) may appear as the

moderator of a monthly public

affairs television series to be aired

on two cable stations in her district

and to be produced, directed and

controlled by those outside the

campaign. In her capacity as a

federal officeholder, Ms. Byrne will

I moderate discussion by a panel of

experts on a selected monthly topic.

The program will not result in a

contribution or an expenditure on

behalf of her reelection campaign

because it will not refer to her

campaign or election and will not be

controlled by her campaign. This

conclusion is based on the assumption that the scheduling and duration

of the series and the selection of

topics will not be made with reference to the timing of her nomination

or election

As a general rule, a public appearance by a candidate-including an

officeholder-does not result in a

contribution or an expenditure as

long as there is no solicitation of

campaign contributions and no

express advocacy of the election or

defeat of any candidate. However,

the absence of solicitations and

advocacy does not preclude a

determination that an activity or

appearance is campaign related. AO

1992-37.

Of particular relevance to Representative Byrne's situation is AO

1992-5, where the Commission

drew the same conclusion based on

similar facts.

Date Issued: June 24, 1994;

Length: 4 pages. Chairman Trevor

Potter filed a three-page concurring

opinion...

Federal Register

Federal Register notices are

available from the FEC's Public

Records Office.

1994-7

Filing Dates for the Oklahoma

Special Elections (59 FR 32207,

June 22,1994)

1994-8

11 CFR Part 8: National Voter

Registration Act of 1993; Final

Rules (59 FR 32311, June 23,

1994)

Federal Election Commission RECORD

AO 1994-16

PAC Contributions Refunded

to Former Employees

The separate segregated fund of

Atlantic Research Corporation

(ARC PAC) retains, in a separate

bookkeeping account, $30,000 that

had been contributed by former

employees who worked for a

subsidiary of ARC. The subsidiary

was later sold to Computer Sciences

Corporation (CSC). ARC PAC

cannot transfer the entire $30,000 to

CSC PAC since unlimited transfers

are permissible only between

affiliated committees and the two

PACs are not affiliated. 11 CFR

102.6(a)(1); see also AO 1989-16.

(ARC PAC may, however, contribute up to $5,000 per calendar year to

CSC PAC.) Moreover, ARC PAC

cannot transfer the contributions to

CSC for refund to the former ARC

employees since that would result in

the unlawful commingling of PAC

contributions with CSC corporate

funds. (The collecting agent procedures at 11 CFR 102.6(b) and (c) are

not applicable here.) ARC PAC

itself, however, may refund the

contributions to the original contributors, subject to certain conditions. Alternatively, ARC PAC may

simply spend the funds as it wishes.

See 11 CFR 114 .5(d) (a corporation

may exercise control over its

separate segregated fund).

(continued on page 8)

1994-9

11 CFR Parts 107, 114 and 9008:

Presidential Election Campaign Fund

and Federal Financing of Presidential

Nominating Conventions; Final Rules;

Transmittal to Congress (59 FR 33606,

June 29,1994)

1994-10

11 CFR Part 102: Special Fundraising

Projects and Other Use of Candidate

Names by Unauthorized Committees;

Final Rule; Announcement of Effective

Date (59 FR 33643, June 30,1994)

7
Federal Election Comm ission RECORD

Advisory Opinions

(continued from page 7)

Background

When ARC owned the subsidiary

(ARC Professional Services Group

or PSG), ARC PAC kept a recordkeepi ng acco unt ( a "sub fund ") on

PSG-related activity. When PSG

was sold to CSC, ARC believed that

the $30,000 in contributions in the

sub fund should be used by CSC

PAC to further CSC interests. While

ARC may not tran sfer the funds to

CSC PAC or transfer them to CSC

for refund to the contributors, ARC

PAC may refund the contributions ,

as describ ed below .

