June 1998 Federal Election Commission Volume 24, Number 6

Table of Contents

Reports

1 Reports From ’96 Available on

Web

Court Cases

1 New Litigation

4 DSCC v. FEC (97-5160 and 97-

5161)

4 RNC v. FEC (97-1552)

5 Judd v. FEC

4 Federal Register Notice

5 Advisory Opinions

Publications

6 FEC Issues 1997 Annual Report

Compliance

7 Nonfilers

7 MUR 4215

Statistics

8 Fundraising Increases Continue in

1998 Election Cycle

Regulations

9 Commission Hears Different

Views on “Member” Regulations

9 NPRM Alternatives for Member

Regulations

10 Index

Reports

Reports From ’96 Available

on Web

The FEC’s web site has expanded

to include images of reports filed

with the Commission during the

1996 election cycle. Already, the

web site provides images of current

reports (from the 1998 election

cycle) filed by PACs, political party

committees and Presidential and

House campaigns.

The reports are available at the

FEC’s web site: http://www.fec.gov.

Once there, click on “View Financial Reports Filed by Presidential

and House Campaigns, Parties, and

PACs.” Simply follow the directions

on the screen to access digital

images of committee reports. Once

the current report for the committee

appears, scroll down to get to the

older reports from 1995 and 1996.

Note that reports from House

campaign committees are available

only from June 1996, the date the

Commission began to receive those

reports directly from committees.

Reports from Senate candidate

committees and those committees

that support only Senate candidates

are not available on the web site

because those committees file their

reports directly with the Secretary of

the Senate and the copies that the

FEC receives on microfilm cannot

Court Cases

(continued on page 2)

New Litigation

RNC v. FEC (98-1207(WBB))

The Republican National Committee (RNC) asks the court for

preliminary and permanent injunctions to prevent the FEC from

applying its regulation at 11 CFR

106.5 to “issue” ads that the RNC

intends to run beginning late spring

or early summer. The RNC claims

the regulation is unconstitutional

because it requires party committees

to allocate expenses between their

federal and nonfederal accounts for

advertising that does not expressly

advocate the election or defeat of a

clearly identified candidate.

Section 106.5 implements the

Act’s restrictions on contributions to

national political party committees.

These restrictions prohibit contributions to those committees from

certain sources, such as corporations, labor organizations and

foreign nationals, and limit the

amounts that may be contributed by

permissible sources. The regulation

requires national party committees

to pay for at least 60 percent of

expenses incurred for activities that

influence both federal and

nonfederal elections with contributions raised in accordance with the

Act’s restrictions (“hard dollars”)

(continued on page 2)
Federal Election Commission RECORD June 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)

Joan D. Aikens, Chairman

Scott E. Thomas, Vice Chairman

Lee Ann Elliott, Commissioner

Danny L. McDonald,

 Commissioner

John Warren McGarry,

 Commissioner

John C. Surina, Staff Director

Lawrence M. Noble, General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Angela Rucker, Editor

http://www.fec.gov

Reports

(continued from page 1)

be used successfully to create digital

images.

The FEC’s addition of the 1996

election cycle data adds nearly 1.4

million pages of reports to the

400,000 already available for

viewing. Future plans call for

adding reports from 1993 and 1994

to the site. The latest reports, as well

as all older reports, remain available

for viewing and copying at the

agency’s Public Records Office,

which is located at 999 E St., N.W.,

in Washington, DC. ✦

Court Cases

(continued from page 1)

during non-presidential election

cycles and 65 percent during

presidential election cycles. The

remainder of the costs of these

mixed activities may be paid with

funds that do not satisfy the Act’s

restrictions (“soft money”) unless

state law provides otherwise. See

AO 1995-25 and the October 1995

Record, p. 7.

The RNC contends that this

regulation, as applied to party

“issue” ads, would violate the First

Amendment’s guarantee of free

speech. The First Amendment, it

argues, forbids any regulation of the

raising and spending of money by a

national party committee, except for

money used to expressly advocate

the election or defeat of particular

federal candidates. The RNC

contends that the allocation rules

will force it to spread its hard dollar

assets between “issue” advocacy

and express advocacy for its candidates and thereby will “seriously”

curtail its political speech.

The RNC states that its planned

advertising campaign will not

expressly advocate the election or

defeat of any identified candidate

for federal office. Thus, the RNC

contends, the planned ads will not

fall under the FEC’s purview, and

the committee should be able to pay

for them entirely with soft money

without running any risk that it

might be assessed civil or criminal

penalties for doing so. This would

hold true, in the RNC’s view,

whether or not it coordinated with

candidates in producing its advertising campaign. The RNC states that

its issue ads will focus on such

matters as “the importance of a

balanced federal budget” and “the

impending insolvency of the Medicare and Social Security programs.”

