July 1997 Federal Election Commission Volume 23, Number 7

Table of Contents

Reports

1 July Reporting Reminder

 10 Electronic Filing Update: July

Report Can Be Filed on Disk

Regulations

1 FEC Seeks Comments on Petitions

to Curtail Soft Money

Court Cases

2 FEC v. Christian Coalition

2 Minnesota Citizens Concerned for

Life v. FEC

4 FEC v. Legi-Tech

5 Gottlieb v. FEC

5 On Appeal?

5 New Litigation

6 Advisory Opinions

7 Conferences

Compliance

8 MUR 4172

8 MUR 4167

9 MUR 4208

9 Federal Register Notices

 10 Index

Regulations

FEC Seeks Comments on

Petitions to Curtail Soft

Money

On June 12, the Commission

approved for public comment a

Notice of Availability concerning

two rulemaking petitions on soft

money. The notice responds to

requests to the Commission to

examine its rules governing soft

money in light of the influence it

had on political campaigns during

the 1996 election cycle.

Soft money generally refers to

funds that are prohibited under the

Federal Election Campaign Act (the

Act) because they come from a

prohibited source or exceed the

Act’s contribution limits.

The first petition, filed on May

20 by five members of the U.S.

House of Representatives—Democrats Marty Meehan and James P.

Moran and Republicans Marge

Roukema, Christopher Shays and

Zach Wamp—urges the Commission to modify its rules “to help end

or at least significantly lessen the

influence of soft money.” On June

5, President Bill Clinton also

submitted a petition, asking the

Commission to ban soft money and

to require candidates for federal

office and national party committees

(Reports continued on page 10) (continued on page 9)

Reports

July Reporting Reminder

All committees (except monthly

filers and Presidential committees)

must file their semiannual reports

with the Commission by July 31.

The report covers financial activity

for the period of January 1 (or the

day after the closing date of the last

report) through June 30.

Presidential committees filing on

a quarterly basis must mail their

reports to the Commission by July

15. These reports cover financial

activity for the period of April 1

through June 30. Monthly filers are

reminded that their reports covering

activity for the month of June are

due on July 20.

Reports sent by registered or

certified mail must be postmarked by

the filing date; reports sent by other

means must be received by the federal

and state filing offices on that date.

For more information on 1997

reporting, including dates, see the

reporting schedule in the January

1997 Record. To order the 1997

reporting schedule handout, call

800/424-9530 or use the FEC’s

Faxline by calling 202/501-3413

(request document 586). This

information is also available at the

FEC’s web site: http://www.fec.gov

(click “Help for Candidates, Parties

and PACs”). ✦
Federal Election Commission RECORD July 1997

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/219-3420

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

800/877-8339 (FIRS)

John Warren McGarry,

Chairman

Joan D. Aikens, Vice Chairman

Lee Ann Elliott, Commissioner

Danny L. McDonald,

 Commissioner

Scott E. Thomas, 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

FEC v. Christian Coalition

On May 13, the U.S. District

Court for the District of Columbia

denied the Christian Coalition’s

motion for partial dismissal of this

case.

The decision means that the FEC

will be able to seek declaratory and

injunctive relief for all of the alleged

violations of the Federal Election

Campaign Act (the Act), but will

not be able to obtain civil penalties

for any of the violations that occurred more than five years before

the lawsuit was filed.

Background

In July 1996, the Commission

filed a lawsuit against the Christian

Coalition alleging that the organization, among other things, used its

corporate treasury funds to make

coordinated expenditures for voter

guides, “scorecards,” get-out-thevote drives and other public communications in support of or in

opposition to various federal

candidates. This suit came after the

Democratic Party of Virginia and

the Democratic National Committee

filed administrative complaints with

the FEC in 1992 concerning the

Christian Coalition’s activities. The

complaints were combined and,

after a review and investigation of

Christian Coalition activities, the

Commission found probable cause

to believe a violation of the Act had

occurred. Attempts at conciliation

between the FEC and the Christian

Coalition failed, leading to the filing

of the suit. (See page 1 of the

September 1996 Record.)

Statute of Limitations

The Christian Coalition sought

dismissal of those portions of the

FEC’s suit that concerned prohibited

activities that had occurred more

than five years before the suit was

filed—essentially the activities that

related to the 1990 election cycle.

At 28 U.S.C. §2462, the law

provides for a five-year statute of

limitations for certain law enforcement proceedings. The Christian

Coalition argued that that time limit

started running at the time that the

alleged offenses occurred—not

when they were reported to the FEC

by the Democratic Party of Virginia.

The FEC argued that the time began

running when it was notified

through the administrative complaint process. Because its investigatory powers and resources are

limited, the FEC said that it had no

way of knowing about the Christian

Coalition’s alleged conduct until a

complaint was filed with the agency.

The court rejected the FEC’s

argument, citing the ruling of the

U.S. Court of Appeals for the

District of Columbia Circuit in 3M

v. Browner.

1

 In that case, the

appeals court ruled that an agency’s

failure to detect violations does not

negate the inherent difficulties faced

by bringing a case to court long

1 3M Co. v. Browner, 17 F.3d 1453

(D.C. Cir. 1994).

Minnesota Citizens

Concerned for Life v. FEC

On May 7, the U.S. Court of

Appeals for the Eighth Circuit

affirmed a district court decision

that concluded that the

Commission’s regulations governing qualified nonprofit corporations

at 11 CFR 114.10 are unconstitutional on First Amendment grounds.

