February 1995

Table of Contents

Public Funding

1 FEC Completes Title 26 Audits

2 Presidential Election Campaign

Fund Forecast

Court Cases

FEC v. NRA Political Victory

Fund

6 Freedom Republicans v. FEe

7 Whitmore and Quinlan v. FEC

7 Lytle v. FEC

7 New Litigation

Audits

2 Bush-Quayle '92 Primary

3 Bush-Quayle '92 General

4 Clinton '92 Primary

5 Clinton/Gore '92 General

8 Federal Register Notices

Regulations

8 Public Hearing on Proposed

Changes to Public Funding Rules

8 Communications Disclaimer

Requirements

9 New FEC System of Records

800 Line

9 Administrative Termination

10 Advisory Opinions

Compliance

10 MURs Released to the Public

11 Index

Federal Election Commission

Public Funding

FEC Completes Title 26

Audits Within Election Cycle

In 1994, the FEC completed all

audits related to the 1992 Presidential election cycle within two years

of the election, a feat that was last

achieved in 1981 . Streamlined

procedures, simplified regulations

and an increase in FEC staff helped

reduce the amount of time it took to

finish the audits.

By law, the FEC is required to

audit every committee (established

for the primaries, the conventions or

the general election) which received

public financing under Title 26 of

the U.S. Code.

The following changes improved

the turnaround time:

• Limits on extensions of time for

committees to submit comments

on audit findings;

• Access to committees' computerized data;

• Requiring an inventory of committees' campaign records prior to

starting field work; and

• Specific due dates for the provision of campaign records during

audit field work.

Additionally, final audit reports

now include all audit findings; prior

to 1992, particular findings were

removed from final audit reports on

(continued on page 2)

Volume 21, Number 2

Court Cases

FEe v. NRA Political

Victory Fund

On December 6, 1994, the

Supreme Court ruled that the FEC

lacks standing to independently

bring a case under Title 2 of the

U.S. Code before the Supreme

Court. In future cases, the FEC must

seek authorization from the U.S.

Solicitor General if it wishes to

represent itself in Title 2 cases.

(No. 93-1151.)

Background

This decision brings to an end the

FEC's legal efforts to enforce a

finding that the NRA contributed

corporate monies to its separate

segregated fund, the NRA Political

Victory Fund. (Corporations are

prohibited sources of contributions

under 2 U.S.C. §441b(a).) In

November 1991 , the U.S. District

Court for the District of Columbia

had ruled in favor of the FEC and

had imposed a $40,000 penalty on

the defendants (see the January

1992 Record for a summary of the

district court's decision). On appeal,

the U.S. Court of Appeals for the

District of Columbia reversed the

district court's ruling on the grounds

that the FEC's two nonvoting, ex

officio members, the Secretary of

the Senate and the Clerk of the

(continued on page 6)
Federal Election Commission RECORD

Public Funding

(continued from page J)

committees involved in enforcement

actions.

During December meetings, the

Commission approved the last five

of the nineteen audits from the 1992

Presidential election cycle:

• The Tsongas primary election

audit (total amount sought:

$74,730);

• The Bush/Quayle primary election

audit (total amount sought:

$84 1,850);

• The Bush/Quayle general election

audit (total amount sought:

$29,775);

• The Clinton primary election audit

(total amount sought: $1,383,587);

and

• Clinton/Gore general election audit

(total amount sought: $254,546).

The Bush and Clinton audits are

summarized in this issue. The

Tsongas audit will be summarized

in a future issue of the Record. ..

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/219-3420

202/501-34 13 (Flashfax Service)

202/2 19-3336 (TDD)

Danny L. McDonald, Chairman

Lee Ann Elliott, Vice Chairman

Joan D. Aikens, Commissioner

John Warren McGarry,

Commissioner

Trevor Potter, Commissioner

Scott E. Thomas, Commissioner

John C. Surina, Staff Director

Lawrence M. Noble, General

Counsel

Published by the Information

Division

Louise D.Wides, Director

Dario Bard, Editor

2

Presidential Election

Campaign Fund Forecast

The Presidential Election Campaign Fund (the fund) is expected to

cover total payments for both the

1996 and 2000 Presidential elections, thanks to the 1994 increase in

the tax checkoff amount from $1 to

$3.

There exists, however, the

possibility of a cash flow problem in

the early months of 1996, which

could result in partial payments to

primary candidates. In such an

event, candidates would presumably

have to make up the difference with

some form of bridge loans secured

by the remaining entitlement for that

period and repay those loans out of

their March or April payments.

This potential problem exists for

two reasons. First, the fund will not

have had time to build up a reserve

by 1996 and, second, the demand

for funds in the early months of

1996 is expected to be greater than

it was in 1992. With regard to the

fund's reserves, by January 1996

the fund will have had the benefit of

the tax checkoff increase for only

two years (1994 and 1995). Although the fund's overall balance in

January 1996 will be enough to

cover first round payments to

primary candidates, U.S. Treasury

regulations require that monies for

the general election and the conventions be set aside before making

such disbursements. The money will

be there, but it won' t be available to

primary election candidates.

The FEC anticipates a greater

demand on the fund in the early

months of 1996 than ever before.

Recently, a number of large states

have rescheduled their primaries for

the first quarter of 1996, and it is

expected that candidates will raise

matching funds early in order to

compete in these primaries. The

fund is expected to recover by

spring of 1996, once the 1996 tax

payments begin to flow in.

