999 E Street NW Washington DC 20463 Volume 17, Number3

11 INDEX

11 cctn'LIANCE: MURs Released to the Public

<nJRl' CASES

10 FEC v. Dramesi for Congress Committee

10 FEC v. west Virginia Republican State

Executive Committee

10 FEe v. Speelman

10 New Litigation

7 I\IJYISORY OPlNIOOS

J

7 S'I:ATISTICS: Semiannual PAC Count

6 SPECIAL ELEX:TIrn: Massachusetts

REPORTS

5 1991 Reporting Reminder

5 Letter to State, Election Officials on

Allocating Reporting Rules

5~: For Candidates and PACs

PUBLIC FUNDIR;

1 FEe Comments on IRS Rules

2 Focus Groups Discuss Tax Checkoff

Tl'tBLE OF CDn'ENl'S

the primary Account. Future checkoff

dollars would also be transferred from the

Fund to the primary Account. (The transfer

of additional funds into the Primary Account could take place only through september 30 of the year following the Presidential election; checkoff dollars deposited

into the Fund after that date would have to

be reserved for the next Presidential

election. )

If a shortfall were to occur--i.e., if

the amount of matching funds certified by

the Commission in one month exceeded the

total dollars in the Primary Account as of

the last day of that month-the amount paid

to each candidate would be reduced. The

candidate would receive a payment based on

his or her pro rata share of the total

(continued on p. 4)

FEDERAL ELECTION COMMISSION

March 1991

Treasury proposal: Full Set-Aside

The Treasury Department proposes a

payment system under which the projected

amount needed to pay for the conventions

and the general election would be set aside

by January 1 of the Presidential election

year. The remaining amount in the F'Undand additional monthly deposits of checkoff

dollars-would then be used for matching

payments to primary candidates.

Specificqlly, under the proposed rules,

the secretary of the Treasury would set

aside funds for the conventions and general

election by transferring moneys from the

Presidential Election Campaign Fund to a

Nominating convention Account (first priorty) and to a General Election Account (second priority). The Treasury, in consultation with the FEC, would determine the

estimated amount needed for these two

accounts.

The dollars remaining in the Fund after

the full set-aside would be deposited into

-~ T-~ _I. __ • _ • ~~.~~-~.... ( -F~~ .~:. ~-~,~ ~~\-~~.. ~-~~ ~~ " AT~~~

/ • h • L"t

-. _ . I :'1 .: &~~·~~::~,c~~ .. ~~::"/.~.~-~~~" ~~~

" . - ~~~ / --

/ • < ~''''' •• / ...... :

_" 1- _ _ __ _ _ _ ~.......... ,- __ ._~_ .~~ _~•• ~~~.

FEe rn 'I'RFASURY RULES

CCNC:ERNIN3 PUBLIC FUNDIOO PAYMmTS

In written comments and oral testimony,

the commission responded to a Notice of

proposed Rulemaking on the financing of

Presidential elections published by the

Department of Treasury, Internal Revenue

Service (55 FR 51303, December 13, 1990).

The proposed rules explain how the Treasury

Department would handle payments f rom the

Presidential Election Campaign Fund in the

event of a shortfall of checkoff dollars in

the Fund. The Commission submitted its

written comments on January 22, 1991.

Following up on thisI Chai rman John Wanen

McGarry testified at an IRS hearing held on

February 1l.

Under the checkoff law, funding for the

conventions and the general election nomdnees has priority over funding for primary candid~tes. The Commission anticipates

that a shortage of public funds for the

1992 Presidential election will jeopardize

the funding of ,primary campaigns.

•
Federal Election CaIIIlission, 999 E Street, Mi, washington, IX: 20463

800/424-9530 202/376-3120 202/376-3136 (TOO)

FEDERAL ELECTION COMMISSIONVolume 17, Numb

Election Campaign Fund, the general publ

is not making an informed choice. Althou

the report noted that creating an inform

populace may not alter existing patterns 

participation in the dollar checkoff, the

report did recommend a public education

program that would address three key

points:

o The purpose of the Presidential public

funding program;

o How much money is collected and spent o

the program; and

o How the public funds are allocated and

spent.

To this end, the COl1U'llission plans to

conduct a broadcast media program in Mar

and April to educate the public. The ag

cy has also developed written materials: 

handout for tax preparers and taxpayers

(see next page) and a new brochure expla

ing the dollar checkoff and how the publ

fundi nq proqram works. Both i terns are

available free from the FEC's Information

Services Division (800/424-9530; 202/376

3120) .