Background

Minnesota Citizens Concerned

for Life (MCCL), a nonprofit

corporation concerned with pro-life

issues, filed a lawsuit against the

FEC soon after the agency promulgated new regulations to conform

with the U.S. Supreme Court

decision in FEC v. Massachusetts

Citizens for Life, Inc.

1

 In MCFL, the

high court concluded that 2 U.S.C.

§441b—the statute governing

contributions and expenditures by

corporations—could not constitutionally prohibit certain types of

nonprofit corporations from making

independent expenditures using

their corporate treasuries in connection with federal elections. Subsequently, the Commission

promulgated a new regulation that

1 FEC v. Massachusetts Citizens for

Life, Inc., 479 U.S. 238 (1986).

Court Cases after the alleged violation has

occurred. The appeals court noted:

“nothing in the language of §2462

even arguably makes the running of

the limitation period turn on the

degree of difficulty an agency

experiences in detecting violations.”

The court, however, agreed with

the FEC that §2462 provides no

shield for the Christian Coalition

from declaratory or injunctive relief.

At 2 U.S.C. §437g(a)(6), the FEC

has the authority to seek injunctive

relief separate from its authority to

seek legal remedies (e.g., civil fines,

penalties and forfeitures).

U.S. District Court for the

District of Columbia, 96-1781. ✦
July 1997 Federal Election Commission RECORD

3

attempted to codify the MCFL

exemption. 11 CFR 114.10. Under

that regulation, in order for a

nonprofit corporation to be exempt

from the prohibitions at §441b, it

must have these three features:

• The corporation must have been

formed to promote political ideas

and does not engage in business

activities (11 CFR 114.10(c)(1),

(2));

• The corporation has no shareholders or other persons who have a

claim on its assets or earnings, or

for whom there are disincentives to

disassociate themselves from the

organization on the basis of its

political positions (11 CFR

114.10(c)(3));

• The corporation must not have

been established by a business

corporation or labor union and

must not directly or indirectly

accept donations from such entities

(11 CFR 114.10(c)(4)(i), (ii)).

MCCL challenged the constitutionality of these regulations because the organization allegedly did

not conform to these three features

but, nonetheless, considered itself

eligible to make independent

expenditures from its general

treasury funds and planned to do so.

Most notably, MCCL engaged in

business activities (such as selling

advertising space in its newsletter)

and accepted corporate contributions.

Prior Court Rulings

In Day v. Holahan,

2

 a case in

which MCCL, the plaintiff here,

was a party, the Eighth Circuit

discussed which nonprofit associations are qualified under MCFL to

make independent expenditures. The

court there held that Minnesota’s

attempt to codify an exemption for

nonprofit corporations allowing

them to make independent expenditures was too restrictive: it “reflected a misreading of MCFL and

infringed the First Amendment

rights of MCCL.” The upshot, the

court stated, was that MCCL could

not be denied exempt status from

Minnesota’s statutory prohibition of

corporate expenditures simply

because it engaged in “minor”

business activities or accepted

contributions from business corporations in amounts that were “not

significant.”

Bound by the Day precedent, in

April 1996, the U.S. District Court

for the District of Minnesota ruled

in favor of MCCL in its suit against

the Commission. After first finding

that MCCL had standing to challenge the Commission’s regulations,

the court held that 114.10(c)(2) and

(4) were “constitutionally infirm

under Day because they deny the

MCFL exemption to a voluntary

political association that conducts

minor business activities or accepts

insignificant corporate donations.”

Noting that the other parts of the

regulation were not severable from

these invalid provisions, the court

declared all of 11 CFR 114.10 void.

(See page 3 of the June 1996

Record.) The Commission had

argued not only that MCCL lacked

standing but that the Day decision

was contrary to MCFL and other

Supreme Court precedents.

Appeals Court Ruling

The appeals court found that,

contrary to the FEC’s arguments,

MCCL had standing to bring this

case to court. It also found that

MCCL’s challenge to the regulations was “ripe” for judicial resolution, and, on the authority of the

Day decision, the court then affirmed the district court’s declaratory judgment voiding the

Commission’s regulations.

Article III standing requires that a

party show actual injury, a casual

relationship between that injury and

the challenged conduct and the

likelihood that a favorable decision

by the court will redress the alleged

injury.3 The FEC argued that MCCL

lacked standing because voiding the

statute would not redress its alleged

injury. The FEC maintained that,

even without the regulation, MCCL

would have to prove that it was

entitled to make independent

expenditures under MCFL and Day.

The appeals court found that MCCL

had either to make significant

changes to its operations or risk

sanctions for violating FEC regulations and concluded that MCCL did

not need to show that a favorable

decision would relieve “every”

injury. According to the appellate

court, the district court redressed an

injury for MCCL by declaring that it

could continue to make independent

expenditures if it met the exemptions defined in Day.

While the courts have been wary

of pre-enforcement challenges—

such as MCCL’s challenge to the

Commission’s regulations before

the organization has actually been

alleged to have violated them—this

stance is not always applicable. The

Supreme Court has held that “the

Administrative Procedure Act

authorizes a pre-enforcement

challenge to agency regulations if

the issue is ‘fit’ for prompt judicial

decision and if failure to review

would cause significant hardship to

the parties.” In this case, the appeals

court said that the legal issue—

whether the Eighth Circuit’s interpretation of MCFL in Day

invalidates portions of the

Commission’s regulations—was “fit

for prompt determination.” Moreover, the court said, court action in

this case would also relieve MCCL

of a hardship because its representatives would now know that MCCL’s

methods of operation would be

tested under Day, rather than under

the Commission’s regulations.

