November 1998 Federal Election Commission Volume 24, Number 11

Table of Contents

Reports

1 Post-General Reporting Reminder

Court Cases

1 RNC v. FEC (98-5263)

2 New Litigation

Publications

2 Updated List of Federal PACs

Available

2 Compilation of FEC Court Cases

Available

 Statistics

4 Republicans Hold Lead in 1997-

1998 Fundraising

5 PAC Contributions Favor

Incumbents by Wide Margin

5 FEC Web Site Offers Easy Access

to Last-Minute Financial Activity

from 1998 Election Cycle

Compliance

6 MUR 4772

6 MUR 4790

6 Federal Register

6 Advisory Opinions

Regulations

9 Soft Money Hearing Set for This

Month

Public Funding

10 Fulani Repayment Stay Lifted

10 Index

Reports

Post-General Reporting

Reminder

The 30-day post-general election

report is due on December 3. Reports

sent by registered or certified mail

must be postmarked by this date. The

post-general report should cover

activity from October 15 (or from the

close of books of the last report filed)

through November 23. The following

committees must file this report:

• All registered PACs and party

committees, even committees with

very little or no activity to disclose. This report is filed in lieu of

the November monthly report for

monthly filers.

• Authorized committees of federal

candidates running in the general

election, including committees of

unopposed candidates.

For more information on reporting dates for political committee

activity during 1998:

• Visit the FEC’s web site at

http://www.fec.gov;

• Dial the automated FEC Faxline at

202/501-3413 (request documents

586 and 587);

• See the reporting tables in the

January 1998 Record; or

• Call and request that the reporting

tables be mailed to you (800/424-

9530 and press 1, or 202/694-

1100). ✦

Court Cases

RNC v. FEC (98-5263)

The U.S. Court of Appeals for the

District of Columbia Circuit denied

the Republican National

Committee’s (RNC’s) and the Ohio

Democratic Party’s (ODP’s) emergency motion for an injunction

pending appeal in this case. The

RNC and ODP had asked the court

to prevent the FEC from enforcing

its allocation regulation 11 CFR

106.5.

The regulation requires that the

RNC, ODP and other party committees pay for a portion of certain

federal election-related advertisement costs with federally permissible funds, or hard money. The

other portion of the advertisements

can be funded with nonfederal

funds, or soft money, which is easier

to raise in large sums.

The RNC filed suit in April

charging that the FEC’s allocation

regulation violated the U.S. Constitution and that the FEC lacked the

authority to promulgate the regulation. The RNC also contended that

the FEC exceeded its authority in

crafting the regulation because the

rule pertains to issue advocacy

communications. See the June 1998

Record, p. 1. The RNC case was

subsequently consolidated with a

similar suit brought by the ODP.

(continued on page 2)
Federal Election Commission RECORD November 1998

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)

800/877-8339 (FIRS)

Scott E. Thomas, Acting Chairman

Lee Ann Elliott, Commissioner

David M. Mason, Commissioner

Danny L. McDonald,

 Commissioner

Karl J. Sandstrom, Commissioner

Darryl R. Wold, Commissioner

James A. Pehrkon, Acting Staff

 Director

Lawrence M. Noble, General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Angela Rucker, Editor

http://www.fec.gov

Court Cases

(continued from page 1)

In June, the U.S. District Court

for the District of Columbia denied

a motion by the RNC and ODP for a

preliminary injunction against the

FEC. See the August 1998 Record,

p. 5. In this latest decision, the

appellate court stated that the

plaintiffs failed to justify why they

had not followed judicial procedures

or satisfied the stringent standards

required in requesting an injunction.

U.S. Court of Appeals for the

District of Columbia Circuit, 98-

5263. ✦

New Litigation

FEC v. Forbes

The FEC asks the court to find

that Malcolm S. “Steve” Forbes, Jr.,

a candidate for the 1996 Republican

nomination for President, the

corporation he directs and his

principal campaign committee

violated the Federal Election

Campaign Act’s (the Act’s) prohibitions against corporate contributions.

In November 1995, while running

for the Republican nomination, Mr.

Forbes took a leave of absence from

Forbes, Inc., but continued to write

the weekly column “Fact and

Comment” for the company’s

flagship publication, Forbes Magazine. In addition, Mr. Forbes continued to be listed as editor-in-chief on

the magazine’s masthead, and he

controlled the length, content and

format of the articles. Excerpts of

these columns also appeared in

another Forbes publication, The

Hills-Bedminster Press. The columns discussed some of the same

themes Mr. Forbes pressed during

his presidential campaign, including

the flat tax, term limits, abortion and

foreign intervention in Bosnia, and

have been valued at $94,900.

Laws and Regulations. The Act

prohibits corporations from making

contributions or expenditures in

Publications

Updated List of Federal

PACs Available

The Commission has published

the 1998 edition of PACronyms, an

alphabetical listing of acronyms,

abbreviations and common names of

political action committees (PACs).

