FEDERAL ELECTION COMMISSION

August 1986 999 E Street NW Washington DC 20463 Volume 12, Numbe

The FEC will send notices on reporting requirements and filing dates to individuals known

to be actively pursuing election to this House

seat. All other committees supporting candidates

in the special election should contact the Commission for forms and more information on required reports. Call 202/376-3120 or, toll free,

800/424-9530.

HA WAIl SPECIAL ELECTION

On September 20, 1986, Hawaii will hold a

special election in its first Congressional District

to fill the seat vacated by Representative Cecil

L. Heftel

Political committees authorized by candidates who are participating in the special election

must file pre- and post-election reports for the

special election. Note that last-minute contributions of $1,000 or more received by candidate

committees between two and 20 days before the

election must be reported within 48 hours of their

receipt.

All other political com mittees .which support

candidates in the special election (and which do

not report on a monthly basis) must also follow

the reporting schedule for the special election

detailed below. Note that last-minute independent expenditures aggregating $1,000 or more and

made between one and 20 days before an election

must be reported within 24 hours after the expenditures are made.'

TABLE OF CONTENTS

REPORTS

1 Hawaii Special Election

1 Reporting by Unopposed Candidates

2 Guam Primary: Correction

REGULAnONS

2 Contribution Limits and Prohibitions:

Notice of Proposed Rulemaking

12 Loans and Presidential Activity:

Notice of Proposed Rulemaking

4 ADVISORY OPINIONS

COURT CASES

6 Common Cause v. FEe (Suit Three)

7 FEG v. He-Elect Hollenbeck

7 FEe v. New ReQublican Victory Fund

8 New Litigation

COMPLIANCE

8 MUR Summary

INFORMATION

9 PAC Data Entry to Continue

CLEAIDNGHOUSE

9 New Advisory Panel Members Named

PUBIJCAnONS

10 Order Information

REPORTING BY UNOPPOSED CANDIDATES

The principal campaign committees of can

dates who are unopposed in an election must f

pre-election reports, regardless of Whether th

names appear on the ballot. See AO 1986-

which is sum mar ized on page 6. (Issued on Ju

27, 1986, this advisory opinion supersedes A

1978-41 and 1978-65.)

The FEe will be sending reporting forms 

notices on reporting requirements to individu

known to be actively pursuing election to Ho

and Senate seats during 1986, including those w

are unopposed in primary elections.

For more information on required repor

call 202/376-3120 or, toll free, 800/424-9530.

contin

Mailing Filing

Date Date

9/1-101l0/ 10/20/86 10/20/86 S

Report is waived for committees

required to file a post-election

report.

7/1-8/31 9/5/86 9/8/86

Period

Covered

October

Quarterly

Post-election

Pre-election

Report

•

•
August 1986 FEDERAL ELECTION COMMISSION Volume 12, Numbe

GUAM CONGRESSIONAL ELEC'I10N:

CORRECTION

The January 1986 Record erroneously

reported that the primary election for

Guam's Delegate to the U.S. House of

Represen tatives would be held on September 2, 1986. In fact, the election will be

held on September 6. The correct schedule

for filing the pre-election report is:

CONTRIBUTION LIMITS AND PROHffimONS:

NOTICE OF PROPOSED RULEMAKING

PUBLlSHED

On July 17, 1986, the Commission approved it

notice of proposed rulemaking for publication in

the Federal Register concernin~ possible revisions

to its regulahons governing limits and prohibitions

on contributions made to federal candidates and

political committees. (11 CFR 1l0.3 through

nn.s) The agency also announced that, on September 17, 1986, it will hold a hearing on the

proposed rules.

Com merits on the notice of proposed rulemaking should be submitted in writing to Ms.

Susan E. Propper, Assistant General Counsel, Federal Election Commission, 999 E Street, N.W.,

Washington, D.C. 20463. Those who are interested

in testifying at the public hearing should so indicate on their written comments.

The proposed revisions to these reguletlons

are intended to clarify the rules and address

issues which have arisen since the current rules

were promulgated in 1977. Please note, however,

that these suggested revisions do not represent a

final decision by the Commission.

Most of the issues raised for comment concern section 110.3, which governs contributions

and transfers by affiliated committees and party

committees and section 110.6, which governs earmarked contributions. Although the Commission

has not proposed major changes to sections 110.4

and 1I0.5, comments are sought on possible revisions to these rules. The major areas of proposed

changes to the rules are highlighted below.

Contribution Limits for Political Party

Committees (llO.3(b»

The current rules provide that a politic

party's national committee (and its committee

and .Jhe same party's state committee have sep

rate contribution limits.

National Party Committee Limits. Propos

revisions would make clear that a party's Sena

campaign committee and its national committ

share a $17,500 election cycle limit on contrib

tions to Senatorial candidates, but that the tw

committees have separate limits for contributio

to other candidates and committees.

Contribution Limits for Affiliated

Committees (110.3(8)

Under section 110.3, political committees a

considered "affiliated" if they are establishe

financed, maintained or controlled by the sam

corporation, labor organization, or any other pe

son or group of persons, including any pare

subsidiary, branch, division, department or lo

unit. These affiliated committees are subject to 

single contribution limit on both contributio

they make and contributions they receive. Seve

revisions have been proposed to section 110.3

to make it clear which committees are consider

"aff'illated" and, therefore, subject to a sing

contribution limit. For example, the propos

rules would clarify that, in appropriate instanc

the term "local unit" may include a franchise

licensee, or state or regional association. Min

amendments have also been proposed to the list 

committees viewed as per affiliated (i.e., aut

matically affiliated) because they have been e

tablished, financed, maintained, or controlled 

the organizations listed.

