June 2001 Federal Election Commission Volume 27, Number 6

Compliance Regulations Election

Administration

Notice of Proposed

Rulemaking on Reporting of

Independent Expenditures,

Last-Minute Contributions

On May 3, 2001, the Commission

approved a Notice of Proposed

Rulemaking (NPRM), which seeks

comment on proposed changes to

the procedures for filing certain

reports of independent expenditures

and last-minute contributions. The

notice was published in the May 9,

2001, Federal Register (66 FR

23628). The proposed rules are

meant to implement statutory

changes to the Federal Election

Campaign Act (the Act) required by

Public Law (P.L.) 106-346, enacted

on October 23, 2000. The proposed

rules also codify current procedures

for filing reports on last-minute

contributions (i.e., 48-hour notices).

The new filing methods are intended

to speed up disclosure and provide

filers with more flexibility.

Filing Deadline

Under current regulations, reports

of independent expenditures of

$1,000 or more made less than

twenty days but more than twentyfour hours before an election (“24-

hour notices”) are considered timely

(continued on page 2) (continued on page 4)

Advisory Panel on Election

Administration Airs Concerns

Voting technology and standards,

election management guidelines,

election reforms and adequate

funding for the Federal Election

Commission’s Office of Election

Administration (OEA) were primary

topics of discussion May 4-5, 2001,

at a conference of the OEA’s

Advisory Panel in Baltimore. The

Advisory Panel, established in 1976,

is comprised of 20 state and local

election officials from around the

nation. The Panel advises the FEC

on the needs of election administrators and how the OEA might best

serve those needs.

Panel members at the conference

expressed concerns about securing

sufficient funding for the OEA,

formerly known as the National

Clearinghouse on Election Administration. They affirmed that the

OEA’s research and clearinghouse

functions provide necessary resources for improving the administration of elections. They expressed

support for additional and continued

funding for the OEA’s efforts, and

they noted that their most immediate

concern is support for the Voting

Systems Standards (VSS) Program.

Table of Contents

Regulations

1 Independent Expenditure

Reporting Rulemaking

3 Coordinated General Public

Political Communications

3 Federal Register

Election Administration

1 OEA Advisory Panel Meeting

Alternative Dispute Resolution

4 ADR Program Resolves Cases

Administrative Fine Program

5 Committees Fined

5 Disclosure Improved

6 Use of Civil Money Penalties

6 Advisory Opinions

Court Cases

8 FEC v. Friends for Fasi

9 Christine Beaumont v. FEC

9 On Appeal

Publications

9 Disclosure Directory Available

Budget

10 FY 2002 Request

Reports

10 Arizona State Filing Waiver

Outreach

10 Public Appearances

10 June Conference

Commission

11 FEC Semi-Finalist in

“Innovations” Competition
Federal Election Commission RECORD June 2001

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/694-1100

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

Danny L. McDonald, Chairman

David M. Mason, Vice Chairman

Karl J. Sandstrom, Commissioner

Bradley Smith, Commissioner

Scott E. Thomas, Commissioner

Darryl R. Wold, Commissioner

James A. Pehrkon, Staff Director

Lois G. Lerner, Acting General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Amy Kort, Editor

Jim Wilson, Associate Editor

http://www.fec.gov

filed if they are postmarked for

certified or registered mail within 24

hours of the time the independent

expenditure was made. Under the

statutory changes and the proposed

rules, 24-hour notices would be

considered timely filed only if they

were received by the Commission or

Secretary of the Senate1

 within 24

hours of the time the independent

expenditure was made.

The Commission also proposes to

clarify when an independent expenditure is “made.” The proposed

definition states that an independent

expenditure is made at the earliest of

three possible events:

Regulations

(continued from page 1)

• When a written contract, promise

or agreement to make the independent expenditure is executed;

• When the communication is first

disseminated to the public; or

• When the person making the

expenditure pays for it.

The Commission seeks comments

on this proposed definition—

specifically, on whether this is an

accurate reflection of when an

independent expenditure is likely to

have been “made.”

Methods of Filing

To assist filers in meeting the

filing deadline, the Act and the

proposed rules would allow 24-hour

notices to be filed by fax machine or

electronic mail. Persons other than

political committees also would be

allowed to fax or e-mail any reports

of independent expenditures filed

under the regular reporting schedules. Electronic filers would have to

continue to file all reports of

independent expenditures using the

Commission’s electronic filing

system.

The proposed revisions would

also clarify that 24-hour notices are

not among those reports considered

timely filed when postmarked for

registered or certified mail.

The statutory changes also

require that the Commission provide

methods of verification of documents, other than by signature, for

all purposes, including certification

under penalties of perjury. Under

current regulations, the forms used

to disclose independent expenditures (i.e., FEC Form 5, Schedule E

or a signed statement) must contain

a notarized certification, under

penalty of perjury, stating whether

the expenditures were “coordinated”

with any candidate, authorized

committee or agent thereof and

whether the expenditures were made

by a qualified nonprofit corporation.2

 11 CFR 114.10.

The Commission is proposing to

allow filers to self-certify 24-hour

notices. This means that, in the case

of 24-hour notices, notarization

would no longer be required. The

proposed regulations set forth two

methods for verifying 24-hour

notices of independent expenditures.

Reports filed in paper form (e.g., by

hand delivery or fax machine)

would be verified by the filer’s

signature beneath the certification

language. Reports filed by e-mail

would be verified by requiring the

filer to type his or her name beneath

the certification language.

The Commission seeks comments

on this and any other methods of

certification (e.g., electronic notarization or digital signatures).