Copies of the ~eport are available fr

the Public Records Office. To order the

report, call 800/424-9530 and ask for Pu

lic Records, or dial the office directly:

202/376-3140.

walter J. stewart, Secretary of the Senate,

Ex Officio Commdssioner

Donnald K. Anderson, Clerk of the House of

Representatives, Ex Officio Commissioner

2

John warren McGarry, Chairman

Joan D. Aikens, Vice Chairman

Lee Ann Elliott

Thomas J. Josefiak

Danny L. MCDonald

Scott E. 'Ibcmas

March 1991

FOCUS GIOJPS DISCUSS 'mK atECROFF

On January 4, 1991, the commission

received a report on the general public's

awareness of the dollar tax checkoff on IRS

forms and how the checkoff relates to the

Presidential public funding system. The

contractor, Market Decisions Corporation of

portland, Oregon, prepared the report after

holding focus groups in three cities du~ing

November and December 1990: Portland,

Oregon; Fort Lee, New Jersey; and Chattanooga, Tennessee. Two focus groups met in

each city: one composed of indviduals who

checked "yes" to the dollar checkoff on

their last tax return, the other consisting

of individuals who checked "no." Each

group comprised from seven to eleven men

and women representing an assortment of

demographic characteristics. The group

sessions were designed to collect data on

the participants' understanding of Presidential public funding, their attitude

towards the public fundi.nq program and why,

as individuals, they checked yes or no.

The report concIuded that the public

funding program is obscure--most citizens

don't understand why it was implemented and

how it works. When making the decision to

contribute-or not to contribute-one

dollar of their taxes to the Presidential
I 0J,t1l No. \54S-0014

For Prlw.c;r Aeland

P.perwork Reduction

Act Notice, "I

1nllrud10nIiVolume 17, Number 3

~~

~)

• In 1988 the Democratic and Hepublican

Presidential nominees each received $46.1

million; 15 primary candidates roceived

a total of $67.5 million, and each convention received $9.2 million.

• Presidential candidates use the checkoff

dollars to pay for t.v. ads. campaign staff,

campaign travel, fundraising and other

campaign expenses, but not personal

expenses.

• None of the money is used for Senate or

House elections.

• After the election, the Commission audits

every campaign that received federal

funds, and any surplus or improperly used

tccoral funds must be repaid to the Fund.

• Taxpayers check off about $33 million

annually

Help taxpayers exercise their choice by

shari ng these facts _For more information,

write the Federal Election Commission,

999 E Street NW, WaShington, DC 20463.

l,ul name

il®90 1(1)

3

o to Chis lund? .

FEDERAL ELECTION COMMISSION

lA' ),<I1i~ii~,-?)~~,

The Taxpayer's Choice

It 310'''' It-rUin, ~pou~·s h/1;t n3m~.anl,j Inll ....t

u.s. Individual Income Tax Return

FQrrl'l., eer Jan. - Dec.1 I I 1990. Qf otn tUn iI r "11"1

"(cur h'~1 (J.am~ 'n<lIr1lt~1

~I •. , •

Many taxpayers overlook the tax checkoff

line. That line asks taxpayers to make a

choice, to indicate whether they want $1 of

their taxes to be set aside for the Presidential

Election Campaign Fund. To help taxpayers

exercise that choice, here are the essential

facts:

• The dollar checkoff does not increase the

taxes an individual owes.

• Checkoff dollars go directly to qualified

Presidential candidates (regardless of

party) to fund their primary and general

election campaigns. The Republican and

Democratic nominating conventions are

also funded.

• The purpose of using federal dollars to

fund Presidential campaigns is to reduce

candidates' dependence on large contributions from individuals and groups and

to place candidates on an equal financial

footing in the general election.

label

(See l

IrlSlfUCl,on~ A

o~~a~ II.) D

E

use IRS label.

, at~erwlse. M

please prmt E

" or type. E

1040

March 1991

Copies of this handout are available free of charge from the COIlU'llission. Additionally, if

your organization would like to print large quantities of the handout, camera-ready copy is

available at no charge. Call 800/424-9530 or 202/376-3120.
March 1991 FEDERAl ELECTION COMMISSION

(continued from p, 1)

amount certified for that month. For

example, if, in a given month, certifications totaled $1,000,000 (two candidates,

$500,000 each) and only $200,000 was available for payment, each candidate would be

paid $100,000, based on the following

calculation:

$ 500,000 $1,000,000 x $200,000 = $100,000

The difference between the amount certified

and the amount actually paid to the candidate would be carried over to the next

month and considered with other certifications for payment that month.