Indicia of Affiliation. The proposed revisio

make clear that, to determine whether co

mittees are affiliated, the Commission may e

amine a variety of relationships, including tho

between their sponsoring organizations; betwe

the committees themselves; or between one spo

soring organization and a committee establish

by another organization.

The agency seeks comments on adding fa

tors to the indicia that may be used to determi

whether affiliation exists between com mitte

which are not considered per affiliated. Spe

fically the new factors would permit conside

tion of:

o Whether the committees (or their parent orga

izations) share common memberships, office

employees or funding; and

o Whether a committee (or the committee's pa

ent organization) had a significant role in for

ing another political committee.

The Commission also seeks comments 

whether the indicia of affiliation should be a

plied to determine whether a political committ

sponsored by a candidate is affiliated with t

candidate's authorized com mittee(s).

2

August 25

Filing

Date

August 22

Mailing

Date

August 17

Closing Date

of Books
August 1986 FEDERAL ELECTION COMMISSION Volume 12, Numt

3

The Record is published by the Federal Election Commission, 999 E Street, N.W., Washington

D.C. 20463. Commissioners are: JoaJl D. Aikens, Chairman; John Warren McGarry, Vice Chairman

Lee Ann Elliott; Danny Lee MeDonaldj Thomas E. Harris; Thomas J. Josefiakj Jo-Anne L. Coe

Secretary of the Senate, Ex Officio; Benjamin J. Guthrie, Clerk of the House of Representatives

Ex Officio. For more information, call 202/376-3120 or ton-free 800/424-9530.

State Party Committee vs. Subordinate Party

Committee Limits. Since a state party cornrnmittee and its subordinate party committees are

presumed to be affiliated, they share a single

contribution limit, unless a subordinate committee can prove it is independent of the state

committee. The proposed rules provide criteria

that a state committee or its subordinate committee would have to use to demonstrate independence.

The Commission requests comments on these

proposed criteria and suggestions for other factors that could be considered in determining

whether a subordinate committee and the state

committee are separate political committees for

purposes of the contribution limits.

Transfers (llO.3(e»

. The final area in which the Commission is

proposing revisions to section 110.3 concerns the

provisions on transfers of funds. The proposed

rules would cross reference the Commission's regulations governing transfers and collecting agents

at 11 CFR 102.6 and the rules on joint fundralslng

at 11 CPR 102.17. The proposed regulations would

retain the provisions regarding transfers involving

candidate committees, which are currently found

in sections 11O.3(a)(2)(iii) through (a)(2)(v) of the

rules. However, the Commission is considering

amending these rules to address the three situations described below.

Transfers Prom State to Pederal Campaigns.

The Commission is considering whether to address

transfers from a candidate's state campaign to his

or her federal campaign. In several advisory opinions, the Commission has permitted candidates to

transfer funds from previous state campaign committees to their current federal campaign committees, provided certain requirements were met.

(See AOs 1982--52, 1983-34, 1984-46 and 1985-2.)

The Commission seeks comments on whether

section 110.3 should be revised to include these

requirements for transfers from a state campaign

to a federal campaign.

Transfers Between the Campaigns of a Candidate Running for More than One Office. With

regard to transfers between the principal campaign committee of a candidate who simultaneously seeks election to more than one federal

office, the agency is considering changes to clarify:

o When a candidate is actually seeking nomination or election to more than one federal office; and

o When a candidate is "not actively seeki

nomination or election to more than one fede

office.

Transfers Prom Inactive to Active Campa

of Same IndividuaL The Commission also se

comments on whether section llO.3 should 

amended to clarify issues which arise whe

candidate abandons one campaign for federal 

fice (e.g., a Senate campaign) and reactivate

previous campaign for another federal of

(~.g., a House campaign). See AO 1984-38.

Earmarked Contributions (110.6)

Under the current rules, a contribution e

marked to a candidate through a conduit is c

sidered to have been made by the original con

butor, thus counting against his/her contribu

limit for that candidate• To clarify who is subject to these rules, 

Commission seeks comments on the follow

issues:

I.Should the regulations include a list of fac

for determining whether a person (individ

group or committee) is a conduit?

2.Should separate segregated funds act as c

duits for earmarked contributions? In sev

opinions, the Commission has stated that se

rate segregated funds could act as conduits 

earmarked contributions, provided certain c

ditions were met. (See AOs 1986-4, 1981-21 

re: AOR ]976-92.)

3. Should the rules apply to contributions e

marked to political com mittees which are 

authorized by candidates?

Reporting of Earmarked Contributions. B

conduits and recipients must report earmar

contributions. The proposed rules would cons

date and clarify several reporting provisions. 

example, under the proposed rules, conduits 

usually are not required to report (e.g., indiv

als) would file a letter by a specific date.

The Commission also seeks comments on p

posals which involve:

o Reporting certain earmarked contr-Ibutions 

memo entries;

o Deleting the exception for reporting earmar

contributions totaling less than $1,000 per y

and

o Clarifying what infor mation the recipient c

didate must report.

Direction and Control Over Earmarked C

tributions. Under the current rules, if a con

contin
August 1986 FEDERAL ELECTION CONiNIISSION 'vbIume 12, Numf

exercises direction or control over an earmarked

contribution, the contribution is considered to be

from both the original contributor and the conduit

and counts against the contribution limits of both.