For each PAC listed, the index

provides the full name of the PAC,

its city, state, FEC identification

number and, if not identifiable from

the full name, its connected, sponsoring or affiliated organization.

The index is helpful in identifying PACs that are not readily

identified in their reports and

statements on file with the FEC.

To order a free copy of

PACronyms, call the FEC’s Disclosure Division at 800/424-9530

(press 3) or 202/694-1120.

PACronyms also is available on

diskette for $1 and can be accessed

free under the “Using FEC Services” icon at the FEC’s web site—

http://www.fec.gov.

Other PAC indexes, described

below, may be ordered from the

Disclosure Division. Prepayment is

required.

• An alphabetical list of all registered PACs showing each PAC’s

identification number, address,

treasurer and connected organization ($13.25).

• A list of registered PACs arranged

by state providing the same

information as above ($13.25).

• An alphabetical list of organizations sponsoring PACs showing

the PAC’s name and identification

number ($7.50).

The Disclosure Division can also

conduct database research to locate

federal political committees when

only part of the committee name is

known. Call the telephone numbers

above for assistance or visit the

Public Records Office in Washington at 999 E St., N.W. ✦

Compilation of FEC Court

Cases Available

The FEC has published the latest

edition of Selected Court Case

Abstracts, a collection of summaries

of court decisions pertinent to the

Federal Election Campaign Act.

This latest edition, which covers

court decisions from 1976 through

September 1998, includes:

• The summaries of court opinions,

• An alphabetical list of opinions,

with page references to the summaries, and

• A subject index.

A table of contents is also included.

The publication is available free

from the FEC’s Information Division. Call 800/424-9530 or 202/694-

1100 to request a copy. Selected

Court Case Abstracts is also available at the FEC’s web site—

http://www.fec.gov—as a PDF file.

You will need Adobe Acrobat

Reader to view the publication once

it has been downloaded. ✦
November 1998 Federal Election Commission RECORD

3

connection with any federal election. The Act also prohibits the

knowing acceptance by any candidate, political committee or other

person of corporate contributions

and prohibits any corporate officer

or director from consenting to such

contributions or expenditures. 2

U.S.C. §441b(a).

Contributions and expenditures

include “any direct or indirect

payment, distribution, loan, advance, deposit, or gift of money, or

any service, or anything of value ...

to any candidate, campaign committee, or political party” in connection

with a federal election. 2 U.S.C.

§441b(b). Expenditures made in

consultation with or at the request or

suggestion of any candidate, candidate committee or authorized agent

of the committee are considered to

be contributions to the candidate. 2

U.S.C. §441a(a)(7)(B).

An exception in the Act provides

that “expenditure” does not include

any news story, commentary or

editorial distributed by bona fide

media outlets as long as such

facilities are not owned or controlled by a political party or

committee, or by a candidate. 2

U.S.C. §431(9)(B)(i). Even if the

media outlet is controlled by a

political party or committee or by a

candidate, no contribution or

expenditure will result if the article

or broadcast represents a bona fide

news account communicated in a

general circulation publication or on

a licensed broadcasting facility, and

it is part of a general pattern of

campaign-related news accounts that

provide equal coverage to all

opposing candidates in the circulation or listening area. 11 CFR

100.7(b)(2), 100.8(b)(2).

Violations Alleged. The Commission contends that Mr. Forbes’s

columns were not bona fide news

accounts and were not part of a

general pattern of campaign-related

news accounts that gave reasonably

equal coverage to all opposing

candidates. Furthermore, the

Commission argues that Forbes,

Inc., published the columns in

consultation with Mr. Forbes while

he was a candidate, thereby turning

the corporation’s expenditure for the

columns—$94,900—into a contribution to the Forbes campaign.

In addition, the Forbes committee

failed to report the value of the

columns in any of its reports filed

with the Commission. 2 U.S.C.

§434(b)(2)(A).

The FEC asks the court to find

that Forbes, Inc., made prohibited

in-kind corporate contributions to

the Forbes committee and that Mr.

Forbes, in his capacity as CEO,

violated the Act by consenting to the

contributions. The FEC also asks the

court to find that Mr. Forbes, the

Forbes committee and the committee treasurer violated that Act when

they knowingly accepted the

prohibited in-kind contributions.

The FEC asks the court to enjoin the

defendants from violating the Act

further and to assess a civil penalty

against them.

U.S. District Court for the

Southern District of New York, 98

Civ. 6148, August 28, 1998. ✦

FEC v. Friends of Jane Harman

The FEC asks the court to find

that Friends of Jane Harman, the

principal campaign committee of

Congresswoman Jane Harman,

violated the Federal Election

Campaign Act (the Act) when it

knowingly accepted more than

$21,000 in corporate contributions.

Hughes Aircraft Company, a Los

Angeles corporation, sponsored a

fundraiser for Ms. Harman at her

request during the 1993-1994

election cycle. At the time of the

fundraiser, Hughes PAC had already

given the maximum $5,000 contribution to the Congresswoman’s

committee for the primary election.