COJIIIission's Coaments and Testimoney

Treasury's Full Set-Aside. The COlTl'l'lissian disagreed with the Treasury proposal

to set aside--before making any payments to

primary candidates--100 percent of the

estimated funds needed to cover payments to

the conventions and general election nominees. Under this proposal, primary candidates might not receive significant amounts

of their entitlements until after the crucial early primaries. The delay and uncer~

tainty might make it difficult for candidates to obtain campaign loans. Moreover,

because candidates would receive only a

fraction of their entitlement at the most

critical period of the campaign, the full

set-aside system would distort the campaign

process and might even induce some primary

candidates to decline public funding

entirely.

f'EC'S Partial set-Aside. The Conunission recommended that the Treasury consider

a method that would take into account

anticipated receipts to the Fund. In the

Commission's view, the public funding

statutes allow the Secretary to consider

reasonable estimates of future receipts to

the Fun~ When calculating the set-aside

amount. The statute provides that the

Primary Account contain "the amount available after the Secretary determines that

amounts for [convention and general election) payments...are available for such

payments." 26 U.S.C. §9037(a). The Commission interprets "available" to mean

1Thi s position is consistent with that

taken by Treasury and the Commission with

respect to the 1976 election cycle, when a

less severe shortfall was projected. See

page 13 of FEC Agenda Document #91-04.

4

Volume 17, Numb

available when the funds are needed to 

payments to the convention c~nuni ttees an

general election candidates. This "pa

tial set~aside" approach would, in effe

increase by about $28 million the pool 

funds available for the Primary Account

during the eacly months of the election

year. This $28 million represents esti

mated checkoff deposits expected during

January through July 1992 (prior to any

general election payouts).

The Commission reoammended a system

under Which primary candidates would

receive a predetermined percentage of th

certifications each month. The agency'

most recent estimates indicate that, un

this system, primary candidates would b

able to receive as much as 95 percent o

their monthly entitlements in the early

months of 1992. This approach would:

o Provide maximum funds at the most cri

cal period in the campaign;

o Create some certainty in the amount o

matching funds primary candidates cou

expect and thereby make it easier for

candidates to obtain campaign loans; 

o Ensure an equitable distribution of fu

among the candidates.

In summary, the Commission urged Tr

ury to consider a system that takes into 

account an estimate of anticipated rece

from the 1992 checkoff and to adopt a

payment system least disruptive to the

public financing of primary campaigns.

2The Commission's most recent projectio

indicate that the 1992 payments to conv

tion committees and general election ca

dates will total $112.24 million. unde

full set-aside, this would leave only $

million to pay primary candidates on Ja

ary 2, 1992. The Commission estimates 

January certifications for matching fun

will equal $20 to $25 million, dependin

the payment schedule used (once a month 

more frequently).
Volume 17, Number 3

1991 REPORTIOO REm~ER

PACs, party committees and House and

Senate candidate committees that filed on a

quarterly basis in 1990 now file on a semiannual basis. The next report these

committees must file is the July 31 semiannual report (covering January through

June 1991). Committees filing semiannually

do not file an April 15 quarterly report.

PACs and party committees that filed on

a monthly basis in 1990 must continue to

file on that basis unless they notify the

commission, in writingf that they wish to

change to semiarmual filing in 1991.

11 era 104.5(c).

Presidential candidate committees have

the option of filing quarterly or monthly

reports during 1991. If they wish to

change their current filing frequency,

however, they should notify the Commission.

For complete information on reporting,

including 1991 deadlines, see the January

1991 Record.

FEe LETI'ER ro STATE OFFICERS rn

ALLOCATlOO REPORTI~ RULES

In early february, the Commission sent

a letter to Secretaries of State (or equivalent state officers) to notify them that

new federal regulations on allocation may

affect the content of state disclosure

reports. Under the allocation rules, which

became effective on January 1, 1991, political committees with federal and nonfederal accounts must use the federal account to

pay for joint federal/nonfederal transactions. The nonfederal account transfers

its portion of a payment for a joint expense to the federal account r the federal

account reports the receipt of the transfer

and the ultimate disbursement of funds to

the vendor. In light of these new regulations, the Commission pointed out that

state officials may wish to consider whether the nonfederal account's report, merely

showing a transfer to the federal account

for a joint expense instead of showing a

payment to the vendor. will satisfy state

disclosure requirements.

5

March 1991 FEDERAL ELECTION COMMISSION

Conference for candidate Ccmnittees

Washington, DC, April 19

Bobby werfel, Chief, Information Services

This one-day conference will focus on

winding down the 1990 campaign and gearing

up for the 1992 elections.

PUBLIC APPFARANCES

3;22 Association of state Democratic

Chairs

Washington, DC

Chairman John Warren McGarry

Louise D. Wides, Assistant

Staff Director, Information

Services

Bobby Werfel, Chief, Information

Services

Allocation Training for party cOJIIIlittees

Columbus, Ohio, March 19-20

Janet Hess

This training is recomnended for state

and local party committees that are located

in Ohio and surrounding states and that

conduct both federal and nonfederal

activity.