Conditions for Making Refunds

Because the contributors are no

longer part of ARC' s restricted

class, any letter accompanying the

refund checks should not co ntain a

sol icitatio n message from ARC or

ARC PAC on behalf of CSC PAC,

whic h would be unlawful unde r

2 U.S.c. §44 1b(b)(4) and 11 CFR

114.5 (i).

Furthermo re, in view of ARC's

knowledge that the funds may be

used for con tributions to CSC PAC,

a refund to a donor should not

exceed the amount of that donor' s

share of the funds on hand (the

$30,000). Otherwise, donors co uld

be at risk of making contributions to

CSC PAC from funds that were not

their own, co ntrary to the prohibition on makin g contributions in the

name of another at 2 U.S.c. §44 1f.

Finally, ARC PAC may use a last

co ntributed/first returned method to

identify the donors of contributions

in the sub fund. This method , which

was proposed by ARC PAC, is

comparable to the last in/first

transferred approac h set out at

11 CFR 104.1 2 and appli ed to

transfers betw een affili ated committees (see , e.g., AOs 199 1-12 and

1982-52 ). Date Issued: Jun e 24,

1994 ; Length : 4 pages. +

8

Advisory Opinion Requests

Adv isory opinion requests

(AORs) are available for review and

comment in the FEC' s Pub lic

Records Office .

AOR 1994-22

Campaign 's lease of mobile home

from partnership owned by the

candidate and his father. (Patrick

Combs for United States Co ngress;

Jun e 23, 1994; 1 page)

AOR 1994-23

Consolid ation of payroll dedu ction

operations after merger of two

corporations and their SSFs.

(No rthrop Grumman; Jun e 24, 1994;

6 pages)

AOR 1994-24

Severance pay and medical benefits

paid by corporation to employee

running in prim ary election.

(Chattem, Inc.; July 8, 1994;

7 pages) +

Alternative Dispositions of

Advisory Opinion Requests

AOR 1994-1

The Commission closed this AOR

without issuin g an opinion because

necessary facts wer e not submitted.

The request concerned a golf tournament fundraiser sponsored by the

We stern Pistach io Association for

its PAC. See Agenda Documents

#94-17 and #94-17 (rev ised).

AOR 1994-4

The Commission did not issue an

opinion because it could not reach

agreement, by the required four-vote

majority, on whether the mem bership classes of the U.S. Chamber of

Commerce qualifi ed as "members"

for purp oses of receiving contribution solicitations and partisan communica tions from the Chamber. See

Age nda Document s #94-63 and

#94-63-A. +

August 1994

Court Cases

FEC v,America's PAC

On May 23, 1994, America' s

PAC and its actin g treasurer, Neil

Barry Rincover, were held in civil

co ntempt by the U.S. District Court

I for the Central District of Ca lifornia

for failing to comply with a January

1993 default j udgment ordering

them to pay a $25,000 civil penalty.

(Civil Action No. CY- 92-2747-

LGB .) The court rejected Mr.

Rincover 's motion to set aside the

j udgment but did reduce the penalty

to $5,000.

The 1993 court found that defendants failed to forward a $2,000

ea rmarked co ntribution from the

Physicians Interindernn ity/P AC to

Bill Press, a U.S. Senate candidate.

The acceptance of the earmarked

co ntribution caused Ame rica 's PAC

to become a fede ral political committee with registration and reporting obligations. The cou rt ruled that

defendan ts, by failing to fulfill those

obligations, violated 2 U.S.c.

§§433(a) and 434(a)(1). The court

also found that they violated

§432(b)(1) by failing to forwa rd the

earm arked contribution and the requir ed information to the candidate.

Finally, because the check contained

corporate funds, the court found that

defend ant s knowingly accepted a

prohibited contribution, in violation

of §44 1b(a). They were ordered to

pay a $25,000 penalty, refund the

$2,000 con tribution to the PAC and

file a Statement of Organization and

required reports, all within 15 days.

On April 18, 1994, responding to

I an FEC petition, the co urt ordered

the defend ant s to show cause why

they should not be held in contempt.