Hughes’s chairman and CEO

approved the fundraiser and directed

a subordinate to plan it. That person,

in turn, directed another company

employee to carry out the logistics

of the fundraiser, including securing

a room and hiring a caterer.

The Act contains a broad prohibition against corporate contributions

in federal campaigns. 2 U.S.C.

§441b(a). A corporation’s employees may undertake isolated volunteer activities in connection with a

federal election while at work so

long as that employee reimburses

the corporation to the extent that its

overhead or operating costs are

increased by such activity. 11 CFR

114.9(a)(2). This exception, however, does not apply to campaign

contributions resulting from collective enterprises where a corporate

executive directs subordinates in

fundraising projects using corporate

resources or solicits the executive

employees.

The fundraiser netted $20,600 in

impermissible corporate contributions. Hughes also made $857.46 in

expenditures in connection with the

fundraiser. While Hughes billed the

Harman committee for that amount

shortly after the fundraiser, the

committee did not pay Hughes for

three months, resulting in an impermissible advance of corporate funds

to the committee.

In addition to finding that the

committee violated the Act, the

Commission asks the court to

require the committee to disgorge to

the U.S. Treasury an amount equal

to the prohibited contributions, to

assess a civil penalty against the

committee and to enjoin the committee from accepting corporate

contributions in violation of 2

U.S.C. §441b.

U.S. District Court for the

Central District of California, 98-

7691-CAS(JGx), September 21,

1998. ✦
Federal Election Commission RECORD November 1998

4

Statistics

Republicans Hold Lead in

1997-1998 Fundraising

Coming into the final stretch of

the 1997-1998 election cycle,

Republican party committees have

amassed a considerable lead over

their Democratic counterparts when

it comes to raising both federal

funds and nonfederal funds, or soft

money.

Between January 1, 1997, and

June 30, 1998, Republican party

committees’ federal accounts raised

$193.3 million and spent $177.5

million. In contrast, Democratic

party committees, in the same time

period, reported raising $107.7

million for their federal accounts

and spending $100.4 million from

their federal accounts. Republicans

had $17.3 million in cash on hand

while Democrats had $10.3 million

in cash on hand.

When measured against the last

comparable nonpresidential election

cycle—the 1993-1994 cycle—the

Republican committees posted a 19

percent increase in receipts and a 30

percent increase in disbursements.

Democrats showed a 30 percent

increase in receipts and a 36 percent

increase in disbursements for the

same comparison period.

Republican party committees

contributed $1.4 million to federal

candidates and spent $414,562 in

coordinated expenditures for the

first 18 months of the election cycle.

Democratic party committees

contributed $1.3 million to federal

candidates and spent $3.6 million in

coordinated expenditures for the

same period.

The Republican party committees

collected $71.8 million in soft

money, a dramatic 255 percent

increase when compared to the

1993-1994 election cycle. The

Democrats raised $53 million in

nonfederal funds, a 70 percent

increase over four years ago.

Republicans spent $60.4 million in

soft money; Democrats spent nearly

$49 million in soft money.

This article and the accompanying charts (see charts below) are

based on data taken from a September 9 news release. The release is

available:

• At the FEC’s web site,

http://www.fec.gov (click “News

Releases and Media Advisories”);

• From the Public Records Office

and the Press Office (call 800/424-

9530); and

• By fax (call FEC Faxline at 202/

501-3413 and request document

609). ✦

$0 $50 $100 $150 $200 $250 $300

1998

1994

1998

1994

Democrats

Republicans

(In Millions)

$0 $50 $100 $150 $200 $250 $300

1998

1994

1998

1994

Democrats

Republicans

(In Millions)

Party Committee Receipts and Disbursements:

First 18 Months of 1994 and 1998 Election Cycles

Receipts

Disbursements

Soft Money

Hard Money
November 1998 Federal Election Commission RECORD

5

PAC Contributions Favor

Incumbents by Wide Margin

Political action committees, or

PACs, contributed $134.3 million to

campaigns of federal candidates

between January 1, 1997, and June

30, 1998, marking a 6 percent

increase in contributions over the

same 18-month period in the

previous election cycle (1995-1996).

All but $10 million of the contributions were given to candidates

seeking election in November. The

rest of the money went to candidates

trying to retire debts and to those

planning to run in future elections.

Incumbents received $113.6

million of the total take by PACs

during this period, while challengers

received $8 million. Candidates

vying for open seats got $12.6

million in PAC contributions. PACs

also reported spending $1.1 million

on independent expenditures.

PACs nearly split their giving

down the middle between Democrats and Republicans. Republican

candidates received $69.1 million

from PACs for this period and

Democratic candidates received $65

million.

The 4,486 federal PACs that file

with the Commission reported total

receipts for this period of $359.4

million and total disbursements of

$292.6 million. This represents a

10.6 percent increase in receipts and

a 15 percent increase in disbursements from the 1995-1996 election

cycle.