On the merits, the appellate court

agreed with the district court that

2 Day v. Holahan, 34 F.3d 1356 (8th

Cir. 1994), cert. denied, 115 S. Ct. 936

(1995).

(continued)

3 Lujan v. Defenders of Wildlife, 504-

U.S. 555, 560-61 (1992).
Federal Election Commission RECORD July 1997

4

FEC v. Legi-Tech

On May 30, the U.S. District

Court for the District of Columbia

granted the FEC’s motion for

summary judgment and imposed a

$20,000 civil penalty on Legi-Tech,

Inc., after the corporation used

information obtained from disclosure reports filed with the FEC for

commercial purposes in violation of

the Federal Election Campaign Act

(the Act).

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).

Legi-Tech, through its Campaign

Contribution Tracking System

(CCTS), devised a plan to provide

paying subscribers with information

about political contributors and their

contributions. Starting with the 1984

election cycle, CCTS copied

contributor information directly

from disclosure reports filed with

the FEC, entered this information

into a computer database, added

telephone numbers of contributors

and sold the information to its

customers. In all, the CCTS received $273,869 from at least 42

customers, including the International Brotherhood of Teamsters,

Freedom Policy Foundation, National Association of Independent

Schools and International Funding

Institute, Inc. In addition, Legi-Tech

was aware that some of its customers used the information to solicit

contributors.

In 1985, the National Republican

Congressional Committee (NRCC)

filed an administrative complaint

against Legi-Tech, alleging the

company was using contributor

information for commercial purposes. After an investigation of the

complaint, the Commission found

probable cause to believe that a

violation of the Act had occurred

and attempted to enter into a conciliation agreement with Legi-Tech.

That effort failed, and the Commission filed suit.

The court dismissed the lawsuit

in October 1994, but the U.S. Court

of Appeals for the District of

Columbia Circuit reversed that

decision in February 1996 and

remanded this case back to the

district court. (For a previous story,

see page 9 of the April 1996

Record.)

District Court Ruling

The court rejected Legi-Tech’s

arguments, which were based, in

part, on the corporation’s contention

that it was an organ of the press and

was therefore entitled to use the

contributor information in the way

that it did. The court agreed with the

Commission when it stated that a

publisher’s use of the names and

addresses from disclosure reports

filed with the FEC is permissible so

long as that use is incidental to the

sale of a larger publication. For

example, a newspaper article that

includes such information as part of

the story is permissible. What is not

permissible, the FEC contends, is

when the use of contributor information is not incidental to the sale

of the publication, but, in fact, the

primary focus of the publication.

AO 1981-38.

Because the Act does not explicitly state whether commercial

activity like the CCTS’s is protected, the court gave deference to

the FEC’s construction of

§438(a)(4) as well as to its regulations and advisory opinions relevant

to this issue. On that basis, the court

rejected all of Legi-Tech’s challenges.

• It said that the CCTS could not be

characterized as a communication

similar to a “newspaper, magazine

or book,” but was more like a

listbroker. The former would fall

under the FEC’s media exemption

to §438(a)(4); a listbroker would

not.

• It said that the CCTS failed the

“principal purpose” test in that its

primary purpose was the dissemination of the contributor information for profit. The court said:

“Legi-Tech’s sale of information

through the CCTS posed the

precise threat that troubled Congress: while Congress wanted to

promote disclosure of campaign

contribution information, it also

wanted to protect political committees’ intellectual property and

‘political discourse from the

adverse effect that the disclosure

requirement of the Act would

otherwise have.’”

• The court found Legi-Tech’s

argument that the CCTS was

exempt because Legi-Tech’s

parent corporation was a diversified media company

“unpersuasive” because the

CCTS’s primary purpose was

commercial.

Legi-Tech also argued unsuccessfully that §438(a)(4) violates the

First Amendment in that it prevents

Court Cases

(continued from page 3)

Day required voiding 11 CFR

114.10 (c)(2) and (c)(4). Only the

court of appeals sitting en banc, the

court noted, could overturn Day’s

interpretation of the Supreme

Court’s MCFL decision. Furthermore, because the district court

found the remainder of 11 CFR

114.10 not to be severable from the

invalid portions—a ruling the

Commission had not appealed—11

CFR 114.10 as a whole was properly declared void.

U.S. Court of Appeals for the

Eighth Circuit, 96-2612. ✦
July 1997 Federal Election Commission RECORD

5

Gottlieb v. FEC

On May 8, the U.S. District Court

for the District of Columbia granted

the FEC’s motion to dismiss this

case in which Alan Gottlieb and

others had asked the court to order

the FEC to take action on an administrative complaint that the Commission had voted to dismiss.

The complaint dates back to

March 1995 (see page 6 of the

December 1995 Record). The

plaintiffs originally filed the administrative complaint with the Commission alleging that President

Clinton’s 1992 campaign received

more than $3 million in excess of

the entitlement allowed it under the

Presidential Primary Matching

Payment Account Act. 2 U.S.C.

§§9034 and 9037. The complaint

also alleged that Clinton’s primary

committee—the Clinton for President Committee—incorrectly treated

some contributions as both matchable primary contributions and

contributions to the Clinton/Gore

‘92 General Election Legal and

Compliance fund, or GELAC fund.

In August 1995, the Commission

dismissed the case—after deadlocking in a 3-3 vote—without finding

reason to believe that a violation of

the law had occurred. The plaintiffs

then filed suit, asking the court to

find that the FEC’s action was

contrary to law and to order the FEC

to take action on the complaint.