For the Presidential race in the

year 2000, on the other hand, the

February 199':5

fund will have had the benefit of

four years' worth of $3 checkoff

receipts. The fund is expected to

easily provide public monies for that

election.

This analysis is based on the

following information:

• The fund' s balance at the end of

1994 was about $101 million.

• Next year's receipts are expected

to range between $69 million and

$72 million.

• Projected entitlements in the two

grant categories for the 1996

Presidential race are $24,879,000

for conventions and $ 124,400,000

for general election candidates.

• Between $21 million and $24

million are expected to be available for the payments to 1996

primary candidates. If first round

entitlements exceed the fund' s

resources, the U.S. Treasury will

make payments on a pro-rata basis,

using whatever funds are available

in January and February 1996,

after having set aside monies for

the conventions and general

election.

• The primary spending limit for the

next Presidential race is estimated

to be around $31 million. ..

Audits

Bush-Quayle '92 Primary

Committee Audit

On December 29, 1994, the Commission released the final audit report on the Bush-Quayle Primary

Committee. The report set the committee's payment and repayment I

I If the committee does not dispute the

initial determin ation ofthe repayment

within 30 days, the repayment amount

I becomesfinal and is payable within 90

days ofthe initial determination. JJ

CFR 9038.2(c) and (d).
fehruarv /995

obligation to the U.S. Treasury at

$841,850.

The findings of the report are

summarized below.

General Election Expenditures

The primary committee incurred

$807,249 in expenses which appeared to be nonqualified because

they benefited the general election

campaign. The Commission made

an initial determination that the

committee repay the U.S. Treasury

$ I95,224-the pro rata portion of

the nonqualified expenses that was

paid with federal matching funds.

(The formula for determining the

repayment is explained at 11 CFR

9038.2(b)(2)(iii).) Alternatively, this

matter would be resolved if the

general election committee reimbursed $807,249 to the primary

committee.

Matching Funds Received in

Excess of Entitlement

The primary committee received

$485,631 more than it was entitled

to in public matching funds. The

committee is required to pay this

amount to the U.S. Treasury.

Unresolved Excessive

Contributions

The committee had $141,801 in

unresolved excessive contributions

from individuals. Although the

committee issued refund checks in a

timely manner, a year later virtually

none of the checks had yet been

cashed. The committee paid

$141,801 to the U.S. Treasury.

Disclosure of Contributor's

Occupation and Name of

Employer

A sample review of the committee's reports revealed that the

committee failed to report the

occupation and name of employer

for 56 percent of the items tested.

Furthermore, language in several of

the committee's solicitations failed

to meet the "best efforts" standard

for notifying the contributor that the

reporting of the information is required by law. The committee

contended that it had met the "best

efforts" standard and therefore did

not contact its contributors or file

amended reports.

Use of Corporate Aircraft

The committee did not pay two

corporations in advance for the use

of their aircraft, as required by law.

Excessive Contributions Resulting

from Staff Advances

An individual made an excessive

contribution by advancing $12,598

for campaign travel and expenses

for himself and others. The committee failed to reimburse the individual within the time frame

specified by law. The committee

argued that the time frame did not

apply in this instance because the

individual was a commercial vendor

who typically received payment for

such expenses. The committee did

not, however, present adequate

documentation to support this

assertion.

Reporting of Debts and

Obligations

The committee failed to disclose

obligations of $1,767,548 owed to

vendors. Although the committee

disagreed with the finding, it filed

amended reports to correct this

problem.

Use of Government Conveyance

for Campaign Travel

The committee appeared to have

underpaid the U.S. Air Force by

$259,636 for use of its aircraft in the

course of campaigning. The committee presented documentation

demonstrating that under the

circumstances the committee

reimbursed the Air Force on a

reasonable basis.

Stale-Dated Committee Checks

A total of $19,194 in checks

issued by the committee were not

cashed. The committee made a

payment equal to this amount to the

U.S. Treasury. •

Federa l Election Commission RECORD

Bush-Quayle '92 General

Committee and Compliance

Fund Audit

On December 29, 1994, the

Commission released the final audit

report on the Bush-Quayle General

Committee and the Bush-Quayle

Compliance Committee. I The report

set the general committee 's payment

and repayment 2 obligation to the

U.S. Treasury at $2 1,1 09. The

compliance fund's obligation to the

U.S. Treasury was set at $8,666.

The findings of the report are

summarized below.

Primary Election Committee

Expenditures

The primary committee made

$807,249 in expenses which appeared to benefit the general election campaign, and therefore

appeared to be nonqualified. This

matter would be resolved if the

general election committee reimbursed the primary committee. The

Commission made an initial determination that unless this is done, the

primary committee must repay the

U.S. Treasury $195,224-the pro

rata portion of the nonqualified

expenses that was paid with federal

matching funds. (The formula for

determining the repayment is explained at 11 CFR 9038.2(b)(2)(iii).)

(continu ed on page 4)

J Presidential campaigns receiving

f ederal f unding are permitted to

establish compliance funds, which are

special accounts used to pay f or

specified expenses, including legal and

I accountin g expenses incurred solely to

comply with the campaign f inance law.

Compliance funds arefunded with

pri vate contributions. Compliance fund

spending does not count against the

expenditure limits that apply to

f ederally funded campaigns.