Conference for PACs

Washington, DC, May

Bobby Werfel

This one-and-one-half-day conference

will cover the campaign finance law's

requirements for corporations, labor organizations, membership groups and their

respective PACs. The new allocation rules

will also be discussed. The conference

date will be announced in a future Record.

aNDID!\TE AND PAC cawERENCES;

ALUX:ATIa-l TRAlNlllXi

The cornrodssion is planning the foll~

ing conferences as well as an allocation

training. For more information, call the

Information Services Division, 800/424-9530

or 202/376-3120, and ask for the contact

person listed below.

•
COfIUTl'EES 'llIAT SUPPORT CANDIM.TES IN 'IHE

SPECIAL PRIMARY <H.Y (APRIL 30)

4/18

5/23

7/5

7/31

4/18

7/31

4;15

5/20

7/5

7;31

RegjCert

l1ail~ng Filin

Date Date

4/15

7/31

Reg/Cert

l1ail~ng Filin

Date Date

Volume 17, Numbe

Pedod 1

Covered

Period 1

Covered

1;1-4;10

4/11-5/15

5/16-6;24

6/25-6/30

1/1-4/10

4/11-6/30

reporting requirement, see 11 CFR 104.4(

and 104.5(g).

axvu:TJ'EES '!HAT SUPPORT CANDIIlA.TE.'5 IN BO

THE SPECIAL PRIMARY (APRIL 30) AND mE

SPECIAL GmERAL (JUNE 4)

Report

Report

l I f the pre-primary report is the first

report filed by the committee, the repor

must disclose all activity that Dccurred

before the committee registered and befo

the individual became a candidate.

2Reports sent by registered or'certified

mail rust be postmarked by the mailing

date. Otherwise, they must be received 

the filing date.

Pre-primary

pre-general

PDst-general

Mid-year

Pre-primary

nid-year

State Filing

In addition to filing with the appro

priate federal office--the Clerk of the

House Dr the FEC--CDmmittees filing Mass

chusetts special election reports must

simultaneously file copies Df reports wi

the Massachusetts state office: Divisio

of Public Records, Office of the Secreta

Df state, one AshburtDn Place, Room 1719

Boston, MA 02108.

Authorized committees of candidates

must file the entire report; other commi

tees must file only the portion of the

report that is applicable to the candida

(for example, the FDrm sx Swmtary page a

any schedules that disclose contribution

or expenditures on behalf of the candidate). 2 U.S.C. §439(a); 11 CFR 108.3.

6

March 1991 FEDERAL ELECTION COMMISSION

Authori zed CoJlIni.ttees

Authorized co~ttees of candidates

running in the special elections must file

reports according to the schedule given in

the tables below. All candidates known to

be on the ballot are automatically sent FEC

reporting forms.

Note that an authorized committee must

file notices Dn cDntributions Df $1,000 or

more received after the close of books for

a pre-election report but more than 48

hours before the election. The notice must

reach the appropriate federal and state

filing offices within 48 hours after the

committee's receipt of the contribution.

For information on the content of the

notice, see 11 CFR 104.5(£).

PACs and party COdIDittees

semiannual Filers. PACs and party

committees that report on a semiannual

basis during 1991 may have to f~le pre- and

post-election reports if the committee

makes contributions or expenditures in

connection with a special election during

the coverage dates shown in the tables.

11 eFR 104.5(h).

PAC Reports on Independent Expenditures. Any PAC (including a monthly filer)

that makes independent expendi tures in

connection with a special election may have

to file a 24-hour report. This reporting

requirement is triggered when a committee

makes independent expenditures aggregating

$1,000 or more between 2 and 20 days before

an electiDn. The report must be filed with

the appropriate federal and state filing

Dffices within 24 hours after the expenditure is made. FDr more information on this

Monthly Filers. PACs and party commi ttees that file mDnthly during 1991 do not

have to file pre- and post-election

reports, but PACs may have to file 24-hour

reports on independent expenditures, as

explained belD......

nASSAOlUSETl'S SPECIAL ELEC'I'ICfiS

Massachusetts will hold special elections in the 1st Congressional District to

fill the seat held by the late Congressman

Silvio Conte. The special primary election

will be held April 30, and the general

election, June 4. Reporting information is

given below.
Volume 17, Number 3

sale of campaign Asset

under the following circumstances,

described by the Smith Committee, the pro-

(continued)

AL'I'ERNATE DISPOSITIOO OF

ADVISORY OPINICN

AOR 1990-28: Te1phone service Bureau's

Provision of 90o-1ine Services

to candidates and Political

COIIIlittees

On January 31, 1991, the commi.ssion failed

to approve a draft advisory opinion by the

required four votes. The vote was 2-2,

with Commissioners Aikens and Thomas

recusing themselves. (See Agenda Documents

90-0B and 91-0B-A.)