This article and the accompanying chart (see chart at right) are

based on data taken from a September 24 news release. The release is

available:

• At the FEC’s web site,

http://www.fec.gov (click “News

Releases and Media Advisories”);

• From the Public Records Office

and the Press Office (call 800/424-

9530); and

• By fax (call FEC Faxline at 202/

501-3413 and request document

611). ✦

$0

$10

$20

$30

$40

$50

$60

Corp

Without

Stock

Cooperative

Trade

Membership

Health

NonconnectedCorporate Labor

PAC Contributions: First 18 Months of 1998

Election Cycle

Millions

The FEC has enhanced its web

site to enable reporters, researchers

and others interested in campaign

finance to more easily identify lastminute contributions to federal

candidates and independent expenditures made on their behalf and/or

against them during the waning days

of the 1998 election cycle.

Contributions of $1,000 or more

received from October 14 through

November 1 had to be reported by

campaigns to the FEC within 48

hours of receipt. Independent

expenditures aggregating $1,000 or

more made between October 15 and

November 2 had to be reported to

the FEC within 24 hours.

Information about these financial

activities already had been available

at the FEC’s web site, but it was

accessible only through each

individual candidate or committee.

Now the information has been

consolidated, permitting users to see

which candidates filed last-minute

reports on a given day, or to view

the reports filed on a given day by

all candidates from a particular

state. The new approach will save

time and allow users to view all or

selected parts of the financial

activity.

To access the new information,

go to the FEC’s web site at

http://www.fec.gov and click on

“View Contributions and Financial

Reports Filed by Presidential and

House Campaigns, Parties and

PACs.” Then choose “Last Minute

Activity.”

Independent expenditures, which

are reported by various committees,

groups and individuals, are accessible from this web page. Select a

candidate by his or her last name, by

state and district or by the name of

the committee, group or person

making the expenditure.

To access information about

contributions, click on the link “Last

Minute Contributions” and follow

the instructions on the screen.

Choose all candidates within a state

by clicking on “By State” and then

clicking on a particular state within

a map of the United States. Alternatively, click on “By Candidate Last

Name,” which will provide an

alphabetical listing of the candidates

who filed reports on a particular

day. ✦

FEC Web Site Offers Easy Access to Last-Minute Financial

Activity from 1998 Election Cycle
Federal Election Commission RECORD November 1998

6

Compliance

MUR 4772

Sun-Land Pays Civil Penalty

for Impermissible

Contributions

The corporation Sun-Land

Products of California has paid an

$80,000 civil penalty for knowingly

and willfully using corporate funds

to make contributions to federal

candidates and committees in the

names of others.

During the 1992 campaign, SunLand’s Board of Directors paid 16

non-management directors $2,500

stipends and suggested they make

contributions to certain political

campaigns and groups. Between

March and May of that year, SunLand sent the collective contributions from some of the 16

employees it targeted to the BushQuayle ’92 Primary Committee.

Some of the stipend recipients sent

contributions directly to BushQuayle ’92 using their own names

or the names of family members. In

all, the targeted employees sent

$16,000 to Bush-Quayle ’92.

In 1993, Sun-Land initiated the

same stipends-for-contributions

plan. This time, the company

collected and sent contributions to

Campaign America, a federal PAC.

Again, some of the targeted employees sent contributions directly to the

PAC in their names or the names of

family members. Campaign

America received a total of $21,000

in contributions from Sun-Land

employees.

It is unlawful for a corporation to

make contributions or expenditures

in connection with any federal

election, and it is unlawful for any

person to make a contribution in the

name of another or knowingly

permit its name to be used to effect

such a contribution. 2 U.S.C.

§441b(a) and §441f.

This matter was referred to the

FEC by the Department of Justice.

The Commission found reason to

believe Sun-Land knowingly and

willfully had violated 2 U.S.C.

§§441b(a) and 441f and entered into

a conciliation agreement with SunLand. ✦

MUR 4790

Contributions Exceeding

Annual $25,000 Limit

E. William Crotty, the recently

confirmed ambassador to Barbados,

has paid a $13,989 civil penalty for

exceeding the annual $25,000

individual contribution limit.

The Federal Election Campaign

Act limits total contributions by an

individual to $25,000 during a

calendar year. 2 U.S.C. §441a(a)(3).

Any contribution that is made

during a nonelection year to a

candidate or authorized committee

with respect to a particular election

counts toward the contributor’s

annual limit for the calendar year in

which that election is held. 11 CFR

110.5(c)(2).