2ff the committee does not dispute the

initial determination ofthe repayment

within 30 days, the repayment amount

becomesfinal and is payable within 90

days ofthe initial determination. 11

CFR 9007.2(c) and (d).

3
FederalElection CommissionRECORD

Audits

(continued from page 3)

Expenditure Limitations

The general committee exceeded

its spending limitation by $553,258.

The Commission suggested that the

compliance fund reimburse this

amount to the committee, thereby

eliminating the excessive expenditures, and provide the FEC supporting documentation.

Use of Government Conveyance

for Campaign Travel

The general committee appeared

to have underpaid the U.S. Air

Force by $545,345 for use of its

aircraft in the course of campaigning. The committee presented

documentation demonstrating that

under the circumstances the committee had reimbursed the Air Force

on a reasonable basis.

Reporting of Debts and

Obligations

The general committee failed to

disclose obligations of $1,052,098

owed to 24 vendors. The compliance fund failed to disclose that it

owed $235 ,587 to eight vendors.

The general committee and the

compliance fund disagreed with this

finding, but filed amended reports to

correct this problem.

Disclosure of Contributor's

Occupation and Name of

Employer

A sample review of the compliance fund's reports revealed that the

fund failed to report the occupation

and name of employer for 68

percent of the items tested. Furthermore, language in several of the

fund 's solicitations failed to meet

the "best efforts" standard for

notifying the contributor that the

reporting of this information is

required by law. The compliance

fund contended that it had met the

"best efforts" standard and therefore

did not contact its contributors or

file amended reports.

4

Gain on Insurance Settlement

The general committee received a

$5,495 insurance payment for the

loss of a $5,745 computer it had

leased from a vendor. The general

committee then bought the vendor a

replacement computer for $3,409.

The general committee paid the U.S.

Treasury the $2,086 insurance

payment balance, as required by

FEC regulations.

Stale-Dated Committee Checks

A total of $19,023 in checks

issued by the general committee and

$8,666 made out by the compliance

fund were not cashed. The committee and the fund abided by the

requirement to make a payment

equal to these amounts to the U.S.

Treasury.•

Clinton '92 Primary

Committee Audit

On December 29, 1994, the

Commission released the final audit

report on the Clinton for President

Committee, President Clinton's

1992 primary committee. The report

set the committee's payment and

repayment I obligation to the U.S.

Treasury at $1,383 ,587 .

The findings of the report are

summarized below.

Misstatement of Financial Activity

Initially, the committee overstated its 1992 receipts and disbursements by $116,489 and

$322,476, respectively, and understated its 1992 ending cash by

$206,717 . Later, in Jul y 1993, the

committee filed amended reports to

correct this problem.

I If the committee does not disput e the

initial determination of the repayment

within 30 days, the repaym ent amount

becomes final and is payable within 90

days of the initial determ ination. 11

CFR 9038.2(c) and (d).

Februarv /995

Itemization of Receipts

The committee failed to itemize a

number of in-kind contributions and

contributions from individuals. The

committee filed amended reports in

July 1993 to correct this problem.

Disclosure of Contributor's

Occupation and Name of

Employer

A sample review of the

committee's reports revealed that

the committee failed to report the

occupation and name of employer

for 49 percent of the items tested .

Furthermore, langu age in several of

the committee's solicitations failed

to meet the "best efforts" standard

by not expli citly notifying the

contributor that the reporting of the

information is requ ired by law and,

in some cases, by failing to request

the name of employer from contributors. The committee filed

amended reports in July 1993 to

correct this problem.

Itemization of Refunds and

Rebates

The committee failed to identify

variou s press organizations and the

Secret Service as the sources of

more than $2 .5 million in travel

reimbursements paid to the committee through a billing and collection

service provided by a travel agent.

The committee also failed to itemize

$11,898 in other refunds and

rebates. The committee filed

amended reports in July 1993 and

October 1994 to correct these

problems, though continuing to

argue that further disclosure was not

requ ired for amounts recei ved from

the press and the Secret Service.

Excessive Contributions Resulting

from Staff Advances

The committee received seemingly excessive contributions from

five individuals totaling $58,482.
February 1995

Contributions, Extensions of

Credit by Commercial Vendors

and Use of Corporate Facilities

The committee received $246,162

in seemingly excessive or prohibited

contributions resulting from advances, use of corporate facilities

and extensions of credit made

outside the ordinary course of

business.

Nonqualified Campaign Expenses

The Commission made an initial

determination that the committee

repay the U.S. Treasury $270,384

for the following nonqualified

campaign expenses:

• Overpayments to vendors;

• General election expenditures

made for equipment, facilities,

poIling, direct mail, media services

and other miscellaneous expenses;

and

• Staff bonuses, an unexplained

settlement, traveler's cheques and

other nonqualified expenses.

Matching Funds Received in

Excess of Entitlement

The Commission made an initial

determination that the candidate

repay $1,072,344 to the U.S.

Treasury, representing matching

funds that exceeded entitlement.

The Commission arrived at this

figure based on an analysis of the

primary committee's Statement of

Net Outstanding Campaign Obligations, relevant post-convention

contributions and matching funds

received after the convention. The

Commission made this determination after being unable to reach a

consensus on the staff's recommendation that the repayment to the U.S.

Treasury be $3.4 million. The

Commission could not agree on this

matter because it could not decide

on the designation status of contributions received after the convention.