The contribution must be reported by both parties

as such. The Commission is considering revising

this provision to state that a conduit would be

considered a co-contributor if the conduit exercised "direct or indirect control" over making the

contribution. The rulemaking notice also suggests

criteria for determining whether a conduit has

exercised "direction and control" over an earmarked contribution. (See AO 1986-4, AOR 1976-

92 and MUR 1028.) Finally, the suggested revisions clarify the reporting requirements for contributions over which the conduit exercises

control.

ALTERNATE DISPOSmON OF ADVISORY

OPINION REQUESTS

AOR 1986-10: Affiliated Status of Two Noneonnected PACs UsiDgSame Consulting Firm

In a letter of June 27, 1986, the General Counsel

stated that, since the requester had not responded

to the FEG's request for additional information,

the advisory opinion request would be treated as

withdrawn. The request may, however, be resubmitted at a later date.

Aoa 1986-15: Media Expenditures b:y NOIleonneeted PAC in Response to Senate Candidate's Charges

The FEe confirmed the requester's withdrawal of

the advisory opinion request in a letter of June

18, 1986.

AOR 1986-16: Hxeessive Contribution Used to

Liquidate Primary Debts of Unsuccessful Candidate

The requester withdrew the advisory opinion request in a letter of June 17, 1986.

4

ADVISORY OPINION REQUESTS

The following chart lists recent requests 

advisory opinions (AORs). The full text of ea

AOR is available to the public in the Comm

sion's Office of Public Records.

AOR Subject

1986-22 Rebate offered by t.v. station to can

date who increases spending on campai

ads. (Date made public: June 24, 19

Length: 2 pages, plus 3-page supplemen

1986-23 Trade association's discount to Congr

sional offices for game simulating Co

gressman's term and reelection ca

paign•.(Date made publici June 25, 19

Length: 4 pages)

1986-24 PAC's deposit of estate gift in escr

account. (Date made publle: June 

1986; Length: 4 pages, plus l3-page su

plement)

1986-25 Corporation's use of FEC contribu

names in its publications. (Date ma

public: July I, 1986; Length: 5 pag

plus 19-page supplement)

1986-26 Presidential candidates' appearances 

convention sponsored by nonprofit corp

ration. (Date made public: JUly 3, 19

Length: 3 pages, plus 41-page supp

ment)

1986-27 Consolidated reporting of state and fe

eral PACs' activities with state fili

office. (Date made public: July 14, 19

Length: 2 pages)

ADVISORY OPINIONS: SUMPtJARImi

AO 1986-17: State Party Convention Not Election; General Election Contributions Received and Spent Before

Primary

Mark Green sought his party's designation as 

U.s. Senate candidate at the New York St

Democratic Committee's convention in June. 

qualified at that time to be a candidate in t

September 9th primary. To promote his Sen

candidacy in New York, Mr. Green established 

principal campaign committee, Friends of M

Green (the Green Committee). In response to M

Green's request for an advisory opinion, the Co

mission addressed two separate issues concern

his candidacy:

1. State Party Convention Not an Election

The New York State Democratic Comm

tee's designation of a U.S. Senate candidate at 
August 1986 FEDERAL ElECTION COMMISSION \blume 12, Numt

convention is only one means by which an individual may obtain ballot access for the Democratic

Senate primary in New York. Accordingly, since

the convention does not have "the authority to

nominate a candidate" for the Senate seat, it does

not qualify as an "election." Thus, there is no

separate contribution limit for Mr. Green's convention activity. Rather, it is considered part of

the primary election process. See 2 U.S.C. §431(l)

and II CFR 100.2.

2. General Election Contributions Received

and Spent Before the Primary

Under certain limited circumstances, the

Green Committee may receive and spend, before

the primary, contributions that are designated for

the general election. Any such expenditures must

be for the general election only. Specifically, the

Green Committee may make advance payments to

vendors for services and goods tha t will be provided to the Committee once Mr. Green becomes a

general election candidate. However, the Green

Committee may not use general election contributions to make expenditures for an activity designed to promote: I) Mr. Green's nomination as

his party's Senate candidate or 2) both his nomination and general election efforts. 2 U.S.C.

§441a(f); AO 1980-122.

If Mr. Green does not become a candidate for

the general election, the Green Committee must,

within a reasonable time, refund any contributions

designated for the general election because a

separate contribution limit will no longer be

available to these contributors. Even if the Green

Committee has already spent these contributions,

they must be refunded.

The Commission noted that this opinion

supersedes AO ]982-49, to the extent that AO

1982-49 may be interpreted as precluding the

spending of general election contributions for

those limited purposes described in this opinion.

(See above.) Commissioner Thomas E. Harris

filed a dissent. (Date issued: June 27, 1986;

Length: 9 pages, including dissent)

AO 1986-18: Maintaining Campaign FWlds in

Cash ManBgement Account Established by Brokerage Pirm

Friends of Tom Bevill (the Committee), Mr.

Bevill's principal campaign committee, may transfer campaign funds currently invested in certificates of deposit to a Merrill Lynch Cash Management Account, an investment program which provides: 1) a cash deposit account with debit card

privileges and 2) a revolving investment fund

composed of U.S. government obligations. Since

the Act and FEC Regulations require campaigns

to make campaign disbursements (except petty

cash payments) with checks drawn on the campaign's designated depository" the proposed

5

transfer would be permissible provided that 

Committee:

o Transfers funds to the Cash Management 

count solely for investment purposes (and 

for the purpose of making campaign disbu

ments); and

o Returns the transferred funds (and any inte

or dividends earned on the funds) to the che

ing account of the Committee's campaign 

posltory" before using them for campaign 

bursements. 2 U.S.C. §432(h)(l) and 11 C

103.3(a).