Moreover, they “may discuss the

positions of officeholders and

candidates on these issues.”

Also a party to the lawsuit is

Alexandria, VA, resident Gant

Redmon, who alleged that he desires

to receive the kind of information

that the RNC intends to produce.

On May 8, the U.S. District Court

for the Eastern District of Virginia

granted the FEC’s request to

transfer this case to the U.S. District

Court for the District of Columbia.

That same day, the RNC filed a

motion to consolidate its case with

one filed by the Ohio Democratic

Party (ODP), and the RNC asked

that its motion for preliminary and

permanent injunctions be heard at

the same time as the ODP’s similar

motion. See ODP v. FEC on this

page. The FEC has filed oppositions

to those motions for preliminary and

permanent injunctions.

U.S. District Court for the

Eastern District of Virginia, 98-

537A, filed April 14, 1998, and

transferred May 8, 1998, to U.S.

District Court for the District of

Columbia, 98-1207 (WBB). ✦

Ohio Democratic Party v. FEC

The Ohio Democratic Party

(ODP) asks the court to find that

FEC regulation 11 CFR 106.5

violates the First and Fifth Amendments of the U.S. Constitution. The

regulation requires state party

committees to finance at least a

portion of the costs of their activities

that influence both federal and

nonfederal elections with contributions raised in accordance with the

restrictions that the Federal Election

Campaign Act (the Act) places on

contributions to political party

committees (“hard money”). In the

case of the ODP, the ratio in 1998 is

22 percent hard money and 78

percent money that does not meet

the Act’s restrictions (“soft

money”). The ODP alleges that the

Constitution forbids any regulation

of the raising and spending of

money by a party committee, except

for money used to expressly advocate the election or defeat of particular federal candidates

The ODP filed a motion for

expedited consideration of its

complaint and to shorten the time

for it to move for summary judgment. On April 28, the court denied

the ODP’s motion to expedite, and

on April 30 the ODP filed a motion

for preliminary and permanent

injunctions.
June 1998 Federal Election Commission RECORD

3

Natural Law Party v. FEC (98-

1025)

In a lawsuit nearly identical to

one filed by Perot ’96, the Natural

Law Party (NLP) and its 1996

Presidential and Vice Presidential

candidates ask the court to find that

the FEC acted contrary to law when,

in February, it dismissed their

administrative complaint (MUR

4451) alleging campaign finance

violations related to the Commission

on Presidential Debate’s (CPD’s)

Perot ’96, Inc., v. FEC (97-2554

and 98-1022)

Perot ’96, Inc., asks the court to

find that the FEC acted contrary to

law when it dismissed its administrative complaint (MUR 4473)

alleging several violations of

campaign finance law related to the

Commission on Presidential

Debate’s (CPD’s) sponsorship of

several Presidential debates in 1996.

Perot ’96 also asks the court to order

the FEC to take action on its administrative complaint.

In the alternative, Perot ’96 asks

the court to find that the FEC’s

regulations governing nonpartisan

candidate debates found at 11 CFR

110.13 and 114.4(f) are unconstitutional. Perot ’96 contends—as it did

in previous litigation—that the FEC

lacked the authority to promulgate

such regulations, and that the

regulations constitute an illegal

exception to the statutory ban on

corporate contributions and expenditures under 2 U.S.C. §441b. While

the law generally prohibits corporations from making contributions or

expenditures in connection with

federal elections, Commission

regulations make an exception for

bona fide nonprofit corporations to

sponsor public debates among

candidates, provided they follow

rules for conducting such debates.

11 CFR 110.13 and 114.4(f). Perot

’96 states that, if the court finds that

these regulations are unconstitutional, it should then declare that all

expenditures made or contributions

received by the CPD are unlawful

under the Federal Election Campaign Act (the Act).

In September 1996, Perot ’96

filed an administrative complaint

alleging that the CPD had violated

Commission regulations in the

formulation of its debate participant

selection criteria. Specifically, Perot

’96 charged that the CPD had used

subjective criteria to select debate

participants, contrary to the

Commission’s regulations that state

that objective criteria must be used

in the selection process. It stated

that such criteria as polling results

and the opinions of journalists were

too subjective. Perot ’96 also

charged that the Democratic and

Republican national committees had

colluded with the CPD, ensuring

that their nominees would be debate

participants and violating the debate

regulations’ proscription against

CPD’s selecting debate participants

solely by their party affiliations.

In February 1998, the Commission voted to reject the FEC General

Counsel’s recommendation that the

CPD had violated Commission

regulations on debates and that, as a

result, the CPD had made prohibited

corporate contributions to the

Clinton/Gore and Dole/Kemp

committees, that those committees

had accepted prohibited contributions, and that the CPD was a

political committee that had failed

to register or report.