Proposed Changes to Electronic

Filing Program

Under current regulations, those

filers participating in the

Commission’s electronic filing

program must submit a paper copy

of Form 5 or Schedule E, along with

the electronic copy, in order to file a

notarized document. In order to

allow all electronic filers to comply

with the new requirement that 24-

hour notices be received within 24

hours of the time when the independent expenditure was made, the

Commission proposes to drop Form

5 and Schedule E from the list of

reports for which a paper copy

follow-up is required. The Commission proposes to require electronic

filers to verify all reports of inde1

 The Secretary of the United States

Senate is the proper recipient of reports

of independent expenditures that either

support or oppose only Senate candidates. 11 CFR 104.4(c)(2).

2

 The Commission also requests

comments on whether to either:

• Add to its regulations a requirement

that those who file a signed statement instead of Form 5 certify that

the expenditure was not made to

finance, disseminate, distribute or

republish campaign materials

prepared by a candidate or a

candidate’s agent or committee; or

• Remove this certification language

from Form 5 and Schedule E.
June 2001 Federal Election Commission RECORD

3

pendent expenditures using the same

process that they would use to file

any other electronic report.

Reports Available Within 24

Hours

The statutory changes require the

Commission to make an electronically-filed document accessible on

the Internet within 24 hours after the

document is received by the Commission. The Commission proposes

making all reports of independent

expenditures that were filed by fax,

e-mail or the Commission’s electronic filing system available on the

Commission’s Web site within 24

hours of receipt.3

Reports of Last Minute

Contributions (48-Hour Notices)

The Commission also proposes

revising its regulations regarding

reports by authorized committees

receiving contributions of $1,000 or

more made less than 20 days but

more than 48 hours (“48-hour

notices”) before the day of an

election. The Commission has for

some time allowed authorized

committees to file these reports by

fax and, more recently, on-line in

addition to other permissible filing

methods. The proposed revisions

would codify fax and e-mail as

appropriate additional filing methods.

Commenting on Proposed

Regulations

Comments must be received on

or before June 8, 2001. All comments should be addressed to Ms.

Rosemary C. Smith, Assistant

General Counsel, and must be

submitted in either written or

electronic form. Written comments

should be sent to the Federal

Election Commission, 999 E Street,

NW., Washington, DC 20463.

Faxed comments should be sent to

202/219-3923, with printed copy

follow-up to insure legibility. Email comments should be sent to

IndyExpRep@fec.gov. Those

sending comments by electronic

mail must include their full name, email address and postal address

within the text of their comments.

Comments that do not contain this

information will not be considered.

For further information, contact

Ms. Rosemary C. Smith, Assistant

General Counsel, or Ms. Cheryl

Fowle, Attorney, 999 E Street, NW.,

Washington, DC 20463, 202/694-

1650 or 800/424-9530.✦

3

 Since reports of independent expenditures that support or oppose only

Senate candidates are filed with the

Secretary of the Senate, these reports

may not be available on the

Commission’s Web site within 24 hours

of receipt by the Secretary of the

Senate.

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 2001-5

General Public Political

Communications Coordinated

with Candidates and Party

Committees; Independent

Expenditures; Announcement of

Effective Date (66 FR 23537,

May 9, 2001).

Notice 2001-6

Independent Expenditure

Reporting; Notice of Proposed

Rulemaking; (66 FR 23628, May

Announcement of Effective 9, 2001).

Date for General Public

Political Communications

Coordinated with Candidates

and Party Committees;

Independent Expenditures

The Commission’s new rules on

coordination of general public

political communications with party

and candidate committees became

effective on May 9, 2001. See

Federal Register Announcement of

Effective Date (66 FR 23537, May

9, 2001).

The new rules define what is

meant by “coordinated expenditures,” through the addition of new

section 100.23 to 11 CFR. Expenditures that are coordinated with a

candidate or a party are considered

in-kind contributions and are subject

to the limits, prohibitions and

reporting requirements of the

Federal Election Campaign Act.

Under 11 CFR 100.23(c), an

expenditure for a general public

political communication is considered to be coordinated with a

candidate or party committee if the

communication is paid for by any

person other than the candidate’s

authorized committee or a party

committee and is created, produced

or distributed:

• At the request or suggestion of the

candidate, the candidate’s authorized committee, a party committee

or their agents;

• After one of these persons or

parties has exercised control or

decision-making authority over the

content, timing, location, mode,

intended audience, volume of

distribution or frequency of

placement of that communication;

or

• After substantial discussion1

 or

negotiation between the purchaser,

creator, producer or distributor of

the communication and the candidate, the candidate committee, the

1

 Under 11 CFR 100.23(c)(2)(iii),

substantial discussion or negotiation

may include one or more meetings,

conversations or conferences about the

value or importance of a communication for a particular election. The

Commission clarified that whether

these discussions or negotiations

qualify as “substantial” depends upon

their substance rather than upon their

frequency.

(continued on page 4)
Federal Election Commission RECORD June 2001

4

party committee or their agents

that results in collaboration or

agreement about the content,

timing, location, mode, intended

audience, volume of distribution or

frequency of placement of the

communication.

In addition, the definition of

“independent expenditure” at 11

CFR 109.1 has been revised to

conform with the new rules at 11

CFR 100.23.

You many obtain a free copy of

the final rules as they appeared in

the Federal Register (65 FR 76138)

through the FEC Faxline. Dial 202/

501-3413 and request document

246. For a summary of the new

rules, see the January 2001 Record,

p. 2.✦

Regulations

(continued from page 3)

Election Administration

(continued from page 1)

The FEC produced the first

national voluntary VSS for computer-based equipment in 1990.