Since campaign disbursements must be m

from the checking account of the committ

designated depository, the Committee may 

use the debit card provided by the Cash Mana

ment Account for the purpose of spending c

paign funds.

The Committee must disclose dividends 

interest earned on the Cash Management 

count. Moreover, the Committee must item

this interest income if it exceeds $200 per y

See 2 U.S.C. §434(b)(3)(G) and 11 C

I04.3(a)(4)(iv). Commissioner Thomas J. Josef

filed a concurring opinion. (Date issued: June 

1986; Length: 5 pages, including concurrence)

AO 1986-20: Promotion Item Prepared and

Distributed by Campaign

The "People for Mark Andrews" Committee 

Committee), the principal campaign commi

for North Dakota Senator Andrews' 1986 ree

tion effort, may pay for the purchase, packag

and distribution of a campaign promotion Item

small plastic bag of bran with a recipe for b

muffins attached to one side. The Committee 

pay the fair market value for milling and pack

ing the bran. Both the package label and 

recipe on each bag will bear the disclaimer: "P

for by the 'People For Mark Andrews.' " Campa

staff will give the bags away at county and st

fairs from July through September 1986.

The Commission has stated in numerous a

sory opinions that a candidate has broad dis

tion in the use of campaign funds, includ

expenditures for campaign promotion items. 

especially AOs 1980-14 and 1980-93.

The Committee must report costs incur

for this promotion item as "operating expe

tures" on line 17 of FEC Form 3. Any paym

totaling more than $200 per year to the sa

payee must also be itemized on Schedule B. (D

issued: June 27, ]986; Length: 2 pages)

*The law's definition. or "campaign deposito

is limited to banks and other banking institut

and does not include a brokerage firm. Se

U.S.C. Section 432(h)(l).
August 1986 FEDERAL ELECTION COMfVlISSION Volume 12, Numm

AO 1986-21: Pre-Election Reporting Requirement for Unopposed Primary

Candidate

Wayne Owens was unopposed in his campaign to

seek the Democratic party's nomination for a

House seat from Utah's Second Congressional District. Since the party's June 28th State convention

had the authority to nominate the Democratic

candidate for this House seat, the convention's

nomination of Mr. Owens constituted an "election" under the Act, even though he was unopposed in the convention. 2 U.S.C. §431(l)(b)j 11

CFR IOO.2(e). Accordingly, Mr. Owens' principal

campaign committee, the Wayne Owens for Congress Committee, should file a pre-election report

for that nominating convention. 11 CFR

104.5(a)(1)0).

The Commission noted that this opinion

supersedes its ruling in two previous opinions--

AOs 1978-41 and 1978-65--to the extent that

those opinions suggest that candidate committees

are not required to file pre-election reports when

the candidate is unopposed in a primary election

or when the oandidate's name does not appear on

the ballot. The Commission said that it issued

those opinions at a time--prior to the 1980

amendments--when the Commission had more

discretion to waive reporting requirements. (Date

issued: June 27, ~986; Length: 3 pages)

COMMON CAUSE v. FEC (Suit Three)

On June 25, 1986, the U.S. District Court for

the District of Columbia issued an opinion in

Common Cause v. FEC, a suit in which Common

Cause challenged the FEC's dismissal of an administrative complaint, Which the organization

had filed with the Commission in September 1984.

(Civil Action No. 85-0968) In remanding the suit

to the FEC, the court ordered the agency to

provide: 1) an explanation of the legal standard

that the agency had used in making its decision to

dismiss the complaint and 2) a statement of

reasons demonstrating how the FEC had applied

this legal standard to the facts before it. The

court noted that, on remand, the FEC could reach

a different conclusion with regard to the merits

of Common Cause's administrative complaint.

Background

On August 24, 1984, two days after he received the Republican Party's Presidential nomination, President Reagan addressed a convention

of the Veterans of Foreign Wars (the VFW) in

Chicago. During his speech, Mr. Reagan did not

6

expressly mention his candidacy; nor did he soli

contributions to his campaign. Since the Reag

administration viewed the Chicago trip as offic

business, the administration allowed the gove

ment to absorb the travel costs and did not rep

them to the FEC.

On September 20, 1984, Common Cause fil

an administrative complaint with the FEC again

the Reagan-Bush '84 General Election Committ

(the Reagan campaign), President Reagan's prin

pal campaign committee for his 1984 gene

election campaign. In the complaint, Comm

Cause alleged that the travel costs related 

President Reagan's Chicago speech constitut

"qualifed campaign expenses"· incurred for M

Reagan's publicly funded general election ca

paign. Consequently, Common Cause claimed th

the Reagan campaign had to: 1) pay for and repo

the costs of the Chicago trip as "qualified Ca

paign expenses" and 2) reimburse the governme

for using a government airplane to make the trip

On December 24, 1984, the FEC's Gene

Counsel recommended that the Commission fi

"reason to believe" that the Reagan campaign a

its treasurer had violated provisions of the ele

tion law and public funding statutes by failing 

report these expenses. On January 15, 1985, ho

ever, the Commission decided, by a four to tw

vote, to find "no reason to believe'' the Reag

campaign and its treasurer had violated feder

election laws. Consistent with past practice, t

Commission did not issue a formal statement 

reasons for its decision to" dismiss Comm

Causers administrative complaint.