Prior to the Commission’s vote,

in October 1997, Perot ’96 had filed

another lawsuit, charging the FEC

with delaying its investigation of the

administrative complaint (Perot ’96

v. FEC, 97-2554). After the FEC

dismissed the administrative complaint in February, both Perot ’96

and the Commission agreed to the

dismissal of that case.

U.S. District Court for the

District of Columbia, 98-1022, April

24, 1998; U.S. District Court for the

District of Columbia, 97-2554. ✦

(continued on page 4)

The ODP states that it plans to

finance “issue” advertising in

spring/summer 1998. The ads will

include communications that will

not directly advocate the election or

defeat of an identified candidate, but

will discuss legislative issues and

positions that the ODP advocates.

While it will continue to follow the

22-to-78 ratio in financing this

advertising campaign, ODP stresses

that hard money (the 22 percent) is

far more difficult to raise than soft

money. The ODP argues that the

FEC’s allocation regulation:

• Violates the First Amendment

because it requires party committees to pay a substantial portion of

“issue” ads with hard dollars and,

because it is more difficult to raise

hard dollars than soft money, ODP

will be limited in the amount of

“issue advocacy” that it can

produce;

• Violates the Fifth Amendment by

disadvantaging party committees

in comparison with individuals,

corporations and unions whose

independent “issue” ads are not

regulated under the Act;

• Exceeds the Commission’s

authority in that Congress allegedly clearly stated that it did not

want spending on “issue advocacy” advertisements to be regulated; and

• Violates the Administrative

Procedure Act because it is

contrary to law.

U.S. District Court for the

District of Columbia, 98-0991, April

17, 1998. ✦

Need FEC Material

in a Hurry?

 Use FEC Faxline to obtain FEC

material fast. It operates 24 hours

a day. Use a touch tone phone to

dial 202/501-3413 and follow the

instructions. To order a complete

menu of Faxline documents, enter

document number 411 at the

prompt.
Federal Election Commission RECORD June 1998

4

Court Cases

(continued from page 3)

DSCC v. FEC (97-5160 and

97-5161)

On April 10, the U.S. Court of

Appeals for the District of Columbia

Circuit remanded these two cases to

the district court after finding that

the question of standing had not

been resolved.

Background

These cases, which date back to

1993, involve allegations by the

Democratic Senatorial Campaign

Committee (DSCC) that the National Republican Senatorial Committee (NRSC) made soft money

donations to nonparty organizations,

which then funneled the money into

the 1992 Senate race in Georgia to

support the Republican nominee.

The DSCC initially filed an

administrative complaint with the

FEC outlining the alleged campaign

finance law violations. In 1995, the

DSCC filed suit in U.S. District

RNC v. FEC (97-1552)

On April 7, the parties to this suit

agreed to dismiss this case with

prejudice and to pay their own legal

expenses. The Republican National

Committee (RNC) had asked the

U.S. District Court for the District

of Columbia to find that the FEC’s

dismissal of an administrative

complaint it had filed with the

agency was contrary to law.

In its initial administrative

complaint, filed in 1995, the RNC

had charged that the Democratic

National Committee (DNC) had

used impermissible nonfederal

funds to pay all the expenses of a

nationwide media campaign that

highlighted the party’s legislative

proposals for health care reform.

Commission regulations require that

if a political committee has both

federal and nonfederal accounts,

then it must allocate its administrative and generic expenses between

sponsorship of several debates in

1996. They also ask the court to

order the FEC to take action on the

administrative complaint.

In the alternative, the plaintiffs

ask the court to find that the FEC’s

regulations governing nonpartisan

candidate debates found at 11 CFR

110.13 and 114.4(f) are unconstitutional. For an explanation, see the

previous article (Perot ’96, Inc., v.

FEC).

U.S. District Court for the

District of Columbia, 98-1025, April

24, 1998. ✦

Court for the District of Columbia

against the FEC, charging that the

agency had failed to take action on

its administrative complaint within a

reasonable time. Because nearly 600

days had passed before the Commission had assigned the case to an

attorney, the court ruled that the

FEC’s inaction was contrary to law.

2 U.S.C. §437g(a)(8). The court

subsequently ordered the Commission to pay the DSCC’s attorney

fees. Later, when the Commission

still had not completed its investigation more than four years after it had

received the DSCC’s administrative

complaint, the court again found

that the Commission had acted

contrary to law and ordered the FEC

to take action within 30 days. In

June 1997, the FEC appealed this

district court order and the previous

court order to pay the DSCC’s

attorney’s fees.