These standards are used by the

National Association of State

Election Directors (NASED) in its

national program, which provides

for independent, third-party testing

of voting systems. The OEA has

been coordinating an update of these

standards with the NASED Voting

Systems Standards Board, which

oversees the national testing process.

The draft of the revised VSS is

scheduled to be released for public

review and comment in two segments, Volume I in late June and

Volume II at the end of October

2001. Volume I will contain standards for the overall performance of

voting systems. Volume II will

contain criteria for the subsequent

testing of automated vote tabulation

systems by certified independent

test authorities. The OEA will

review recommendations obtained

during a public comment period,

and it plans to incorporate appropriate suggestions into the next published version of the standards.

The FEC has requested $3

million in supplemental funds for

enhancement of the OEA, telling

Congress in its proposal that the

funds are sought “to better assist

state and local election administrators, who are responsible for administering federal elections.” The FEC

would direct a large portion of this

funding toward further improving

the VSS.

Additional details are available in

a news release dated May 9, 2001.

The release is available:

• On the FEC Web site at http://

www.fec.gov/news.html; and

• From the Public Records (800/424-

9530, press 3) and Press Offices

(800/424-9530, press 5).✦

Alternative

Dispute

Resolution

ADR Program Resolves Four

More Cases

During March, April and May,

2001, the Commission accepted four

more agreements under the Alternative Dispute Resolution (ADR)

program, bringing the total number

of agreements reached to 12. The

respondents, the alleged violations

of the Federal Election Campaign

Act and the penalties assessed are

listed below.

On May 10, 2001, the Commission reached agreement with the

Liberal Party of New York (the

Party). The Party agreed to pay a

civil money penalty of $6,000 for

failure to reconcile a cash-on-hand

discrepancy between its amended

1998 Post-General report and the

1998 Year-End report. The Party

also agreed to file amended 1998

Post-General and 1998 Year-End

reports and will attend a Commission-sponsored seminar on reporting

requirements.

On May 10, 2001, the Commission reached agreement with the

Illinois Senate Victory Fund (Victory). Victory agreed to pay a civil

money penalty of $1,500 for failure

to provide a Schedule B for transfers

for its 1998 October Quarterly and

1998 Post-General reports. Victory

also will file amended 1998 October

Quarterly and 1998 Post-General

reports with the required Schedule B.

On April 24, 2001, the Commission reached agreement with District

1199C National Union of Hospital

and Health Care Employees Political Action Fund (the Fund). The

Fund agreed to pay a $2,000 civil

money penalty for failure to establish a nonfederal account and for the

use of nonfederal funds in connection with a federal election. The

respondent will attend an FECsponsored seminar on reporting

requirements.

On March 6, 2001, the Commission reached agreement with the

Rogers for Congress Committee (the

Committee) and Jerry Spitler, Todd

Spitler and Scott Spitler (Spitler):

• The Committee agreed to pay a

$2,550 civil money penalty for

accepting excessive contributions

and corporate contributions.

Committee staff will attend an

FEC-sponsored seminar on

campaign committee reporting and

will meet with Commission staff to

review reporting procedures; and

• Spitler agreed to pay a $8,200 civil

money penalty for excessive

contributions.

Closed ADR-negotiated settlement summaries are available from

the Public Records Office at 999 E

Street, NW., Washington, DC

20463, or at 800/424-9530 (press

3).✦
June 2001 Federal Election Commission RECORD

5

Committee Civil Late/Nonfiled—

Penalty Report*

Conseco Inc., Concerned

Citizens PAC $675 Late—2000 Sept. M.

Danner for Congress $825 Late—2000 Oct. Q.

Friends of Mark Brewer $8,000 Non—2000 July Q.

Hamilton for Congress $7,000 Late—2000 July Q.

IUE Cmte. on Political Education

International Union/Electronic Eletrical Tech. Salaried Mach. Workers $6,000 Non—2000 Oct. M.

Kilian for Congress $1,800 Non—2000 July Q.

Midnight Sun PAC $500 Late—2000 Sept. M.

Moore for U.S. Senate $700 Late—2000 Oct. Q.

PECO Energy Company PAC $1,800 Non—2000 July Q.

Ray Haynes for US Senate $388 Late—2000 Oct. Q.

Title Industry PAC $800 Late—2000 Oct. M.

United Assoc. of Steam/Pipefitters

Local Union 524 Pol. Action Fund $300 Late—2000 Oct. Q.

U.S. Chamber of Commerce PAC $250 Late—2000 Sept. M.

Venturepac $500 Late—2000 Sept. M.

Administrative

Fines

Committees Fined for Late

and Nonfiled Reports

On April 25, 2001, the Federal

Election Commission publicized its

final action on 14 new Administrative Fine cases, bringing the total

number of cases to 64. Civil money

penalties are determined by the

number of days the report was late

or whether the report was so late as

to be considered not filed, the

amount of financial activity involved and any prior penalties for

violations. Election sensitive

reports, which include reports and

notices filed immediately before an

election, (i.e., 48-hour notices, and

pre-primary, pre-special, pregeneral, October quarterly and

October monthly reports) receive

higher penalties. The committees

listed in the chart at right, and the

treasurers of those committees, were

assessed civil money penalties when

the Commission made its final

determination. Unpaid civil money

penalties are referred to the Department of the Treasury for collection.

Closed Administrative Fine case

files are available through the FEC

Press Office, at 800/424-9530 (press

2) and the Public Records Office, at

800/424-9530 (press 3).✦

Timely Disclosure Improved

Under Administrative Fine

Program

Since the Administrative Fine

Program was implemented with the

2000 July Quarterly report, the

number of reports filed late or not

filed at all has generally decreased.