I Stale-Dated Committee Checks

A total of $40,859 in checks

issued by the committee were not

cashed. The Commission determined that the committee had to pay

the U.S. Treasury the value of these

stale-dated checks. •

Clinton/Gore '92 General

Committee and Compliance

Fund Audit

On December 29, 1994, the

Commission released the final audit

report on the Clinton/Gore '92

Committee, which served as President Clinton's 1992 general election

committee, and the campaign's

compliance fund. I The report set the

committee's payment and repayment 2 obligation to the U.S. Treasury at $254,546.

The findings of the report are

summarized below.

Disclosure

The compliance fund failed to

adequately disclose the name and

employer of its contributors, and did

not demonstrate best efforts to

obtain this information. Subsequently, however, the compliance

fund filed amended reports to

correct this problem.

In addition, the general committee failed to adequately disclose

I Presidential campaigns receiving

federal funding are permitted to

establish compliance funds. which are

special accounts used to pay for

specified expenses, including legal and

accounting expenses incurred solely to

comply with the campaign finance law.

Compliance funds are funded with

private contributions. Compliance fund

spending does not count against the

expenditure limits that apply to

f ederally funded campaigns.

2 If the committee does not dispute the

initial determination of the repaym ent

within 30 days, the repayment amount

becom es final and is payable within 90

days of the initial determination. 11

I CFR 900 7.2(c) and (d).

Federal Election Commission RECORD

refunds and rebates, and debts and

obligations. Later the committee

filed amended reports correcting the

information on refunds and rebates.

Funds from Non-Allowable

Sources

The compliance fund received

seemingly impermissible transfers

from President Clinton's primary

committee. The primary committee

also seems to have paid for some

fundraising expenses that benefited

the compliance fund as a result of a

disproportionate allocation of costs

to the primary committee involving

a common vendor. The compliance

fund disagreed with these findings.

The Commission could not reach

agreement on the designation status

of contributions received by the

primary committee and transferred

to the compliance fund after the

convention and, correspondingly, on

I whether or not to require the compliance fund to return $1,353,397 to

the primary committee.

Extension of Credit as a Possible

Prohibited Contribution

The general committee received

an extension of credit by a vendor.

The committee demonstrated that

this was done in the normal course

of business and was therefore not a

prohibited contribution.

Prohibited Contributions

The general committee received

seemingly prohibited contributions

in the form of donated equipment,

poIling services it did not pay for,

deposits from unknown sources, and

amended contracts that benefited the

committee. The committee demonstrated that some of these were

legally permissible. Apparent

prohibited contributions of $112,100

remain, however, and the committee

is to repay this amount to the U.S.

Treasury.

(continued on pag e 6)

5
Federal Election Commission RECORD

Audits

(continued from page 5)

Nonqualified Campaign Expenses

The Commission made an initial

determination that the committee

repay the U.S. Treasury $78,625 for

nonqualified campaign expenses,

including duplicate payments and

noncampaign-related payments,

such as payments for lost vehicles.

Expenditure Limitation

The general committee made

expenditures totaling $267,840 in

excess of the spending limitations.

The compliance fund is to reimburse

this amount to the committee,

thereby eliminating the excessive

amount and the need to make a

repayment to the U.S. Treasury.

Income Earned by the General

Committee

The general committee earned

income from federal funds, mainly

from deposits in an interest bearing

escrow account. The Commission

made an initial determination that

the committee pay $6,646 to the

U.S. Treasury.

Stale-Dated Committee Checks

A total of $57,175 in checks

issued by the committee and the

compliance fund were not cashed.

The committee and the fund are to

pay the U.S. Treasury the value of

these stale-dated checks...

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6

Court Cases

(continued from page f)

House, sat on the Commission in

violation of the Constitution's

separation of powers (see the

December 1993 Record for a

summary of the appeals court's

decision).

Following the appeals court's

decision, the Commission took

several steps to ensure the uninterrupted enforcement of the federal

election law. The agency:

• Reconstituted itself as a sixmember body, comprising only

those commissioners appointed by

the President;

• Ratified, in its reconstituted form,

the regulations, forms, advisory

opinions, audits, compliance

matters and litigation issued and/or

initiated by the former Commission; and

• Filed a petition for a writ of

certiorari with the Supreme Court.

Supreme Court Decision

The FEC's petition to the Supreme Court was filed within the

90-day filing period mandated by

law, but it was filed without the

authorization of the Solicitor

General. The Court contrasted the

language at 2 U.S.c. §437d(a)(6)

with thatof26 U.s.C. §§9010(d)

and 9040(d) to reach the conclusion

that the FEC lacked standing to

bring this case. The Title 2 statute

I empowers the FEC "to .. . appeal

any civil action . . . to enforce the

provisions of the" Federal Election

Campaign Act. It fails, however, to

explicitly provide the FEC with the

authority to file a writ of certiorari

or otherwise conduct litigation

before the Supreme Court. By

contrast, the Court stated, the Title

26 statute does specifically provide

the FEC with the authority "to

petition the Supreme Court for

certiorari to review" judgments in

actions to enforce the Presidential

election fund laws. The Court

interpreted the discrepancy in the

February 1995

language of these two statutes to

indicate congressional intent to

restrict the FEC's independent

litigating authority at the Supreme

Court level to those matters involving the Presidential election laws.