ADVISORY OPINI<E SUl9fARIES

NJ 1990-26: sale of campaign Asset;

Personal Use of Excess Funds

After November 30, 1989

The Committee to Be-Elect Virginia Smith to

Congress, the 1988 principal campaign

committee of a ngrandfatheredn Member of

Congress, now retired, may sell the committee's computer without a contr i bution

resulting, as long as the price does not

exceed the usual and normal charge. The

committee may follow one of two methods to

determine its cash-on~hand balance as of

November 30, 1989--i.e .• the maximum amount

that may be converted to the former

Member's personal use--and to determine

whether the proceeds from the sale of the

computer may be converted to personal use.

1\OR 1991-1

Employees' advance authorization for

periodic credit card contributions to partnership PAC. (Date Made Public: January

24, 1991; Length: 17 pages)

l\OR 1991-2

Disposition of possibly illegal contributions rai5ed through 900-1ine services.

(Date Made Public: February 5, 1991;

Length: 16 pages plus attachments)

ADVISORY OPINIOO RQJESTS

Recent requests for advisory opinions

(AORS) are listed below. The full text of

each AOR is available for review and comment in the FEC's Public Records Office.

7

FEDERAL ELECTION COMrvllSSJON

SEMIANNUlU. PAC COONT

At the close of 1990, the number of

political action committees (PACs} registered with the FEC dropped to 4,172, a

decrease of 21 PACs since the last semiannual survey (July 1990). The category of

nonconnected PACs lost the most PACs--53--

while the number of trade/membership/health

PACs increased by 21, as shown in the table

below. For statistics of semianual PAC

counts taken since 1975, order the FEe

press release of January 11, 1991 (800/424-

9530 or 202/376-3140).

March 1991

l"Other" category consists of PACs formed

by corporations without capital stock and

PACs formed by incorporated cooperatives.

category Number of PACs Gain or Loss

of PAC as of 12/31/90 Since 711/90

Corporate 1,795 +13

Labor 346 0

Trade/me!1lbership/health 774 +21

Noncoflected 1,062 -53

Other 195 -2

e Total 4,172 -21
March 1991 FEDERAL ELECTION COrvlrvllSSION

posed sale of the computer will not result

in a contribution from the purchaser:

a The committee purchased the computer for

its own particular use (rather than as a

fundraising item);

o The computer has an ascertainable market

value; and

o The committee is apparently contemplating

termination. See ADs 19B9-4 and 1985-1.

In order not to be considered a contribution, however, the purchase price of the

computer must not exceed the usual and normal charge on the retail market at the time

of sale. See 11 CFR- lOO.7(a)(1)(iii) (B).

If the committee sells the computer at

the usual and normal charge (and therefore

no contribution results), the committee

must report the money it receives under the

"Other Receipts" category on the Detailed

Summary Page, itemizing the entry if the

transaction exceeds $200. 2 U.S.C. S434(b)

(2)(J); 11 CFR 104.3(a)(3)(x).

Personal Use of Proceeds

Because Mrs. Smith is "grandfathered,"

i.e., she was a Member of Congress on January 8, 1980, she may convert excess campaign funds tO'personal use under 2 u.s.c.

§439a. (See also 11 CFR 113.2.) (Candidates who are not "grandfathered" are

prohibited from doing so.) In November

1989, Congress amended section 439a to

phase out the personal use exception for

grandfathered members. See the section 504

of the Ethics Reform Act of 1989, P.L. No.

101-194.

The amendment placed a limit on the

amount of excess campaign funds that may be

converted to a "grandfathered" candidate's

personal use: "the amount equal to the

[campaign's] unobligated balance on hand on

the date of the e~actrnent of this Act (NOVember 30, 1989]."

The Smith Committee asked whether proceeds from the sale of the computer could

be included in the Committee's November 30,

1989, unobligated balance for purposes of

converting the proceeds to Mrs. Smith's

personal use. The Corrrnission offered two

options for determining the Committee's

November 30 balance. under Method A, only

cash assets may be included in the balance.

Method B permits the fair market value of

the committee's noncash assets to be

included in the balance, but additional

reporting is required under this method.

1The amendment further pt"ovided that the

personal use exception will completely

expire for grandfathered officeholders

serving after the 102nd Congress, which

ends on January 3, 1993.

B

Volume 17, Numbe

Method A: cash Assets Only. This

method construes the balance to be the

committee's cash on hand, as defined und

11 eFR 104.3(a)(I), on November 30, 1989

minus any debts and obligations owed by 

committee. (Section 104.3(a)(I) defines

cash on hand to include currency; the

balance on deposit in banks and other

institutions; traveler's checks; certifi

cates of deposit, treasury bills and any

other committee investments.) The amoun

of excess campaign funds converted to the

candidate's personal use may not exceed

this balance. If, however, the committe

unobligated balance drops below the Novem

ber 30 amount, noncash assets (such as th

computer) may be liquidated and added to

the current balance up to the November

ceiling.