Appeals Court Ruling

The appeals court remanded both

cases to the district court to determine whether the DSCC had

standing to sue the Commission

under §437g(a)(8). In citing the

issue of standing, the appeals court

acknowledged that the question had

come up only on appeal and mainly

through an amicus curiae, or friend

of the court, brief. The appeals court

based its ruling on a 1998 U.S.

Supreme Court decision in Steel Co.

v. Citizens for a Better Environment,

which “seems to hold that before

deciding the merits (of a case),

federal courts must always decide

Article III (of the U.S. Constitution)

standing whenever it is in doubt.”

Because some doubt has now been

raised, the appeals court remanded

the cases to the district court to

address the standing question. The

DSCC must present evidence that it

satisfied the three-pronged test of

standing—injury in fact, causation

and redressability. With regard to

redressability, the court said that the

standing analysis may well have to

depend on the Supreme Court’s

decision in Akins v. FEC. See page

1 of the February 1997 Record. That

case has been argued before the high

court, but no decision has yet been

rendered. During oral arguments,

however, questioning by the justices

suggested that their decision might

hinge on the redressability element

of standing.1

For past Record stories on these

suits, see page 5 of the July 1996

issue, page 2 of the January 1997

issue, page 3 of the August 1997

issue and page 1 of the October

1997 issue.

U.S. Court of Appeals for the

District of Columbia Circuit, 97-

5161, 97-5160; U.S. District Court

for the District of Columbia, 96-

2184 and 95-0349. ✦

1

 In the Akins case, several former

government officials filed a lawsuit

against the FEC after it dismissed an

administrative complaint they had filed.

Among the issues discussed at the

Supreme Court was whether these

former officials had standing to initiate

this lawsuit.

Federal Register

 Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1998-9

Filing Dates for New Mexico

Special Election (63 FR 19260,

April 17, 1998)
June 1998 Federal Election Commission RECORD

5

Judd v. FEC

Keith Judd, a Texas resident and

registered Presidential candidate in

2000, asked the U.S. Court of

Appeals for the District of Columbia

Circuit to find that the Presidential

Primary Matching Payment Account

Act is unconstitutional and to award

him public funding for the election

equal to that awarded President Bill

Clinton during his 1996 reelection

effort. On April 9, the court dismissed Mr. Judd’s petition for lack

of prosecution.

U.S. Court of Appeals for the

District of Columbia Circuit, 98-

1078, filed February 16, 1998, and

dismissed April 9, 1998. ✦

those two accounts. 11 CFR 102.5.

The Commission did not have four

votes to proceed against the DNC

and, therefore, voted unanimously to

close the case. The RNC had filed

this lawsuit in response to that vote.

See page 1 of the September 1997

Record.

U.S. District Court for the

District of Columbia, 97-1552. ✦

Advisory

Opinions

AO 1997-21

Repayment to Candidate of

Advances to Campaign

Committee

After reconsidering its October 2,

1997, decision in this advisory

opinion, the Commission concluded

that the Firebaugh for Congress

Committee may use an unexpected

refund from a vendor to repay its

candidate, Emily Firebaugh, for

advances she made to the committee

during the campaign. The Commission had previously ruled that the

Committee could not use the refund

to repay Ms. Firebaugh for a

transaction that her committee had

reported as an in-kind contribution.

Since that opinion was issued,

however, the Committee produced

evidence that the transaction had

been incorrectly reported and that it

had been, in fact, an advance to the

campaign.

When Ms. Firebaugh was vying

for the 8th congressional district

seat in Missouri during the 1996

election, the Committee secured a

$100,000 bank loan with the candidate as the guarantor. When the loan

came due, Ms. Firebaugh paid the

bank $125,000, which represented

an advance to the committee. That

advance, however, was mistakenly

recorded in her committee’s reports

as an in-kind contribution rather

than as an advance forgiven by the

candidate.

In March 1997, the Committee

received an unexpected media

refund of $46,131 and wanted to use

it—and any other remaining balances in its accounts—to repay Ms.

Firebaugh for the advance.

Citing affidavits from both Ms.

Firebaugh and the Committee

treasurer attesting to the mistake in

reporting and the true intent of the

advance, the Commission concludes

that the media refund and any other

AO 1998-4

Use of Contributor

Information to Demonstrate

Data Mining Technology

White Oak Technologies, Inc.

(WOTI), may use the FEC’s database of contributors to federal

elections in order to demonstrate a

software system it has developed

that performs specialized analyses

of transaction databases, or “data

mining.” This use of contributor

information does not violate the

Federal Election Campaign Act’s

(the Act’s) prohibition against the

sale and use of contributor information. 2 U.S.C. §438(a)(4).