Mr. Crotty made $38,989 in

contributions for the 1996 elections—$13,989 over the contribution limit. Once he learned that his

contributions likely exceeded the

annual limit for individuals, he

requested refunds or asked that

some of the funds be reclassified as

nonfederal and transferred to the

nonfederal accounts of the committees. He also alerted the FEC to the

excessive contributions. The Commission investigated the information

and entered into a conciliation

agreement with Mr. Crotty over the

matter. ✦

Advisory

Opinions

Federal Register

 Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1998-15

Change of Public Hearing Date:

Prohibited and Excessive

Contributions; “Soft Money” (63

FR 55056, October 14, 1998)

AO 1998-11

Contributions from

California LLC

Patriot Holdings (PH), a California limited liability company, may

make contributions to federal

political committees subject to the

contribution limits for “person” set

out in the Federal Election Campaign Act (the Act). Individuals

associated with PH may also join

with individuals associated with its

two subsidiaries, also limited

liability companies (LLCs), in

forming a nonconnected PAC

despite the fact that the subsidiaries

are federal contractors.

In addition to revenue from its

two subsidiaries, PH generates

revenue from separate business

ventures. PH must use this separate

pool of revenue in making contributions to federal political committees.

The Act does not specifically

address LLCs, but, in past advisory

opinions, the Commission has

concluded that LLCs in four different jurisdictions constitute a distinct

entity, different from corporations

(contributions are prohibited) and

partnerships (contributions require

dual attribution to the firm and the

partners). For purposes of contribution limits, the Commission has

concluded that LLCs fall within the

category of “any other organization

or group of persons.” See AOs

1997-17, 1997-4, 1996-13 and

1995-11. (Entities in this category

may contribute $1,000 to each

candidate, per election, $20,000 to a

national party committee and $5,000

to any other political committee per

year.)

In determining that LLCs in the

District of Columbia, Missouri,

Pennsylvania and Virginia are

eligible to make contributions in

connection with federal elections,

the Commission noted:
November 1998 Federal Election Commission RECORD

7

• The state’s recognition of the LLC

as a distinct form of business,

separate from a corporation or

partnership, with its own statutory

framework;

• The state’s requirements for

naming the LLC;

• The corporate attribute of limitation of liability for all members;

and

• The lack of the general corporate

attributes of free transferability of

interests and continuity of life.

California laws pertaining to

LLCs closely track the statutes in

the other locations where the

Commission ruled that LLCs could

make contributions to federal

campaigns. In granting LLCs the

ability to make contributions,

however, the Commission stated

that if any member of the contributing LLC fell within a prohibited

category—corporations, federal

contractors, foreign nationals—the

contribution by the LLC would be

impermissible. In this instance, the

Commission has likened PH’s

relationship with its two subsidiaries

as that of a holding company. In

past advisory opinions, the Commission reasoned that a holding company was a distinct legal entity and

that no language in the Act’s

prohibitions disallowed such entities

from making contributions to

federal candidates. That conclusion

was based on the assumption that

the holding company had a separate

identity from its subsidiaries and

was not merely an agent, instrumentality or alter ego of the subsidiaries.

Additionally, contributions from the

holding company could not come

from revenue derived by the subsidiaries that were prohibited from

making contributions to federal

political committees.

Forming a Nonconnected PAC

The Act at 2 U.S.C. §441c

prohibits federal contractors from

contributing to or making expenditures on behalf of any federal

political committee. Nevertheless,

Commission regulations permit

employees, officers or individual

members of an organization that is a

federal contractor to make contributions from their personal assets or to

form a nonconnected PAC. 11 CFR

115.6. See AOs 1993-12, 1991-1

and 1990-20. Consequently, individuals associated with PH and its

two subsidiaries may establish a

nonconnected PAC. The PAC would

have to be independent of and

receive no support from the federal

contractor. Additionally, any

payments to the PAC by PH for

administrative costs would be

considered contributions.

Date Issued: September 3, 1998;

Length: 6 pages. ✦

AO 1998-15

Contributions from Illinois

LLCs

Fitzgerald for Senate, Inc., the

principal campaign committee of

Republican Senate nominee Peter

Fitzgerald, may accept contributions

from limited liability companies

(LLCs) in Illinois subject to the

contribution limits for “person” set

out in the Federal Election Campaign Act (the Act).

The Act does not specifically

address LLCs, but, in past advisory

opinions, the Commission has

concluded that LLCs in four jurisdictions constitute a distinct entity,

different from corporations (contributions are prohibited) and partnerships (contributions require dual

attribution to the firm and the

partners). For purposes of contribution limits, the Commission has

concluded that LLCs fall within the

category of “any other organization

or group of persons.” See AOs

1997-17, 1997-4, 1996-13 and

1995-11. (Entities in this category

may contribute $1,000 to each

candidate, per election, $20,000 to a

national party committee and $5,000

to any other political committee per

year.)

In determining that LLCs in four

jurisdictions are eligible to make

contributions in connection with

federal elections, the Commission

noted:

• The state’s recognition of the LLC

as a distinct form of business,

separate from a corporation or

partnership, with its own statutory

framework;

• The state’s requirements for

naming the LLC;

• The corporate attribute of limitation of liability for all members;

and

• The lack of the general corporate

attributes of free transferability of

interests and continuity of life.