That same day, Mr. Rincover filed a

motio n to set aside the Janu ary 1993

default judgm ent. (Ame rica 's PAC

never responded to the order to

show ca use .)

The court, however, rejected Mr.

Rincover's motion, finding that his
August 1994

claims did not indicate the "extraordinary circumstances" necessary for

the court to set aside a judgment.

The court therefore ordered Mr.

Rincover and America's PAC to

comply with the January 1993 order

within 30 days or pay $50 for each

day of delay. Exercising its discretion, the court reduced the penalty to

$5,000 because all the violations

stemmed from a single incident. ..

Froelich v. FEC

The U.S . Court for the Eastern

District of Virginia, Alexandria

Division, dismissed this suit on May

27, 1994, ruling that Francis E.

Froelich and two other plaintiffs, all

residents of Virginia, lacked standing to bring suit. (Civil Action No .

93-1610-A.) Plaintiffs have filed an

appeal in the Fourth Circuit.

In their suit, they claimed that the

Federal Election Campaign Act is

unconstitutional to the extent that it

allows House and Senate candidates

to accept out-of-state contributions.

They argued that such contributions

to the announced U.S. Senate

candidates from Virginia (also

named in the suit) allow nonVirginians to participate in the

process of electing a Senator and

dilute the value of the plaintiffs'

participation. They further claimed

that nonresident contributions create

the appearance that an elected

Senator is answerable to nonresident

contributors. These alleged consequences of nonresident contributions, they argued, violate the 17th

Amendment's guarantee that two

Senators from each state shall be

"elected by the people thereof."

The court, however, ruled that

plaintiffs' claims were too general,

lacking the factual specificity

necessary to establish standing for

judicial review. The court said that

the "abstract question of wide

significance" and "general grievances" presented by the plaintiffs

were more properly addressed by

Congress. The court commented that

if it were to uphold plaintiffs' claims,

it would be "making legislative

policy" and consequently "improperly interfering" with the legislative

branch...

Jordan v. FEC

The U.S. District Court for the

District of Columbia granted

summary judgment to the FEC on

May 27, 1994, upholding the

agency 's dismissal of an administrative complaint filed by Absalom F.

Jordan, Jr., against Handgun Control, Inc. Civil Action No. 91-2428

(NHJ).

Background

In his complaint, Mr. Jordan

claimed that Handgun Control, Inc.

(HC!) had violated the law by

soliciting contributions from

individuals who did not qualify as

"members" because they lacked

sufficient rights to participate in the

governance of HCI.

Mr. Jordan's complaint raised the

same membership issue as a succession of complaints filed against HCI

by the National Rifle Association

(NRA) between 1983 and 1992. The

first NRA complaint resulted in a

conciliation agreement requiring

HCI to pay a civil penalty and to

amend its bylaws to establish voting

rights for its members.

Three more NRA complaints

challenging HCI membership were

dismissed by the FEC, which had

already concluded that HCI members, under the new bylaws, had

sufficient governance rights through

their ability to vote for an at-large

board member. The FEC's dismissal

of the third and fourth complaints

I were affirmed by the D.C. Court of

I Appeals.

In dismissing the Jordan complaint, the FEC stated that his claims

were "substantially similar" to those

in the four NRA complaints, which

had already been "conclusively

resolved."

Federal Election Commission RECORD

Definition of Member

Until recently, FEC regulations

defined member simply as a person

who satisfied the requirements for

membership, but FEC advisory

I opinions had refined the term to

mean persons who had some right to

participate in the organization's

governance and the obligation to

pay regular dues .' This reading was

based on the Supreme Court's

decision in FEC v. National Right to

Work Committee (NRWC), 459 U.S.

197 (1982). The agency determined

that HCI's voting rights were

sufficient to satisfy this definition

when the issue arose in the second

NRA complaint.

Mr. Jordan challenged that

interpretation, claiming that HCI's

members were not solicitable

because they lacked the power to

remove management. He based his

argument on the NRWC holding

that members should be defined "at

least in part, by analogy to stockholders of business corporations."