WOTI’s software has been

designed to detect, within data

bases, hidden patterns of collaborations among people or organizations. To demonstrate its capabilities

to prospective clients—both political and nonpolitical organizations

and individuals—WOTI intends to

use the FEC’s contributor database

and to display the results. In order to

establish the veracity of its data

mining software, WOTI states that it

must use data—including full

names, addresses and contribution

amounts—that potential clients can

verify independently. WOTI states

funds that remain following the final

settlement of the Committee’s debts

may be used to repay the remainder—$125,000—of the advance

from the candidate.

The Committee must file an

amended 30-day post election report

for the 1996 election cycle, and

must amend all subsequent reports

to correctly designate the transactions as advances from the candidate

to the Committee. The remainder of

the loan to the Committee should be

reported as forgiven to the extent

that any amount of the advance

remains unpaid to the candidate.

Date Issued: April 20, 1998;

Length: 4 pages. ✦

(continued on page 6)

Back Issues of the

Record Available on

the Internet

This issue of the Record and all

other issues of the Record from

1996, 1997 and 1998 are available through the Internet as PDF

files. Visit the FEC’s World Wide

Web site at http://www.fec.gov

and click on “What’s New” for

this issue. Click “Help for Candidates, Parties and PACs” to see

back issues. Future Record issues

will be posted on the web as well.

You will need Adobe® Acrobat

Reader software to view the publication. The FEC’s web site has

a link that will take you to

Adobe’s web site, where you can

download the latest version of the

software for free.
Federal Election Commission RECORD June 1998

6

Advisory Opinions

(continued from page 5)

Alternative Disposition of

Advisory Opinion Requests

AOR 1997-24

The Commission vote on this AOR

was split 3-2, and no opinion was

rendered. (Four affirmative votes

are necessary to approve an advisory opinion.) The request, submitted on October 21, 1997, sought the

Commission’s opinion on the

conversion of a separate segregated

fund to a nonconnected PAC after

dissolution of the SSF’s parent

corporation.

AOR 1998-5

The requester withdrew this request

for an advisory opinion. The request,

submitted on March 5, sought the

Commission’s opinion on the

preemption of Michigan law governing payroll deductions for contributions to separate segregated funds.

AOR 1998-6

The Commission vote on this AOR

was split 2-2, and no opinion was

rendered. The request, submitted on

March 24, sought the Commission’s

opinion on the solicitation of

contributions from, and the making

of election advocacy communications to, the restricted class of a

foreign corporation and its domestic

subsidiaries. ✦

that, with the exception of its

marketing materials, it would not

publish or distribute FEC data. In

those marketing materials, only city

and zip code information would be

displayed or published. FEC contributor information would not be

part of the software packages

delivered to clients.

The Act requires political committees to identify each individual

whose aggregate contributions

exceed $200 in a calendar year by

listing their name, mailing address,

occupation and employer. 2 U.S.C.

§434(b)(3)(A). The FEC must make

disclosure reports available for

public inspection and copying

within 48 hours of receipt. However, “information copied from such

reports or statements may not be

sold or used by any person for the

purpose of soliciting contributions

or for commercial purposes.” 2

U.S.C. §438(a)(4).

Because WOTI plans only to use

contributor information to illustrate

its methodology and will not sell the

information drawn from FEC

reports to its prospective clients, its

use of the data is permissible.

Date Issued: April, 20, 1998;

Length: 4 pages. ✦

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1998-9

Generic party expenditures made in

connection with special election

(Republican Party of New Mexico,

April 15, 1998; 3 pages plus 1-page

attachment)

AOR 1998-10

Restricted class of physician practice management corporation

(American Oncology Resources,

Inc., May 6, 1998; 6 pages plus 101-

page attachment) ✦

Publications

FEC Issues 1997 Annual

Report

The FEC’s Annual Report 1997 is

now available. The report chronicles

the agency’s activities during the

last year and includes the legislative

recommendations that it presented

to Congress in March.

Among the topics covered in the

report are independent expenditures

by nonprofit corporations and by

party committees, express advocacy,

major purpose test, limited liability

companies and soft money. The

report also discusses the agency’s

limited financial resources and the

increased demands on those resources in the area of enforcement.

The report contains an update on the

predicted shortfall in public funding

for the 2000 Presidential election. A

number of charts and statistical

tables are included.

Free copies of the annual report

are available by calling the FEC’s

Information Division at 800/424-

9530 (press 1) or 202/694-1100. The

report also is available at the FEC’s

web site—http://www.fec.gov. ✦

Change of Address

Political Committees

 Treasurers of registered political committees automatically receive the

Record. A change of address by a political committee (or any change to

information disclosed on the Statement of Organization) must, by law, be

made in writing on FEC Form 1 or by letter. The treasurer must sign the

amendment and file it with the Secretary of the Senate or the FEC (as

appropriate) and with the appropriate state office.