On March 22, 1985, Common Cause challen

ed the FEC's dismissal decision by filing s

against the Commission with the district court. 

its suit, Common Cause asked the court to: 

declare that the FEe's dismissal of its administ

tive complaint was contrary to law and 2) ord

the agency to act on the allegations in its co

plaint.

In arguing that the FEe's dismissal was co

trary to law, Common Cause said that, in dete

mining whether President Reagan's Chicago tr

was campaign related, the Commission shou

have considered the "totality of circumstance

surrounding his Chicago speech rather than usi

a narrower review standard, which focused sole

on: 1) whether President Reagan's speech expre

ly advocated his reelection and 2) whether 

solicited contributions in conjunction with h

speech.

The Court's Ruling

Although accepting the legal standard whi

the parties agreed had been applied by the FEC 

"'FEC Regulations define "qWJlified campai

e:rpenses" as those e:rpenditures made during t

reporting pericxl to further the general electi

campaign of a publicly fWlded Presidential can

date. See 11 CFR 9002.11.
August 1986 FEDERAL ELECTION COIVIMISSIOI\J Volume 12, Numb

its dismissal of Common Cause's complaint, the

court observed that it still had to "determine

whether the agency has presented a rational basis

for its decision." In this regard, the court noted

that lithe record before us prevents that threshold

determination." The court therefore remanded the

case to the FEC "both for an explanation of the

legal standard actually applied and ..•a statement

of reasons demonstrating how the Commission

applied such legal standards to the facts before

it."

FEC v. RE-ELECT HOLLENBECK TO

CONGRESS COMMITTEE

On June 16, 1986, the U.S. District Court for

the District of Columbia denied the Commission's

motion for summary judgment and entered a judgment for the defendants in FEC v. Re-Elect

Hollenbeck to Can ress Committee (CiVil Achon

No. 85-2239 • The court held that the Re-Elect

Hollenbeck to Congress Committee (the Hollenbeck Committee), Representative Hollenbeck's

principal campaign committee for his 1982 reelection effort, and the Hollenbeck Com mittee's

treasurer, David I. Korsh, had not knowingly violated the election law by accepting an excessive

contribution from the New Jersey Republican

State Committee.

Background

In 1982, when the New Jersey Republican

State Committee (the State Committee) made a

$5,000 contribution to the Hollenbeck Committee,

the State Committee had not achieved rnulticandidate com mittee status" because it had not yet

satisfied the six-month registration requirement.

Consequently, the State Committee was only eligible to make a contribution of up to $1,000 per

election to each candidate, and the Hollenbeck

Committee could legally receive only $1,000 for

the primary election.

On learning of the State Committee's excessive contributions, the FEC initiated enforcement

proceedings against the State Committee, the

campaign com mittee of each New Jersey Republican incumbent and their respective treasurers.

When the Commission failed to reach a settlement with the Hollenbeck Committee, the agency

filed a suit against the Committee in which it

asked the district court to: 1) assess a $5,000 civil

.-Multicandidate committees may contribute

up to $5,000 per election to a candidate's authorized committee(s) or any other political committee. To achieve multicandidate status, a committee must have more than 50 contributors, have

been registered for at least six months and, with

the exception of state party committees, have

made contributions to five or more candidates for

federal office. 2 U.S.C. Section 441a(a)(4); 11

CFR 100.5(e)(3).

7

penalty against the defendants for violat

§441a(f) of the Act in accepting the State C

mittee's excessive contribution and 2) order 

Hollenbeck Committee and its treasurer to ref

the excessive portion of the contribution (i

$4,000) to the State Committee.

Acknowledging receipt of the $5,000 con

bution, the Hollenbeck Committee denied "kn

ingly accepting" an illegal contribution. The C

mittee argued that it had "erroneously assum

that the State Committee had qualified for 

status of a multicandidate political committee.

The Court's Ruling

The court noted that, under FEe Regulatio

a campaign committee's "treasurer shall make 

or her best efforts to determine the legality 

any contrlbution't" made to the campaign. 

court observed that this regulation was "not 

duly burdensome. It does not place an affirma

obligation upon the treasurers to verify the le

ity of every contribution. Rather, it requ

verification of contributions that 'appear to 

illegal,' including those exceeding $1,000 that 

not appear to come from a multieandidate co

mittee."

In ruling that the Hollenbeck Commi

should not be held liable for the State Comm

tee's excessive contribution, the court held t

the State Committee's contribution to the Hol

beck Committee "would appear to be legal to 

reasonable treasurer.... IT

FEC v. NEW REPUBLICAN VICTOR Y FUND

On June 23, 1986, the U.S. District Court 

the Eastern Division of Virginia, Alexandria D

sion, approved a consent order between the C

mission and defendants, the New Republican V

tory Fund (the Fund), a nonconnected polit

committee, and the Fund's treasurer, Charles 

Black, Jr. The consent order provides that def

dants violated section 434(a){4)(A) of the elect

law during the 1984 election cycle by:

o Failing to file the Fund's October quarte

year-end and post-general election reports; a

o Filing its July quarterly report approxima

64 days late.

Within 30 days of filing the consent or

the defendants agreed to:

o File these reports; and

o Pay a $2,350 civil penalty to the U.S. Tr

surer•

The consent order concluded a suit filed 

the FEC on April 18, 1986 (CA No. 86-402-A).

contin

"See 11 CPR l03.3(b)(1).
ALgust 1986 FEDERAL ELECTION COJVIJVlISSION \blume 12, Numoo

NEW LITIGATION

John Glenn Presidential Committee, IDe. v. FEC

The John Glenn Presidential Committee, Inc.