The Illinois law pertaining to

LLCs is similar to the statutes in the

other jurisdictions where the Commission has ruled that LLCs may

make contributions to federal

campaigns (the District of Columbia, Missouri, Pennsylvania and

Virginia). The Commission’s

approval of these LLC contributions

was conditioned on the assumption

that none of the members of the

LLC was in a category prohibited

from contributing to federal elections—corporations, foreign nationals or federal contractors.

Thus, upon receipt of a contribution from an LLC, the Fitzgerald

committee treasurer should ask the

LLC, orally or in writing, whether

any of its members fall within the

prohibited categories. If the committee does not receive written or oral

(memorialized in writing) confirmation that none of the LLC’s members fall within those categories, the

committee must return the contribution in accordance with 11 CFR

103.3(b).

Date Issued: September 3, 1998;

Length: 4 pages. ✦

(continued on page 8)
Federal Election Commission RECORD November 1998

8

Advisory Opinions

(continued from page 7)

AO 1998-17

Free Air Time on Cable for

California Candidates

Daniels Cablevision, Inc.

(Daniels), may carry out its plan to

provide free cable television air time

to federal candidates in the communities in which it offers its cable

services without making a contribution to the committees.

Daniels plans to make up to 750

thirty-second spot advertisements

available to bona fide candidates for

the Senate from California and for

the House in the 44th, 48th and 51st

California congressional districts—

the cable company’s coverage

area—for each of the eight weeks

leading up to the general election.

Daniels defines bona fide candidates

as those who meet the state requirements to run for the office and

qualify as a candidate under the

definition in the Federal Election

Campaign Act (the Act). 2 U.S.C.

§431(2).

Under its plan, Daniels would

broadcast the candidates thirtysecond ads for free. It would not

exercise any control over the

content. The ads would run on

commercial cable channels, such as

CNN and ESPN, between 6 a.m. and

midnight. The specific time slots for

each ad would be developed by

Daniels and made available to the

public. Each candidate would be

permitted to run between 15 and 60

ads per week in the free time slots.

If a campaign did not submit its

advertisements for the week in a

timely fashion, the time slots would

be lost. This would prevent candidates from stockpiling their time for

use as the election nears.

The Act prohibits corporations

from making contributions or

expenditures in connection with

federal elections. 2 U.S.C. §441b(a).

It defines “contribution” and

“expenditure” to include any gift of

money or anything of value for the

purpose of influencing a federal

election. 2 U.S.C. §431(8)(A)(i) and

(9)(A)(i). There is, however, an

exemption from these definitions for

any news story, commentary or

editorial distributed through the

facilities of a broadcasting station

(including a cable television operator), as long as the station is not

owned or controlled by a political

party, political committee or candidate. 2 U.S.C. §431(9)(B)(i), 11

CFR 100.7(b)(2) and 100.8(b)(2).

Daniels falls within this media

exemption by virtue of the facts that

it is not owned or controlled by a

political party, political committee

or candidate; it qualifies as a bona

fide media entity; and, in providing

free air time to candidates, Daniels

would be performing a function of a

media entity contemplated under the

Federal Communications Act. See

AOs 1996-48, 1996-41, 1996-16

and 1982-44. The Commission notes

that Federal Communications

Commission statutes indicate media

companies such as Daniels should

provide access to candidates on an

equal-opportunity basis to more

fully inform voters about candidates

before an election. The Commission

views the airing of candidate

advertisements for free as a form of

commentary and thus concludes that

the activity would fall within the

press exemption. If, however, the

cable company’s plans reflect an

intent to advance one candidate over

another, or to give preference to

certain candidates, the ads would

fall outside of the FEC’s media

exemption.

Although the disclaimer requirements do not apply to Daniels as a

donor of time to candidates, the

cable company should advise each

candidate whose advertisements it

runs that a disclaimer is required on

the ads themselves. The disclaimer

must say who paid for the communication, and, in the case of an ad that

was paid for by a person other than

the candidate’s committee, who paid

for and who authorized it. 2 U.S.C.

§441d(a). Examples of acceptable

disclaimers include: “Paid for by X

for Congress,” “Paid for by X for

Congress and time provided free by

Daniels Cablevision,” and “Time for

the following message is provided

free by Daniels Cablevision to help

inform the public about the current

House campaign and other costs are

paid by X for Congress.”

Date Issued: September 10, 1998;

Length: 7 pages. ✦

AO 1998-18

Payment for Testing-theWaters Poll

The Washington State Democratic Committee must pay for a

testing-the-waters poll entirely from

its federal account despite the fact

that the person whose prospects

were being tested declined to seek

federal office.

The state committee initiated the

poll in June 1998 to explore the

prospects of an individual who was

considering a run for Congress. The

randomly conducted telephone

survey of 400 people consisted of a

number of questions about the

individual running against a Republican incumbent, impressions of

other candidates and officeholders,

views of certain issues and the

likelihood and manner of voting by

the respondent. The polling firm

billed the state committee $8,000.