Other Subscribers

 Record subscribers who are not registered political committees should

include the following information when requesting a change of address:

• Subscription number (located on the upper left corner of the mailing label);

• Subscriber’s name;

• Old address; and

• New address.

 Subscribers (other than political committees) may correct their addresses by

phone as well as by mail.
June 1998 Federal Election Commission RECORD

7

Compliance

Nonfilers

The campaign committees listed

at right failed to file required

campaign finance disclosure reports.

The list is based on recent FEC

news releases. The FEC is required

by law to publicize the names of

nonfiling campaign committees. 2

U.S.C. §438(a)(7). The agency

pursues enforcement actions against

nonfilers on a case-by-case basis. ✦

MUR 4215

MI Democrats Agree to

$35,000 Penalty

The Michigan Democratic State

Central Committee and its treasurer,

Roger Winkelman, have agreed to a

$35,000 civil penalty for

misreporting a total of $355,316 in

allocable expenses for a get-out-thevote effort undertaken before the

1994 general election, for paying the

nonfederal portion of shared expenses directly to the vendor rather

than transferring it to the federal

account and having the federal

account pay the vendor and for

reporting transfers from its

nonfederal to its federal account that

did not occur.

Commission regulations require

committees that make expenditures

in connection with both federal and

nonfederal elections to make the

payments only from a federal

account or to establish separate

federal and nonfederal accounts and

to allocate the costs between the two

accounts. Party committees with

federal and nonfederal accounts

must allocate certain expenses

between those accounts, including

generic voter drives that support

federal and nonfederal candidates,

and then report these allocations. 11

CFR 106.5(a)(2)(i-iv) and

104.10(b)(1). If using two accounts,

a committee must pay all of its

allocable expenses from its federal

account and then transfer funds

from its nonfederal account to its

federal account to cover the

nonfederal portion of the expenditure. 11 CFR 106.5(g)(1)(i).

The Federal Election Campaign

Act (the Act) requires committees to

report all transfers and disbursements during a reporting period. 2

U.S.C. §434(b). Commission

regulations further state that political committees must report each

transfer of funds from their

nonfederal accounts to their federal

accounts. 11 CFR 104.10(b)(3).

On November 1 and 2, 1994, the

Committee made disbursements to a

vendor for services related to

generic voter activity. These payments were disclosed on the

Committee’s 1994 Post-General

report and amended on a report

submitted in July 1995.

The Committee’s allocation ratio

in 1994 was 22 percent federal and

78 percent nonfederal—based on the

ballot composition method applicable in Michigan. The Committee

itemized the disbursements to the

vendor using the proper allocation

formula on a Schedule H-4, the

schedule used to report joint federal/

nonfederal activity, with the reported figures for the two dates

being $37,598.66 federal/

$133,304.34 nonfederal and

$40,570.86 federal/$143,842.16

nonfederal. However, the actual

wire transfers to the vendor were in

the amounts of $66,964 federal/

$103,939 nonfederal and $11,206

federal/$173,207 nonfederal. Thus,

even though the combined figures

for the actual payments complied

with the Committee’s allocation

ratio, the reported figures were

incorrect.

In addition, on a Schedule H-3 in

the same report (this schedule shows

transfers from nonfederal accounts

to federal accounts), the Committee

reported a total of $277,146 in

nonfederal funds as transferred to its

federal account for purposes of

paying for the generic voter activity

at issue. However, these funds were

actually disbursed directly from the

nonfederal account to the vendor.

In addition to paying the civil

penalty, the Committee agreed to

file amended reports to correct all of

its reporting violations.

This MUR (Matter Under Review) came out of a complaint filed

by the Michigan State Republican

Committee. The Commission

reviewed the complaint and found

no violations pertaining to the

Republican committee’s allegations,

but it did turn up the violations

discussed above. ✦

Candidate Office Sought Report Not Filed

Adametz, Paul T. House PA/04 Pre-Primary

Carn, Andrew J. House PA/01 Pre-Primary

Firestone, Brooks House CA/22 April Quarterly

Golding, Susan Senate CA April Quarterly

Holtz, Daniel A. House IN/03 Pre-Primary

Lobato, Francesco House NM/03 April Quarterly

MacCallum, James J. House WV/03 Pre-Primary

Overman, John W. J. House CA/44 April Quarterly

Petyo, Michael Edward House IN/01 April Quarterly &

Pre-Primary

Ruehl, Bill E. House WV/01 Pre-Primary

Scarborough, Ella Olivia Butler Senate NC April Quarterly &

Pre-Primary

Smith, Judy House AR/04 Pre-Primary

Stoker, Michael Brian House CA/22 April Quarterly

Zemel, Robert S. House CA/46 April Quarterly
Federal Election Commission RECORD June 1998