The Court rejected the

Commission's argument that, in the

past, it had represented itself before

the High Court. The Court pointed

out that none of those cases had

challenged the FEC's standing to

petition the Court for a writ of

certiorari.

Although the Solicitor General

authorized the FEC's petition, this

action came months after the 90-day

filing period had closed-"too late

in the day to be effective."

The FEC's petition for a writ of

certiorari, therefore, was dismissed

for want of jurisdiction. The action

leaves standing the ruling of the

court of appeals...

Freedom Republicans, Inc.,

v.FEe

On December 7,1994, the U.S.

District Court for the District of

Columbia dismissed this case, as

instructed on remand by the Court

of Appeals, which had taken notice

of the Supreme Court's October 3,

1994, denial of the appellees'

petition for writ of certiorari.

The Freedom Republicans

brought this case before the court,

alleging that the Republican Party's

delegate-selection process and

system of nonvoting, minority

"auxiliaries" discriminated on the

basis of race, in violation of Title VI

of the Civil Rights Act. See page 3

of the March 1994 Record for an indepth discussion of the case.

U.S. District Court for the

District of Columbia, No. 92-0153

(CRR), December 7, ]994. ..
February / 995

Whitmore and Quinlan v.

FEC, et al.

On December 9, 1994, the U.S.

District Court for the District of

Alaska dismissed this case, in which

the plaintiffs challenged the constitutionality of permitting federal

candidates for the Alaska at-large

seat in the U.S. House of Representatives to accept contributions from

individuals and PACs residing

outside of Alaska.

Joni Whitmore was the Green

Party's 1994 candidate for U.S.

House Representative from Alaska.

She refused out-of-state contributions throughout her campaign.

James Quinlan is a resident of

Alaska. Plaintiffs argued that the

Federal Election Campaign Act (the

Act) permitted out-of-state contributions, which violated their constitutional rights, hurt Ms. Whitmore's

candidacy and diluted Mr. Quinlan's

vote this past election. (See the

September 1994 Record, page 9, for

further discussion of the plaintiffs'

arguments.)

The court found that the plaintiffs

lacked standing to bring this case

against the defendants because they

did not demonstrate injury-in-fact or

causation, or that the relief they

sought would redress the alleged

II1Jury.

An injury-in-fact must affect a

plaintiff in a personal and individual

way. The court deemed Ms. Whitmore's alleged injury to be hypothetical and speculative. The court

found no evidence to suggest that

Ms. Whitmore would have fared

better in the election if out-of-state

contributions had been prohibited.

As to the allegation that the Act

injures Mr. Quinlan by depriving

him of his right to equal protection

and to be governed by a republican

form of government, the court said

there was no injury-in-fact because

all candidates were free to solicit

and receive contributions.

To show causation, a plaintiff's

injury must be traceable to the

challenged action of the defendant.

The court stated that Ms. Whitmore

failed to present any facts indicating

that the government had caused

non-Alaskans to contribute to her

opponents, prevented her from

soliciting such contributions or

prevented non-Alaskans from

contributing to her. The Act, the

court found, does not treat the

plaintiffs any differently than other

American citizens.

Lastly, the court stated that there

was no evidence to show that

prohibiting her opponents from

accepting out-of-state contributions

would redress Ms. Whitmore's

injury; the effect of out-of-state

contributions on her campaign was

wholly speculative.

The Court said" . . . to accomplish the result plaintiffs seek, the

court would have to add to [the Act]

a prohibition [on] nonresident

contributions, which it is not

permitted to do.. .. [R]egulation of

federal elections is more appropriately committed to the legislature,

not to the j udiciary."

Plaintiffs filed an appeal with the

Court of Appeals on December 22,

1994.

U.S. District Court for the

District of Alaska, Civil Action No.

A94-289 CIv(JWS), December 8,

1994. ..

Lytle v. FEC

On December 13, 1994, the U.S.

District Court for the Middle District

of Tennessee dismissed this case

without prejudice due to plaintiffs

failure to attend the December 9

initial case management conference.

Terry L. Lytle, an independent

U.S. Senate candidate, had asked the

court to find it unconstitutional for

U.S. Senate candidates in Tennessee

to accept contributions from out-ofstate sources. See page 10 of the

January 1994 Record for a further

discussion of Mr. Lytle's case.

U.S. District Court for the Middle

District of Tennessee, No. 3-94-

0946, December 13, 1994. ..

Federal Elect ion Commissio n RECORD

New Litigation

FEC v. Rick Montoya, et at.

The FEC asks the court to find

that the defendants violated the

terms of the conciliation agreement

they entered into in March 1994

(MUR 3444), and to order them to

pay $3,000, as stipulated in the

agreement, plus interest calculated

from May 15, 1994, until the date

on which the amount is paid in full.

Additionally, the FEC asks the court

to impose a $5,000 civil penalty on

the defendants for failing to comply

with the terms of the agreement.

U.S. District Court for the

District of Columbia, No. 94-2675,

I December 13, 1994.

Wilson , et at. v. U.S.A., et at.

Plaintiffs in this case ask the

court to declare that the National

Voter Registration Act is unconstitutional and to enjoin the defendants

from enforcing it, unless Congress

appropriates complete funding for

its implementation.

The State of California and its

governor, Pete Wilson, allege that

the Act violates the Tenth Amendment by impinging on the state's

sovereign right to allocate its

budgetary resources as it determines. The Tenth Amendment states

that powers not delegated to the

federal government and not prohibited to the states by the Constitution

are reserved to the states.