In its order dismissing this case,

the court agreed with the FEC that

the plaintiffs did not have standing

because they were not harmed by

the Commission’s decision. The

court relied on the recent opinion of

the U.S. Court of Appeals for the

District of Columbia Circuit in

Common Cause v. FEC as the basis

for its decision. In that ruling, the

court held that the plaintiffs lacked

constitutional standing to litigate

their claims against the Commission

because they had not suffered a

particular harm. (see page 4 of the

May 1997 Record).

On May 14, plaintiffs appealed

the decision to the DC Circuit.

U.S. District Court for the

District of Columbia, 95-1923. ✦

On Appeal?

FEC v. Williams

The U.S. Court of Appeals for the

Ninth Circuit denied a petition from

the FEC for a rehearing of this case

en banc. The FEC had requested

such action after the appeals court

reversed a decision from the U.S.

District Court for the Central

District of California to dismiss this

case, and ruled in favor of the

defendant, Larry Williams. See page

3 of the February 1997 Record.

Akins v. FEC

The U.S. Supreme Court granted

the FEC’s petition for certiorari in this

case. The U.S. Court of Appeals for

the District of Columbia, sitting en

New Litigation

FEC v. California Democratic

Party

The FEC asks the court to find

that the California Democratic Party

(CDP) violated the Federal Election

Campaign Act (the Act) and several

Commission regulations by using

funds from its nonfederal committee

account (containing prohibited

corporate and union funds) to pay

for a voter registration drive instead

of allocating the costs of the drive

between its federal and nonfederal

committee accounts.

Specifically, the CDP made

payments from its nonfederal

committee account to a group called

Taxpayers Against Deception-No on

165 (No on 165) to help it conduct

voter registration drives and get-outthe-vote activities associated with

defeating Proposition 165 on the

California ballot. The Commission

asserts that the CDP knew that the

registration drive was designed to

increase the number of Democratic

voters—voters who would support

Democratic candidates for state and

federal offices. Accordingly, the

FEC contends that part of the

payments should have come from

the CDP’s federal committee

account to avoid the use of prohibited contributions for federal

election purposes.

Background. Proposition 165 was

a California ballot initiative designed to reduce the state’s spending

on welfare and other social programs and was supported by Governor Pete Wilson. No on 165 was a

political committee organized to

defeat this initiative. Its strategy was

(continued)

“‘the dissemination of the truth

about political campaigns’ and

constitutes ‘a content based restriction on core political speech.’”

The court, noting that the constitutionality of the statute already had

been upheld in FEC v. International

Funding Institute, restated that the

statute “serves important governmental interests by minimizing the adverse

effects of the Act’s disclosure requirements.” In addition, the statute also

protects political committees’ intellectual property. The commercial use of

such information, as the NRCC

contended in its original complaint,

diminishes the economic value of

contributor lists. The court also found

that prohibiting commercial use of

contributor information would make it

more likely that individuals would

continue to support financially the

current private campaign financing

system for U.S. elections. Legi-Tech’s

other First Amendment arguments

also were rejected by the court.

U.S. District Court for the

District of Columbia, 91-0213. ✦

banc, reversed a district court decision

and ordered the FEC to review its

administrative actions concerning the

American Israel Public Affairs

Committee and its status as a political

committee. See page 1 of the February 1997 Record. ✦
Federal Election Commission RECORD July 1997

6

to register prospective voters in

minority and low-income communities—both groups presumed to be

predominantly against Proposition

165 and to vote predominantly

Democratic. This strategy involved

several organizations, including the

CDP, which ultimately spent

$719,000 on the registration effort.

Among the examples of the

partisan nature of the voter drives:

• Voter drive workers were instructed

to assist those who identified

themselves as Democrats in completing voter registration cards, but

were told to simply hand registration

cards to those who identified

themselves as Republicans.

• Signs at the voter drives included

one with the message: “Stop Pete

Wilson—Register Democrat.”

• Staff at the CDP received regular

updates on the progress of the voter

drives, and the CDP’s coordinated

campaign steering committee also

received progress reports. The

steering committee included representatives of federal and nonfederal

candidates running in California,

including Presidential nominee Bill

Clinton and Senate nominees Diane

Feinstein and Barbara Boxer, who

won election to those seats in the

1992 election cycle.

Lack of Allocation. To support the

registration drive, the CDP disbursed

funds from its nonfederal committee

account and did not report any

payments from that account to the

FEC—violations of 11 CFR

102.5(a)(1)(i), 104.10(b)(4) and

106.5(d).

These regulations call for party

committees (and nonconnected

committees) to establish a separate

federal account for funds that are

permissible under the Act and to use

only this account for expenditures in

connection with federal elections.

Likewise, the regulations require a

separate nonfederal account for funds

from corporations and unions that are

Court Cases

(continued from page 5)

Advisory

Opinions

AO 1997-5

Solicitation of MemberLessee on Chicago

Mercantile Exchange

The Chicago Mercantile Exchange (CME) may solicit PAC

contributions from noncorporate

member-lessees who lease seats

from its full members because,

based on several court opinions,

they qualify as members under the

Federal Election Campaign Act (the

Act).

The CME is a nonstock and notfor-profit corporation under Illinois

law that provides markets for

trading futures contracts and options

on futures contracts. It is divided

into four divisions, each with a

limited number of seats. The owner

of each seat is considered a member

in the CME. Membership status is

also given to member-lessees. They

have the same rights and obligations

as the other members except that

they may not vote in CME elections

and they may not be elected to the

board of directors.