8

Statistics

$0

$10

$20

$30

$40

$50

$60

$70

$80

1998

1996

Republican

Open Seats

Democratic

Open Seats

Democratic

Challengers

Republican

Incumbents

Republican

Challengers

Democratic

Incumbents

Millions

Total Receipts for House Candidates: First 15 Months of Election Cycle

Fundraising Increases

Continue in 1998 Election

Cycle

Candidates running for House

and Senate seats in 1998 raised a

total of $338 million and spent $185

million during the first 15 months of

the 1998 election cycle. Receipts

increased by $41 million over the

same reporting period in the 1996

election cycle. The totals include

reports from 1,509 candidates

running for the House and Senate.

As in past years, contributions

from individuals continued to be the

largest source of campaign funds,

reaching 57 percent. PAC money

accounted for 25 percent of receipts,

and direct contributions and loans

from the candidates themselves

accounted for 12 percent of receipts.

Senate candidates who filed

campaign disclosure reports—166 in

all—raised $140.3 million and spent

$70.9 million. House candidates

filing with the FEC numbered 1,343

and raised and spent $197.9 million

and $113.9 million, respectively.

In the upcoming cycle, Senate

receipts are up, reflecting competitive races in states with large

populations, such as California,

New York and Florida. In general,

however, comparisons between

different Senate election cycles are

difficult because different seats in

different states are up for election

each cycle.

This information about candidates’ April quarterly reports is

included in a May 8 news release.

The chart on this page is based on

data taken from this news release.

The complete news release, which

contains statistical campaign finance

information for individual candidates, is available:

• At the FEC’s web site at http://

www.fec.gov (click on “News

Releases and Media Advisories” at

the main menu);

• From the Public Records Office

(call 800/424-9530 and press 3, or

call 202/694-1120); and

• By fax (call FEC Faxline at 202/

501-3413 and request document

610). ✦
June 1998 Federal Election Commission RECORD

9

Regulations

 The changes proposed in the Notice

of Proposed Rulemaking (NPRM)

would modify language at 11 CFR

100.8(b)(4)(iv) and 114.1(e), and

would repeal 11 CFR 114.7(k) and

114.8(g). The proposed rules also

would provide that direct

membership in any level of a multitiered association be construed as

membership in all tiers of the

association for purposes of the

regulations.

 All three alternatives would retain

the three preliminary requirements

set forth in the current rules: that the

membership association specifically

provide for members in its articles

and by-laws, expressly solicit

members and acknowledge the

acceptance of membership by, e.g.,

sending a membership card or

including the new member on a

mailing list.

Alternative A

 For all organizations:

• Annual dues of at least $50,

• A major organizational

 attachment to the membership

 association, or

• A combination of annual dues

 of less than $50 and some lesser

Commission Hears Different

Views on “Member”

Regulations

During testimony at the FEC’s

April 29 public hearing concerning

changes to its “member” qualification regulations, representatives of

several organizations expressed

their views on the three alternatives

that the Commission has proposed.

Testimony highlighted the relative

merits of these alternatives and of

conferring membership status on a

case-by-case basis. (See sidebar on

this page for an explanation of the

alternatives.)

Members of an incorporated

membership association can be

solicited for contributions to the

association’s separate segregated

fund and can also receive express

advocacy communications from the

organization. The proposed rules

would result in an expansion of the

types of persons considered to be

members.

Background

The Commission published its

Notice of Proposed Rulemaking

(NPRM) on who qualifies as a

member of a membership association on December 22, 1997, in

response to a petition for

rulemaking filed by the National

Right to Life Committee, Inc. The

petition sought revisions in the

regulations in light of the decision in

Chamber of Commerce of the

United States v. FEC. (See the

August 1997 Record, p. 8, and the

January 1998 Record, p. 4.) In that

case, the U.S. Court of Appeals for

the District of Columbia Circuit

held that the FEC’s rules on who

could be considered a member were

unduly restrictive as applied to the

U.S. Chamber of Commerce and the

American Medical Association. 11

CFR 100.8(b)(4)(iv) and 114.1(e).

Testimony Favoring “C”

Representatives from several

nonmember ideological associations

and advocacy groups favored

alternative “C.” James Bopp Jr.,

general counsel for the James

Madison Center for Free Speech,

suggested that membership in an

organization alone should satisfy the

FEC’s requirements for member

without requiring a set amount of

dues. He said “psychological”

attachments to organizations,

particularly ideological organizations, are sufficient, and that a dues

requirement could result in “politics

for the wealthy.”

 organizational attachment to the

 association.