Dismissal of Complaint

Finding the FEC's definition of

member to be reasonable, the court

pointed out that, while the NRWC

Court said that there had to be

"some" attachment between the

organization and its membership,

that Court "certainly did not require

that members be provided with the

opportunity to seize total control of

the organization, as plaintiff argues."

Furthermore, the court said the

FEC's refusal even to consider Mr.

Jordan 's claims was neither arbitrary nor capricious but, instead,

made "perfect sense," considering

that the agency had already conclusively resolved the HCI membership

issue. The court said that a "scrupulous adherence to precedent is

hardly arbitrary.l' e-

(Court Cases continued on page II)

I The FEC further clarified the definition ofmember at revised II CFR

I 114.I(e), effective November 1993.

9
441. Section 441

442. Section 442

451. Section 451

452. Section 452

453. Section 453

454. Section 454

455. Section 455

906 . AO 1993-6

907 . AO 1993-7

908. AO 1993-8

909. AO 1993-9

910. AO 1993-10

911. AO 1993-11

912. AO 1993-12

913 . AO 1993-13

914. AO 1993-14

915. AO 1993-15

916. AO 1993-16

917. AO 1993-17

918. AO 1993-18

919. AO 1993-19

920. AO 1993-20

921. AO 1993-21

922. AO 1993-22

923. AO 1993-23

924. AO 1993-24

925. AO 1993-25

Federal Election Commission RECORD

Flashfax Menu

To order any of these documents,

24 hours a day, 7 days a week, call 2021

501-3413 on a touch tone phone. You

will be asked for the numbers of the

documents you want, your fax number

and your regular number. The documents will be faxed shortly thereafter.

(See article on front page.)

Disclosure

301. Guide to Researching Public

Records

302. Accessibility of Public Records

Office

303. FederallState Records Offices

304 . Using FEC Campaign Finance

Information

305. State Computer Access to FEC

Data

306. Direct Access Program (DAP)

307. Sale and Use of Campaign

Information

Limitations

315. Contributions

316. Coordinated Party Expenditure

Limits

317. Advances: Contribution Limits

and Reporting

318. Volunteer Activity

319. Independent Expenditures

320. Local Party Activity

321. Corporate/Labor Facilities

323. Corporate/Labor Communications

324. Trade Associations

Public Funding

330. Public Funding of Presidential

Elections

331. The $3 Tax Checkoff

332. 1993 Changes to Checkoff

333. Recipients of Public Funding

334. Presidential Fund Tax Checkoff

Status

Compliance

340. Candidate Registration

341. Committee Treasurers

342. Political Ads and Solicitations

343. 10 Questions from Candidates

344. Reports Due in 1994

345. Primary Dates and Deadlines for

Ballot Access

346. Filing A Complaint

Federal Election Commission

401. The FEC and the Federal Campaign Finance Law

402. La Ley Federal relativa al Financiamiento de las Carnpafias

403. State and Local Elections and the

Federal Campaign Law

10

404. Compliance with Laws Outside

the FEC's Jurisdiction

405 . Biographies of Commissioners

and Officers

406. Telephone Directory

407. Table of Organization

408. Index for 1993 Record newsletter

409. Free Publications

411. Complete Menu of All Material

Available

Clearinghouse on Election

Administration

425. List of Reports Available

426. Voting Accessibility for the

Elderly and Handicapped Act

427. National Voter Registration Act

of 1993

Money in Politics Statistics

625. 1991-92 Political Money

626. 1993 Year-End PAC Count

627 . 1993-94 Congressional

628. 1993-94 National Party

629. 1993-94 PAC Finances

Regulations (11 CFR Parts 100-201)