Reports are considered late if they

are received after the due date, but

within 30 days of that date. Election-sensitive reports are considered

late if they are filed after their due

date, but prior to four days before

the election. (Election sensitive

reports are those filed immediately

before an election and include preprimary, pre-special, pre-general,

October quarterly and October

monthly reports.) Committees filing

reports after these late dates are

considered nonfilers.

 Under the Administrative Fine

Program, the number of reports filed

late declined in each reporting

period—except the monthly report

for August. For some periods, the

decline in the number of late reports

was significant. For example, the

percentage of late year-end reports

decreased from 24 percent for the

year-end 1998 report to 11 percent

for the year-end 2000 report. The

largest percentage drop in the

number of late filers occurred with

recent monthly report filings. In

2000, the number of September

monthly reports filed late dropped

16 percentage points from the 1998

cycle, late November reports

decreased 18 percent from the 1998

cycle and late December reports

decreased 28 percent from the 1998

cycle. Overall, the percentage of all

reports filed late dropped from 21.7

(continued on page 6)

Committees Fined Under Administrative Fine Program

* “M” indicates a monthly report; “Q” indicates a quarterly report.
Federal Election Commission RECORD June 2001

6

percent in 1996 to 15.6 percent in

2000 for comparable reporting

periods.

The number of nonfilers generally has declined from the 1998

cycle, with the exception of the

year-end report and several monthly

reports where the number of

nonfilers has increased from 1998.

The largest percentage decline in

nonfilers occurred with the postgeneral election report, where

nonfilers dropped from 252 in 1998

to 128 in 2000, a 49 percent decrease.

Additional details are available in

a news release dated April 25, 2001.

The release is available:

• On the FEC Web site at http://

www.fec.gov/news.html; and

• From the Public Records Office

(800/424-9530, press 3) and the

Press Office (800/424-9530, press

5).✦

Administrative Fines

(continued from page 5)

Use of Civil Money Penalty

Funds from the Administrative

Fine Program

Funds collected from civil money

penalties assessed under the Administrative Fine Program are not

received or used by the Federal

Election Commission. Instead,

respondents (those who have

violated the law) send funds to a

special government “lockbox”

account. While respondents are

directed to make checks, cashiers’

checks or money orders out to the

Commission, the checks are deposited into the “lockbox” account and

then forwarded to the Department of

the Treasury. Moneys collected

under the Administrative Fine

Program do not affect the

Commission’s appropriation or

budget. Fines that remain uncollected are forwarded to the Department of the Treasury for collection,

as required by the 1996 Debt

Collection Improvement Act.✦

Advisory

Opinions

AO 2001-4

Use of Electronic Signatures

for PAC Contributions by

Payroll Deduction

The Morgan Stanley Dean Witter

& Co. Political Action Committee

(MSDWPAC) may use an electronic

signature system to authorize

payroll deduction contributions

from its restricted class.1

 The

electronic signature system will be

part of a Web site that uses the

standard “click through” process

that forms the basis for much of

Internet commercial activity.

When a payroll deduction or

other check-off process is used to

collect contributions for a separate

segregated fund (SSF), the contributor must provide an affirmative

authorization in order to permit the

deduction.2

 The specific and voluntary intent of the solicited employee

must be manifested in a written

authorization before the actual

deduction of any contributions. See

AO 1997-25. Such authorizations

are often made through the use of a

paper payroll deduction form, where

the employee designates the amount

to be deducted and then indicates

his assent via signature. The signature is required as a unique identifier

of the employee, and it also indicates to the Commission that the

employee authorized his contribution.

In AO 1999-3, the Commission

approved the use of electronic

signatures to authorize payroll

deductions of contributions by

members of the restricted class to an

SSF. The protocols adopted by the

corporation and SSF in that case

ensured that only authorized employees could submit payroll

deduction authorizations. These

protocols included:

• The use of individual passwords

for each employee;

• The use of confirmation e-mail

messages sent after the submission

of the deduction authorization; and

• The ability of contributors to

modify or revoke their authorizations.

SSF’s Web site and the “Clickthrough” Process

In this case, MSDWPAC’s

proposed Internet Web site incorporates the features mentioned above.

The site operates as follows:

1. The first page the user sees

contains a login screen that

requires the user to enter a

personally-unique employee

identification number. This

number will be checked against a

database of eligible restricted

class members. Only those users

whose identification number is

verified as belonging to a member of the restricted class will be

permitted to access the Web site

and proceed to the next series of

Web pages.

2. When the user then clicks on a

screen option from a menu list to

make a “pledge,” a series of

screens appears, which requires

the user to verify his home

address, occupation and e-mail

address. The e-mail address

screen ensures that the user will

be sent an e-mail confirming his

contributions. As before, all of

1

 The “restricted class” personnel of a

corporation consists of the

corporation’s executive and administrative personnel and its stockholders.

The families of these personnel are also

included. See 2 U.S.C. §441b(b)(4)(A)

(i), 11 CFR 114.1(c)(1), 114.1(j) and

114.5(g)(1).

2

 See Federal Election Commission v.

National Education Association, 457

F.Supp. 1102 (D.D.C. 1978), where the

court determined that a reverse checkoff procedure to collect contributions

resulted in involuntary contributions to

an SSF.
June 2001 Federal Election Commission RECORD

7

the above information must be

provided and is checked against

the database for restricted class

employees; this information must

be correctly matched before

access is given to the subsequent

steps in the authorization process.