Ultimately, the individual decided

not to run for election in 1998.

Applicable Laws and Regulations

The Federal Election Campaign

Act (the Act) defines “contribution”

to include a gift of money or

anything of value given to any

person to influence a federal election. 2 U.S.C. §431(8)(A)(i). An

“expenditure” is defined to include

the purchase or payment of money

or anything of value for the purpose

of influencing a federal election, as

well as a written contract or agreement to make an expenditure. 2

U.S.C. §431(9)(A).
November 1998 Federal Election Commission RECORD

9

Commission regulations exempt

from these definitions testing-thewaters activities—such as conducting a poll to determine whether an

individual should become a candidate. Nonetheless, the regulations

require that only federally permissible funds be used for any such

exploratory activities. The regulations go on to state that if the

prospective candidate decides to run

for election, he or she must report

all funds received and payments

made in connection with any

testing-the-waters activities as

contributions and expenditures. 11

CFR 100.7(b)(1) and 100.8(b)(1).

When a PAC or party committee

purchases results of an opinion poll

and a candidate accepts the results,

then an in-kind contribution by the

purchaser to the recipient candidate

occurs. 11 CFR 106.4(b).

Poll results purchased by a PAC

or party committee for its own use is

considered an overhead expenditure

by the political committee to the

extent of the benefit derived by the

committee. 11 CFR 106.4(d).

Poll Payment by Committee

Although, for reporting purposes,

the cost of the testing-the-waters

poll is not considered a contribution

or expenditure until the prospective

candidate becomes a candidate,

Commission regulations require that

committees adhere to the Act’s

limits and prohibitions in anticipation of an eventual candidacy.

Had the state committee entered

into a written contract with the

polling firm, that action would have

created the equivalent of an expenditure. Furthermore, because the

poll results were given to, and were

accepted by, the potential candidate,

the result would have been an inkind contribution to the individual at

that time had he or she later decided

to run in the election. Thus, federal

funds must be used to pay for the

poll. The fact that the payment to

the pollster did not occur before the

individual decided not to run for

Congress does not change the result.

Date Issued: October 9, 1998;

Length: 4 pages. ✦

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1998-20

Application of contribution limits to

fundraising for repayment to U.S.

Treasury (Dr. Lenora B. Fulani for

President, September 9, 1998; 6

pages)

AOR 1998-21

Permissibility of post-election

transfer between federal and

nonfederal accounts for administrative expenses (National Republican

Senatorial Committee, September

17, 1998; 11 pages)

AOR 1998-22

Application of expenditure definition and disclaimer requirements to

web site containing express advocacy (Leo Smith, September 18,

1998; 2 pages plus 3-page attachment)

AOR 1998-23

Status as state committee of a

political party (Maine Green Party,

September 9, 1998; 3 pages plus 13-

page attachment)

AOR 1998-24

Status as state committee of a

political party (American Heritage

Party, October 8, 1998; 2 pages plus

19-page attachment)

AOR 1998-25

Contributions forwarded by connected organization to union PAC

after being held in escrow account

for more than 30 days (Mason

Tenders District Council, October 2,

1998; 2 pages plus 5-page attachment) ✦

Alternative Disposition of

Advisory Opinion Request

AOR 1998-13

The requester withdrew this request

for an advisory opinion. Submitted

on June 15, the AOR sought the

Commission’s opinion on the

legality of contributions made by a

limited liability company in New

York and by its members using nonrepayable drawing accounts. ✦

Regulations

Soft Money Hearing Set for

This Month

The FEC has rescheduled its

public hearing on soft money at the

request of one of the commenters,

the National Republican Senatorial

Committee. The hearing will now

take place on November 18 at 9 a.m.

in the FEC’s hearing room at 999 E

St., NW, in Washington. The

deadline for comments has passed.

Anyone who wants to learn more

about the Commission’s proposed

rules for soft money should see the

July 13 Federal Register (63 FR

37721). It is available at the FEC’s

web site (http://www.fec.gov) and at

FEC Faxline (202/501-3413, request

document 230).

A copy of the Notice of Proposed

Rulemaking (NPRM) may also be

obtained by calling the Public

Records Office (800/424-9530 or

202/694-1120). Callers can also

purchase copies of comments the

FEC has received in response to the

NPRM. The 82 comments, totaling

1,232 pages, are available from the

Public Records Office at 5 cents per

page. ✦
Federal Election Commission RECORD November 1998

10

Fulani Repayment Stay

Lifted

On September 18, the Commission voted to lift the stay of repayment granted Lenora B. Fulani and

the Fulani for President Committee.

The Commission acted after the

U.S. Court of Appeals for the

District of Columbia Circuit denied

the committee’s petition seeking

judicial review of the FEC’s repayment determination of $117,269.

See the August 1998 Record, p. 6.

The Commission had stayed

$115,875.54 of the repayment

determination while the committee

disputed some of the issues in the

Commission’s final determination

that the committee repay $117,269

to the U.S. Treasury.