100. Part 100 Scope and Definitions

101. Part 101 Candidate Status and

Designations

102. Part 102 Registration, Organization and Recordkeeping by

Political Committees

103. Part 103 Campaign Depositories

104. Part 104 Reports by Political

Committees

105. Part 105 Document Filing

106. Part 106 Allocations of Candidate

and Committee Activities

107. Part 107 Presidential Nominating

Convention, Registration and

Reports

108. Part 108 Filing Copies of Reports

and Statements with State Offices

109. Part 109 Independent Expenditures

110. Part 110 Contribution and

Expenditure Limitations and

Prohibitions

III. Part III Compliance Procedure

112. Part 112 Advisory Opinions

113. Part 113 Excess Campaign Funds

and Funds Donated to Support

Federal Officeholder Activities

114. Part 114 Corporate and Labor

Organization Activity

115. Part 115 Federal Contractors

116. Part 116 Debts Owed by Candidates and Political Committees

200. Part 200 Petitions for Rulernaking

20 I. Part 20 I Ex Parte Communications

August 1994

Forms

361. Form I, Statement of Organization

362. Form 2, Statement of Candidacy

363. Form 3 and 3Z, Report for an

Authorized Committee

364 . Form 3X, Report for Other Than

an Authorized Committee

365. Form 5, Report of Independent

Expenditures

366. Form 6, 48-Hour Notice of

Contributions/Loans Received

367. Form 7, Report of Communication

Costs

368. Form 8, Debt Settlement Plan

369. Form 1M, Notification of Multicandidate Status

Schedules

370. Schedule A, Itemized Receipts

371. Schedule B, Itemized Disbursements

372. Schedules C and C-I, Loans

373. Schedule 0, Debts and Obligations

374. Schedule E, Itemized Independent

Expenditures

375. Schedule F, Itemized Coordinated

Expenditures

376. Schedules H 1-H4, Allocation

377 . Schedule I, Aggregate Page

Nonfederal Accounts

U.S. Code (Title 2)

431 . Section 431

432. Section 432

433. Section 433

434. Section 434

437. Section 437

438. Section 438

439. Section 439

Advisory Opinions

802 . AO 1994-2

803. AO 1994-3

804. AO 1994-4

805. AO 1994-5

806. AO 1994-6

807 . AO 1994-7

808. AO 1994-8

809. AO 1994-9

810. AO 1994-10

8 I I. A0 1994-1 I

812. AO 1994-12

813. AO 1994-13

815. AO 1994-15

816. AO 1994-16

900. Brochure

901. AO 1993-1

902. AO 1993-2

903. AO 1993-3

904 . AO 1993-4

905. AO 1993-5
August / 994 Federal Election Commission RECORD

Name

Organization

No. of Copies

(If ordering more than 25 copies, please include your phone number.)

No. of Copies

Zip Code

1993-25: Preemption of Wisconsin

law restricting contributions from

lobbyists, 3:7

1994-2: Preemption of Minnesota

law restricting contributions from

lobbyists, 5:6

1994-3: Charitable matching plan

for twice-yearly solicitations, 6:4;

correction, 7:6

1994-5: Candidate status, 6:5;

correction, 7:6

1994-6: Charitable matching plan

for twice-yearly solicitations, 7:4

1994-7: Charitable matching plan

for twice-yearly solicitations;

treasurer as custodian, 7:4

1994-8: Campaign's rental of office

space from candidate-owned

corporation, 7:4

1994-9: Transfers from nonfederal

PACs; effect of corporate reorganization on affiliation, 7:5

1994-10: Waiver of bank fees for

political committee borrowers, 8:6

1994-11: SSF activities of federal

contractor partnership, 7:6

(continued 0 11 page / 2)

State

Phone Number

Address

City

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

Orde~ Fonn for Candidate Guide and Supplement

(See article 0 1/ page 2.;

Send your order to: Federal Election Commissio n

Information Division

999 E Street, NW

Washington. DC 20463

Campaign Guide for Congressional Candidates

and Committees

Candidate Guide Supplement

I Index

The first number in each citation

refers to the "number" (month) of

the 1994 Record issue in which the

article appeared. The second number

following the colon, indicates the '

page number in that issue. For

example, " I:4" means that the

article is in the January issue on

page 4.