3. After the entry of the user’s email address, the next screen

gives the user the opportunity to

specify the amount he wishes to

contribute. A statement on the

screen informs the user that the

suggested guideline is merely a

suggestion and that the contributor is under no obligation to

follow it or to make a contribution at all.

4. The final page of the Web site

presents the last step of the

deduction authorization process.

On this page, the user is required

to review a series of Commission-required affirmation statements.3

 The screen presents the

user with the following statement: “By entering your full

name below you are agreeing to

all of the above items,” and then

provides a space for the user to

type his name. Clicking the

“submit” icon provides the

electronic signature of the user.4

While the Commission has not

previously considered the “click

through” process for contributions

made to an SSF, it has previously

approved situations where this

method was used to make contributions to Presidential candidate

committees. See AOs 1999-9 and

1999-22. Furthermore, while past

opinions on Internet contributions

provided a safe harbor for the

security measure a political committee could adopt, once basic security

and verification concerns were

addressed, these opinions did not

purport to restrict or delineate the

specific type of technology that

must be used. See AOs 1999-9 and

1999-3. Therefore, MSDWPAC’s

proposed method of accepting

restricted class payroll deduction

authorization is permissible.

Date Issued: April 19, 2001;

Length: 5 pages.✦

3

 These disclaimers include an acknowledgment that the user is a U.S. citizen

or permanent resident alien, and the

recognition of the political purpose of

the PAC and the uses of contributions

made to the PAC. The affirmation

statements also attest to the user’s

willingness to make the contribution

and that the contribution is not made

with corporate treasury funds or

through a business credit card.

4

 The Commission also concluded that a

second electronic signature method for

the last page on the Web site (where

users view the appropriate disclaimers)

was permissible. This method required

the user to also type his or her Social

Security number below his or her name.

AO 2001-6

Status of State Party as State

Committee of Political Party

The Green Party of Maryland

satisfies the requirements for state

committee status.1

The Federal Election Campaign

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

by virtue of the bylaws of a political

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

at the State level, as determined by

the Commission.” 2 U.S.C.

§431(15). In order to achieve state

committee status under Commission regulations, an organization

must meet two requirements. It must

have:

• Bylaws or a similar document that

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

of a party at a state level; and

• Ballot access for at least one

federal candidate who has qualified as a candidate under Commission regulations.2

The Green Party of Maryland

meets both requirements. It satisfies

the first requirement because its

bylaws set out a comprehensive

organizational structure for the party

from the statewide level down

through local levels, and the bylaws

clearly identify the role of the Green

Party of Maryland.

The Green Party of Maryland

satisfies the second requirement—

ballot access for a federal candidate—in that one individual who

had met the requirements for

becoming a federal candidate gained

ballot access as a candidate of the

Green Party of Maryland in 2000.

This was Ralph Nader as the Party’s

candidate for President.

Date Issued: May 7, 2001;

Length: 4 pages.✦

1

 The Commission notes the description

and statements regarding the Party’s

relationships with the national Green

Party organizations. However, the

requester has not posed any questions

as to the Party’s affiliated status with

these organizations. Therefore, this

opinion does not address issues

regarding the application of the Act or

Commission regulations to the possible

affiliation of the Maryland Green Party

with any other political committee or

organization within the Green party

movement at the local, state or national

levels. See 2 U.S.C. §§433(b)(2),

441a(a)(5)(B); and 11 CFR 110.3(b),

110.3(c)(1).

2

 An individual becomes a candidate for

the purposes of the Act (2 U.S.C.

§431(2)) once he or she receives

contributions aggregating in excess of

$5,000 or makes expenditures in excess

of $5,000. Federal candidates must

designate a principal campaign

committee within 15 days after qualifying as a candidate, and the committee

also becomes subject to registration

and reporting requirements. 2 U.S.C.

§§432(e)(1) and 434(a); 11 CFR 102.1

and 104.1.

(continued on page 8)
Federal Election Commission RECORD June 2001

8

Advisory Opinions

(continued from page 7)

Advisory Opinion Requests

AOR 2001-7

Affiliation of a PAC, sponsored

by a limited liability company, with

SSFs of the companies that are

members and owners of the limited

liability company (Nuclear Management Company PAC, April 12,

2001)

AOR 2001-8

Campaign committee’s purchase

of candidate’s book for distribution

to campaign contributors (Senator

Arlen Specter; May 16, 2001)✦

Court Cases

FEC v. Friends for Fasi;

MUR 4594

On January 19, 2001, the U.S.

District Court for the District of

Hawaii found that Friends for Fasi

violated the Federal Election

Campaign Act (the Act) by accepting foreign national contributions. 2

U.S.C. §441e. This case grew out of

an enforcement matter, MUR 4594,

in which the Commission and

Longevity International Enterprises

(Longevity) had signed a conciliation agreement concluding that

Longevity violated the law by

making prohibited contributions in

connection with an election to a

U.S. public office. 2 U.S.C.

§441e(a) and 11 CFR 110.4(a).

MUR 4594: Prohibited Foreign

National Contributions

Frank Fasi served as Mayor of

Honolulu from 1968 through 1980

and from 1984 through 1994. He

also campaigned for the office of

governor in 1994 and the office of

mayor in 1996. The prohibited

contributions in question were inkind contributions to Mr. Fasi and

his 1996 mayoral campaign committee (Friends for Fasi); specifically,

the contributions resulted from

Longevity discounting the rent for

space in Longevity-owned property,

the Chinese Cultural Plaza Shopping

Center (Cultural Plaza) used by Mr.