For example, based on the 8mith comm

tee's 1989 year-end report, the Committe

unobligated balance on November 30. 1989

its net cash-onihand amount--was $32,775

under Method A. If the Committee's bal

ance falls below this figure, the funds

received from the sale of the conputer m

be added to the current balance in order 

bring the excess funds available for per

sonal use back to the November 30, 19B9,

amount.

Under this method, unliquidated campaign assets-for example, a car--may be

directly converted to the candidate's

personal use (i.e., given to the candida

as long as the value of the asset, when

combined with other outlays of personal

use, does not exceed the November 30

balance.

Any personal use of committee funds o

assets after November 30, 1989, will cou

as a drawdown on the ceiling. If, for

example, the Smith Committee had converte

$2,000 to personal use after November 19

the unused ceiling balance would drop to

$30,775. This would also be true under

Method B.

Jllethod B: Cash and Noncash Assets.

The second method permits a committee to

include in the November 30, 1989, figure

not only the co~ttee's net cash-an-hand

balance but also the fair market value o

noncash assets held by the committee on

2Thi s figure was derived by determining t

Committee's net cash on hand at the end o

1989 (cash on hand of $32,551.52 minus $0

debts and obligations owed by the Commit

tee) and backing out December activity,

i.e., subtracting receipts received in

December ($230.13) and adding disburseme

made in December 1989 ($453.84).
FEDERAL ELECTION COIVlMISSION

•

March 1991

that date. Noncash assets would include

items purchased by the committee (e.g.,

cars, computers) as well as any unliquidated in-kind contributions received by

November 30, 1989, such as contributions of

stocks, bonds and art objects. However,

under this method, the committee must file,

as an amendment to its 1989 year-end

report, a separate memo entry Schedule A

itemizing each asset (date acquired; fair

market value as of November 30, 1989; and

an explanation of the basis used to ascertain the aSset's value). Moreover, in the

report covering the period when an asset is

disposed of (e.g., sold or given to the

candidate for personal use), the committee

must disclose the asset's fair market value

on that date.

under Method B, certain co~ttee

receivables may also be treated as assets

and included in the Nove~ber 30, 1989,

unobligated balance: debts and loans

reported as owed to the committee as of

November 30, 1989 (as long as the committee

actually collects on the debts) and credits

or refunds payable to the cornmittee by

vendors. These types of receivables, however, must be itemized on Schedule C or 0

of the committee's 1989 year-end report (or

an amendment thereto).

under Method e, if the Smith Committee

adds the fair market value of the computer

(for illustration purposes, $700) to the

committee'S net cash-on-hand balance as of

November 30, 1989. the addition will increase the ceilinq on funds and assets

convertible to personal use to $33,475

($32,775 plus the $700 computer). The Committee must amend its 1989 year-end report

to itemize the computer on a memo entry

Schedule A.

Tax Ramifications

The Commission expressed no 0plnlon as

to any tax ramifications concerning the use

of excess campaign funds because such

issues are outside its jurisdiction.

Commissioner Thomas J. Josefiak filed a

concurring opinion. (Date Issued: January

18, 1991; Length, 8 pages, including

concurring opinion)

N) 1990-27: Transfer to Party's Federal

Account of Funds Mistakenly

Deposited in State Account

Based on the unique factors in this situation, the Connecticut Republican party may

transfer to its federal account certain

escrowed funds that were originally transferred to the party from a federal candidate committee but that were mistakenly

9

Volume 17, Number 3

deposited in the Party's nonfederal

account.

In anticipation of terminating, Congressman John Rowland's principal campaign

committee transferred $103,765 in excess

funds to the Connecticut Republican Party

(the party Committee), which deposited the

funds in a nonfederal account. The State

Elections Enforcement commission of Connecticut determined that the deposit of the

Rowland funds in the party's nonfederal

account violated a provision of state law.

In compliance with a conciliation agreement

resulting from the state violation, the

party Committee transferred $71,565 from

the state account to an escrow account; the

other $32,200 in misdeposited funds, which

the nonfederal account had contributed to

Mr. Rowland's gubernatorial committee, were

returned to the pa~ty Committee and also

deposited in the escrow account. The state

conciliation agreement provided that the

party Committee would transfer the escrowed

funds to the federal account if the Federal

Election Commission approved such a transfer.

Commission regulations prohibit the

transfer of funds from a committee's nonfederal account to its federal account

(except for payment of allocated expenses).