(the Committee), the principal campaign committee for Senator Glenn's publicly funded 1984 Presidential primary campaign, asks the appeals court

to review a final repayrnant determination the

FEC made with regard to the Committee. In its

May 15, 1986, decision, the agency found that the

Committee had made nonqualified campaign expenses (amounting to $248,004.62) as a result of

exceeding its spending limits for the Iowa and

New Hampshire primaries.* Accordingly, within

20 days of its decision, the FEC required the

Committee to repay $74,955.62 to the U.S. Treasury for these nonqualified expenses.*.

U.S. Court of Appeals for the District ·of

Columbia Circuit, CA No. 86-1348.

Common Cause v. FEC (Suit Four)

On April 29, 1986, the FEC denied Common

Cause's petition for rulemaking on issues related

to the use of "soft moneyll·*. in federal

elections. (See 51 Fed. Reg. 15915.)

Common Cause and four of its members ask

the district court to:

o Declare that the Commission's denial of Common Cause's rulemaking petition was contrary

to law; and

o Issue an order directing the Commission to

reconsider Common Cause's rulemaking petition

in conformity with the court's opinion.

U.S. District Court for the District of Columbia, Civil Action No. 86-1838, June 30, 1986.

"'The public funding statutes require Presidential primary candidates to repay the U.S. Treasury

for nonqualified campaign expenses, 26 U.S.C.

Section 9038(b)(2). Under the statutes, spending in

excess of the state-by-state spending limits is

considered one type of nonqualified campaign

expense.

......When a campaign incurs nonqualified expenses, the campaign must make a repayment

based on the ratio of federal fwtdS to total funds

received by the candidate (both private and federal funds). 11 CFR 9038.

**"'1n its complaint, Common Cause defines the

term "soft money" as "fWlds from sources prohibited lUlder the FECA that are given to political

committees and party organizations ostensibly for

use at the state or local level, but which are

actually used in connection with and to influence

federal elections in violation of the FECA. "

8

MUR 1964: Accepting Excessive Contribution

Attribution to Spouse

This MUR, resolved through conciliation, involv

a Senate candidate committee which accep

excessive contributions and inaccurately repor

these contributions.

Complaint

The MUR was internally generated by 

Commission in the normal course of carrying 

its administrative responsibilities. A review of 

report filed by the candidate indicated receipt 

contributions that exceeded the election la

dollar limits. Moreover, the candidate commit

did not follow the procedures contained in Co

mission Regulations for handling contributio

which appear to be illegal. 11 CFR 103.3(b).

General Counsel's Report

The Commission's investigation indica

that the candidate committee received excess

contributions from 42 individuals and from t

political committees which had not qualified 

multicandidate status. 2 U.S.C. §441a(a)(I)(A

These contributions (totaling $44,301) were n

refunded or redesignated within Q reasona

length of time. Under the election law, contrib

tions must be screened within 10 days of rece

and timely accounted for to avoid any violatio

The Committee had employed a system wh

screened contributions only at the end of t

reporting period. This procedure did not perm

the committee to follow the guidelines for h

dling contributions which appear to be illegal.

According to the candidate committee, t

contributions from the two political committe

had been designated for different elections, i.

for the general election and the primary. T

committee, however, had failed to report t

contributions accurately. 11 CPR 104.14(d).

In the case of the contributions from indiv

uals, the investigation indicated that the can

date committee had not provided the necessa

written documentation in support of 16 re

tributions between spouses. 11 CFR 100.7(c) a

104.8(d). The Regulations require that a contrib

tion from a married individual may not be att

buted to a spouse unless specified in writing 

the contributor or the person to whom the cont

bution is attributed. The Commission conclud

that the 16 contributions allegedly reattributed 

the spouses of the contributors were excess

contributions.

The General Counsel recommended that t

Commission enter into conciliation with the co

mittee prior to finding probable cause to belie

the committee had violated the Act.
August 1986 FEDERAL ELECTION COMMISSION \A)lume 12, Numbe

Commission Determination

The Com mission found reason to believe that

the candidate committee violated the Act by

knowingly accepting excessive contributions and

inaccurately reporting contributions. In the conciliation agreement, the candidate committee refunded the excess portion of contributions

received; amended its reports to accurately disclose all contributions; and agreed to pay a $5,000

fine.

FEC STAFF WILL CONTINUE ENTRY

OF PAC DATA

In July, the Commission announced that it

would continue to computerize information on

political action committee (PAC) contributions to

federal candidates. In January, the Commission

had considered discontinuing this program in response to budget cuts mandated by the GrammRudman-Hollings Deficit Reduction Act. The

agency deferred that decision, however, for nearly five months, to determine if FEC staff--rather

than an outside contractor-i-could handle efficient entry of the PAC information.

While the entry of itemized PAC information

has been somewhat less timely than in the past,

the Com mission considers this staff effort very

successful. Recognizing that the volume of data

will increase in this election year, the FEC will

hire several additional data entry clerks on a

temporary basis to maintain the efficiency of

these operations.

Despite the mandated budget cuts, the agency has continued to offer computerized information on the 1984 and 1986 election cycles. This

information includes total receipt and disbursement figures from the reports of candidate committees, party com mittees and PACs. Data from

the second summary page of candidate reports is

also available through the FEC's computer system, along with detailed contribution information

from PACs and party committees. (For the years

prior to 1983, this information is on mlcrofilrn.)