Fasi’s campaign.1

Longevity is a Hawaii corporation. All of the original shareholders

of Longevity were foreign nationals

and residents of the Republic of

China. All but one of the members

of Longevity’s original board of

directors were executives of China

Airlines, Ltd. (CAL), a foreign

corporation. As a result, foreign

nationals2

 initially held absolute

control and direction over the

composition of Longevity’s board of

directors. Through 1996, Longevity

was owned, managed and/or controlled by foreign nationals. Foreign

national participation in Longevity’s

management included approving

leases at the Cultural Plaza.

In MUR 4594, the Commission,

on September 14, 1999, found

probable cause to believe that

Longevity, controlled by foreign

nationals, made prohibited in-kind

contributions to Friends for Fasi and

Frank Fasi in the form of belowmarket rental rates for space at the

Cultural Plaza between January

1994 and November 1996. The

Commission subsequently, on

December 29, 1999, entered into a

conciliation agreement3

 with

Longevity in which Longevity

admitted the violation, agreed not to

engage in any similar activity in the

future and paid a civil money

penalty of $75,000.

FEC v. Friends for Fasi:

Acceptance of Prohibited

Contributions

On the same date that the Commission found probable cause that

Longevity made prohibited contributions, it found probable cause that

Mr. Fasi and Friends for Fasi

accepted prohibited contributions.

Mr. Fasi and Friends for Fasi did not

enter into a conciliation agreement,

so the Commission filed a civil

complaint on January 12, 2000,

alleging that Frank Fasi and Friends

for Fasi had violated §441e of the

Act, which prohibits the making and

accepting of foreign national

contributions in connection with any

election to a U.S. public office.

On June 6, 2000, the U.S. District

Court for the District of Hawaii

granted in part and denied in part

defendants’ motion to dismiss the

Commission’s January 12 civil

complaint. Among other things,

defendants had argued that 2 U.S.C.

§441e did not apply to contributions

to nonfederal elections. The court

rejected defendants’ argument,

finding the Commission’s interpre1

 Frank Fasi had a written lease with

Longevity from January 1981 through

February 1984, and he was a month-tomonth tenant thereafter, with no written

lease, until November 1996, when the

premises were vacated. Mr. Fasi’s

written lease provided for a base rent of

more than $1,500 per month. However,

Friends for Fasi, who made all the

rental payments, paid only $800 per

month for that space. (The rent varied

from April 1996 until November 1996.)

According to Longevity, Mr. Fasi and

Friends for Fasi were the only tenants

to rent space in the Cultural Plaza

without a written lease.

2

 A foreign national is an individual

who is not a citizen of the United States

and who is not lawfully admitted for

permanent residence, as defined by 8

CFR 1101(a)(20). See also 2 U.S.C.

§441e(b).

3

 Once the Commission determines

probable cause, it is required, for a

period of at least 30 but not more than

90 days, ”to correct or prevent” the

violation “by informal methods of

conference, conciliation, and persuasion, and to enter into a conciliation

agreement with any person involved.”

§437g(a)(4)(A)(i). The full complaint

procedure can be found at 2 U.S.C.

§437g.
June 2001 Federal Election Commission RECORD

9

tation of §441e to be consistent and

reasonable.4

On January 19, 2001, the U.S.

District Court for the District of

Hawaii, signed a consent judgment,

in which the court:

• Found that Friends for Fasi

violated the ban on contributions

from foreign nationals by accepting the discounted rental space

from January 1995 to November

1996;

• Ordered Friends for Fasi to pay a

$15,000 civil money penalty; and

• Permanently enjoined Friends for

Fasi and its agents, employees,

attorneys, including Frank F. Fasi,

from accepting “something of

value from a foreign national at

less than market value in connection with U.S. elections for public

office.”

See also the August 2000 Record,

p. 14, and the March 2000 Record,

p. 9.✦

4

 The Court granted the motion to

dismiss in part by ruling that any

violations that took place before

January 12, 1995, were beyond the

statute of limitations. It denied the

motion in part by ruling that each

rental payment constituted a separate

violation, so that any payments that

were discounted after January 12,

1995, constituted violations.

Christine Beaumont v. FEC

On April 23, 2001, the U.S. Court

of Appeals for the Fourth Circuit

dismissed as moot a December 22,

2000, Commission appeal that had

requested relief from a preliminary

injunction of the U.S. District Court

for the Eastern District of North

Carolina, Northern Division. That

preliminary injunction, issued on

October 26, 2000, barred the

Commission from relying on,

enforcing or prosecuting violations

of 2 U.S.C. §441(b) and 11 CFR

114.2(b) and 114.10—or any other

parts of the Federal Election Campaign Act (the Act) whose restrictions flow from these provisions —

against North Carolina Right to

Life, Inc., (NCRL), a non-profit,

MCFL-type corporation.1

 In its

order, the Court wrote: “Assuming

that we reverse the district court’s

final judgment, we conclude that the

FEC will not be precluded from

enforcing the challenged provisions

with respect to NCRL’s conduct

during the life of the preliminary

injunction.”

The Commission’s December 22,

2000, appeal had previously been

consolidated with its March 6, 2001,

appeal of the District Court’s final

judgment that the prohibitions on

corporate contributions and expenditures of the Act and Commission

regulations were unconstitutional as

applied to NCRL. The court found

that the statute and regulations

infringed on NCRL’s First Amend1

 In FEC v. Massachusetts Citizens for

Life (MCFL) 479 U.S. 238 (1986), the

Supreme Court concluded that 2 U.S.C.

§441b could not constitutionally

prohibit certain nonprofit corporations

from making independent expenditures.