Alternative B

 Organizations formed to further an

ideological, social welfare or

political agenda:

• Annual Dues of $200, or

• A lesser dues obligation coupled

 with specified governance rights

 in the organization.

 Organizations formed to further

business or economic interests

(business leagues, trade associations,

labor organizations and selfregulating professional associations)

• Any set amount of annual dues.

Alternative C

 For all organizations:

• Any set amount of annual dues.

 The NPRM detailing the list of

alternatives in full is available:

• From the FEC’s Public Records

 Office, 800/424-9530 (press 3)

 or 202/694-1120;

• Through the FEC’s Faxline,

 202/501-3413 (request

 document 229);

• At the FEC’s web site—

 http://www.fec.gov; and

• In the December 22, 1997,

 Federal Register (62 FR 66832).

NPRM Alternatives For Member Regulations

(continued on page 10)

Paul Sullivan, president of

Americans Back In Charge Foundation, agreed, stating that too much is

being made of the financial commitment a member has to his or her

organization. Another speaker,

William J. Olson, expressed concern

that alternatives “A” and “B” could

discourage people from becoming

involved in the political process

because of the dues requirement.

Mr. Olson, legal co-counsel of Free

Speech Coalition, Inc., a nonpartisan group of ideological organizations, also opposed alternative “B,”

which he agreed would treat ideological organizations more harshly
Federal Election Commission RECORD June 1998

10

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

than those organized around business concerns.

Another theme was summed up

by Jerald A. Jacobs, general counsel

for the American Society of Association Executives, who appealed to

Commissioners to make changes to

the regulations that are “simple,

enduring and easy to follow.” While

several speakers leaned toward

alternative “C,” under which any

amount of dues would be sufficient

to confer member status, several

speakers said that there should be

waivers for those members who pay

no dues (i.e., lifetime members or

new members for whom the dues

payment is waived for the first

year).

Union Representatives’ Concerns

Laurence Gold, associate general

counsel of the AFL-CIO, said that in

his view all three alternatives raised

concerns because they do not fully

satisfy the standards set by the

Supreme Court in FEC v. National

Right to Work Committee. He also

urged the Commission to retain the

current rule treating union local

members as members of the AFLCIO and to permit retirees to qualify

as members. Mr. Gold’s views were

shared by Robert Lenhard, associate

general counsel for the American

Federation of State, County and

Municipal Employees.

The Case-By-Case Approach

Daniel M. Schember, an attorney

representing several former government officials in Akins v. FEC,

which is now before the Supreme

Court (see page 1 of the February

1997 Record), proposed rejecting all

the alternatives and assessing

member status on a case-by-case

basis. Calling membership a

“thorny” problem, Mr. Schember

suggested that the Commission craft

a series of “factors” that would be

applied to each organization seeking

approval to solicit and communicate

with its members.

Additional comments also came

from Michael Boos, legal director of

the National Citizens Legal Network, who questioned whether any

of the alternatives could pass a First

Amendment test. Mr. Boos also

suggested that the Commission

defer to state laws defining who is a

“member” for organizations organized under the laws of that state.

In all, 10 people offered testimony at the public hearing. The

FEC received 20 written comments

in response to the NPRM on the

definition of member. To review the

written comments, call the FEC’s

Public Records Office at 800/424-

9530 (press 3)or 202/694-1120. ✦

Regulations

(continued from page 9)

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

application of “data mining”

technologies to campaign finance,

6:5

Court Cases

FEC v. _____

– Al Salvi for Senate Committee,

4:4

– Charles Woods for U.S. Senate,

3:3

– National Medical Political Action

Committee, 1:3

– Williams, 1:3

_____ v. FEC

– Clifton, 4:5

– DSCC (97-5160 and 97-5161), 6:4

– Hollenbeck, 4:4

– Judd, 6:5

– Judicial Watch, Inc., 4:4

– National Committee of the Reform

Party, 1:2; 4:4

– Natural Law Party (98-1025), 6:3

– Ohio Democratic Party, 6:2

– 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

– Stockman, 5:3

Reports

Electronic filing, 4:1; 4:2

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

Pre-Election Reporting Dates: 1998

Primary and Runoff Elections, 1:8

Reports, Alabama Runoff, 2:1

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

Reports due in April, 4:2

Special Elections, California, 1:12;

3:9

Special Election, New Mexico, 5:3

Special Election, New York, 2:4

Special Election, Pennsylvania, 1:13

Surveying potential for electronic

filing, 2:2
June 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
FEDERAL ELECTION COMMISSION

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Washington, DC 20463

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Penalty for Private Use, $300

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Federal Election Commission RECORD June 1998