Under its new computer contract, the agency

plans to restore financial information from the

1978, 1980 and 1982 election cycles. Eventually,

the agency hopes that the public will have access

to all such data through the computer. (For more

information on the enhanced computer capabilities resulling from the contract, see page I of the

JUly 1986 Record.)

9

FEC HAMES NEW MEMBERS TO

CLEARINGHOUSE ADVISORY PANEL

On JUly 3, 1986, the Commission announ

that the agency had appointed four individuals 

the 16-member Advisory Panel of the FEC's 

tional Clearinghouse on Election Administrati

They are: Emmett H. Fremaux, Jr., Execut

Director of the District of Columbia Board 

Elections and Ethics; Dr. Ronald D. Michaels

Executive Director of the Illinois State Board 

Elections; Richard H. Austin, Michigan Secret

of.State; and Natalie Meyer, Colorado Secret

of State.

The new members will participate in a tw

day meeting of the Advisory Panel scheduled 

September 21-23 in Washington, D.C.

The Advisory Panel was created in 1975 

advise the FEC's Clearinghouse on Election 

ministration on how to best use its resources 

improve the administration of elections throu

out the nation. The FEC is the only age

specifically charged by Congress to conduct 

search on the adrninlstation of federal electio

Current research projects include studies on: v

ing system standards, the Voting Accessibility 

and computerizing election administration.

PUBLIC APPEARANCES

9/4 University of Utah

Department of Continuing

Education

Washington, D.C.

Chairman Joan Aikens

9/11 Texas Medical Educational

Research Foundation

Austin, Texas

Com missioner Lee Ann Elliott

9/12 Pennsylvania Election Officials

Conference

Harrisburg, Pennsylvania

Chairman Joan Aikens
August 1986 FEDERAL ELECTION COMMISSION

FREE PUBLICATIONS

The FEC offers the following free publications. To order, return the completed form below.

\bIurne 12, Numba

Trade Associations 

Using FEC Campaign Finance Informat

Volunteer Activity

Annual Report

Report to President and Congress, sum

rizing agency's activities, advisory opinions 

litigation; and presen ting Commission's legisla

recom menda tions,

Federal Election Campaign Laws

Complete compilation of Federal election

campaign laws prepared by FEC.

FEC Regulations (II CFR)

FE C regulations; subject indexes prepared by

FEC.

FEC Record

Monthly newsletter covering reporting, advisory opinions, litigation, legislation, statistics,

regulations, compliance, Federal Register notices,

FEe procedures and staff, and publieations,

Order Form NAME .

STREET

CITY,STATE, ZIP CODE

CONNeCTED ORGANIZATION IPHONE (Optional)

Please indicate quantity in box to left of each item.

General

Congreuional Corporation. and

Candidates Labor Orqanizations

Party Commiltees Nonconnected

Committees

Federa I Elec lion BOOkkeeping Manual

Campaign laws for Candi dates

F EC Regulations Annual Report

FEC Record

[su bscri ptionl

Federal Election Cornrnlssion

Information Services

Washington, D.C. 20463

Toll Free: 800/424-9530

Local: 202/376·3120

Brochures

Campaign Guides

Advisory Oplntons Local Party

Activity

Candidate Political Ads

RegistratiOn and SOlicitations

Committee PUblic Funding of

Treasurers Presidential Elections

Contributions State Elections &

Federal Cln'Paign Law

Corporate/Labor Trade Associations Communications

coree ratelLebor Using FEC Campaign

Facilities Finance Information

F EC and Federal Volunteer Activity Election Law

Independem

Expenditures

--

Phone:

Mail to:

10

House and Senate Bookkeeping Manual

Recommended method of bookkeeping and

reporting for Federal candidates and their committees.

FEC and Federal Election Law

Brief overview of major provisions of the

Federal Election Campaign Act and the Commission's role in administering it.

Campaign Guides

Clear explanation and illustration of election

law requirements. Separate Guide for:

Congressional Candidates and Committees

Party Committees

Corporations and Labor Organizations

Nonconnected Political Committees

Broehures

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Contributions

Corporate/Labor Communications

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Political Ads and Solicitations

Public Funding of President Elections

State Elections & Federal Campaign Law

Using FEC Campaign Finance Information

Brochure explaining how to gather information on financial activity of political committees

and candidates by using reports and FEC's computer indexes.
, .

August 1986 FEDERAL ELECTION COIVIMISSION \blume 12, Numte

This cumulative index lists advisory opinions,

court cases and 800 Line articles published in the

Record during 1986. The first number in the

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

Record issue; the second number, following the

colon, indicates the page number in that issue.

OPINIONS

1985-26: Corporation's distribution of employee's political message, f:7

1985-31: Affiliation between insurance corporation and agencies for purposes of PAC solicitations, 2:2