The Act prohibits corporations

from making contributions or

expenditures in connection with a

federal election, but does allow for

the establishment of a separate

segregated fund (SSF) whose

administrators may solicit contributions from a restricted class—

executive or administrative

personnel, stockholders and the

families of those groups. 2 U.S.C.

§§441b(a), 441b(b)(2)(C) and

441b(b)(4)(A). An exception at

§441b(b)(4)(C) allows an incorporated membership organization or an

SSF established by such an organization to solicit contributions from

its individual members.

A membership organization, such

as the CME, is one that provides for

members in its bylaws, expressly

solicits members and acknowledges

the acceptance of membership. 11

CFR 114.1(e)(1).

The term “member” is not

defined in the Act, but is defined in

Commission regulations and has

also been interpreted in two court

cases. In FEC v. National Right to

Work Committee (NRWC),1

 the U.S.

Supreme Court suggested that

members of nonstock corporations

were to be defined similarly to

stockholders of business corporations and members of labor unions.

The U.S. Court of Appeals for the

District of Columbia Circuit in

Chamber of Commerce v. FEC2

interpreted the NRWC decision in

1

 FEC v. National Right to Work

Committee, 459 U.S. 197, 202 (1982).

2 Chamber of Commerce v. FEC, 69

F.3rd 600 (D.C. Cir. 1995); petition for

rehearing denied, 76 F.3d 1234 (1996).

not permitted to be used for federal

elections. Party committees must

allocate expenditures for generic voter

drives involving state and federal

candidates between the federal and

nonfederal accounts or use funds only

from the federal account. Finally,

party committees must report the

allocated disbursements to the FEC.

The CDP also violated 2 U.S.C.

§441b(a), which prohibits a political

committee from using impermissible

contributions in connection with

federal elections.

The FEC asks the court to assess

civil penalties against the CDP and its

treasurer and against the party’s

federal and nonfederal committees. It

also asks the court to order the CDP’s

federal committee to transfer to the

nonfederal committee the amount that

should have been allocated for these

expenditures. The federal committee

must also amend its 1992 October

quarterly, Pre-General and PostGeneral reports.

U.S. District Court for the Eastern

District of California, 97-0891, May

9, 1997. ✦
July 1997 Federal Election Commission RECORD

7

order to consider what might

constitute a significant organizational or financial attachment for

purposes of membership. It cited

two characteristics. The court noted

that Chamber members were

permitted to serve on policy formulating committees. Additionally,

member-physicians of the American

Medical Association, another

plaintiff, by agreeing to abide by the

AMA ethical code, were under the

sanctioning authority of the organization. With respect to the acceptable range of financial attachment,

the court cited favorably the payment of $1,000 in annual dues and

noted that some Chamber members

paid annual dues of $100,000 to the

organization.

In this AO, the Commission

noted that “the rights and duties of

member-lessees were similar to

those cited with approval by the

court in Chamber.” Specifically, the

Commission noted that:

• Member-lessees may serve on

policy formulating committees.

• They are subject to sanctions

within CME that would affect their

professions.

• They assume significant financial

obligations associated with CME

that are comparable to those

mentioned in the Chamber case.

Consequently, member-lessees

qualify as members for purposes of

the Act. Those member-lessees who

are individuals may be solicited for

contributions to CME’s SSF.

This opinion supersedes portions

of several previous opinions, as

explained below:

• AO 1988-39: This opinion supersedes the Commission’s conclusion that member-lessees of CME

did not have sufficient organizational and financial attachments to

qualify as members and that only

one membership in the CME

existed with respect to each leased

membership.

• AOs 1987-31, 1988-38 and 1994-

34: This opinion supersedes the

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1997-6

Reinvestment by political committee of investment income (Kay

Bailey Hutchinson for Senate

Committee, May 15, 1997; 3 pages)

AOR 1997-7

Status as state committee of political

party (The Virginia Reform Party,

May 21, 1997, 2 pages plus 32-page

attachment)

AOR 1997-8

Use of campaign funds to rent

campaign space from candidate

(Congressman Lamar Smith, March

13, 1997, 9 pages plus 8-page

attachment)

AOR 1997-9

Collection of PAC contributions

from individual members of trade

exchange through electronic debiting of their trading accounts held

with member firms of exchange

(Chicago Board of Trade, May 30,

1997, 9 pages plus 25-page attachment) ✦

Commission’s one-seat, onemembership principle to the extent

that the attachments of the member-lessees to the exchanges

described in those previous

opinions are indistinguishable

from the attachments to CME

considered in this advisory opinion.

Date Issued: May 16, 1997;

Length 6 pages. ✦

FEC Conference

Schedule

 The FEC has set dates for three

regional conferences, and tentative

dates for four others for 1997-98.

Seattle

Date: September 24-26, 1997

Location: Cavanaugh’s Inn

Registration: $175

Hotel rate: $134

Candidates, political parties,

corporate and labor organizations

Atlanta

Date: October 15-17, 1997

Location: Sheraton Colony Square

Registration: $180

Hotel rate: $149

Candidates, political parties,

corporate and labor organizations

Washington, DC

Date: November 6-7, 1997

Location: Madison Hotel

Registration: $180.50

Hotel rate: $124

Corporate and labor organizations

 To register for any of these

conferences, call Sylvester

Management at 1/800-246-7277 or

send an e-mail message to

TSYLVESTER@WORLDNET.ATT.NET.