The plaintiffs estimate the cost of

implementing the Act in California

to equal or exceed $20 million.

These costs are associated with the

preparation of a National Voter

Registration Form, the processing

and distribution of this form,

assistance to citizens in completing

the form, the modification of the

state's drivel" S license application

form, and other costs associated

with other obligations imposed upon

I state agencies by the National Voter

Registration Act. Although the

(continued on page 8)

7
Federal Election Commission RECORD

Court Cases

(continuedfrom page 7)

federal government is expected to

cover a portion of the costs, the

amount of federal assistance has not

yet been determined, and it is not

expected to fully cover all expenses.

U.S. District Court for the

Northern District of California, No.

C94-4364VRW, December 20,

1994...

Federal Register

Federal Register notices are

available from the FEC's Public

Records Office.

1994-18

11 CFRParts 9003-9038: Public

Financing of Presidential

Primary andGeneral Election

Candidates; Extension of

Comment Period (59FR64351,

December 14,1994)

1994-19

11 CFR Part 8: National Voter

Registration Act; Technical

Amendment, Final Rule (59FR

64560, December 15, 1994)

1995-1

11 CFRPart 110:

Communications Disclaimer

Requirements; Notice of Public

Hearing (60 FR4114, January 20,

1995)

1995-2

II CFR Parts 9003-9038

Public Financing of Presidential

and General Election Candidates;

Notice of Public Hearing (60 FR

4114, January 20, 1995)

1995-3

11 CFR Part I: Privacy Actof

1974; New and/or Revised

Systems of Records; Notice of

Effective Date (60 FR 4165,

January 20, 1995)

1995-4

II CFRPart I: Privacy Act; New

Exempt System of Records; Final

Rule (60 FR4072, January 20,

1995)

8

Regulations

Public Hearing on Proposed

Changes to Public Funding

Rules

The FEC will hold a public hearina on proposed changes to the regulations governing the public funding

of Presidential primary and general

election candidates on February 15.

It will take place at 10a.m. in the

Commissionmeetingroom on the

ninth floor of the FEC building at

999 E Street, NW, Washington, D.C.

The hearing is being held in response

to commentsreceived on the Notice of

Proposed Rulemaking publishedin the

Federal Register last October 6 (59

FR 51(06).

The proposed regulations raise a

variety of issues, including negligent handling of public funds, reimI bursement for the use of government

aircraft and several proposals affecting the Commission's audit process.

See the November 1994 Record for

a more detailed description of the

proposed rules. .

The Commission is also considering a petition for rulemaking filed

by the Center for Responsive PoJi~

tics. The petition urges the Cornmission to repeal the rules permitting a

publicly financed general election

candidate to establish a separate

legal and accounting compliance .

fund, which can be used for speerfied expenses and can accept private

contributions.

Notice of the hearing was issued

in the Federal Register (60 FR 4114,

January 20, 1995). Copies of this

notice and the proposed regulations

notice may be ordered from the

FEC's Public Records Office. Call

800/424-9530 (then press 3 if using

a touch tone phone) or 202/219-

4140...

February 1995

Communications Disclaimer

Requirements

The FEC will hold a public

hearing on proposed changes to the

disclaimer regulations for campaign

communications on March 8 at 10

a.m. in the Commission meeting

room, located on the ninth floor of

the FEC building at 999 E Street,

NW Washington , u , D.C. The hearing

is being held in response to comments received on the Notice of

Proposed Rulemaking published in

the Federal Register last October 5

(59 FR 50708).

The proposed rules include a

proposal to presume that all communications by candidate committees

and party committees that mention a

candidate constitute express advocacy and therefore require a disclaimer. Further the proposed rules

would require oral disclaimers to

accompany oral communications

and solicitations. The rules also

contain proposed definitions for

"direct mail" and for the "clear and

conspicuous" disclaimer display

requirement. For further details on

the proposed rules, refer to the

article on the regulations appearing

on the front page of the November

1994 Record.

Notice of this hearing was issued

in the Federal Register (60 FR 4114,

January 20, 1995). Requests to

testify must be received in writing

by the FEC on or before February

22. Persons requesting to testify

must accompany their request with

written comments on the proposed

rules if such comments were not

previously filed. Requests to testify

and any accompanying comments

must be addressed to Ms. Susan E.

Propper, Assistant General Counsel,

999 E Street, NW, Washington, DC

20463.

Copies of the public hearing

notice and the proposed regulations

notice may be ordered from the

FEC's Public Records Office. Call

800/424-9530 (then press 3 if using

a touch tone phone) or 202/2 I9-

4140...
February /995

New FEe System of Records

Under Privacy Act

A new system of records bec ame

effective on January 20. A notice on

this matter appeared in the October

27 Federal Register (59 FR 53946).

This notice was accompanied by a

notice of proposed rulemaking to

exempt a new records system,

" Inspector General Investigative

Files," from certain provisions of

the Privacy Act of 1974 . The FEC

did not receive any comments on

either notice.

The rules exempting the "Inspector General Investigative Files"

from disclosure under certain

circumstances will become effective

on February 21 , 1995 (60 FR 4072,

Janu ary 20, 1995). The Inspector

General's office has substantial

investigatory and enforcement

authority that would be compromised if these records were not

protected from routine disclosure .•

800 Line

Administrative Termination

Th is article, written for authorized committees of candidates,

explains administrative termination

procedures. Administrative termination can occur in two ways: a

committee may be granted a request

to be administratively terminated or

the Commission may , at its own

initiative, administratively term inate

a committee.