The Commission also granted the

committee a 90-day extension to

make the repayment, and concluded

that the committee had to pay interest

on the repayment amount dating back

to August 1997—the original due

date for the repayment. ✦

Public Funding

Index

The first number in each citation

refers to the “number” (month) of

the 1998 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.

Advisory Opinions

1997-18: Status of committee as

local party committee, 1:14

1997-21: Refund to candidate who

had made contribution to own

campaign, 6:5

1997-22: Communicating membership corporation’s endorsements

of federal candidates to members

and their restricted classes, 1:14

1997-25: Affiliation of corporate

SSFs after reorganization, 3:5

1997-26: Establishment of

nonconnected PAC by individuals

affiliated with trade association, 3:7

1997-27: Use of campaign funds to

pay legal expenses, 4:7

1997-28: Reinstatement of terminated candidate committee to

retire debt to candidate, 4:8

1997-29: Status as state committee

of political party, 4:8

1998-1: Use of campaign funds to

pay legal expenses, 4:8

1998-2: Status as national committee of political party; status of

affiliated state parties as state

committees of political party, 4:10

1998-3: Status as state committee of

political party, 4:11

1998-4: Use of contributor lists

from FEC reports for marketing

“data mining” technologies, 6:5

1998-7: Exemption for party office

building fund and construction of

state party office facilities and

parking lot, 7:8

1998-8: Preemption of Iowa law

prohibiting corporate contributions to party building fund, 7:9

1998-9: Generic party expenditures

made in connection with special

election, 7:9

1998-11: Contributions made and

nonconnected PAC established by

California limited liability

company that owns or is federal

contractor, 11:6

1998-12: Status of employee

stockholders as part of restricted

class, 9:4

1998-14: Acceptance of contributions from residents of Pacific

Island nations covered under

Compact of Free Association,

10:4

1998-15: Contribution limits of

limited liability company in

Illinois, 11:7

1998-16: Corporate payment of

security for executive conducting

activity on behalf of

nonconnected committee, 10:5

1998-17: Application of press

exemption to free 30-second spot

time slots offered by cable

broadcasting system to candidate

campaigns, 11:8

1998-18: Payment for testing-thewaters poll for individual who did

not become candidate, 11:8

Court Cases

FEC v. _____

– Al Salvi for Senate Committee,

4:4; 10:2

– California Democratic Party, 8:5

– Charles Woods for U.S. Senate, 3:3

– Forbes, 11:2

– Freedom’s Heritage Forum, 10:2

– Friends of Jane Harman, 11:3

– National Medical Political Action

Committee, 1:3; 7:5

– Williams, 1:3

_____ v. FEC

– Akins, 7:1

– Clifton, 4:5; 7:4

– DNC (97-676), 9:3

– DSCC (97-5160 and 97-5161),

6:4; 8:7

– Fulani, (97-1466), 8:6

– Gottlieb, 7:4

– Hollenbeck, 4:4; 9:4

– Judd, 6:5; 10:2

– Judicial Watch, Inc., 4:4; 9:3

– National Committee of the Reform

Party, 1:2; 4:4

– Natural Law Party (98-1025), 6:3

– Ohio Democratic Party (98-0991),

6:2; 8:5

– Perot ’96, Inc., (97-2554), 6:3

– Perot ’96, Inc., (98-1022), 6:3

– RNC (97-1552), 6:4

– RNC (98-1207 (WBB)), 6:1; 8:5

– RNC (98-5263), 11:1

– Right to Life of Dutchess County,

Inc., 7:3; 9:3

– Stockman, 5:3

Reports

Electronic filing, 2:2; 4:1; 4:2; 9:2

On FEC web site, 2:1; 4:2; 6:1; 9:2;

11:5

Post-General Reports due date, 11:1

Pre-Election Reporting Dates: 1998

Primary and Runoff Elections, 1:8

Reports, Alabama Runoff, 2:1
November 1998 Federal Election Commission RECORD

11

Do you want to file your FEC reports electronically? The FEC will

mail you a copy of its new, free electronic filing software—FECFile.

Mail or fax this form to the address/number below. Currently, FECFile

operates on Windows95 and WindowsNT platforms.

FEC Identification Number

Committee Name

Electronic Filing Contact Name

Address: Street 1

Address: Street 2

City

State

Zip Code

Phone Number

Fax Number

E-mail Address

Federal Election Commission

Data Division—Room 431

999 E Street, NW

Washington, DC 20463

Fax: 202/219-0674

✃

FECFile Order Form

Reports due in 1998, 1:6; 1:11

Reports due in April, 4:2

Reports due in July, 7:11

Reports due in October, 10:1

Special Elections, California, 1:12;

3:9

Special Election, New Mexico, 5:3

Special Election, New York, 2:4

Special Election, Pennsylvania, 1:13
FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

Penalty for Private Use, $300

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

Printed on recycled paper

Federal Election Commission RECORD November 1998