Read future issues of the Record to

get more scheduling information

for these conferences slated for late

1997 and 1998:

Washington, DC

December 1997

Trade and membership associations

Washington, DC

February 1998

Candidate committees

Denver

March 1998

Candidates, political parties,

corporate and labor organizations

Washington, DC

April 1998

Nonconnected committees

 For more information call the

FEC’s Information Division at 1/

800-424-9530 (press 1).
Federal Election Commission RECORD July 1997

8

Compliance

MUR 4167

RNC Agrees to $20,000

Civil Penalty

The Republican National Committee agreed to pay a $20,000 civil

penalty to the FEC for failing to

provide complete contributor

MUR 4172

Advances to Clinton Primary

Result in Civil Penalties

President Bill Clinton’s 1992

primary election political committee, the Clinton for President

Committee, agreed to pay a $15,000

civil penalty to the FEC for accepting contributions in violation of

limits set out in the Federal Election

Campaign Act (the Act). One of

those contributions was from the

American Federation of Teachers

(AFT), which agreed to pay a

$2,000 civil penalty to the FEC for

violating the Act’s ban on union

contributions to federal candidates.

The Clinton committee’s violations stem from the committee’s

improper reimbursement of staff

members, volunteers, a partnership

and the AFT. The Act states that no

political committee may knowingly

accept a contribution made for the

benefit or use of a candidate that

violates any imposed limitation on

contributions or expenditures. 2

U.S.C. §441a(f).

Under FEC regulations found at

11 CFR 116.5(b), an advance (i.e.,

an expenditure made on behalf of a

political committee by an individual

from his or her personal funds)

constitutes a contribution unless it is

exempt from the definition of

contribution found at 11 CFR

100.7(b)(8). The expenditure also

does not count as a contribution if it

is made for an individual’s personal

transportation or for the usual and

normal subsistence expenses of an

individual who is not a campaign

volunteer so long as the expenses

are incurred while the individual is

traveling on behalf of a candidate.

In either of these cases, however,

the expenditure must be reimbursed

by the committee within 60 days if

it was paid for by credit card or

within 30 days in all other cases.

During the 1992 primary season,

the Clinton committee received

several advances for which it failed

to make reimbursements in a timely

manner. In each case, the late

reimbursement resulted in excessive

contributions. The advances included:

• $14,248 by two staff members for

transportation, subsistence and

other expenses,

• $50,551 by four volunteers for

fundraising and other expenses,

and

• $7,403 by a law firm for a luncheon for Mr. Clinton.

The Clinton committee also

failed to make a timely reimbursement to the AFT for a newspaper

article on which the teacher’s union

spent $12,125 on Mr. Clinton’s

behalf. The Clinton committee left

the invoice unpaid for 10 months,

and, during that time, the AFT made

no effort to collect the money owed

to it. In accepting the contribution,

the Clinton committee violated the

Act at 2 U.S.C. 441b, which prohibits contributions from labor organizations in connection with any

federal election. The AFT violated 2

U.S.C. 441b(a), which states that it

is unlawful for labor organizations

to make contributions in connection

with any federal election.

This MUR, or Matter Under

Review, was initiated as the FEC

carried out its normal supervisory

duties. After a review of the information, but prior to finding probable

cause to believe the committee or

the AFT had violated the law, the

Commission entered into conciliation agreements with both parties. ✦

information in its reports and failing

to demonstrate “best efforts” in

obtaining such information, in

violation of 2 U.S.C. §434(b)(3)(A).

The Federal Election Campaign

Act (the Act) requires that political

committees disclose the identification of each person making aggregate contributions in excess of $200

in the calendar year. 2 U.S.C.

§434(b)(3)(A). The required information includes the name, mailing

address, occupation and employer of

the contributor. 2 U.S.C. §431(13).

Where a committee can show that it

has made “best efforts” to obtain

and submit the information, its

reports will be considered in compliance with the Act. 2 U.S.C.

§432(i).

Prior to March 3, 1994, a committee was considered to have

exercised best efforts to obtain

contributor information if it had

made at least one effort per solicitation. The request for the information

had to be in writing or had to be an

oral request documented in writing.

Additionally, the request had to be

clear and tell the contributor that the

information was required by law.

Since March 3, 1994, following the

Commission’s adoption of revised

regulations, committees demonstrate

best efforts by making at least one

follow-up, stand-alone request for

the missing information within 30

days of receipt of a contribution

with incomplete contributor information. This stand-alone request

may not include a solicitation for

another contribution. 11 CFR

104.7(b). A committee must also

report the previously missing

information in amendments to its

disclosure reports.

Between March 3, 1994, and

December 31, 1996, the RNC failed

to follow these revised rules. It used

additional solicitations, rather than

stand-alone, follow-up requests, to

obtain the missing contributor

information, and it did not file

amended reports to disclose previ-
July 1997 Federal Election Commission RECORD

9

MUR 4208

Staff Advances, Failure to

Report Contributions Net

Utah Committee $55,000

Civil Penalty

The Friends of Bob Bennett

Senatorial Campaign Committee

agreed to pay a $55,000 civil

penalty to the FEC for accepting

excessive contributions (in the form

of staff advances and other contributions) and for failing to file the

required 48-hour notices on a

number of contributions it received

during the 1992 campaign.

Senator Robert F. Bennett was a

candidate for one of two seats

representing Utah in the U.S. Senate

during the 1992 election cycle. At

that time, one of his committee staff

members, Michael Tullis, made

advances through his personal credit

card to the Committee for his travel

ously missing contributor information.1 Since January 1, 1997,

however, the RNC has been in full

compliance with the Commission’s

best efforts regulations.