MCFL was exempt from this ban

because it had the following features:

• It was formed to promote political

ideas and did not engage in business

activities;

• It did not have shareholders or other

persons who had a claim on its

assets or earnings, or who had other

disincentives to disassociate

themselves from the organization;

and

• It was not established by a business

corporation or labor union and had

a policy of not accepting donations

from such entities.

ment rights without a compelling

state interest. See the May 2001,

Record, page 6. The March 6, 2001,

appeal is still pending.

U.S. Fourth Circuit Court of

Appeals, 2:00-cv-2-BO(2).✦

On Appeal

Ralph Nader, et al. v. FEC

On April 30, 2001, the U.S.

Supreme Court denied plaintiffs’

petition for a writ of certiorari to

review a decision by the U.S. Court

of Appeals for the First Circuit

upholding the FEC’s Debate Regulations. Petitioners had asked for the

Debate Regulations to be set aside,

arguing that the regulations were in

excess of the FEC’s statutory

authority under the Federal Election

Campaign Act. This case, originally

filed as Becker v. FEC, was covered

in the November 2000, Record, p. 8,

and in the April 2001, Record, p.

8.✦

Publications

Disclosure Directory of

Federal and State Election

Offices Available

The Combined Federal/State

Disclosure and Election Directory

2001 is now available. This annual

publication provides information on

the national and state agencies

responsible for the disclosure of

campaign finances, lobbying,

personal finances, public financing,

candidates on ballots, election

results, spending on state initiatives

and other financial filings.

The publication, which includes

agency e-mail and Internet addresses, is also available on the

Commission’s Web site,

www.fec.gov. Located in the

“Elections and Voting” section, this

(continued on page 10)

Commission regulations at 11 CFR

114.10 incorporate the MCFL decision.

These regulations establish a test to

determine whether a corporation

qualifies for exemption from the Act’s

prohibition against corporate independent expenditures.
Federal Election Commission RECORD June 2001

10

interactive version provides

hyperlinks to allow viewers to

directly access the home pages of

the state and federal agencies listed.

This version of the publication will

be updated periodically throughout

the year. The Directory is also

available on 3.5” diskette. Paper

copies, which are free, may be

obtained by calling the Public

Records Office at 800/424-9530

(press 3) or 202/694-1120.✦

Publications

(continued from page 9)

Reports

Commission Certifies Arizona

for State Filing Waiver

On April 30, 2001, the Commission certified that Arizona qualified

for a state filing waiver.1

 Consequently, federal committees and

candidates in Arizona no longer

have to file copies of their federal

reports with the Arizona Office of

the Secretary of State. The first

report affected by the waiver was

the 2001 May Monthly Report.✦

1

 The Commission has certified that the

following states and territories qualify

for filing waivers: Alabama, American

Samoa, Arizona, Arkansas, California,

Colorado, Connecticut, Delaware,

Florida, Georgia, Hawaii, Idaho,

Illinois, Indiana, Kansas, Kentucky,

Louisiana, Maine, Maryland, Michigan,

Minnesota, Mississippi, Missouri,

Nebraska, Nevada, New Hampshire,

New Jersey, New Mexico, New York,

North Carolina, North Dakota, Ohio,

Oklahoma, Oregon, Pennsylvania,

Rhode Island, South Carolina, South

Dakota, Tennessee, Texas, Utah,

Vermont, Virginia, Virgin Islands,

Washington, West Virginia, Wisconsin

and Wyoming. Committees that file

their reports at the FEC need not file

copies in these states.

Commission Submits Budget

Proposal for 2002

On March 29, 2001, the Commission sent its fiscal year 2002 budget

proposal to Congress and the Office

of Management and Budget (OMB).

The proposal requests $47.67

million and 375 personnel for FEC

operations. In prior negotiations, the

OMB had recommended $41.4

million and 357 personnel as the

Commission’s 2002 appropriation.

The Commission’s appropriation for

2001 is $40.41 million and 357

personnel.

In a letter accompanying the

formal request, Commission Chairman Danny L. McDonald explained,

“While the FEC is aware of the

general budgetary climate and has

striven to reach agreement with

OMB on our budget request, we did

not reach agreement for the FY

2002 request. Therefore, we must

independently make a special appeal

to pursue the staff and resources

necessary to fulfill our statutory

mission. And, depending upon the

scope of campaign finance reform

legislation under consideration, the

FEC could face significant additional resource needs.” The additional funds and personnel could be

used to expand the Commission’s

Office of Election Administration

Budget

Public Appearances

June 5-8, 2001

International Foundation for

Election Systems

Mexico City, Mexico

Vice Chairman Mason

June 7, 2001

Aristotle

Washington, DC

Kate Miller

June 21, 2001

American League of Lobbyists

Alexandria, Virginia

Liz Kurland

June 28-29, 2001

Center for Alternative Dispute

Resolution

Washington, DC

Allan Silberman

Conference for Labor and

Membership Organizations

On June 11-13, the Federal

Election Commission will hold a

conference tailored to meet the

specific needs of labor and membership organizations. (Note, however,

Outreach

and to support recently-developed

programs, such as Mandatory

Electronic Filing, Administrative

Fines, state waivers and Alternative

Dispute Resolution.✦

that this conference is not for trade

associations, which have rules

unique to them.)

The conference, which will be

held in the Washington, DC area,

will cover the basic provisions of

the federal election law and explain

the rules governing participation of

labor and membership organizations

and their political action committees

(PACs). Workshops will also

address the new electronic filing

requirements, and a representative

from the IRS will be available to

answer election-related tax questions.

Registration

The conference registration fee is

$375. A late registration fee of $10

will be added effective May 26.