11 CFR 102.5(a)(1)(i). In this case, however, the Party Committee may transfer

funds from the escrow account to its federal aCcoWlt, given the unique combination of

factors presented in the advisory opinion

request:

o The original transfer of excess campaign

funds was lawful, since the Federal Election Campaign Act (the Act l and FEe rules

permit a candidate committee to transfer

unlimdted excess campaign funds to a

party committee (2 U.S.C. S439a; 11 CFR

113.1(e) and 113.2(c);

o The funds could have been deposited in

the federal account at the time of the

transfer, and the failure to do so was

"in honest clerical error" 1

o In most significant respects, the contribution limits and prohibitions of Connecticut law are consistent with those of

the Act; and

o The transfer of funds to the escrow

account, and the proposed transfer to the

federal account, were prescribed by a

state election agency enforcing applicable state law (rather than being proposed

by the party Committee to seek an exemption from the transfer prohibition).

(Date Issued: January 18, 1991;

Length: 4 pages)
March 1991 FEDERAL ELECTION COMMISSION Volume 17, Numbe

- - - - . ..... -- - - -

. . ';. . - :....

- - . .. -

FEe v. ORAPJESI FOR CCNiRESS CCJ'IDIIITTEE

Having previously found Russell E.

paul, as treasurer of th~ committee, in

contempt of court for1failing to pay a

$5,000 civil penalty, the U.S. District

Court for the District of New Jersey issued

an order on January 2, 1991, in which Mr.

Paul agreed to pay a total of $5,317 to the

FEe. (Civil Action No. 85-4093.) That

amount represents the original $5,000

penalty, $91 in interest charges and $226

in FEe costs. The Commission agreed to

waive the contempt penalties of $50 a day,

which had been accumulating since the

September 5, 1990, contempt order. However, if Mr. Paul does not pay the FEC the

$5,317 stipulated in the current order by

March 1, 1991, the contempt penalties

(accruing from October 10, 1990) will be

immediately due.

The court issued a consent order iropo

ing a $2,000 civil penalty against the

committee and permanently enjoining it fro

future similar violations.

FEe v , SP'EELI'Wl

On January 28, 1991, the U.S. Distric

Court for the District of Maryland issued 

consent order and judgment in which the FE

and Harry speelman agreed that defendant

speelman exceeded the contribution limits

of the Federal Election Campaign Act by

making a total of $11,470 in contribution

to American Citizens for political Action

during 1987. These contributions exceede

the $5,000 per year limit under 2 U.S.C.

§441a(a)(1)(C). The court permanently

enjoined Mr. Speelman from future similar

violations of the Act. Because of extenuating circumstances that came to the

agency's attention after it had filed thi

suit, the Co~ssion agreed to drop its

request for a civil penalty and court

costs. (Civil Action No. 90-2190.)

FEe v_WEST VIRGINIA REPUBLICAN

STATE nECtJTIVE <:DRU'ITEE

On January 18, 1991, the u.s. District

Court for the Southern District of west

Virginia entered a judgment that was agreed

to by the FEC and the defendant committee.

(Civil Action No. 2:90-0B98.) The parties

agreed to the following points:

o In conducting a phone bank voter drive on

behalf of the Presidential ticket--an

exempt party activity--the committee also

mentioned the names of House and Senate

candidates but failed to report any part

of the phone bank expenditures as contributions allocated to the House and Senate

candidates, in violation of 2 U.S.C.

§434(b) .

o The committee incorrectly reported as

n operating expenditure s" ce rtain di5-

bursements for newspaper advertisements

that advocated the defeat of a federal

candidate, a second violation of 2 U.S.C.

§434(b) .

o The committee used its nonfederal account

to make the phone bank and newspaper ad

expenditures described above, a violation

of 11 CFR 102.5(a).

o The committee failed to itemize certain

contributions and transfers it received

and failed to disclose year-to-date

totals, a third violation of 2 U.S.C.

§434(b) •

1A summary of the contempt order appears in

the November 1990 Record.

10

NEIi LITIGATIQf

FEX: V. NRA PoBtical View')' Fund

The FEe asks the district court to

declare that the NRA Political Victory

Fund, the separate segregated fund of the

National Rifle Association, and its treas

urer violated 2 U.S.C. §441b(a) by accept

ing a corporate contribution totaling

$415,745 from the National Rifle Association-Institute for Legislative Action

(ILA), a lobbying arm of the NRA that

operates from a corporate account. speci

fically, the FEC alleges that in 1988 ILA

initially paid that amount in solicitation

expenses for two Victory Fund fundraisers

held in March and July 1988. The Victory

Fund, on August 1, 1988, reimbursed ILA fo

these expenses. on October 20, 1988, ILA

paid $415,745 to the Victory FUnd. Under

11 eFR 114.5(b)(3), a corporation may reim

burse its separate segregated fund (SSF)

for expenses that the corporation could

lawfully have paid as an administrative

expense, but reimbursement must be made n

later than 30 days after the expense was

paid by the SSF. The FEC also asks the

court to declare that ILA violated 2 U.S.C

§441b(a) by making a $415,745 corporate

contribution to the Victory fUnd.