This MUR, or Matter Under

Review, was initiated as the FEC

carried out its normal supervisory

duties. The Commission found

probable cause to believe that a

violation of the Act had occurred

and entered into a conciliation

agreement with the RNC, which

included the civil penalty. ✦

1

 In 1994, the respondent, along with

other committees, filed suit against the

Commission, challenging the

Commission’s revised “best efforts”

regulations. The U.S. Court of Appeals

for the District of Columbia Circuit

upheld the requirement for a follow-up,

stand-alone request to obtain missing

contributor information, but vacated

the requirement for mandatory language specified for solicitation notices—also contained in the regulation.

The U.S. Supreme Court decided not to

review this decision. RNC v. FEC, 76

F.3d 400(D.C. Cir. 1996), cert. denied,

117 S. Ct. 682 (1997).

and subsistence expenses. He also

used his credit card to pay for the

travel and subsistence expenses of

other campaign workers, and to cover

campaign office expenses, media

expenses and other miscellaneous

items. The charges totaled $22,206.

Under the Federal Election Campaign Act (the Act) no officer or

employee of a political committee

may knowingly accept a contribution

made for the benefit or use of a

candidate in violation of the statute’s

contribution limits. 2 U.S.C. §441a(f).

Moreover, commission regulations

found at 11 CFR 116.5(b) state that

advances are considered contributions

unless they are made for an

individual’s personal transportation

expenses and for the usual and normal

subsistence of a staff person who is

traveling on behalf of the candidate.

This exemption applies only if the

individual’s transportation and

subsistence expenses are reimbursed

within 60 days if the advance was

paid by a credit card or 30 days in

other cases. Mr. Tullis’s charges

constituted an excessive contribution

of $22,206, and the Committee

violated 2 U.S.C. §441a(f) by accepting such a contribution. The Committee eventually repaid Mr. Tullis in full

for his charges.

The FEC also found that the

Committee had accepted another

$13,450 in excessive contributions

during the 1992 election cycle.

Finally, the Committee failed to

report 37 contributions within 48

hours of their receipt, as is required by

2 U.S.C. §434(a)(6)(A). The contributions included $600,000 from Mr.

Bennett and another $49,001 from

individuals—all received in the

closing days of the Utah primary and

general elections.

This MUR, or Matter Under

Review, was initiated after the FEC

conducted an audit of the Committee.

After reviewing the disclosure reports

and other pertinent information, but

prior to finding probable cause to

believe that the Committee had

violated the law, the Commission

entered into a conciliation agreement

with the Committee. ✦

to raise and spend only federallypermissible funds, or hard dollars.

The Notice of Availability seeks

comments on whether the FEC

should initiate a rulemaking in

response to the petitions. The

Commission routinely provides an

opportunity for comments on

rulemaking petitions before the

agency considers the merits of the

petition.

Copies of both petitions and the

notice are available from the Public

Records Office at 800/424-9530

(press 3); through the FEC’s Faxline

service at 202/501-3414 (request

document 230); and at the FEC’s

web site—http://www.fec.gov.

Additionally, the notice is published

in the June 18 Federal Register (62

FR 33040).

Public comments on the petitions

are due by July 18 and must be

submitted in writing to Susan E.

Propper, Assistant General Counsel,

or Paul Sanford, Staff Attorney, at

999 E St., NW, Washington, DC

20463. Comments may also be emailed using this Internet address—

softmoney@fec.gov—or faxed to

the FEC at 202/219-3923. See the

Notice of Availability for more

information. ✦

Regulations

(continued from page 1)

Federal Register

 Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1997-9

Adjustments to Civil Monetary

Penalty Amounts: Final Rules;

Correction of Effective Date (62

FR 32021, June 12, 1997)

Notice 1997-10

Prohibited and Excessive

Contributions; Soft Money;

Petition of Rulemaking; Notice of

Availability (62 FR 33040, June

18, 1997)
Federal Election Commission RECORD July 1997

10

Index

The first number in each citation

refers to the “number” (month) of

the 1997 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

1996-35: Status of Green Party as

national committee, 1:10

1996-42: SSF disaffiliation following corporate spin off, 1:11

1996-45: Use of campaign funds,

1:12

1996-46: Continuation of exemption

from select FECA reporting

provisions, 4:7

1996-48: Application of “news

story” exemption, 2:5

Electronic Filing Update:

July Report Can Be Filed

on Disk

For political committees that file

directly with the FEC, the Mid-Year

Report due July 31 is the first report

that can be filed electronically on

disk. The Commission encourages

committees to file in this way.

In previous editions of the

Record, articles have described the

process of electronic filing and

noted that some companies who

provide software to committees

have modified their programs to

allow for disk filing. The FEC

encourages filers to try these new

electronic filing versions of their

software.

There are also a number of

committees that have designed their

own systems for preparing FEC

reports. If you have downloaded the

required electronic filing formats

from the Commission’s Web site

(http://www.fec.gov) and modified

your process to create the appropriate file, we would like to hear from

you during the month of July.

In order to facilitate this first

filing, the FEC encourages committees that plan to submit disclosure

reports on disk to call the technical

staff at the Commission (202/219-

3730 or 800/424-9530) before

submitting their filings. This will

allow the Commission to be sure

everything is in place so that the

filings can be processed as quickly

and efficiently as possible. The FEC

may also be able to help with some

of the details of preparing the filing

and the disk.