Advisory Opinions

1993-18: Corporate plan to foster

political participation, 2:I

1993-19: Retiring 1984 Presidential

debt, 1:13

1993-20: Purchase and distribution

of candidate biography, 2:3

1993-21: Preemption of Ohio law,

2:4

1993-22: Use of excess funds by

retired House Member, 3:5

1993-23: PAC disaffiliation, 3:6

1993-24: Definition of member, 4:6

Court Cases

(continued from page 9)

New Litigation

Fulani v. FEC

Lenora B. Fulani and the other

plaintiffs-her 1992 Presidential

committees, their treasurers and a

campaign manager-ask the court to

find that a complaint filed with the

FEC is invalid and that the Commission therefore acted unlawfully in

opening an enforcement matter.

They ask the court to stop the FEC

from taking any action in the matter

until the court decides the case.

According to plaintiffs, Kellie

Gasink, a former Fulani supporter,

filed an complaint with the Commission in January 1994. Her filing

consisted of three components: a

one-paragraph letter to the Commission; a copy of a five-page letter she

had submitted to the Manhattan

District Attorney; and a newspaper

article.

The letter to the District Attorney

alleged that certain persons associated with the Fulani Presidential

campaign were involved in a

fraudulent embezzlement scheme.

The newspaper article reported on

the District Attorney's investigation

of the plaintiffs and their affiliated

party, the New Alliance Party. The

article cited Ms. Gasink and another

former Fulani supporter as sources.

The FEC returned the complaint

because it lacked the required

statement that the contents had been

sworn to in the presence of a notary.

Ms. Gasink refiled the complaint in

February 1994, the first page of

which contained the required

statement.

Claiming that the five-page letter

also required a sworn statement to

validate the complaint, plaintiffs

seek a court order prohibiting any

FEC enforcement action based on

the letter. They also seek a ban on

public release of materials obtained

by the FEe.

U.S. District Court for the Southern District of New York, Civil Action No. 94-4461, June 17,1 994.•

/I
Federal Election Commission RECORD

Index

(continued from page 11)

1994-12: Definition of member

applied to association's governing

and membership structure, 8:6

1994-13: Video slate card listing

multiple candidates, 7:6

1994-15: Cable series moderated by

House Member seeking reelection, 8:7

1994-16: PAC contributions refunded to former employees, 8:7

Court Cases

FEC v.

- America's PAC, 8:8

- GOPAC, 6:5

- LaRouche (94-658-A), 7:3

- Michigan Republican State

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washingt on, DC 20463

Official Business

Penalty for Private Use, $300 *

Printed on recycled paper

Committee, 4:7

- National Republican Senatorial

Committee (93-1612), 1:12; 4:7

- Political Contributions Data, Inc.

(PCD), 5:4

I - Rodriguez, 6:5

- Survival Education Fund, Inc., 3:1

- Williams, 1:12

_ _ v. FEC

- Akins (92-1864), 5:4

- Center for Responsive Politics,

1:12

- Freedom Republicans, Inc., 3:3

- Froelich, 2:2; 8:9

- Fulani, 8:11

- Jordan, 8:9

- LaRouche (92-1100), I:12

- National Republican Senatorial

Committee (NRSC), 5:5; 7:2

August 1994

- Republican National Committee

(RNC) (94-1017), 7:3

Reports

Reporting reminders, April, 3:1;

July, 6:1

Schedule for 1994, 1:4; correction,

2:1

- change in Florida and South

Carolina election dates, 4:6

Special elections

- Kentucky (2nd District), 5:9

- Oklahoma (6th District), 3:7

- Oklahoma (Senate), 7:2

800 Line Articles

Help - my report is late, 6:1

Registration by candidates and their

committees, 1:14

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Postage and Fees Paid

Federal Election Commission

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