1985-32: Proceeds of reception beyond Act's

purview, 1:7

1985-33: Personal loans to candidate for campaign, 1:7

1985-34: Nonconnected PAC's use of proceeds

from life insurance policy, 1:8

1985-35: Solicitability of corporate board members, 1:8

1985-37: Affiliation of local Chambers of Commerce with State Chamber, 3:1

1985-38: Committee established by candidate

for state and local candidates, 3:2

1985-39: Bank ad in political journal, 2:2

1985-40: PAC's spending for Presidential

testing-the-waters activities, 3:2

1985-41: Contribution for general election accepted prior to primary, 2:3

1985-42: Campaign funds used to pay candidate's rent, 3:4

1986-1: Vendor's offer to provide free tickets to

committee, 4:6

1986-2: Candidate's sales campaign, 4:6

1986-4: Corporation's program to encourage

employee contributions, 4:6

1986-5: Excess campaign funds transferred

from candidate's federal to local committee,

4:7

1986-6: PAC established by Vice President for

party building and candidate support, 5:2

1986-7: Cooperative PAC's shareholder solicitation program, 4:7

1986-8: 1982 contributions refunded by candidate's 1986 campaign, 6:7

1986-9: Candidate's use of 1986 campaign funds

to reimburse himself for legal expenses, 6:7

1986-11: Act's pree rnption of state election

law, 6:8

1986-12: Excess campaign funds transferred to

1986 exploratory committee, 7:1

1986-13: PAC expenses financed by trade association's corporate members, 7:2

1986-14: Proceeds from sale of committee's

campaign van, 6:8

11

800 LINE

Candidate use of loans and personal assets, 7:

Designating a principal campaign committ

3:5

Local and state officeholders become fede

candidates, 7:4

Transfer of candidate funds from state to f

eral com mittee, 1:8

Using information in FEC reports, 7:3

COURT CASES

Antosh v. FEC, 3:8; 6:8

Alwin E. Hopfmann v, FEC, 2:3; 6:9

FEC v; American International Demograp

Services, lnc., 4:8

FEC v, Beatty for Congress Committee, 6:9

FEC v, Californians for Democratic Repres

tation, 3:8

FEC v, Jimmy Carter Committee for a Grea

America, 6:10

FEC v, Citizens Party, 3:8

FEC v, Dramesi for Congress, 7:7

FEC v, Eldredge, 1:10

FEC v. Haley, 1:11

FEC v• Maggin for Congress, 5:4

FEC v. MAPAC, 1:10

FEC v. National Congressional ClUb, 7:7

FEC v, NCPAC (Third Suit), 7:6

FEC v. New Republican Victory Fund, 6:10

FEC v. NRA, I:ll

FEC v, Pryor for Congress Committee, 5:5

FEC v, Rhoads for Congress Committee, -6:9

FEC v. Rodriguez, 7:8

FEC v, Sailors' Union of the Pacific Fund, 2:3

FEC v, Wolfson, 4:8

FEC v. 1984 Victory Fund (Second Suit), 6:10

Gramm v. FEC; FEC v, Gramm, 1:10
August 1986 FEDERAL ELECTIOI\J COMMISSION \blume 12, NumOO

BANK LOANS; PUBLIC FINANCING OF

PRIMARY AND GENERAL ELECTION

PRESIDENTIAL CANDIDATES: NOTICE

OF PROPOSED RULEMAKING PUBLISHED

On July 24, 1986, the Commission decided to

publlsh a notice of proposed rulemaking in the

Federal Register concerning possible revisions to

its regulations governing: 1) bank loans secured by

federal candidates (both Congressional candidates

and publicly funded Presidential candidates) and

other political committees and 2) administration

of the public financing program for Presidential

primary and general election candidates.

Regulatory review will include the broad areas listed below. However, other proposed

changes are reflected in the draft regulations.

(Note that the issues presented by bank loans are

governed by Title 2 of the election law and that

the other issues [2-9] are governed by Title 26 of

the public funding statutes.)

The public is invited to comment in writing

on the issues presented in the notice. For more

information, contact: Ms. Susan E. Propper,

Assistant General Counsel, Federal Election Commission, 999 E Street, N.W., Washington, D.C.

20463 or call 376-5690 or toll free 800/424-9530.

A copy of the notice may be obtained by calling

376-3120, or toll-free, 800/424-9530.

FEDERAL ELECTION COMMISSION

999 E Street, N.W.

Washington, D.C. 20463

Official Business

Major Issues Published for Public Comment

I. Bank Loans. The Commission seeks comme

on what constitutes a bank loan made "in t

ordinary course of business" by a publicly fun

ed Presidential candidate, a Congressional ca

didate or a political com mittee. In particul

questions have been raised on how' to determi

whether a bank loan has been "made on a ba

that assures repayment." The Commiss

therefore seeks com ments on three possi

interpretations of this phrase, as well as oth

suggested interpretations. (II CFR 100.7(b)(

and 100.8(b)(I2»

2. Debt Settlement and Extensions of Cred

(Proposed 11 CFR 9035.1(a)(2) and 9035.2(a)(2

3. Administration of the Matching Fund Progra

(Proposed II CF R 9033.l(b)(5), 9033A(

9036.l(b), 9036.2(a), 9036.2(b)(2), 9036.5 (b) a

9036.6)

4. Statement of Net Outstanding Campaign Ob

gations. (Proposed 11 CFR 9034.5)

S. Administrative Costs for Seeking Media Rei

bursement. (Proposed 11 CFR 9004.6(d) a

9034.6(d»

6. Definition of a Qualified Campaign Expen

(Proposed 11 CFR 9034.4(a) and (b»

7. Petitions for Rehearing; Stays of Repayme

Determinations and Other Repayment Issu

(Proposed II CFR 9007.5 and 9038

9003.2(c)(7), 9035. 1(a)(2) and 9038.2(b)(2)(iii»

8. Filing Dates. (e.g., 11 CFR 9007.2(c)-(

9033.3(b), 9003.4(b»

9. Other issues which could be addressed in t

proposed rules (e.g., the distinction for repa

ment purposes between expenses incurred a

expenses paid).

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31