Steps in Submitting a Financial

Report to the FEC Electronically

There are six basic steps in

preparing a report for electronic

filing with the FEC:

1. Create the filing using the

 prescribed FEC electronic filing

 format (or a commercial software

 program that has been modified

 to create the electronic format).

2. Validate the filing on your

 computer using the validation

 program (FECHECK) provided

 by the FEC. (In most cases, a

 validation program is also

 included in your modified

 commercial software product.)

3. Print the file using the

 FECPRINT program provided.

 Do not send the printed copy to

 the FEC. However, it may be

 useful to review the disclosure

 report in this way and keep it for

 your records and for submission

 to relevant state offices. This step

 is optional.

4. Prepare a signature page. Sign the

 Summary Page of the printed

 version of the filing and either

 include that one signed page with

 the disk in the envelope sent to

 the Commission, or scan that

 signed page and include a TIFF

 version of the page on the disk

 with the filing.

5. Label the disk, listing the com-

 mittee name and the files in-

 cluded on the disk. If this is your

 first electronic filing, please also

 include your fax number and/or

 e-mail address so that the auto-

 mated confirmation of receipt and

 validation can be sent directly to

 you. First-time electronic filers

 are encouraged to send a sample

 filing to the Commission in

 advance of the actual filing.

 While not required, this will help

 ensure that the FEC processes

 your report immediately when

 filed. Call the Data Systems

 Division at 202/219-3730.

6. Send the disk, along with the

 signed Summary Page, to the

 Federal Election Commission, 999

 E Street NW, Washington, DC

 20463.

During July, the FEC will be

contacting those filers who have

requested sample copies of the

software that the agency has been

developing. This program will help

committees keep their books and

prepare their reports for electronic

filing. Those who request the pilot

software—“beta” testers—will

receive copies of the software and

will be asked to share their comments and suggestions with the FEC

before the agency makes the program available to the public. Release of the first official version of

the software is scheduled for

September 1997.

Companies that have completed

or are in the process of modifying

their programs for electronic filing

include:

• Aspen Software (Trail Blazer)

• Aristotle Industries (Campaign

Manager)

• Capitol Hill Software

• Donnelson and Associates

(Micropac)

• Gnossos Software (Keep in Touch:

PAC SOLUTION)

• Public Affairs Support Services

(PASS). ✦

Reports

(continued from page 1)
July 1997 Federal Election Commission RECORD

11

1996-49: Affiliation between PAC

of joint venture partnership and

SSF of corporate partner, 3:7

1996-50: Disaffiliation of SSFs, 3:9

1996-51: Qualification as state

committee of political party, 3: 9

1996-52: Resolicitation of excess

campaign funds for nonfederal

campaign, 3:10

1997-1: Use of excess campaign

funds to establish foundation, 5:8

1997-2: Use of campaign funds for

congressional retreat fees, travel,

5:8

1997-3: Qualification as state

committee of political party, 6:11

1997-4: Application of contribution

limit to limited liability company,

6:12

1997-5: Qualification of lessee of

trading “seat” on Exchange as

member, 7:6

Court Cases

FEC v. _____

– California Democratic Party, 7:5

– Charles Woods for U.S. Senate,

4:6

– Christian Action Network, 1:5; 5:5

– Christian Coalition, 7:2

– DSCC (95-2881), 3:2

– Fund For a Conservative Majority,

1:5

– Kalogianis, 5:3

– Legi-Tech, 7:4

– McCallum, 2:4

– Orton, 6:6

– Parisi, 1:4

– Public Citizen, 4:6

– Williams, 2:3; 7:5

_____ v. FEC

– Akins, 2:1; 7:5

– Bush-Quayle ‘92 Primary Committee, 3:5

– Clark, 5:1

– Common Cause (96-5160), 5:4

– DCCC (96-0764), 1:4

– DNC (96-2506), 1:5; 5:5

– DNC (97-676), 6:7

– DSCC (96-2184), 1:2

– Gottlieb, 7:5

– Hagelin, 6:7

– Hooker, 1:5

– Jones, 6:7

– Minnesota Citizens Concerned for

Life, 7:2

– NRCC (96-2295), 1:2

– Reilly, 1:4

– Right to Life of Dutchess Co.,

Inc., 6:8

– RNC (94-5248), 2:5

Reports

Electronic Filing, 2:1; 5:9; 7:10

July Reporting Reminder, 7:1

Schedule for 1997, 1:6

Special Election, New Mexico, 4:3

Special Election, Texas, 3:6; 4:3

800 Line

Amended reports, 4:2

Debt settlement and committee

termination, 1:8

The FEC Now Takes

Visa and Mastercard

 FEC customers can now pay for

FEC materials with Visa or

Mastercard. Most FEC materials

are available free of charge, but

some are sold, including financial

statistical reports ($10 each),

candidate indexes ($10) and PAC

directories ($13.25). The FEC

also has a 5¢ per page copying

charge for paper documents and a

15¢ per page copying charge for

microfilmed documents.

 Paying by credit card has its

advantages. For instance, since

the FEC will not fill an order

until payment is received, using a

credit card speeds delivery by

four to five days.

 Visitors to the FEC’s Public

Records Office are also able to

make payments by credit card.

Regular visitors, such as

researchers and reporters, who in

the past have paid for FEC

materials out of their own pockets,

may now make payments with a

company credit card.

 The credit card payment system

also reduces costs and paperwork

associated with check processing,

enabling FEC staff to better serve

the walk-in visitor.
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 July 1997