Conference registrations are

accepted on a first-come, first-serve

basis. Attendance is limited, and

FEC conferences regularly sell out,

so please register early. Individuals

may register for the conference on

line at Sylvester Management

Corporation’s secure Web page at
June 2001 Federal Election Commission RECORD

11

Index

The first number in each citation

refers to the “number” (month) of

the 2001 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.

(continued on page 12)

www.fec.gov/pages/

infosvc.htm#Conferences or by

calling Sylvester Management

Corporation at 800/246-7277.✦

Commission

FEC Semi-Finalist in

“Innovations” Competition

The Federal Election Commission has been designated one of 99

semi-finalists from some 1,300

applicants in the “Innovations in

American Government” award

competition sponsored by the Ford

Foundation and administered by

Harvard University’s John F.

Kennedy School of Government.

The recognition highlights the

success of the FEC’s “State Filing

Waiver Program.” Initiated in 1999,

the program eliminates the need for

the administration of paper filings of

campaign reports at the state level

by replacing such paper filings with

an Internet-based system of electronic access to reports filed with

the Commission. Since candidates

for federal office are required by

law to file campaign reports with the

FEC, and those reports are rapidly

posted on the Commission’s Web

site (www.fec.gov), the Commission

felt it costly and redundant for states

to continue processing the federal

reports.

To implement the waiver program and encourage state participation, the Commission offered to

provide computer equipment,

Internet capability and training for

state personnel. In December 1999,

12 states applied and received

certification into the program. The

total number of state offices certified to date is 48. Thirty-five states

have accepted the Commission’s

offer to provide computer equipment.

To qualify for an Innovations

award, government programs “must

involve a fresh approach to a

Advisory Opinions

Alternative disposition of 2001-5,

5:6

2000-24: Preemption of state

election law mandating fixed

allocation ratio for administrative

and voter drive expenses, 2:2

2000-27: Status of party as state

committee, 3:6

2000-28: Disaffiliation of trade

associations and their PACs, 2:3

2000-30: Nonconnected PAC’s

receipt and use of securities, 5:1

2000-32: Reporting uncollectable

loan, 1:9

2000-34: Name and acronym of

SSF, 2:5

2000-35: Status of party as state

committee, 1:10

2000-36: Disaffiliation of

nonconnected PACs, 2:5

2000-37: Use of campaign funds to

purchase and present Liberty

Medals, 2:6

2000-38: Registration of party

committee due to delegate

expenses, 2:7

2000-39: Status of party as state

committee, 2:8

2000-40: Donations to legal defense

fund of Member of Congress, 3:7

2001-1: Use of political party’s

office building fund to pay

building renovation costs and

fundraising expenses of building

fund, 4:5

2001-2: Status of party as state

committee, 4:6

2001-3: Use of campaign funds to

purchase an automobile for

campaign purposes, 5:5

2001-4: Use of electronic signatures

for PAC contributions by payroll

deduction, 6:6

2001-6: Status of party as state

committee, 6:7

Compliance

Committees fined under Administrative Fines Program, 2:6, 4:7, 5:7,

6:5

problem of significant concern to a

portion of the U.S. public.” Four

criteria are used to evaluate each

application: originality of the

approach, effectiveness in addressing important problems, value of

services to clients and the potential

for replication in other jurisdictions.

Fifteen finalists will be selected

in late May. The National Selection

Committee will select five winning

programs after a full day of presentations on October 17, 2001, in

Washington, DC. Each of the

winning programs will receive a

$100,000 award, and remaining

finalists will receive $20,000. There

were 1,298 applicants from which

the 99 semi-finalists were chosen.

Commission Chairman Danny L.

McDonald said of the FEC’s

recognition, “The Commission is

proud of this accomplishment as

well as the innovative people who

conceived and implemented it.

Although the entire agency undoubtedly is gratified by this honor, we

enthusiastically share it with the

states and territories participating in

the State Filing Waiver Program.

They readily offered the public

easier access to government’s

electronic information portals,

which leads to increased public

awareness and participation in the

process. Every government official—local, state or federal—should

be pursuing this goal.”✦
FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

Penalty for Private Use, $300

Presorted Standard

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

Printed on recycled paper

Federal Election Commission RECORD June 2001

Index

(continued from page 11)

MUR 4594: Prohibited Foreign

National Contributions, 6:8

MUR 4762: Prohibited union

contributions and other violations,

2:9

MUR 5029: Contributions in the

name of another made by corporation and government contractor,

2:10

Court Cases

_____ v. FEC

– Beaumont, 2:8, 3:2, 5:6, 6:9

– Buchanan, 1:10

– DNC, 2:8. 3:2

– Dole, 5:6

– Miles for Senate, 3:3

– Nader, 4:8, 6:9

– Natural Law Party of the United

States of America, 1:10, 2:8, 3:2

FEC v. _____

– Friends for Fasi, 6:8

Other

– Hooker v. All Campaign Contributors, 1:10

– Hooker v. Sundquist, 4:8

Regulations

Advanced Notice of Proposed

Rulemaking on definition of

“political committee,” 4:1

Notice of Proposed Rulemaking on

reporting of independent expenditures and last-minute contributions, 6:1

Final rules for general public

political communications coordinated with candidates and party

committees; independent expenditures, 1:2, 6:3

Reports

Amendments to Statements of

Organization, 2:1

Arizona state filing waiver, 6:10

California special election, 3:5

Committees required to file tax

returns, 3:4

Nevada state filing waiver, 2:2

Pennsylvania special election, 4:5

Reports due in 2001, 1:4

Virginia special election, 5:6