This is the final article in a series

of three articles on debt retirement ,

debt settlement and termination by

ca ndidate committees. Th e first

article, "Retiring Campaign Debts,"

was published in the November

1994 issue. The second article,

"Ca ndidate Committee Termination

and Debt Settlement," was published in the December 1994 issue.

If you have any questions after

reading this article , ca ll the information Division at 800/424-9530 (press

I if using a touch tone phone) or

202/219-3420.

Criteria for Administrative

Termination

An authorized committee that

wishes to terminate but cann ot reach

settlement agreements with its

creditors may ask the FEC for

administrative termination. II CFR

102.4. (Committees without debt

need only have their termination

report approved by the FEC to

terminate . See the second article in

this series in the December 1994

Record, page 1.)

A committee is not eligible for

administrative termination if it is:

• Involved in any matter before the

Commission (such as a MUR,

litigation or an audit); or

• An authorized committee of a

federal candidate who is currently

seeking election.

Otherwise, the Commission will

consider the foll owing factors when

determining a committee's eligibil -

ity for administrative termination:

• The committee 's aggregate

reported financial activity in one

year is less than $5,000.

• The committee' s reports disclose

no receipt of contributions for the

previous year.

• The committee' s last report

disclosed minimal expenditures.

• The committee 's primary purpose

for filin g its reports has been to

disclose outstanding debts and

obligations.

• The committee's last report

disclosed that the debts owed to

the committee were not substantial.

• The committee's outstanding debts

and obligations do not appear to

present a possible violation of the

Federal Election Campaign Act 's

(the Act's) contribution prohibitions or limitations.

Federal Election Commission RECORD

• The committee's outstanding debts

and obli gations exc eed the total of

the committee' s reported cash-onhand bal ance.

II CFR 102.4(a) and FEC

Directive 45 .

Procedures for Requesting

Administrative Termination

When requesting administrative

termination, the committee' s

treasurer should set forth the

committee 's eligibility in writing,

based on the factors listed above. In

addition, with resp ect to each

outstanding debt listed on the last

report, the committee's request

should describe:

• The term s and conditions of the

initial exten sion of credit;

• Steps taken by the committee to

repay the debt; and

• Efforts mad e by the creditors to

obtain payment.

Requests should be addressed to

the Commission's Reports Analysis

Division.

On ce the Commission completes

its review of the request, the committee will be sent a written notification of the Commission 's approval

or disapproval. Committees must

continue to file regular reports until

the administrative termination request

has been approved. Directive 45.

FEC-Initiated Administrative

Termination

Peri odic ally, the FEC reviews its

data bases to identify committees

that appear elig ible for administra -

tive termination in an effort to purge

inactive committee s from the FEe's

computer records.

Committees that qualify will receive a notice informing them that

they will be administratively terminated. Th ose commi ttees not wishing to terminate mu st submit to the

FEC a written statement so stating

within 30 days of receipt of the

administrative term ination notice.

For more information, see FEC

Dire cti ve 45 . •

9
Federal Election Commission RECORD

Advisory

Opinions

Advisory Opinion Requests

Advisory opinion requests

(AO Rs) are avai lable for review and

commen t in the Publ ic Records

Office.

AO R 1994-40

Fulfilling FEC requiremen ts for

preserving reco rds by using microfilm instead of paper. (Alliance for

American Leaders hip; December

2 1, 1994; 2 pages)

AO R 1995-1

MU R respondents' selected

disclosure of their responses to a

complaint. (Arthur Block, January

4, 1995, 3 pages plus 3-page attachment)

AO R 1995-2

Application of definition of

member to individuals holding seats

on commodities exchange that are

benefic ially own ed by member

firms. (NYMEX and NYMEX PAC,

January 5, 1995, 6 pages)

AO R 1995-3

Simultaneo us fund raising by one

cand idate for dual candidacy

(Se nate and Presidency). (Friends of

Phil Gra mm '96, January 11, 1995,

3 pages)

AO R 1995-4

Purchase of lease d car by PAC

established by retired Congressman .

(Congressman Douglas Applega te,

Jan uary 13, 1995, I page plus 10-

page attachment) ..

Alternative Disposition of

Advisory Opinion Requests

AO R 1994-14

The Commission closed this AO R

without issuing an opinion beca use

necessary facts were not submi tted.

The requ est was made by the

10

Tsakanikas for U.S. Congress/

District 19 Committee and con -

cerned the ownership of credit card

points earned by the candidate by

using his credit card for campaign

expenses. ..

Compliance

MURs Released to the Public

Listed below are summaries of

FEC enforce men t cases (Ma tters

Under Review or MURs) rece ntly

released for public review. This

listing is based on the FEC press

releases of December 8, 20 and 22,

but it does not incl ude the 45 MURs

in which the Commission took no

action. Files on closed MURs are

available for review in the Public

Records Office.