Finally, the FEC requests that the

court impose civil penalties against the

Victory Fund and ILA. in the amount involve

in the Violation; permanently enjoin them

from future violations; and award the FEC

its costs.
Volume 17, Number 3

axJRT CASES

FEC v.

- Aug\iStIile for Congress, 2:7

- Dramasi for Congress, 3:10

(continued)

ADVISORY OPINIaoJS

1990-14: AT&T's 900-line fundraising service, 2:4

1990-19: Vendor/coromdttee relationship;

sale and repurchase of fundraising items,

1:8

1990-22: Blue Cross/Blue Shield's solicitation of member plans' personnel, 1:9

1990-25: Parent corporation's obligations

to labor organization under twice-yearly

provisions, 2:5

1990-26: Sale of campaign asset; personal

use of excess funds after November 3D,

1989, 3:7

1990-27: Transfer to party's federal

account of funds mistakenly deposited in

state account, 3:9

The first number in each citation

refers to the "number" (month) of the 1991

Record issue in which the article appeared;

the second number, following the colon,

indicates the page number in that issue.

MlJR 3086

Respondents: Williamette Citizen, Abner

Linwood Holton, III, treasurer (OR)

COlIIplainant: Oregon Republi can Pa rty,

Richard B. Noonan, Executive Director

SUbject: Disclaimer (newspaer

advertisement and flier)

Disposition: Reason to believe but took no

furthe r action (newspape r); no reason to

believe (flier)

SUbject: Failure to file report on time

Disposition: (a) Reason to believe but

took no further action; (bl no reason to

believe

MUR 3149

Respondents: (a) National Republican

Senatorial Committee, James L. Hagen,

treasurer (DC)i (b) Larry E. Craig (ID);

(c) craig for U.S. senate, Richard W.

Jackson, treasurer (10)

Complainant: Robert F. Bauer, General

Counsel, Democratic Senatorial campaign

Committee (DC)

SUbject: Excessive contribution

Disposition: (a)-(c) No reason to believe

11

March 1991 FEDERALELECTION COMMISSION

MlJR 3082

Respondents: (a) Scott for Congress, Marc

J. Zanghi, treasurer (CT); (b) Thomas Scott

(CT)

Complainant: Richard M. Bates, Executive

Director, Democratic Congressional Campaign

Committee (DC)

MURS RELEASED '1U '!HE PUBLIC

Listed below are MURs (FEe enforcement

cases) recently released for public review.

The list is based on the FEe press releases

of January 7 and 11, 1991. Files on closed

MURs are available for review in the Public

Records Office.

unless otherwise noted, civil penalties

~esulted from conciliation agreements

reached between the respondents and the

Commission.

(U.S. District Court for the District

of Columbia, civil Action No. 90-3090,

December 20, 1990.)

MlJR 2750

Respondents: (a) Friends of Voinovich,

Vincent M. Panichi, treasurer (OH);

(b) Bush/Ouayle '88, J. Stanley Huckaby,

treasurer (DC)

complainant: James M. Ruvolo, Chairman,

Ohio Democratic party (OH)

SUbject: Excessive in-kind contributions;

failure to report in-kind contributions;

disclaimer

Disposition: (a) $3,500 civil penalty;

(b) reason to believe but took no further

action

FEC v. Legi-Tech, Inc.

The FEC asks the dist~ict court to

declare that Legi-Tech, Inc. (LTI) violated

2 U.S.C. S438(a)(4) by using contributor info~mation copied f~om FEC reports for

corame rcial purposes. The FEe alleges that

LTI marketed a data base composed of information on individual contributors copied

from reports. At least one firm subscribing to this data base used the data for

commercial purposes. The FEC also asks the

court to assess a civil penalty against

LTI, permanently enjoin LTI from further

violations of section 438(a)(4) and award

the FEe its court costs.

(u.S. District Court for the District

of Columbia, Civil Action No. 91-0213,

January 30, 1991.)

•
Official Business

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Volume 17, Numb

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

March 1991 FEDERAL ELECTION COIVlMISSION

800 LINE

Allocating expenses through ballot composition. 2:1

staff advances and salaries, 2:6

- Legi-Tech, Inc., 3:11 - Mid-America Conservative PAC, 2:10 - NRA political victo~y Fund. 3:10 - Political Contributions Data, Inc.,

2:8

- Speelman, 3:10

- Webb for Congress Commi ttee. 2: 10

- West Virginia Republican State

Executive Committe~, 3:10

v. FEe

----=-Common Cause; National Republican

Senatorial Committee, Appellant {90-

5317),1:7

- stern, 2:7