MUR 2619/Pre-M UR 240

Respondents (all in CA):

(a) Antonovich for Senate Committee, Thomas B. Silver, treasurer;

(b) Michael Antonovich; (c) Ae tna

Equi ty Financing Company, Inc.,

Abraham Spiegel, president (successor to Remi ngton Investments,

Incorporated)

Complainant: FEC initiated;

De partment of Justice referra l

Subject: Corporate contributions;

failure to disclose loan properly and

timely; excessive co ntributions;

failure to refund general election

contributions within reasonable

time; inaccurate reporting

Disposition: (a) and (b) $37,000

civi l penalty; refund of $5,322 .50 in

contributions to contributors or U.S .

Treasury; amendment of reports;

(c) $ 15,000 penalty

MUR 2991

Respondents: (a) NRA Political

Victory Fund , Grant A. Wills,

treas urer (DC); (b) Nationa l Rifle

Association- Ins titute for Legislation

Action (DC)

February 1995

Com plainan t: FEC initia ted

Subject: Corporate contributions

Disposition: (a) and (b) Probable

cau se to believe; litigation initiated;

Supreme Co urt dismissed case for

lack of jurisdiction in 1994

MUR 3472

Responden ts: (a) People for

Boschwitz 1990, Sco tt Johnson,

treasurer (MN ); (b) Ester

Sch neerson (NY); (c) Abraham

Barber (NY); (d) St. Paul Companies Inc. Volunteer Committee for

Good Federal Governmen t, Karen

L. Himle, treas urer (MN); (e) Perry

Mendel (AL)

Complainant: FEC initiated

Subject: Excessive con trib utions;

reporting undesignated con trib utions

as designated before receiving

written redesignations from con -

tributors

Disposition: (a) $ 16,500 civil

penalty; (b) $750 civi l penalty;

(c) $500 civil pena lty; (d) and

(e) reason to believe but took no

further act ion

MUR 3540

Respondents: (a) Prudential

Sec urities, Inc. (NY); et al. (b)-(j)

Com plainant: FEC initiated

Su bject: Corporate co ntributions

(use of cor pora te facilities and

personnel for feder al cand idate

fundra ising)

Disposition: (a) $550,000 civil

penalty; (b)-U) reason to believe but

took no further action; sent admon -

ishment letters

MUR 3541/Pre-MUR 260

Respondents: (a) Vincent C.

Schoemehl, Jr. (MO); (b) Citizen s

for Schoemehl Committee. Nancy

Rice, treasurer (MO); (c) John M.

Suarez (MO); (d) Jose Antonio

Boveda, Tippins Development, Ltd.

I (Spain); et al. (e)-(g)

Compla ina nt: Carnahan for

Governor Campaign (MO )

Su bject: Contributions by foreign

nationals

Disposition: (a) and (b) $ 10,000

civ il pena lty; (c) $7,000 civil
, Februarv /995

penalty; (d) $7,000 civil penalty;

(e)-(g) reason to believe but took no

further action

MUR 3852

Resp ond ents: (a) Friends of

Marjorie Margolies-Mezvinsky,

Betsy Klein, treasurer (PA); et al.

(b)-(j) .

Complaina nt: National Republican

Congressional Committee (DC)

Subject: Corpora te contributions

Disposition: (a)-(j) No reason to

believe

MUR3855

Respondents: (a) Friends of Andrea

Seastrand for Congress Committee,

Pete Agalos, treasurer (CA); et at.

(b)-(d)

Complainant: Stephen P. Anderson

(CA)

Subjec t: Use of state campaign

funds for federal campaign; failure

to register and report; excessive

contributions

Disp ositi on: (a)-(d) No reason to

believe

MUR 3937

Respond en ts: (a) Friends of Andrea

Seastrand for Congress Committee,

Pete Agalos, treasurer (CA); et at.

(b)-(d)

Complaina nt : Mike Stoker for

Congress Committee (CA)

Subject: Use of state campaign

funds for federal campaign; failure

to register and report; excessive

contributions

Disposition: (a)-(d) No reason to

believe

MUR 4084

Respondents: Republican State

Committee of Delaware, Thomas 1.

Shopa, treasurer

Complainant: FEC initiated

Subject: Failure to file report on

time

I Disposition : $2,400 civi l penalty .

Federal Election Commission RECORD

Index

The first number in each citation

refers to the "number" (month) of

the 1995 Record issue in which the

article appeared. The second

number, following the colon,

indicates the page number in that

issue, For example, " 1:4" means

that the article is in the January

issue on page 4.

Court Cases

FEC v.

- Montoya, 2:7

- NRA Political Victory Fund, 2:1

v. FEC

- Democratic Senatorial Campaign

Committee (93-1321), 1:10

- Freedom Republicans, 2:6

- Lytle, I :10, 2:7

- Whitmore, 2:7

- Wilson, 2:7

Reports

Schedule for 1995, 1:4

800 Lin e Articles

Administrative Termination, 2:9

Change of Address

Political Committees

Treasurers of registered political committees automatically receive the Record. A change of.ad?ress ?y a .

political committee(or n~ chang.c to. information disclosed on the Statement of Organization) must, by law, be

made in writing on FEe Form I or by letter. The treasurer

must sign the amendment and tile it with the Secretary of.

the Senate, theClerkof the House or the FEC(as appropnate) and with the appropriate state office.

Other Subscribers

Record subscriberswhoare notregistered political

committees should include the following information

when requesting a changeof address:

• Subscription number (located on the upper left corner

of the mailing label);

• Subscriber's name;

• Old address; and

• New address.

Subscribers (other than political committees) may

correct their addresses by phone as well as by mail.

11